ProLogis Leases Big in the U.S. - Analyst Blog

ProLogis (PLD), a leading global provider of distribution facilities, has recently signed two new lease agreements spanning about 179,000 square feet in the U.S. The continued leasing activities show signs of stabilization in the industrial property market after a prolonged recession that pushed back the sector.

About 106,000 square feet were leased to an unnamed manufacturer in the bedding industry. The lessee will occupy the space at ProLogis Park 275 Building Four in Cincinnati. ProLogis also leased about 73,000 square feet to Shoreline Aerospace, a distributor of aero systems for defense and commercial purposes. The lessee will occupy the space at ProLogis Park Sawgrass Building One in Florida. Following this deal, the facility will be fully leased.

We maintain our Neutral recommendation on ProLogis, which presently has a Zacks #3 Rank translating into a short-term Hold rating and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months.

Our long-term Neutral recommendation on the stock is based on the belief that ProLogis has considerably reduced operating risks through continued lease-up of its development portfolio. ProLogis also has a geographically diverse portfolio of distribution facilities that integrates international scope and expertise with a strong local presence in its markets, which provides strong upside potential for the company.

However, the continued troubles in the residential sector are weighing on commercial property operations. This has significantly affected the top-line growth of industrial real estate companies like ProLogis and AMB Property Corp. (AMB).

AMB provides industrial distribution warehouse space in some of the busiest distribution markets in the Americas, Europe and Asia that have held up relatively well during the recession. Consequently, AMB is comparatively better equipped than private developers and smaller public companies to weather the macroeconomic challenges.