Deepens presence in core, high-growth U.S.
markets
Annual stabilized core funds from operations*
expected to increase $0.06-$0.08 per share
Prologis, Inc. (NYSE: PLD) and DCT Industrial Trust Inc. (NYSE:
DCT) today announced that the two companies have entered into a
definitive merger agreement by which Prologis will acquire DCT for
$8.4 billion in a stock-for-stock transaction, including the
assumption of debt. The boards of directors of both companies have
unanimously approved the transaction.
“For some time, we have considered DCT’s realigned portfolio to
be the most complementary to our own in terms of product quality,
market position and growth potential,” said Prologis chairman and
chief executive officer Hamid R. Moghadam. “This high level of
strategic fit will allow us to capture significant scale economies
immediately. In addition, our current platform initiatives,
particularly in the areas of advanced analytics, customer
experience and procurement and ancillary revenues, will enable us
to extract significant upside from the combined portfolios.”
The 71 million square foot operating portfolio deepens Prologis’
presence in high-growth markets including Southern California, the
San Francisco Bay Area, New York/New Jersey, Seattle and South
Florida. The acquisition also includes:
- 7.1 million square feet of development,
redevelopment and value-added projects
- 195 acres of land in pre-development,
predominantly in Seattle, Atlanta, South Florida and Southern
California with build-out potential of over 2.9 million square
feet
- 215 acres of land under contract or
option, predominately in New York/New Jersey, Southern California,
Northern California and Chicago, with a build-out potential of over
3.3 million square feet
"This transaction underscores the exceptional quality of DCT’s
portfolio, platform and customer relationships, which our talented
team has worked hard to create,” said DCT Industrial president and
chief executive officer Philip L. Hawkins. “Our shared commitment
to quality, exceeding expectations and enhancing customer
experience makes this a perfect combination."
“DCT’s team is as good as it gets, and we expect a number to
join us to help manage the portfolio, execute on capital deployment
activities and make long-term contributions to the Prologis
platform,” said Prologis chief executive officer for the Americas
Eugene F. Reilly. “This deal also diversifies our customer roster
through the addition of some 500 new relationships.”
The transaction is anticipated to create substantial synergies,
including near-term synergies of approximately $80 million in
corporate general and administrative cost savings, operating
leverage, interest expense and lease adjustments, which are
forecast to increase annual stabilized core funds from operations*
(Core FFO) per share by $0.06-$0.08. A combination of revenue
synergies and incremental development volume has the potential to
generate $40 million of additional annual revenue and development
profit in the future.
“This all-stock transaction enables us to maintain our strong
balance sheet and significant financial flexibility,” said Prologis
chief financial officer Thomas S. Olinger. “In addition, the
transaction increases our U.S. dollar net equity and drives
additional core FFO growth.”
Under the terms of the agreement, DCT shareholders will receive
1.02 Prologis shares for each DCT share they own. The transaction,
which is currently expected to close in the third quarter of 2018,
is subject to the approval of DCT stockholders and other customary
closing conditions. At closing, it is anticipated that Philip L.
Hawkins will join the Prologis board of directors.
J.P. Morgan is acting as exclusive financial advisor and Mayer
Brown LLP is serving as legal advisor to Prologis. BofA Merrill
Lynch is acting as exclusive financial advisor and Goodwin Procter
LLP is serving as legal advisor to DCT.
Webcast & Conference Call Information
Prologis and DCT will host a webcast and conference call
tomorrow to discuss the transaction. Here are the event
details:
- Monday, April 30, 2018, at 9:00 a.m.
U.S. Eastern time.
- Live webcast at http://ir.Prologis.com
by clicking Investors>Investor Events and Presentations.
- Live webcast at
http://investors.dctindustrial.com/CorporateProfile.
- Dial in: +1 (866) 393-4306 or +1 (734)
385-2616 and enter Passcode 4794005.
A telephonic replay will be available April 30 to May 7 at +1
(855) 859-2056 (from the United States and Canada) or +1 (404)
537-3406 (from all other countries) using conference code 4794005.
The webcast replay will be posted when available in the Investor
Relations "Events & Presentations" section at www.prologis.com.
The replay will also be available in the Investor Relations section
of DCT's website at www.investors.dctindustrial.com/Corporate
Profile.
About Prologis
Prologis, Inc. is the global leader in logistics real estate
with a focus on high-barrier, high-growth markets. As of March 31,
2018, the company owned or had investments in, on a wholly owned
basis or through co-investment ventures, properties and development
projects expected to total approximately 683 million square feet
(63 million square meters) in 19 countries. Prologis leases modern
distribution facilities to a diverse base of approximately 5,000
customers across two major categories: business-to-business and
retail/online fulfillment.
About DCT®
DCT is a leading logistics real estate company specializing in
the ownership, development, acquisition, leasing and management of
bulk-distribution and light-industrial properties in high-demand
distribution markets in the United States. DCT’s actively managed
portfolio is strategically located near population centers and
well-positioned to take advantage of market dynamics. As of March
31, 2018, the company owned interests in approximately 73.7 million
square feet of properties leased to approximately 840 customers.
DCT maintains a Baa2 rating from Moody’s Investors Service and a
BBB from S&P Global Ratings. Additional information is
available at www.DCTindustrial.com.
Additional Information
In connection with the proposed transaction, Prologis will file
a registration statement on Form S-4, which will include a document
that serves as a prospectus of Prologis and a proxy statement of
DCT (the “proxy statement/prospectus”), and each party will file
other documents regarding the proposed transaction with the SEC.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE
SEC, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. A definitive proxy statement/prospectus will
be sent to DCT’s shareholders. Investors and security holders will
be able to obtain the registration statement and the proxy
statement/prospectus free of charge from the SEC’s website or from
Prologis or DCT. The documents filed by Prologis with the SEC may
be obtained free of charge at Prologis’ website at the Investor
Relations section of www.ir.prologis.com or at the SEC’s website at
www.sec.gov. These documents may also be obtained free of charge
from Prologis by requesting them from Investor Relations by mail at
Pier 1, Bay 1, San Francisco, CA 94111 or by telephone at
415-394-9000. The documents filed by DCT with the SEC may be
obtained free of charge at DCT’s website at the Investor Relations
section of http://investors.dctindustrial.com/CorporateProfile or
at the SEC’s website at www.sec.gov. These documents may also be
obtained free of charge from DCT by requesting them by mail from
Investor Relations, 555 17th Street, Suite 3700, Denver, CO 80202,
or by telephone at 303-597-1550.
Participants in the Solicitation
Prologis and DCT and their respective directors and executive
officers and other members of management and employees may be
deemed to be participants in the solicitation of proxies in respect
of the proposed transaction. Information about Prologis’ directors
and executive officers is available in Prologis’ Annual Report on
Form 10-K for the fiscal year ended December 31, 2017, and in its
proxy statement dated March 22, 2018, for its 2018 Annual Meeting
of Shareholders. Information about DCT’s directors and executive
officers is available in DCT’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2017, and in its proxy statement
dated March 21, 2018, for its 2018 Annual Meeting of Shareholders.
Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the proxy statement/prospectus and other relevant materials to be
filed with the SEC regarding the transaction when they become
available. Investors should read the proxy statement/prospectus
carefully when it becomes available before making any voting or
investment decisions. You may obtain free copies of these documents
from Prologis or DCT as indicated above.
Cautionary Statement Regarding Forward-looking
Statements
The statements in this communication that are not historical
facts are forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. These
forward-looking statements are based on current expectations,
estimates and projections about the industry and markets in which
Prologis, Inc. (“Prologis”) and DCT Inc. (“DCT”) operate as well as
beliefs and assumptions of management of Prologis and management of
DCT. Such statements involve uncertainties that could significantly
impact financial results of Prologis or DCT. Words such as
“expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,”
and “estimates” including variations of such words and similar
expressions are intended to identify such forward-looking
statements, which generally are not historical in nature. All
statements that address operating performance, events or
developments that Prologis or DCT expect or anticipate will occur
in the future—including statements relating to rent and occupancy
growth, development activity, contribution and disposition
activity, general conditions in the geographic areas where Prologis
and DCT operate, debt, capital structure and financial position,
Prologis’ ability to form newco-investment ventures and the
availability of capital in existing or newco-investment
ventures—are forward-looking statements. These statements are not
guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to predict.
Although we believe the expectations reflected in any
forward-looking statements are based on reasonable assumptions, we
can give no assurance that our expectations will be attained, and
therefore actual outcomes and results may differ materially from
what is expressed or forecasted in such forward-looking statements.
Some of the factors that may affect outcomes and results include,
but are not limited to: (i) national, international, regional and
local economic and political climates; (ii) changes in global
financial markets, interest rates and foreign currency exchange
rates; (iii) increased or unanticipated competition for our
properties; (iv) risks associated with acquisitions, dispositions
and development of properties; (v) maintenance of REIT status, tax
structuring and changes in income tax laws and rates; (vi)
availability of financing and capital, the levels of debt that we
maintain and our credit ratings; (vii) risks related to our
investments in our co-investment ventures, including our ability to
establish newco-investment ventures; (viii) risks of doing business
internationally, including currency risks; (ix) environmental
uncertainties, including risks of natural disasters; (x) risks
associated with achieving expected revenue synergies or cost
savings; (xi) risks associated with the ability to consummate the
merger and the timing of the closing of the merger and (xii) those
additional risks and factors discussed in the reports filed with
the Securities and Exchange Commission (“SEC”) by Prologis and DCT
from time to time, including those discussed under the heading
“Risk Factors” in the irrespective most recently filed reports on
Form 10-K and 10-Q. Neither Prologis nor DCT undertakes any duty to
update any forward-looking statements appearing in this
communication except as may be required by law.
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended.
*This is a non-GAAP financial measure. Because of the impact of
non-cash real estate depreciation, Prologis expects the acquisition
to be dilutive to net earnings. See our First Quarter 2018
Supplemental Information Report for our definition of Core FFO.
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version on businesswire.com: https://www.businesswire.com/news/home/20180429005071/en/
Prologis:Investors:Tracy Ward, +1
415-733-9565 (San
Francisco)tward@prologis.comorMedia:Jason Golz, +1
415-733-9439 (San
Francisco)jgolz@prologis.comDCT:Investors/Media:Melissa
Sachs, +1 303-597-1550
(Denver)investorrelations@dctindustrial.com
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