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November 21, 2019
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Prologis to Acquire Liberty Property Trust in $12.6 Bil Transaction

10/29/19

Prologis Inc. (NYSE: PLD) and Liberty Property Trust (NYSE: LPT) have entered into a definitive merger agreement by which Prologis will acquire Liberty in an all-stock transaction, valued at approximately $12.6 bil, including the assumption of debt. The board of directors of Prologis and the board of trustees of Liberty have each unanimously approved the transaction.

"Liberty's logistics assets are highly complementary to our U.S. portfolio and this acquisition increases our holdings and growth potential in several key markets," said Prologis chairman and CEO Hamid R. Moghadam. "The strategic fit between the portfolios allows us to capture immediate cost and long-term revenue synergies."

The transaction deepens Prologis' presence in target markets such as Lehigh Valley, Chicago, Houston, Central PA, New Jersey and Southern California.

The acquisition on an owned and managed basis comprises:

107 msf logistics operating portfolio; 87% overlap with key markets
5.1 msf of logistics development in progress
1,684 acres of land for future logistics development with build-out potential of 19.7 msf
4.9 msf office operating and development portfolio

Prologis plans to dispose of approximately $3.5 bil of assets on a pro rata share basis. This includes $2.8 bil of non-strategic logistics properties and $700 mil of office properties.

This transaction is anticipated to create immediate cost synergies of approximately $120 mil from corporate general and administrative cost savings, operating leverage, lower interest expense and lease adjustments. Initially, this transaction is expected to increase annual core funds from operations* (Core FFO) per share by $0.10-$0.12. Upon stabilization of the acquired development assets, completion of the planned non-strategic asset sales and redeployment of the related proceeds, annual stabilized Core FFO per share is forecasted to increase by an additional $0.04 per share for a total of $0.14-$0.16.

Further, there are future synergies with the potential to generate approximately $60 mil in annual savings, including $10 mil from revenue synergies and $50 mil from incremental development value creation.

Under the terms of the agreement, Liberty shareholders will receive 0.675x of a Prologis share for each Liberty share they own. The transaction, which is currently expected to close in the first quarter of 2020, is subject to the approval of Liberty shareholders and other customary closing conditions.

BofA Securities and Morgan Stanley are acting as financial advisors and Wachtell, Lipton, Rosen & Katz is serving as legal advisor to Prologis. Goldman Sachs and Citigroup are acting as financial advisors and Morgan, Lewis and Bockius LLP is serving as legal advisor to Liberty.




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