ProLogis Leases in Poland - Analyst Blog

ProLogis (PLD), a leading global provider of distribution facilities, has recently signed a new lease agreement spanning about 127,000 square feet in Poland. The deal was signed with an unnamed existing customer of the company for an undisclosed sum.

With the deal, the 1.1-million-square-foot distribution facility is currently 96% leased. The lessee will occupy the space at ProLogis Park Sochaczew Building Three in Sochaczew, Poland. The leased property is located in close proximity to Warsaw city center and enables the tenants to streamline their distribution networks in Poland.

ProLogis had earlier acknowledged in its research that improving economic conditions have fueled a recovery in industrial real estate in Europe, and the stage is set for a continuing recovery with limited new supply in the pipeline. Furthermore, leasing decisions that were earlier postponed due to volatility in the markets are gradually coming off the shelf.

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 better during the recession. Consequently, AMB is comparatively better equipped than private developers and smaller public companies to weather the macroeconomic challenges.