Prologis to Buy DCT Industrial Trust for $8.4 Billion
April 29 2018 - 6:50PM
Dow Jones News
By Dana Mattioli and Jennifer Smith
Prologis Inc. agreed to buy logistics-property owner DCT
Industrial Trust Inc. for $8.4 billion including debt as a surge in
e-commerce ramps up demand for warehouses and distribution
centers.
DCT shareholders will receive 1.02 Prologis shares for each
share, valuing the deal at $67.91 per DCT share, the companies
announced Sunday, confirming an earlier report by The Wall Street
Journal. That amounts to a roughly 16% premium over DCT's closing
share price Friday.
DCT, based in Denver, is an industrial real-estate investment
trust.
Prologis, based in San Francisco, has a market value of about
$36 billion. It is the world's largest owner of distribution
centers and logistics properties, which have been changing rapidly
as e-commerce fulfillment needs draw more investment into the
field, and warehouse development in the U.S., Europe and Asia
booms.
E-commerce growth has fueled demand for more distribution
centers, including pricey sites near population centers that are
used to ship online purchases more rapidly to consumers.
Prologis had an estimated 676 million square feet of warehousing
under its control at the end of 2016, according to National Real
Estate Investor. DCT was No. 10 in the world in the same survey,
with 74 million square feet of space.
Both companies have a footprint in key industrial real-estate
markets like Southern and Northern California, New Jersey, Atlanta
and Chicago, where demand is up as e-commerce companies and others
set up warehouses closer to major population centers.
Rental rates in industrial real-estate markets have growing at a
more-than-5% annual rate in each of the last seven quarters, as
demand outpaces supply, according to real-estate broker CBRE Inc.
The firm said the 7.3% availability rate for warehouse space in the
U.S. in the first quarter was the lowest in 17 years.
Increased demand has driven other deal making recently. A
Chinese private-equity consortium agreed to buy the logistics
real-estate market's second-biggest player, Singapore-based Global
Logistic Properties. GLP is the biggest operator of warehouses in
Asia and has properties in China and Japan as well as the U.S.
Prologis Chief Executive Hamid Moghadam said in an interview
Sunday that the deal will yield operational efficiencies, as well
as so-called revenue synergies in part from "more development with
the same customers because now, between the two of us, we have a
bigger share of their wallets."
DCT Industrial Chief Executive Philip Hawkins said the
transaction came together "fairly quickly" and that it was "a great
opportunity for our combined stockholders."
In recent months, the supply of industrial real estate has been
inching closer to demand as warehouse developers put up buildings
at a faster pace.
Mr. Moghadam said that while supply is improving, "the vacancy
rate remains at very low levels, and I don't see it going anywhere
in the next couple of years."
J.P. Morgan and Mayer Brown are advising Prologis on the deal.
Bank of America Merrill Lynch and Goodwin Procter LLP are advising
DCT.
DCT separately on Sunday reported that its net income
attributable to common stockholders was 52 cents a share in the
first quarter, compared with 16 cents a year earlier.
Paul Page contributed to this article
Write to Dana Mattioli at dana.mattioli@wsj.com and Jennifer
Smith at jennifer.smith@wsj.com
(END) Dow Jones Newswires
April 29, 2018 18:35 ET (22:35 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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