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Analyst Blog

Prologis Inc. , a leading industrial real estate investment trust (REIT), has recently signed five new lease agreements spanning about 558,000 square feet of its development portfolio in Japan. The deal was penned with unnamed customers for an undisclosed amount.

Earlier, in May 2012, Prologis had signed a build-to-suit agreement to construct a new e-commerce distribution hub spanning 473,000 square feet in Osaka, Japan. Prologis will start construction on the proposed hub in November 2012 and expects to wind it up by September 2013.

The distribution hub will come up in Prologis Park Amagasaki 3, which is strategically located in close proximity to the central business district of Osaka with easy access to major expressways and a commuter rail station.

The continued leasing activities in the region show signs of stability in the industrial property market in Japan that was pegged back by the devastation and loss caused by the earthquake and tsunami.

In addition, with improving property values and growing institutional demand for quality properties, Prologis has witnessed a growing customer interest in new build-to-suit development projects across the globe. Additionally, leasing decisions that were earlier postponed due to volatility in the markets are gradually coming off the shelf.

Prologis acquires, develops, operates and manages industrial real estate space in North America, Asia and Europe. As of March 31, 2012, Prologis had approximately 22 million square feet of logistics and distribution space in Japan. Given its international presence, Prologis has lately faced unfavorable foreign currency movements and other economic fluctuations that have impaired its top-line growth.

Furthermore, although first quarter 2012 results were in sync with the Zacks Consensus Estimates, macroeconomic issues had contributed to a slower pace of recovery as the industry was affected by the continued concerns about sovereign debt issues, rising energy costs, global military action, and natural calamity in Japan.

We currently have a Neutral recommendation and a Zacks #3 Rank for Prologis, which translates into a short-term Hold rating. However, we have an Outperform recommendation and a Zacks #1 Rank (short-term Strong Buy rating) for Winthrop Realty Trust , one of the peers of Prologis.

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