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Prologis' NPR Issues Investment Units to Repay Bridge Loans

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Prologis Inc.’s (PLD) wholly owned subsidiary – Nippon Prologis REIT, Inc. (‘NPR’) – announced the issuance of new investment units. This Japanese real estate investment trust (:REIT) expects to garner JPY 38 billion ($374 million) from the issuance as net proceeds.

NPR plans to use the proceeds for paying off the bridge loans, which were utilized to buy five Class-A assets (totaling approximately 2.4 million square feet) from Prologis' wholly owned Japanese portfolio. The acquisition, valued at approximately JPY 45.5 billion ($448 million), is scheduled to be completed on Sep 1, in Japan. Notably, Prologis has a 15% stake in NPR.

The new issuance is a strategic fit for NPR as it will lower debt and boost financial flexibility. In addition, the acquisition of the premium assets will go a long way in enhancing its top-line growth.

As a matter of fact, amid a rise in global trade and consumption levels, as well as growth in e-commerce application and supply chain consolidation, there is an increasing demand for Class-A facilities. However, new supply is substantially below the required levels. Prologis stands to benefit as it has the capacity to offer modern distribution facilities in strategic infill locations globally.

Last week, this leading industrial REIT disclosed that Jaguar Land Rover has chosen Prologis Park Ryton in the U.K. for setting up its special vehicles operations technical center (read: Prologis Leases Space at Ryton, U.K. to Jaguar Land Rover). Early this month, Prologis disclosed a deal for pre-leasing a space of 197,000 square feet to a logistics and supply chain solutions company at Prologis CCP Cajamar II, Building 300 in Sao Paulo, Brazil (read: Prologis Inks Prelease Deal for Brazilian Development). Such deals reflect a strong demand for Prologis’ properties worldwide and offer a solid potential for top-line growth.

Prologis currently carries a Zacks Rank #3 (Hold). Investors interested in the REIT industry may consider better-ranked stocks like DCT Industrial Trust Inc. (DCT), Extra Space Storage Inc. (EXR) and Gladstone Commercial Corp. (GOOD). All these stocks have a Zacks Rank #2 (Buy).

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