Earlier, ProLogis announced it would buy Philadelphia-based Keystone's 141 industrial properties with about 33 million sf in the Eastern half of the US.
Fitch says the Keystone properties are well leased, with an overall average 92.4% occupancy rate. The properties also are in markets that generally complement ProLogis' existing holdings, Fitch says.
"The addition of the Keystone assets will enhance Prologis' position in key markets like Miami, Florida, New Jersey and eastern Pennsylvania, though increase the company's exposure to more challenging markets in South Carolina," according to Fitch.
The fund structure minimizes ProLogis' vulnerability to individual markets, assets, and tenants, and enhances its already broadly diversified portfolio, the rating company notes.
However, "it does increase the potential for conflicts of interest among Prologis varied constituencies."
Fitch says Keystone's assets are "well leased, good quality assets, with strong tenancy, in solid industrial markets though pockets of leasing risk/opportunity exist within the portfolio." However, it is not risk free.
The purchase modestly increases ProLogis' leverage, there is a potential for conflicts of interests, and some adverse asset selection with respect to its core portfolio, according to Fitch.
The core portfolio alone, however, supports the unsecured borrowing rating, according to Fitch.
At the same time, "remains cautious in its view of the increasing management and financial resources needed to further the expansion the company's funds management businesses."
ProLogis is the world's largest industrial REIT.
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