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Prologis to Acquire DCT Industrial Trust for $8.4 Bil

5/01/18

Prologis Inc. (NYSE: PLD) and DCT Industrial Trust Inc (NYSE: DCT) just agreed to a merger by which Prologis will acquire DCT for $8.4 bil in a stock-for-stock transaction, including the assumption of debt. The boards of directors of both companies have unanimously approved the transaction.

"For some time, we have considered DCT's realigned portfolio to be the most complementary to our own in terms of product quality, market position and growth potential," said Prologis chairman and chief executive officer Hamid R. Moghadam. "This high level of strategic fit will allow us to capture significant scale economies immediately. In addition, our current platform initiatives, particularly in the areas of advanced analytics, customer experience and procurement and ancillary revenues, will enable us to extract significant upside from the combined portfolios."

The 71 msf operating portfolio deepens Prologis' presence in high-growth markets including Southern California, the San Francisco Bay Area, New York/New Jersey, Seattle and South Florida. The acquisition also includes:

7.1 msf of development, redevelopment and value-added projects
195 acres of land in pre-development, predominantly in Seattle, Atlanta, South Florida and Southern California with build-out potential of over 2.9 msf
215 acres of land under contract or option, predominately in New York/New Jersey, Southern California, Northern California and Chicago, with a build-out potential of over 3.3 msf

"This transaction underscores the exceptional quality of DCT's portfolio, platform and customer relationships, which our talented team has worked hard to create," said DCT Industrial president and chief executive officer Philip L. Hawkins. "Our shared commitment to quality, exceeding expectations and enhancing customer experience makes this a perfect combination."

The transaction is anticipated to create substantial synergies, including near-term synergies of approximately $80 mil in corporate general and administrative cost savings, operating leverage, interest expense and lease adjustments, which are forecast to increase annual stabilized core funds from operations* (Core FFO) per share by $0.06-$0.08. A combination of revenue synergies and incremental development volume has the potential to generate $40 mil of additional annual revenue and development profit in the future.

"This all-stock transaction enables us to maintain our strong balance sheet and significant financial flexibility," said Prologis chief financial officer Thomas S. Olinger. "In addition, the transaction increases our U.S. dollar net equity and drives additional core FFO growth."

Under the terms of the agreement, DCT shareholders will receive 1.02 Prologis shares for each DCT share they own. The transaction, which is currently expected to close in the third quarter of 2018, is subject to the approval of DCT stockholders and other customary closing conditions. At closing, it is anticipated that Philip L. Hawkins will join the Prologis board of directors.

J.P. Morgan is acting as exclusive financial advisor and Mayer Brown LLP is serving as legal advisor to Prologis. BofA Merrill Lynch is acting as exclusive financial advisor and Goodwin Procter LLP is serving as legal advisor to DCT.





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