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Prologis Inks Lease Deals in Latin America

Zacks Equity Research

Ushering in good news for its Latin America platform, industrial real estate investment trust (:REIT) – Prologis Inc. (PLD) – announced the signing of four development lease deals in the first quarter of 2014 in Brazil and Mexico. The lease deals involve a total space of 582,000 square feet. The move reflects the solid demand for Prologis’ facilities in this part of the world.

Specifically, the deals include pre-leasing of 290,000 square feet at Prologis CCP Dutra in Sao Paulo to a wholesale warehouse club and a repeat Brazil customer. The second deal is for 113,000 square feet of space at Prologis CCP Queimados, leased to a pharmaceutical distributor close to Rio de Janeiro.

The other deals involve 179,000 square feet of space at Prologis Park Toluca in Mexico leased to two different customers – a regional packaging producer and an automotive company.

As a matter of fact, the demand for premium quality logistics facilities has been on the rise in Brazil and Mexico in recent times with growing domestic consumption. Particularly, in Brazil, the market remains underserved, while in Mexico, demand has continued to recuperate and occupancy rates are improving.

Alongside, with well-placed land banks and capacity to offer modern distribution facilities in strategic infill locations, Prologis is leveraging on this trend. With around 35 million square feet of logistics and distribution space as of Dec 31, 2013, the company has emerged as a leading provider of industrial real estate in Latin America.

Prologis is expected to release its first-quarter 2014 results on Apr 22, 2014. The Zacks Consensus Estimate for funds from operations (:FFO) for the quarter is currently pegged at 42 cents, reflecting a year-over-year increase of 4.79%.

Prologis currently carries a Zacks Rank #3 (Hold). Investors interested in the REIT industry may also consider stocks like Cousins Properties Incorporated (CUZ), Duke Realty Corporation (DRE) and Liberty Property Trust (LPT). All three stocks have a Zacks Rank #2 (Buy).

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.

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