Real estate investment trust Prologis, Inc. (NYSE: PLD) and real estate firm Duke Realty Corp. (NYSE: DRE) have signed a merger agreement under which the former will acquire the latter for around $26 billion, including debt.
The deal comprises 1,228 acres of land, 11 million square feet of property under development and 153 million square feet of operating properties at 19 locations in the U.S.
Following the completion of the transaction, which is expected in the fourth quarter of 2022, Prologis plans to exit one of Duke Realty’s markets and hold nearly 94% of its assets.
The CFO of Prologis, Tim Arndt, said, “This transaction increases the strength, size and diversification of our balance sheet while expanding the opportunity for Prologis to apply innovation to drive long-term growth. In addition to generating significant synergies, the combination of these portfolios will help us deliver more services to our customers and drive incremental long-term earnings growth.”
Agreement Details
As per the agreement, for each share of Duke Realty, its shareholders will receive 0.475 shares of Prologis.
The transaction is expected to generate corporate general and administrative cost savings of approximately $310 million to 370 million, immediately after the deal concludes. Further, it is anticipated to boost core funds from operations (FFO) by $0.20 to $0.25 per year.
About Duke Realty
Headquartered in Indiana, Duke Realty owns and operates almost 165 million square feet of rentable industrial assets in 19 major U.S. logistics markets. It provides leasing, property and asset management, construction and other tenant-related services.
About Prologis
California-based Prologis has a client base of 5,800 customers to whom it leases modern logistics facilities. The company owns or has investments in properties and development projects spanning approximately 1 billion square feet in 19 nations.
Price Target
Based on 12 Buys and three Holds, the stock has a Strong Buy consensus rating. PLD’s average price target of $177.36 implies 63.6% upside potential from current levels. Shares have lost 31.3% over the past six months.
Bloggers’ Stance
According to TipRanks, financial bloggers are 83% Bullish on PLD, compared to the sector average of 70%.
Conclusion
Even though PLD stock lost 7.5% on Monday, after the announcement of the deal, it stands to benefit from the acquisition that will expand the company’s footprint in Atlanta, Southern California, Dallas, New Jersey, Chicago and South Florida.
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