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A Prologis holding. Photo by Prologis.

SAN FRANCISCO–Prologis is acquiring rival industrial REIT DCT Industrial Trust in a stock-for-stock deal for $8.4 billion. The deal, which boards of directors for both companies have approved, comes as e-commerce activity is driving industrial demand to new heights.

BTIG estimates that the deal represents “$67.91/sh” for DCT’s stock, a 15.6% premium over market close on Friday, April 27. It also estimates the implied cap rate on the transaction at 4.3% to 4.5%, which is 40 to 60 basis points lower than its most recent NAV estimate. BTIG analysts write that while the rationale makes sense — portfolio overlap, last-mile/infill focus, strong development platform — “Prologis offered a sizeable premium (26.3x 2018 FFO/sh) in an already aggressively priced sector.”

Complementary Portfolios

Denver-based DCT Industrial Trust’s 71 million square foot operating portfolio will expand Prologis’ presence in Southern California, the San Francisco Bay Area, New York/New Jersey, Seattle and South Florida. Prologis chairman and chief executive officer Hamid R. Moghadam said the REITs’ respective portfolios are very complementary and will allow Prologis “to capture significant scale economies immediately.”

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Erika Morphy

Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.

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