Axios Pro Exclusive Content

Prologis and Duke Realty tie $26B knot

Jun 13, 2022
Illustration of a robotic arm moving a package in an Amazon warehouse

Illustration: Sarah Grillo/Axios

Warehousing giant Prologis said it would acquire Duke Realty in an all-stock transaction valued at roughly $26 billion, including debt.

Why it matters: The combination underscores the need for industrial space in the U.S. to help mitigate supply chain woes and to fulfill e-commerce orders as shoppers got into the habit of buying online.

What’s happening: The deal will give Prologis 153 million square feet of properties in 19 major U.S. logistics markets, another 11 million square feet of properties in development and 1,228 acres of land owned that could be developed into about 21 million square feet of warehousing space.

  • Duke Realty’s properties span Southern California, New Jersey, South Florida, Chicago, Dallas and Atlanta.
  • Prologis said it will hold about 94% of Duke Realty’s assets and plans to exit one market.

By the numbers: Duke Realty’s shareholders will receive 0.475 of a Prologis share for each of the Duke Realty shares they own. Prologis’ shares, which traded at $117.19 as of Friday’s close, were down nearly 9% today. Duke Realty’s shares, which stood at $49.77 on Friday, slipped.

  • The company expects it could garner about $375 million to $400 million in future annual earnings.

Context: The San Francisco-based Prologis has about 1 billion square feet of warehouse and distribution space across 19 countries and some of its biggest customers are Amazon, Home Depot, FedEx and UPS.

Be smart: The U.S. will need about 330 million in additional distribution space by 2025 to meet e-commerce demand, CBRE said last year. And the real estate firm says demand for industrial space in the U.S. continues to outstrip supply in the first quarter.

Of note: Companies have been stockpiling goods in order to get ahead of anticipated supply chain disruptions, but that has started to affect their balance sheet. Target said last week it will pare its inventory, which the company warned will drive up its costs and dent profitability in the near term. It’s not alone.

What’s next: The deal is expected to be completed in the fourth quarter.

Go deeper