Portfolio addition will drive long-term
shareholder growth
SAN
FRANCISCO and INDIANAPOLIS, June 13,
2022 /PRNewswire/ -- Prologis, Inc. (NYSE: PLD) and
Duke Realty Corporation (NYSE: DRE) today announced that the two
companies 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. The respective board of directors
for Prologis and Duke Realty have unanimously approved the
transaction.
"We have admired the disciplined repositioning strategy the Duke
Realty team has completed over the last decade," said Prologis
Co-founder, CEO and Chairman Hamid R.
Moghadam. "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."
With the transaction, 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.
"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," said
Duke Realty Chairman and CEO Jim
Connor. "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."
The transaction 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.
Further, 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.
"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," said Tim Arndt, Prologis'
chief financial officer. "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."
Under the terms of the agreement, Duke Realty shareholders will
receive 0.475x of a Prologis share for each Duke Realty share they
own. The transaction, 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.
Goldman Sachs Group, Inc. and Citigroup are serving as financial
advisors and Wachtell, Lipton, Rosen & Katz is serving as legal
advisor to Prologis. Morgan Stanley & Co. LLC is serving as the
lead financial advisor and Hogan Lovells US LLP is serving as legal
advisor to Duke Realty. J.P. Morgan Securities LLC and Alston &
Bird LLP are also serving as financial and legal advisors,
respectively, to Duke Realty.
Webcast & Conference Call Information
Prologis will host a webcast and conference call today to
discuss the transaction. Here are the event details:
- Monday, June 13, 2022, at
10:00 a.m. U.S. Eastern time.
- Live webcast at http://ir.Prologis.com by clicking Events &
Presentations.
- Participant Toll-Free Dial-In Number: 1 (888) 330-2502;
Conference ID: 7126328.
- A telephonic replay will be available from June 13 to June 27.
- The webcast replay will be posted when available in the
Investor Relations "Events & Presentations" section at
www.prologis.com.
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, 2022, 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 1.0 billion square feet (93 million
square meters) in 19 countries. Prologis leases modern logistics
facilities to a diverse base of approximately 5,800 customers
principally across two major categories: business-to-business and
retail/online fulfillment.
About Duke Realty
Duke Realty Corporation owns and operates approximately 164.9
million rentable square feet of industrial assets in 19 major
logistics markets. Duke Realty Corporation is publicly traded on
the NYSE under the symbol DRE and is a member of the S&P 500
Index. More information about Duke Realty Corporation is available
at www.dukerealty.com.
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 and Duke Realty operate as well as beliefs and assumptions
of Prologis and Duke Realty. Such statements involve uncertainties
that could significantly impact Prologis' or Duke Realty's
financial results. 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 Duke Realty
expects or anticipates will occur in the future — including
statements relating to any possible transaction between Prologis
and Duke Realty, rent and occupancy growth, acquisition and
development activity, contribution and disposition activity,
general conditions in the geographic areas where Prologis or Duke
Realty operate, Prologis' and Duke Realty's respective debt,
capital structure and financial position, Prologis' and Duke
Realty's respective ability to earn revenues from co-investment
ventures, form new co-investment ventures and the availability of
capital in existing or new co-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 Prologis and
Duke Realty believe the expectations reflected in any
forward-looking statements are based on reasonable assumptions,
neither Prologis nor Duke Realty can give assurance that its
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)
Prologis' and Duke Realty's ability to complete the proposed
transaction on the proposed terms or on the anticipated timeline,
or at all, including risks and uncertainties related to securing
the necessary shareholder approvals and satisfaction of other
closing conditions to consummate the proposed transaction; (ii) the
occurrence of any event, change or other circumstance that could
give rise to the termination of the merger agreement relating to
the proposed transaction; (iii) risks related to diverting the
attention of Prologis and Duke Realty management from ongoing
business operations; (iv) failure to realize the expected benefits
of the proposed transaction; (v) significant transaction costs
and/or unknown or inestimable liabilities; (vi) the risk of
shareholder litigation in connection with the proposed transaction,
including resulting expense or delay; (vii) the risk that Duke
Realty's business will not be integrated successfully or that such
integration may be more difficult, time-consuming or costly than
expected; (viii) risks related to future opportunities and plans
for the combined company, including the uncertainty of expected
future financial performance and results of the combined company
following completion of the proposed transaction; (ix) the effect
of the announcement of the proposed transaction on the ability of
Prologis and Duke Realty to operate their respective businesses and
retain and hire key personnel and to maintain favorable business
relationships; (x) risks related to the market value of the
Prologis common stock to be issued in the proposed transaction;
(xi) other risks related to the completion of the proposed
transaction and actions related thereto; (xii) national,
international, regional and local economic and political climates
and conditions; (xiii) changes in global financial markets,
interest rates and foreign currency exchange rates; (xiv) increased
or unanticipated competition for Prologis' or Duke Realty's
properties; (xv) risks associated with acquisitions, dispositions
and development of properties, including increased development
costs due to additional regulatory requirements related to climate
change; (xvi) maintenance of Real Estate Investment Trust status,
tax structuring and changes in income tax laws and rates; (xvii)
availability of financing and capital, the levels of debt that
Prologis and Duke Realty maintain and their credit ratings; (xviii)
risks related to Prologis' and Duke Realty's investments in
co-investment ventures, including Prologis' and Duke Realty's
ability to establish new co-investment ventures; (xix) risks of
doing business internationally, including currency risks; (xx)
environmental uncertainties, including risks of natural disasters;
(xxi) risks related to the coronavirus pandemic; and (xxii) those
additional factors discussed under Part I, Item 1A. Risk Factors in
Prologis' and Duke Realty's respective Annual Reports on Form 10-K
for the year ended December 31, 2021.
Neither Prologis nor Duke Realty undertakes any duty to update any
forward-looking statements appearing in this communication except
as may be required by law.
Additional Information
In connection with the proposed transaction, Prologis will file
with the Securities and Exchange Commission ("SEC") a registration
statement on Form S-4 ("Form S-4"), which will include a document
that serves as a prospectus of Prologis and a joint proxy statement
of Prologis and Duke Realty (the "joint 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 FORM S-4 AND THE JOINT PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE
SEC, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. A definitive joint proxy
statement/prospectus will be sent to Prologis' and Duke Realty's
shareholders. Investors and security holders will be able to obtain
the Form S-4 and the joint proxy statement/prospectus free of
charge from the SEC's website or from Prologis or Duke Realty. The
documents filed by Prologis with the SEC may be obtained free of
charge at Prologis' website at the SEC Filings 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.
The documents filed by Duke Realty with the SEC may be obtained
free of charge at Duke Realty's website at the SEC Filings section
of http://investor.dukerealty.com or at the SEC's website at
www.sec.gov. These documents may also be obtained free of
charge from Duke Realty by requesting them from Investor Relations
by mail at 8711 River Crossing Blvd. Indianapolis, IN 46240.
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 Securities
Act of 1933, as amended.
Participants in the Solicitation
Prologis and Duke Realty and their respective directors,
executive officers and other members of management 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, 2021, its proxy statement dated March 25, 2022, for its 2022 Annual Meeting of
Shareholders and its Current Report on Form 8-K/A filed with the
SEC on April 5, 2022.
Information about Duke Realty's directors and executive officers is
available in Duke Realty's Annual Report on Form 10-K for the
fiscal year ended December 31, 2021,
its proxy statement dated March 2,
2022, for its 2022 Annual Meeting of Shareholders and its
Current Report on Form 8-K filed with the SEC on April 27, 2022. 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 joint proxy
statement/prospectus and other relevant materials to be filed with
the SEC regarding the proposed transaction when they become
available. Investors should read the joint 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 Duke Realty as
indicated above.
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SOURCE Prologis, Inc.
