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Featured Mergers and Acquisitions

Prologis buys rival for $12.6B

Prologis, the world’s biggest industrial landlord, is set to buy rival Liberty Property Trust in a $12.6 billion deal.

The company announced on Monday it had struck a deal with Liberty in a move it said would improve its U.S. presence amid the ecommerce boom.

HAMID MOGHADAM

“Liberty’s logistics assets are highly complementary to our U.S. portfolio and this acquisition increases our holdings and growth potential in several key markets,” said Prologis chairman and CEO Hamid R. Moghadam. “The strategic fit between the portfolios allows us to capture immediate cost and long-term revenue synergies.”

Prologis will acquire Liberty in an all-stock transaction, valued at approximately $12.6 billion, including the assumption of debt.

The board of directors of Prologis and the board of trustees of Liberty have each unanimously approved the transaction.

The transaction deepens Prologis’ presence in target markets such as New Jersey, Lehigh Valley, Chicago, Houston, Central PA and Southern California.
Assets include Liberty’s 107 million square foot logistics operating portfolio with another 5.1 million square feet in development.

It also includes 1,684 acres of land for future logistics development with build-out potential of 19.7 million square feet and a 4.9 million square foot office operating and development portfolio.

Prologis said it plans to dispose of approximately $3.5 billion of assets, incuding “non-strategic” logistics properties and $700 million of office properties.

“Liberty and Prologis represent two of the finest teams of real estate professionals and two of the finest portfolios of industrial real estate ever assembled,” said Bill Hankowsky, Liberty chairman and chief executive officer.

BILL HANKOWSKY

“The joining of these two platforms at this moment, when industrial logistics has become so pivotal to the new economy, will further the industry’s ability to support the nation’s supply chain and enhance value creation for our combined shareholders. It is a testament to Liberty’s outstanding teams of professionals, both present and past.”

“Liberty’s high-quality logistics real estate will strengthen our portfolio as well as our customer roster,” said Prologis chief investment officer Eugene F. Reilly.

“We are also excited about the caliber of talent at Liberty and expect a number of their employees to join us to help manage the portfolio and execute on capital deployment.”

Growing its portfolio has the potential to save Prologis around $60 million a year, including $10 million from revenue synergies and $50 million from incremental development value creation.

“The execution of this transaction is further evidence of the strength of Prologis’ balance sheet and will create significant additional capital from the future sale of the non-core assets,” said Prologis chief financial officer Thomas S. Olinger.

“The combination of these portfolios will drive incremental Core FFO growth and long-term shareholder value.”

BofA Securities and Morgan Stanley are acting as financial advisors and Wachtell, Lipton, Rosen & Katz is serving as legal advisor to Prologis.

Goldman Sachs and Citigroup are acting as financial advisors and Morgan, Lewis and Bockius LLP is serving as legal advisor to Liberty.

According to Reuters, the sale comes after activist investor Jonathan Litt of Land & Buildings Investment Management pushed Liberty to consider selling itself given what he considered to be undervalued shares and recent purchases of similar real-estate assets by Blackstone Group and Prologis.

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