Why Prologis (PLD) And Duke Realty (DRE) Are Merging In A $26 Billion Deal

By Amit Chowdhry ● Jun 13, 2022
  • Prologis, Inc. (NYSE: PLD) and Duke Realty Corporation (NYSE: DRE) announced that they have entered into a definitive merger agreement valued at $26 billion. These are the details.

Prologis, Inc. (NYSE: PLD) and Duke Realty Corporation (NYSE: DRE) announced that they have entered into a definitive merger agreement by which Prologis will acquire Duke Realty in an all-stock transaction, valued at approximately $26 billion, including the assumption of debt. And the respective board of directors for Prologis and Duke Realty have unanimously approved the transaction.

With this deal, Prologis is gaining high-quality properties for its portfolio in key geographies, including Southern California, New Jersey, South Florida, Chicago, Dallas and Atlanta. The acquisition on an owned and managed basis comprises:

— 153 million square feet of operating properties in 19 major U.S. logistics geographies.

— 11 million square feet of development in progress – about $1.6 billion in total expected investment.

— 1,228 acres of land owned and under option with a build-out of approximately 21 million square feet.

Prologis plans to hold approximately 94% of the Duke Realty assets and exit one market.

The deal is anticipated to create immediate accretion of approximately $310-370 million from corporate general and administrative cost savings and operating leverage as well as mark-to-market adjustments on leases and debt. In year one, the transaction is expected to increase annual core funds from operations* (Core FFO), excluding promotes per share by $0.20-0.25. On a Core AFFO basis, excluding promotes, the deal is expected to be earnings neutral in year one.

Plus future synergies have the potential to generate approximately $375-400 million in annual earnings and value creation, including $70-90 million from incremental property cash flow and Essentials income, $5-10 million in cost of capital savings and $300 million in incremental development value creation.

Under the terms of the deal, Duke Realty shareholders will receive 0.475x of a Prologis share for each Duke Realty share they own. The deal, which is currently expected to close in the fourth quarter of 2022, is subject to the approval of Prologis and Duke Realty shareholders and other customary closing conditions.


“We have admired the disciplined repositioning strategy the Duke Realty team has completed over the last decade. They have built an exceptional portfolio in the U.S. located in geographies we believe will outperform in the future. That will be fueled by Prologis’ proven track record as a value creator in the logistics space. We have a diverse model that allows us to deliver even more value to customers.”

— Prologis Co-founder, CEO and Chairman Hamid R. Moghadam

“This transaction is a testament to Duke Realty’s world-class portfolio of industrial properties, long-proven success and sustainable value creation we’ve delivered over the years. We have always respected Prologis, and after a deliberate and comprehensive evaluation of the transaction and the improved offer, we are excited to bring together our two complementary businesses. Together, we will be able to accelerate the potential of our business and better serve tenants and partners. We are confident that this transaction – including the meaningful opportunity it provides for shareholders to participate in the growth and upside from the combined portfolio — is in the best long-term interest of Duke Realty shareholders.”

— Duke Realty Chairman and CEO Jim Connor

“This transaction increases the strength, size and diversification of our balance sheet while expanding the opportunity for Prologis to apply innovation to drive long-term growth. In addition to generating significant synergies, the combination of these portfolios will help us deliver more services to our customers and drive incremental long-term earnings growth.”

— Tim Arndt, Prologis’ chief financial officer