ProLogis Leases Japan Facility - Analyst Blog

ProLogis (PLD), a leading global provider of distribution facilities, has recently signed two new lease agreements for about 93,000 square feet at ProLogis Parc Ichikawa I – a 1.3 million square-foot distribution facility in Ichikawa City, near Tokyo, Japan. With the deal, the facility is currently fully leased.

About 65,000 square feet of space were leased to CEVA Logistics, a leading logistics company providing end-to-end design, implementation and operational capabilities in freight forwarding, transportation management and distribution management. ProLogis also leased 28,000 square feet to an unnamed domestic third-party logistics provider. The distribution facility is strategically located along a major highway network, enabling swift distribution to the greater Tokyo and greater Chiba regions – one of the largest industrial areas of the country.  

With improving property values and growing institutional demand for quality properties, ProLogis has witnessed a growing customer interest in new build-to-suit development projects across the globe. In addition, leasing decisions that were earlier postponed due to volatility in the markets are gradually coming off the shelf.

ProLogis owns and manages interests in over 2,500 distribution facilities, service offices and properties spanning 475 million square feet of space (including properties under development), out of which approximately 10.9 million square feet are located in Japan.

The company has leased its industrial facilities to over 4,400 customers, which mostly include manufacturers, retailers, transportation companies, third-party logistics providers and other enterprises with large-scale distribution needs.

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 a healthy 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.