Prologis Inc. (PLD - Analyst Report), an industrial real estate investment trust (REIT), has recently signed a new agreement to lease a facility which spans a total of 401,523 square feet, in Sao Paulo, Brazil. The deal was penned with an unnamed logistics provider for an undisclosed amount.
With the improvement in property values and growing institutional demand for quality properties, Prologis has taken up efficient leasing decisions that were earlier postponed due to volatility in the markets. The company, which focuses on leasing distribution space to high-class tenants, has a cluster of U.S. based tenants – such as Amazon.com Inc. (AMZN - Analyst Report), The Home Depot, Inc. (HD - Analyst Report) and Anixter International Inc. (AXE - Snapshot Report).
The industrial property market in Brazil, mainly in Sao Paulo, is growing on the back of increasing demand. In 2011, the demand for industrial space in Sao Paulo continued to grow with overall vacancy rate (stand-alone and industrial parks) falling from 8.7% to 5.8%, despite new developments.
The current facility leased by Prologis is a part of their development portfolio - Prologis CCP Jundiai Industrial Park, located in Jundiai submarket of Sao Paulo in Brazil. The park has easy access to Avenida Hermengildo Tonolli and is located in between the municipalities of Campinas and Sao Paulo. When fully built out, the facility is expected to total approximately 1,622,992 square feet of industrial space. With the deal, Prologis CCP Jundiai Industrial Park is fully pre-leased.
The project is a joint venture with Cyrela Commercial Properties (CCP) – one of the leading commercial real estate companies in Brazil, focusing on the development and acquisition of high-quality office buildings, shopping malls and distribution centers. The development property is expected to meet the highest functionality, flexibility, and accessibility standards by incorporating the technical know-how of CCP and expertise of Prologis, the world leader in the acquisition and development of Class A industrial projects.
In addition, Prologis has also witnessed a growing customer interest in new build-to-suit development projects across the globe. Last week, the company signed a new build-to-suit agreement with Rakuten Inc., which spans about 810,000 square feet in Osaka, Japan, for an undisclosed amount.
Prologis acquires, develops, operates and manages industrial real estate space in North America, Asia and Europe. As of June 30, 2012, the company owned properties and development projects spanning approximately 569 million square feet across 21 countries.
We presently have a long-term Neutral recommendation on the stock. It also carries a Zacks #3 Rank (a short-term Hold rating).