Prologis Preleases Facility in Japan - Analyst Blog

Prologis Inc. PLD is actively capitalizing on the growing demand for industrial real estate. The company inked a preleasing deal for a 211,000 square feet facility at Prologis Park Osaka 5 in Osaka, Japan.

Inked with a repeat customer - Koizumi Logistics, a third-party logistics provider - the preleasing deal at this new development boosts Prologis' ties and reflects its concerted efforts towards meeting the increasing demand for spaces amid a lack of supply and growing rents in the Osaka area.

Notably, Prologis Park Osaka 5, spanning 800,000 square foot of space, would offer premium facility, upon its completion in early 2015. Its strategic location would enable Koizumi to proficiently ship goods to and from the Osaka Port.

Amid the backdrop of a larger customer base, rise in e-Commerce application and supply chain consolidation, there will continue to be an increasing demand for Class-A facilities. Specifically in Japan, markets like Tokyo and Osaka have absorbed new deliveries and with rising development expenses, new supply is anticipated to be in check. As such, vacancy rates are low while rents are exhibiting an upward trend.

Prologis stands to benefit as it has the capacity to offer modern distribution facilities in strategic infill locations and with around 22.9 million square feet of logistics and distribution space as of Dec 31, 2013, the company is the leading provider of industrial real estate in Japan.

Prologis is expected to release its first-quarter 2014 results on Apr 22, 2014. The Zacks Consensus Estimate for funds from operations (FFO) for the quarter is currently pegged at 42 cents, reflecting a year-over-year increase of 4.79%.

Prologis currently carries a Zacks Rank #3 (Hold). Investors interested in the REIT industry may also consider stocks like Boston Properties Inc. BXP, Cousins Properties Incorporated CUZ, and Duke Realty Corporation DRE. All three stocks have a Zacks Rank #2 (Buy).

Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.