FUR Winthrop Realty Trust New (delisted)

Prologis Inc. (PLD), a leading industrial real estate investment trust (REIT), has recently leased over 1 million square feet of its development portfolio in France to Geodis, a premier European logistics firm. The long-term lease agreements with one of its existing clients signify the inherent high quality of Prologis’ distribution facilities that make them attractive investment proposition for logistics-based firms to enhance their supply chain efficiencies.

The company leased 749,000 square feet of space as part of its renewal agreement for two buildings at Prologis Park Evry in Evry Lisses located south of Paris, France. Prologis also signed a new lease agreement with Geodis for 266,000 square feet of space in one of these buildings as part of its expansion initiative.

With the lease, Geodis is expected to strengthen its distribution network in the region to facilitate seamless supply of goods in the FMCG (Fast Moving Consumer Goods), retail and high-tech sectors. The expanded facility is further anticipated to bolster its presence in Evry and shape up as a strategic hub within the greater Paris region.

Prologis acquires, develops, operates and manages industrial real estate space in North America, Asia and Europe. Given its international presence, Prologis has lately faced unfavorable foreign currency movements and other economic fluctuations that have impaired its top-line growth.

Furthermore, although fourth quarter 2011 results exceeded the Zacks Consensus Estimates, macroeconomic issues had resulted in a slower pace of recovery as the industry was affected by the continued concerns about sovereign debt issues, rising energy costs, global military actions and the devastation and loss caused by the earthquake and tsunami in Japan.

In addition, the unrelenting troubles in the residential sector are weighing on commercial property operations. The credit crunch has also widened the bid-ask spread between buyers and sellers of commercial real estate, which has caused deal volumes to fall compared to pre-recession levels. Moreover, market vacancy is expected to offset Prologis’ ability to push through rental rate increases, thereby affecting its long-term profitability.

We currently have a Neutral recommendation and a Zacks #3 Rank for Prologis, which translates into a short-term Hold rating. We also have a Neutral recommendation and a Zacks #3 Rank for Winthrop Realty Trust (FUR), one of the peers of Prologis.

 
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