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Prologis Commences ATM Program

Zacks Equity Research

San Francisco-based industrial real estate investment trust (:REIT) Prologis Inc. (PLD) recently initiated an at-the-market (:ATM) equity-offering program. The company plans to sell shares up to $750 million aggregate offering price, from time to time, based on market conditions and capital requirements. 

BofA Merrill Lynch, a corporate and investment banking division of Bank of America Corporation (BAC) and Citigroup Global Markets Inc., an operating arm of Citigroup, Inc. (C) will support Prologis as the managers for the ATM offering.

Prologis plans to use net proceeds from the shares sale for general corporate purposes – such as funding proposed acquisitions and investments as well as reducing the debt level.

We believe that the above-mentioned transaction by Prologis will provide it financial flexibility and position it favorably to pursue expansion opportunities, which will go a long way in enhancing top-line growth. Notably, Prologis have been riding on a growth trajectory lately, by joining hands with various retailers for build-to-suit deals. However, the share dilution impact cannot be ignored.  

Last week, the company penned a deal with a retailer for a build-to-suit facility in Poland. Spanning 376,000 square feet, this distribution center represents the fourth build-to-suit project in less than two years at Prologis Park Wroclaw V.

In March 2013, Prologis penned a new build-to-suit agreement with end-to-end e-Commerce service provider – SpeedFC – a subsidiary of Navarre Corp. (NAVR). The agreement is for a distribution center spanning 770,000 square feet in Etna, Ohio.

Prologis currently carries a Zacks Rank #3 (Hold).

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