PLD - AMB Merger Should Drive Meaningful Synergies, Jefferies Reports

A merger between ProLogis

and AMB Property Corporation

should drive meaningful synergies given that the cost of maintaining each company's global development platform is relatively high, Jefferies reports. “Specifically, we estimate that the G&A margin of AMB and PLD are 20% and 16%, respectively,” Jefferies writes. “This compares to a G&A margin for the domestic-focused Industrial REITs of closer to 10%. “Management of AMB and PLD believe that there are $80M of annual G&A synergies (20% savings on gross G&A of $400M) that could take 2 years to achieve, which would imply a net G&A margin of 12-14% for a combined AMB-PLD entity.” ProLogis closed Monday at $14.92; AMB Property Corporation closed at $33.55.