Back to top

Analyst Blog

In order to spread its industrial real estate footprints in China, Prologis Inc. (PLD - Analyst Report) inked a build-to-suit deal for 447,000 square foot of space in that country with an existing customer. Particularly, this industrial real estate investment trust (REIT) inked this agreement with Deppon Logistics Co, a leading Chinese logistics provider.

The new facility would come up at Prologis Tianjin Ninghe Logistics Center and will serve as Deppon’s regional distribution center for the greater Beijing area. In fact, this build-to-suit transaction is Prologis’ fourth deal with Deppon and extends their relationship to over 1.4 million square feet in China.

The industrial property market in China is exhibiting an upward trend. Particularly, amid a larger customer base and rise in e-Commerce application and supply chain consolidation, there is an increasing demand for high-quality logistics facilities. Prologis stands to benefit as it has the capacity to offer modern distribution facilities in strategic infill locations globally and had around 7 million square feet of logistics and distribution space in China, as of Mar 31, 2014.

As a matter of fact, Prologis is significantly capitalizing on the growing opportunities in build-to-suit development projects and lease deals across the globe. In relation to that, most recently, the company announced a build-to-suit deal for a 500,000 square foot distribution center in Monterrey, Mexico. This deal followed the disclosure of sole sponsorship of FIBRA Prologis by the company, last week.

Earlier this month, Prologis also inked a preleasing deal for a 211,000 square feet facility at Prologis Park Osaka 5 in Osaka, Japan with a repeat customer - Koizumi Logistics, a third-party logistics provider. These transactions bode well for long term growth of Prologis.

Prologis currently carries a Zacks Rank #3 (Hold). Investors interested in the REIT industry may also consider stocks like The GEO Group, Inc. (GEO - Snapshot Report), Terreno Realty Corp. (TRNO - Snapshot Report) and W. P. Carey Inc. (WPC - Snapshot Report). All these stocks sport a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.