ProLogis (PLD), a leading global provider of distribution facilities, has recently signed a new lease agreement spanning about 111,000 square feet of its development portfolio in Japan to Kanto Transport Co. Ltd., the largest privately owned freight transportation company in the country.
The lessee will occupy the space at ProLogis Parc Zama I, a 1.2 million square feet distribution facility in the city of Zama, near Tokyo. The city of Zama is a central logistics hub in Japan’s Kanagawa Prefecture and provides easy access to the greater Tokyo and greater Nagoya areas – one of the largest industrial areas of the country. The leased property is strategically located in close proximity to a commuter train station, which provides seamless communication facilities to the white-collared workforce of the region.
Furthermore, the leased facility has a first photovoltaic system installed by ProLogis in Japan. The one-megawatt photovoltaic system is estimated to generate approximately 1 million kilowatt hours per year, which could provide adequate electricity for about 280 households. ProLogis Parc Zama I also has a state-of-the-art seismic isolation structure, which minimizes the potential damage of the building as well as goods stored in the facility in the event of an earthquake. Consequently, the leased site offers a huge growth potential to the lessee.
With improving property values and growing institutional demand for quality properties, ProLogis has witnessed a growing customer interest in new build-to-suit development projects across the globe. In addition, leasing decisions that were earlier postponed due to volatility in the markets are gradually coming off the shelf. In order to decrease the risk associated with cyclical local real estate markets and economies, and increase the stability and predictability of the earnings, ProLogis has drastically reduced its non-income producing assets on the balance sheet.
ProLogis owns and manages interests in over 2,500 distribution facilities, service offices, and properties spanning 475 million square feet of space (including properties under development), out of which approximately 10.7 million square feet is located in Japan. The company leases its industrial facilities to over 4,400 customers, which mostly include manufacturers, retailers, transportation companies, third-party logistics providers and other enterprises with large-scale distribution needs.
We maintain our Neutral recommendation on ProLogis with a Zacks #3 Rank, which indicates a short-term ‘Hold’ recommendation.
Read the full analyst report on “PLD”
Zacks Investment Research
