Prologis Inc. ( PLD ) - a leading industrial real estate investment trust (REIT) - closed a $1 billion joint venture (JV) in the U.S. with the Norges Bank Investment Management (NBIM). The JV, named Prologis U.S. Logistics Venture (USLV), represents Prologis' second venture with NBIM following its European JV earlier last year.
The JV, structured as a 55/45 venture with Prologis owning 55% and NBIM owning 45%, acquired a 12.8 million square foot stabilized portfolio consisting of 66 logistics facilities. These facilities were previously owned by Prologis.
These 66 properties are positioned in eight states in the U.S. across nine markets including Southern California, Pennsylvania, the San Francisco Bay Area, New Jersey, Las Vegas, Chicago, Seattle, Atlanta, and Miami. The JV may further increase its portfolio through strategic acquisitions in key markets to complement its existing asset base.
Notably, NBIM is a unit of Norges Bank - the Central Bank of Norway. It is in charge of the operational management of the Norwegian Government Pension Fund Global and manages foreign exchange reserves of Norges Bank.
This fund is the largest pension fund in Europe. Therefore, the partnership of Prologis and NBIM brings in capital so that both the companies can leverage on the growing demand for premium logistic facilities in the U.S.
As a matter of fact, with a larger customer base, rise in e-Commerce application and supply chain consolidation, the demand for logistics infrastructure and efficient distribution networks has grown in the U.S.
Prologis is scheduled to announce its fourth-quarter 2013 results on Jan 30. The Zacks Consensus Estimate for fourth-quarter fund from operations (FFO) is currently pegged at 42 cents per share, representing a year-over-year increase of 1.1%.
The Earnings ESP for Prologis is +2.38 %. This is because the Most Accurate estimate stands at 43 cents while the Zacks Consensus Estimate is lower at 42 cents. In addition, Prologis' Zacks Rank #3 (Hold) enhances the predictive power of ESP. This combination of its Zacks Rank and Earnings ESP makes us confident of an earnings surprise call in the to-be-reported quarter.
Investors interested in the REIT industry may also consider stocks like Getty Realty Corp. ( GTY ), National Health Investors Inc. ( NHI ) and Pebblebrook Hotel Trust ( PEB ). All these stocks carry a Zacks Rank #1 (Strong Buy).
Note: FFO, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation and amortization and other non-cash expenses to net income.