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Prologis Prices Stock Offering

Zacks Equity Research

Real estate investment trust (:REIT) Prologis, Inc.’s (PLD) operating subsidiary – Prologis, L.P. –  priced senior unsecured notes offering worth €700 million. The notes, which are set to mature on Feb 20, 2024 and carry an annual coupon rate of 3.375%, were priced at 98.919% of the principal amount.

Prologis’ operating partnership will utilize the net proceeds from the offering in paying back or repurchasing debt and meeting other corporate needs. However, in the short run, the unit proposes to employ the proceeds for settlement of its debt that includes multi-currency senior term loan and/or global line of credit. We believe the payment of debt is encouraging as it will reduce interest expenses.
Notably, Prologis Inc. will provide absolute guarantee for the notes. The company expects the offering that opened on Feb 11, 2014 to close by Feb 20, 2014, subject to the fulfillment of customary closing conditions.
Last month, Prologis reported its fourth-quarter 2013 results with adjusted FFO (fund from operations) per share of 43 cents, beating the Zacks Consensus Estimate by a penny. Performance reflected higher investment management fees, strategic investments and a modest leasing activity.

As of Dec 31, 2013, Prologis’ total assets were $24.6 billion. Cash and cash equivalents stood at $491.1 million while outstanding debt was $9.0 billion.

Prologis currently has a Zacks Rank #3 (Hold). However, other REIT –equity trust stocks worth considering include QTS Realty Trust, Inc. (QTS) and Sabra Health Care REIT, Inc. (SBRA) and Chatham Lodging Trust (CLDT). Both QTS Realty and Sabra Health Care carry a Zacks Rank #1 (Strong Buy) while Chatham Lodging holds a Zacks Rank #1 (Buy).

Note: Funds from operations, a widely accepted and reported measure of REITs performance, are derived by adding depreciation, amortization and other non-cash expenses to net income.

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