Prologis Inc. (PLD), a leading industrial real estate investment trust (REIT), has recently disclosed that it had completed approximately $80 million worth of asset sale in various markets in the U.S. Besides providing additional liquidity, the sale of these wholly-owned properties enabled the company to restructure its portfolio in tune with its corporate strategy.
Prologis sold 10 properties spanning approximately 2.0 million square feet of space in Memphis for $40 million. The company also sold a portfolio totaling 0.7 million square feet in Tolleson, Arizona; Queens, New York; Itasca, Illinois; Orange, California; and Dallas, Texas, for an additional $40 million.
Prologis acquires, develops, operates and manages industrial real estate space in North America, Asia and Europe. Given its international presence, Prologis has lately faced unfavorable foreign currency movements and other economic fluctuations that have impaired its top-line growth.
Furthermore, although first quarter 2012 results were in sync with the Zacks Consensus Estimates, macroeconomic issues had contributed to a slower pace of recovery as the industry was affected by the continued concerns about sovereign debt issues, rising energy costs, global military actions and the devastation and loss caused by the earthquake and tsunami in Japan.
In addition, the unrelenting troubles in the residential sector are weighing on commercial property operations. The credit crunch has also widened the bid-ask spread between buyers and sellers of commercial real estate, which has caused deal volumes to fall compared to pre-recession levels. Moreover, market vacancy increases is expected to mitigate Prologis’ ability to push through rental rate increases, thereby affecting the long-term growth of the company.
We currently have a Neutral recommendation and a Zacks #3 Rank for Prologis, which translates into a short-term Hold rating. However, we have an Outperform recommendation and a Zacks #1 Rank (short-term Strong Buy rating) for Winthrop Realty Trust (FUR), one of the peers of Prologis.
Zacks Investment Research