Prologis Inc. (PLD), a leading industrial real estate investment trust (:REIT), has recently signed a new build-to-suit agreement to construct a turnkey distribution center spanning about 300,000 square feet in the U.K., for an undisclosed amount. The deal was penned with Network Rail, which operates, maintains and develops rail tracks, bridges, tunnels, level crossings, viaducts and 17 key stations in the U.K.
The proposed construction is slated to come up at Prologis Park Ryton in the West Midlands region and is scheduled to be complete in March 2013. The facility is strategically located on the A45 road off the central U.K. motorway network and in close proximity to Coventry Airport, which is one of the most easily accessible airports in the country.
Besides its locational advantage, the facility is designed to achieve a “Very Good” accreditation from Building Research Establishment Environmental Assessment Method (:BREEAM) that sets the standard for the best practice in sustainable building design, construction and operations. In addition, the project is expected to receive the best possible Energy Performance Certificate (:EPC) ranking based on its energy efficiency rating.
The agreement showcases the inherent high quality of the properties of Prologis and signifies a growing demand for Class A logistics space in the U.K. Earlier, in May and September 2012, Prologis had also signed two build-to-suit agreements to construct a new e-commerce distribution hub spanning 473,000 square feet and 810,000 square feet of distribution space respectively, in Osaka, Japan.
With improving property values and growing institutional demand for quality properties, Prologis has witnessed a growing customer interest in new build-to-suit development projects across the globe. Additionally, leasing decisions that were earlier postponed due to volatility in the markets are gradually coming off the shelf.
Prologis acquires, develops, operates and manages industrial real estate space in North America, Asia and Europe. As of June 30, 2012, Prologis had approximately 18 million square feet of logistics and distribution space in the U.K.
We currently have a Neutral recommendation and a Zacks #2 Rank for Prologis, which translates into a short-term Buy rating. However, we have an Underperform recommendation and a Zacks #5 Rank (short-term Strong Sell rating) for Winthrop Realty Trust (FUR), one of the peers of Prologis.
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