Back to top

Analyst Blog

Yesterday, Prologis Inc (PLD - Analyst Report) – a real estate investment trust (REIT) – inked a build-to-suit deal with Amazon.com Inc (AMZN - Analyst Report) for constructing a distribution center at Prologis Park Tracy Phase II in Ca. This deal will likely strengthen Prologis’ relationship with its high-end loyal customers.

Seattle, Wa.-based Amazon.com Inc. is one of the largest online retailers, with extensive operations worldwide. The company owns several strategic distribution facilities of Prologis in eight markets across the world.

The new facility will be developed on 90 acres of land at Prologis Park Tracy Phase II – the 1.2 million square feet property that comprises two buildings. The park is strategically located between major ports and is also contiguous to major west coast metro areas, including the San Francisco bay area. On the completion of the construction of Amazon's facility, Prologis Park Tracy Phase II will be fully occupied and comprise three distribution facilities, spanning approximately 2.2 million square feet.

We remain impressed with the company for taking such a step considering Amazon’s thriving e-Commerce business and continued loyalty towards the former. This, in turn, is anticipated to provide steady source of rental revenue for Prologis going forward.

Prologis has been providing industrial distribution warehouse space through build-to-suit deals in some of the busiest distribution markets across the globe. Accordingly, in Nov 2012, Prologis signed such an agreement with a leading food and beverage company for approximately 1.2 million square feet of space in Lancaster, south of Dallas. These agreements have enabled the company to gain a significant advantage over its competitors.

Prologis is scheduled to release its fourth-quarter 2012 results on Feb 6, 2013. The Zacks Consensus Estimate for the company’s fourth-quarter FFO (funds from operations) is currently pegged at 41 cents per share.

Zacks Earnings ESP (Read: ZACKS EARNINGS ESP: A BETTER METHOD) for Plum Creek is +7.32% for the fourth quarter. This, along with its Zacks Rank #2 (Buy), makes us confident about a positive earnings surprise call.

Two of Prologis’ peers – Winthrop Realty Trust (FUR - Snapshot Report) and Brandywine Realty Trust (BDN - Snapshot Report) – also hold a Zacks Rank #2.

Note: FFO, a widely accepted and reported measure of the performance of REITs is derived by adding depreciation, amortization and other non-cash expenses to net income.

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

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.69 +3.94%
WEATHERFORD… WFT 23.77 +3.84%
BANCO DO BR… BDORY 14.45 +3.58%
AIR INDUSTR… AIRI 9.89 +3.13%
EQT MIDSTRE… EQM 97.67 +2.89%