Prologis' Japanese REIT Raises Cap to Settle Bridge Loans

Prologis Inc.’s (PLD) wholly owned subsidiary – Nippon Prologis REIT, Inc. (‘NPR’) – disclosed per unit offering price of 250,096 Japanese yen (:JPY) for its previously announced investment units. This offering, which includes domestic and international placement of 92,250 and 66,800 units, respectively, is anticipateto close on Sep 16 in Japan.

This Japanese real estate investment trust (:REIT), which expects to garner JPY 38 billion ($374 million), will use the proceeds for paying off the bridge loans, which were utilized to buy five Class-A assets (totaling approximately 2.4 million square feet) from Prologis’ wholly-owned Japanese portfolio. The acquisition is valued at approximately JPY 45.5 billion ($434 million). Notably, Prologis has a 15% stake in NPR.

The issuance is a strategic fit for NPR as it will lower debt and boost financial flexibility. In addition, the acquisition of the premium assets will go a long way in enhancing its top line.

As a matter of fact, a growing consumer market and expansion in e-Commerce are propelling the demand for Class-A facilities. Companies are seeking consolidation of distribution networks. In order to better serve their customers and reduce delivery time, these are settling near areas where majority of the population resides.

Prologis stands to benefit from this move as it has the capacity to offer modern distribution facilities in strategic infill locations. Last week, to capitalize on the growing opportunities in the Japanese market, this leading industrial REIT inked a build-to-suit deal for a logistics facility in Sendai (read: Prologis Inks Build-to-Suit Deal in Japan; Will It Benefit?). Such facilities, in turn, will help Prologis’ customers to experience efficiency gains and lower operational costs.

Prologis currently carries a Zacks Rank #3 (Hold). Investors interested in the REIT industry may consider better-ranked stocks like DCT Industrial Trust Inc. (DCT), Extra Space Storage Inc. (EXR) and Gladstone Commercial Corp. (GOOD). All these stocks have a Zacks Rank #2 (Buy).

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Prologis' Japanese REIT Raises Cap to Settle Bridge Loans
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