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Prologis, Blackstone Buying Warehouses?

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Prologis Inc. (PLD - Analyst Report) and The Blackstone Group L.P. (BX - Analyst Report) are said to have struck a deal to acquire a portfolio spanning 17 million square feet of warehouse and distribution centers for about $960 million, according to a Reuters report. The portfolio, which is majority owned by Lehman Brothers includes properties in Reno and Las Vegas, Nevada.

Blackstone would operate approximately 9.5 million square feet of properties in Reno, while the remaining properties that are mainly located in Las Vegas and Pennsylvania would be acquired by Prologis.

It is believed that if the current deal materializes, it would be accretive to Prologis’ bottom line. The company could benefit from rising rent and occupancy. As a matter of fact, Prologis is endeavoring to capitalize on its global prospects.

With growth in e-Commerce, there is a rising demand for Class-A facilities and the company stands to benefit as it has the capacity to offer modern distribution facilities in strategic infill locations. Moreover, leasing decisions that were earlier postponed due to volatility in the markets are gradually coming off the shelf.

Its build-to-suit deal in the first quarter with end-to-end e-Commerce service provider SpeedFC, a subsidiary of Navarre Corp. and the transaction with Chinese logistics provider, Deppon are expected to contribute meaningfully to the company’s top line.

Last month, Prologis reported first quarter 2013 core FFO (funds from operations) per share of 40 cents, in line with the Zacks Consensus Estimate and the prior-year quarter figure. Results reflect decent revenues in the reported quarter, and completion of the Japan-REIT IPO as well as the European joint venture. Moreover, its strategic measures have helped lower its overall debt level.

Prologis currently holds a Zacks Rank #3 (Hold). Another REIT stocks that is performing well and deserves a look is DCT Industrial Trust Inc. (DCT - Snapshot Report), which carries a Zacks Rank #2.

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