Prologis To Acquire Logistics Firm DCT -- WSJ

By Dana Mattioli and Jennifer Smith 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (April 30, 2018).

Prologis Inc. agreed to buy logistics-property owner DCT Industrial Trust Inc. for $8.4 billion including debt, as a surge in e-commerce ramps up demand for warehouses and distribution centers.

DCT shareholders will receive 1.02 Prologis shares for each share, valuing the deal at $67.91 per DCT share, the companies said Sunday, confirming an earlier report by The Wall Street Journal. That amounts to a roughly 16% premium over DCT's closing share price Friday.

DCT, based in Denver, is an industrial real-estate investment trust.

Prologis, based in San Francisco, has a market value of about $36 billion. It is the world's largest owner of distribution centers and logistics properties, which are proliferating rapidly as e-commerce fulfillment needs draw more investment into the field, and warehouse development in the U.S., Europe and Asia booms.

The growth of online shopping has fueled demand for more distribution facilities, including pricey sites near population centers that are used to ship online purchases more rapidly to consumers.

Prologis had an estimated 676 million square feet of warehousing under its control at the end of 2016, according to National Real Estate Investor. DCT was No. 10 in the world in the same survey, with 74 million square feet of space. Both companies have a footprint in key industrial real-estate markets such as Southern California and Northern California's Bay Area, New Jersey, Atlanta and Chicago, where demand is up as e-commerce companies and others set up warehouses closer to major population centers.

Rental rates in industrial real-estate markets have been growing at a more-than-5% annual rate in each of the past seven quarters, as demand outpaces supply, according to real-estate broker CBRE Inc. The firm said the 7.3% availability rate for warehouse space in the U.S. in the first quarter was the lowest in 17 years.

Increased demand has driven other deal making recently. A Chinese private-equity consortium agreed to buy the logistics real-estate market's second-biggest competitor, Singapore-based Global Logistic Properties. GLP is the biggest operator of warehouses in Asia and has properties in China and Japan as well as the U.S.

Prologis Chief Executive Hamid Moghadam said in an interview Sunday that the deal will yield operational efficiencies, as well as so-called revenue synergies in part from "more development with the same customers because now, between the two of us, we have a bigger share of their wallets."

DCT Industrial Chief Executive Philip Hawkins said the transaction came together "fairly quickly" and that it was "a great opportunity for our combined stockholders."

In recent months, the supply of industrial real estate has been edging closer to demand as warehouse developers put up buildings at a faster pace.

Mr. Moghadam said that while supply is improving, "the vacancy rate remains at very low levels, and I don't see it going anywhere in the next couple of years."

J.P. Morgan and Mayer Brown are advising Prologis on the deal. Bank of America Merrill Lynch and Goodwin Procter LLP are advising DCT.

DCT separately on Sunday said its net income attributable to common stockholders was 52 cents a share in the first quarter, compared with 16 cents a year earlier.

Paul Page contributed to this article

Write to Dana Mattioli at [e-mail] and Jennifer Smith at [e-mail]

(END) Dow Jones Newswires

April 30, 2018 02:47 ET (06:47 GMT)

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