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Prologis to Acquire Industrial Property Firm Duke Realty in USD 26bn Deal.

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Vincent

MANews-(C)2009-2022

US-based logistics real estate company Prologis, Inc. (NYSE: PLD) and US-based industrial property company Duke Realty Corp. (NYSE: DRE) have entered into a definitive merger agreement by which Prologis will acquire Duke Realty in an all-stock transaction, valued at approximately USD 26bn, including the assumption of debt, the companies said.

The respective board of directors for Prologis and Duke Realty have unanimously approved the transaction.

With the transaction, Prologis is gaining high-quality properties for its portfolio in key geographies, including Southern California, New Jersey, South Florida, Chicago, Dallas and Atlanta.

Prologis plans to hold approximately 94% of the Duke Realty assets and exit one market.

The transaction is anticipated to create immediate accretion of approximately USD 310-370m from corporate general and administrative cost savings and operating leverage as well as mark-to-market adjustments on leases and debt.

In year one, the transaction is expected to increase annual core funds from operations (Core FFO), excluding promotes per share by USD 0.20-0.25. On a Core AFFO basis, excluding promotes, the deal is expected to be earnings neutral in year one.

Further, future synergies have the potential to generate approximately USD 375-400m in annual earnings and value creation, including USD 70-90m from incremental property cash flow and Essentials income, USD 5-10m in cost of capital savings and USD 300m in incremental development value creation.

Under the terms of the agreement, Duke Realty shareholders will receive 0.475x of a Prologis share for each Duke Realty share they own.

The transaction, which is currently expected to close in 4Q22, is subject to...

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