What the AMB/ProLogis Merger Means for the Industrial Property Sector
Grubb & Ellis reports: Recently the two largest owners and operators of industrial real estate in the U.S. announced that they are entering into a “merger of equals.” Pre-crisis, this merger was quite unthinkable. ProLogis, the larger of the two, was expanding globally at an astronomical rate, monetizing its global portfolios through the public markets and raising billions of dollars for their funds. Merging with AMB would have been a distraction. Now, this merger, despite being quite unexpected and even shocking, makes perfect sense. AMB, currently the stronger company and considered the acquirer by some, will gain access to new global markets and customer base that ProLogis has been cultivating for a decade, while ProLogis will be able to help its deleverging effort, which has tied the company down for the past two years.
Industrial Real Estate Landscape
• In the industrial REIT space, there are five sizable pure-play industrial REITs ProLogis (NYSE: PLD), AMB Property (NYSE: AMB), DCT Industrial Trust (NYSE: DCT), First Industrial Realty Trust (NYSE: FR) and EastGroup Properties (NYSE: EGP) and two large mixed-property REITs – Duke Realty (NYSE: DRE) and Liberty Property Trust (NYSE: LRY). To put the proposed merger in perspective, AMB/PLD will have a total of just less than 600 million square feet of property versus the competition’s total of 320 million square feet. When consummated, the merged entity will be at least six times larger than their next competitor, Duke, and almost 20 times larger than the smallest member of
this group, EastGroup.