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Prologis buys rival Liberty Property Trust for $12.6 billion
Buying spree in warehousing continues, with Prologis’ purchase of US logistics REIT by Prologis
Prologis, Inc. (NYSE: PLD) and Liberty Property Trust (NYSE: LPT) have announced a merger, valued at approximately $12.6 billion, through which Prologis will acquire Liberty in an all-stock transaction, including the assumption of debt.
The merger adds 107 million square feet of space to the Prologis portfolio, as well as:
- 5.1 million square feet of logistics development in progress
- 1,684 acres of land for future logistics development with build-out potential of 19.7 million square feet
- 4.9 million square foot office operating and development portfolio.
The deal comes on the back of a major spree of mergers and investments in the logistics property space, including Blackstone’s multi-billion dollar deals, which leaves the two companies as the biggest warehouse space providers in the US currently. The combined pair have spent more than $38 billion on deals in 2019 and own more than 1 billion square feet of space combined.
Prologis' said the acquisition was driven by their interest in deepening their presence in target markets such as Lehigh Valley, Chicago, Houston, Central PA, New Jersey and Southern California and the ability to drive cost savings. Prologis said that it believes that it can generate immediate cost synergies of approximately $120 million from corporate general and administrative cost savings, operating leverage, lower interest expense and lease adjustments.
Prologis noted in a release that it plans to dispose of approximately $3.5 billion of assets on a pro rata share basis. This includes $2.8 billion of non-strategic logistics properties and $700 million of office properties.
"Liberty's logistics assets are highly complementary to our U.S. portfolio and this acquisition increases our holdings and growth potential in several key markets," said Prologis chairman and CEO Hamid R. Moghadam. "The strategic fit between the portfolios allows us to capture immediate cost and long-term revenue synergies."
"Liberty and Prologis represent two of the finest teams of real estate professionals and two of the finest portfolios of industrial real estate ever assembled," said Bill Hankowsky, Liberty chairman and chief executive officer. "The joining of these two platforms at this moment, when industrial logistics has become so pivotal to the new economy, will further the industry's ability to support the nation's supply chain and enhance value creation for our combined shareholders. It is a testament to Liberty's outstanding teams of professionals, both present and past."
"Liberty's high-quality logistics real estate will strengthen our portfolio as well as our customer roster," said Prologis chief investment officer Eugene F. Reilly. "We are also excited about the caliber of talent at Liberty and expect a number of their employees to join us to help manage the portfolio and execute on capital deployment."
"The execution of this transaction is further evidence of the strength of Prologis' balance sheet and will create significant additional capital from the future sale of the non-core assets," said Prologis chief financial officer Thomas S. Olinger. "The combination of these portfolios will drive incremental Core FFO growth and long-term shareholder value."
BofA Securities and Morgan Stanley are acting as financial advisors and Wachtell, Lipton, Rosen & Katz is serving as legal advisor to Prologis. Goldman Sachs and Citigroup are acting as financial advisors and Morgan, Lewis and Bockius LLP is serving as legal advisor to Liberty.