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Prologis & CBRE Global Investment Form UK Logistics Venture

Zacks Equity Research

Prologis, Inc. PLD, a leading industrial real estate investment trust (“REIT”) and CBRE Global Investment Partners – an affiliate of CBRE Group, Inc. CBG – have set up a new development venture in the UK, called as Prologis UK Logistics Venture (“UKLV”). The UK market offers tremendous opportunities and tying up with CBRE Global Investment Partners – a division of CBRE Global Investors – is an excellent way to reap these opportunities.

UKLV will follow a develop-to-own strategy and concentrate on the prime UK markets in the East and West Midlands, London, and the South East. This venture will be responsible for acquiring land, developing buildings and operating logistics real estate. The venture, expected to close by the end of Feb 2017, will begin with a portfolio of stabilized properties of 7.6 million square foot, developments in progress and land, with an estimated initial closing of 3.9 million square feet. The total estimated value of the UKLV is around £1 billion GBP ($1.26 billion), with 15% being owned by Prologis and the remaining 85% owned by clients of CBRE Global Investment Partners.

Prologis acquires, develops, operates and manages industrial real estate space in the Americas, Asia and Europe. The company principally targets investments in distribution facilities for customers engaged in global trade and dependent on efficient movement of goods through the global supply chain.

The REIT has a highly experienced team in the UK, with a track record of successfully delivering development projects and managing stabilized assets. Currently, Prologis owns and operates 23 million square feet in 97 buildings in the UK. Solid demand in the UK for logistics real estate is propelled by consumption, e-commerce and supply chain modernization. The formation of this venture signals consistent strength of the UK logistics property market.
 
Currently, both Prologis and CBRE Group carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Prologis outperformed the Zacks categorized REIT and Equity Trust – Other industry over the past one year. During that time frame, shares of the company gained 38.9%, whereas the industry rose by 20%.

Investors interested in the REIT and Equity Trust – Other industry may consider stocks like Ashford Hospitality Prime, Inc. AHP and Community Healthcare Trust Incorporated CHCT. Both the stocks carry a Zacks Rank #2 (Buy).

Over the past 30 days, Ashford Hospitality Prime’s funds from operations (“FFO”) per share for first-quarter 2017 moved up 11.1% to 40 cents. Community Healthcare Trust’s first-quarter 2017 FFO per share estimate remained unchanged at 45 cents over the past 30 days.

Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. All EPS numbers presented in this write up represent FFO per share.

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