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Prologis Making Progress With Polk County Warehouse Plans

Zacks Equity Research

With healthy operating fundamentals in the industrial real estate markets, Prologis Inc. PLD is actively capitalizing on growth opportunities through acquisitions and developments. The company seems to be progressing well with a huge warehouse in Polk County and recently filed plans with the Southwest Florida Water Management District for a 1.078-million-square-foot warehouse in Auburndale, per a recent report from Tampa Bay Business Journal.

Slated to occupy a 146-acre site, the warehouse will be situated on C. Fred Jones Boulevard, south of Interstate 4 close to the State Road 559 interchange. It will have parking for cars and trailers. Moreover, it is speculated that Amazon AMZN will be among the prospective tenants, though there are other companies in the market seeking such massive warehouses, per the report. Long ago, Prologis had proposed a 1.3-million-square-foot warehouse on the Auburndale site, however retreated from such intentions after facing resistance from residents in the surrounding area.

Notably, the industrial real estate asset category has grabbed attention as rising e-commerce market, resilient consumer sentiment, low unemployment level and rising wages are playing key roles in keeping up the industrial and logistics sector’s healthy performance.

Companies are making immense efforts to improve supply-chain efficiencies, spurring demand for logistics infrastructure and efficient distribution networks. Services like same-day delivery are gaining traction, and last-mile properties in high-income urban areas are witnessing solid pricing, occupancy and growth in rentals. This, in turn, is opening up growth opportunities for industrial REITs, including Duke Realty DRE, Liberty Property Trust LPT and others.

In this favorable environment, Prologis is well poised to benefit from its capacity to offer modern distribution facilities at strategic in-fill locations. The company is actively banking on its growth opportunities.

In July, Prologis announced it has agreed to acquire warehouse owner Industrial Property Trust Inc. in an all-cash deal valued at about $3.99 billion, including debt, from Black Creek Group. The deal, including an operating portfolio of 236 properties, will expand the company’s position in Southern California, the San Francisco Bay Area, Chicago, Atlanta, Dallas, Seattle and New Jersey. The company also plans to capture substantial cost and revenue synergies, apart from improving customer relationships.

Prologis also has decent balance-sheet strength to back its growth endeavors. Being a market leader, the company has the ability to raise capital at favorable rates. Nevertheless, rising supply and protectionist trade policies are key concerns.

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