Prologis Invests in Europe, Rating Goes Up - Analyst Blog


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Prologis Inc. ( PLD ) continues to strengthen its foothold in Europe. The company has recently announced the acquisition of two logistics facilities in Poland and Hungary by its Prologis European Properties Fund II. This acquisition followed a June disclosure regarding the development of a logistic facility each in Slovakia and the Czech Republic.

The latest acquisitions, spanning over 1 million square feet, are fully leased, reflecting the solid demand for the properties. Specifically, the Poland property is a 610,000 square foot building in Gliwice with access to two trans-European road networks. It is occupied by multinational grocery retailer and repeat customer, Tesco.

The Budapest, Hungary-based property covers 404,000 square feet and is positioned near the city's international airport. It is occupied by global retailer and repeat customer, Auchan.  

The acquisitions along such important commercial routes look promising for Prologis, given the increasing importance of intra-regional trade in Central and Eastern Europe. Prologis, specializing in industrial distribution warehouse space in some of the busiest global markets, already owns and manages around 152 million square feet of logistics and distribution space in Europe as of Mar 31, 2014.

Separately, it was revealed that Moody's Investors Service, the rating arm of Moody's Corp. ( MCO ) raised the company's senior unsecured debt rating to Baa1 from Baa2, and its preferred stock rating to Baa2 from Baa3, with a stable rating outlook. Material improvement in operational metrics and portfolio occupancy over the past 10 quarters, have been cited as the reason for the upgrade.

Going forward, we believe that given a solid balance sheet and decent cash flow generating capabilities, this industrial real estate investment trust (REIT) remains well poised to capitalize on the improving fundamentals in the industrial REIT market worldwide. Moreover, the rating upgrade plays an important role in boosting investors' confidence on the stock.

Prologis currently carries a Zacks Rank #3 (Hold). Investors interested in the REIT industry may consider stocks like Cousins Properties Inc. ( CUZ ) and Duke Realty Corp. ( DRE ), both holding a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: PLD , MCO , DRE , CUZ

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