The 12 assets contributed by Prologis have been appraised at approximately JPY 173 billion ($2 billion). Mainly comprising properties located in Tokyo and Osaka, the newly establish portfolio totals 9.6 million square feet (890,000 square meters), the weighted average age being of 3.4 years.

NPR has already been approved for listing on the Tokyo Stock Exchange. The real estate investment trusts will serve as a long-term investment vehicle for modern logistics facilities.

As part of NPR’s efforts to expand its portfolio, the trust already has exclusive negotiation rights for another eight properties owned by Prologis. Through the sponsor support agreement, Prologis will also provide pipeline, operational and personnel assistance. Moreover, Prologis’ wholly owned subsidiaries will act as NPR’s property and asset managers.

Although the sponsorship is a great opportunity for the US-based Prologis, it not intended as a securities sales offer in the United States, as securities may not be offered or sold in the United States unless they are registered or exempt from registration. Yet the high-profile player in the industrial real estate market comes with valuable expertise which will benefit NPR. Focusing on global and regional markets across the Americas, Europe and Asia, Prologis currently owns or has invested in properties and development projects from 21 countries which will amount, upon completion,  to about 565 million square feet (52.5 million square meters).

Prologis Park Pineham, Northampton, DC139

According to the press from the companies, Gary White, Dalepak’s Co-Managing Director, had this to add about the deal:

“The decision to move into this new Prologis building is a tremendous step forward for our business. We already have a skilled workforce and highly sophisticated technology. Now we have the building to match.”

For those unfamiliar with Dalepak, the company is a leading UK warehousing, distribution, and contract packing outfit. Freight forwarding and Internet fulfillment to Integrated solutions, the company does a lot more than “just putting things into boxes. Phillip Dunne, President of Prologis Europe, added this:

“By understanding Dalepak’s requirements, we were able to provide a new, energy efficient facility that will be an ideal fit for their headquarters. With this agreement, only one building now remains available in our entire UK development portfolio.”

Prologis has some 21 plus million square feet of operating space, as well as nearly 500,000 square feet being developed in the UK alone. For more information on this news, please consult the original PR Newswire release here.

Image courtesy Prologis website.

Under consideration is the  combining in an all-stock, at-market transaction reliant upon trading prices of both companies’ stock. In the release from the ProLogis website, it is apparent that no further elaboration will be forthcoming until the companies have come to a mutual decision, or negotiations have been discontinued.

ProLogis is the leading provider of distribution facilities and industrial space with more than 435 million square feet under their banner. For AMB’s part, their nearly 160 million square feet, and their global reach will add significantly to the emerging company’s reach.

ProLogis the world's largest industiral landlord

Neither Hamid R. Moghadam, CEO of AMB, nor ProLogis’ head Walter C. Rakowich have made comment. As for the International impact of this potential merger, Takashi Ishizawa, a real estate analyst at Mizuho Securities Co. in Tokyo, told Bloomberg:

“In the U.S., the warehouse industry is the biggest in terms of space and most important sector for property investment. The merger is positive for the companies to increase their competitiveness and promote expansion.”

AMB industrial complexes in Europe are extensive

ProLogis for one was hard hit by the financial crisis. The company has an international presence of massive scope with a presence in 105 markets in 19 countries. The company reported five consecutive quarters of losses since the recession struck as the demand for distribution spaces waned.

AMB suffered a similar fate obviously, and now many experts feel this merger is a cost cutting effort as much as a strategic positive forward event. By closing offices that will be redundant, and cutting some staff, the two commercial behemoths can obviously safe tens, if not hundreds of millions joining forces.

ProLogis Heathrow

Meanwhile, Ilaina Jonas of Reuters reports that this “supposed” merger of equals may actually be a buyout by the smaller AMB. While ProLogis is the larger of the two, that company’s near collapse in 2008 because of massive debt is a factor to be considered. For the last two years Rakowich’s company has been selling off properties and refinancing debt. The weaker balance sheet of ProLogis actually tells the tale of these talks in all likelihood.

At the close of trading yesterday, both stocks showed significant change and activity with ProLogis up almost 8 % at 15.87,  and AMB finishing at plus more than 3.5 % at 34.01. However we consider this merger, it’s clear it makes sense from a practical standpoint at the very least. Sustainablity, something both companies adhere to in their dogma, demands efficiency. Having redundancy where none is needed is poor logistics after all. We will follow this merger and report as news arrives.

ProLogis AMB stocks at close of business