VTR - Prologis Merger Reveals Froth In Industrial REITs

Prologis (PLD) has announced its acquisition of Liberty Property Trust (LPT) in a stock for stock deal. I believe Prologis overpaid and that this deal is indicative of the froth in the industrial REIT sector. Let us begin with the vital statistics of the purchase:

• Purchase price $12.6B
• 107mm square feet of logistics facilities, another 5.1mm in development
• 4.9mm square feet of office valued at $700mm
• NOI cap rate 4.25%
• $2.8B of “non-core” industrial assets
• Flat same store NOI growth on LPT’s portfolio

We looked at the deal from 3 angles,

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