SAN FRANCISCO–Prologis is acquiring rivalindustrial REIT DCT Industrial Trust in astock-for-stock deal for $8.4 billion. The deal, which boards ofdirectors for both companies have approved, comes as e-commerceactivity 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 onFriday, April 27. It also estimates the implied cap rate on thetransaction at 4.3% to 4.5%, which is 40 to 60 basis points lowerthan its most recent NAV estimate. BTIG analysts write that whilethe rationale makes sense — portfolio overlap, last-mile/infillfocus, strong development platform — “Prologis offered a sizeablepremium (26.3x 2018 FFO/sh) in an already aggressively pricedsector.”

Complementary Portfolios

Denver-based DCT Industrial Trust's 71 million square footoperating portfolio will expand Prologis' presence inSouthern California, the San Francisco Bay Area, NewYork/New Jersey, Seattle and SouthFlorida. Prologis chairman and chief executive officerHamid R. Moghadam said the REITs' respectiveportfolios are very complementary and will allow Prologis “tocapture significant scale economies immediately.”