Industrial real estate investment trust (“REIT”) – Prologis Inc. (PLD) – revealed the sale of its 56-acre industrial park in the Silicon Valley to Facebook Inc. (FB). The financial terms of this transaction were not disclosed. However, as per industry sources, the site is valued at $400 million.
This industrial park, named as Menlo Science & Technology Park, is located near Facebook’s corporate headquarters. Specifically, it is positioned on the Willow Road between Highway 101 and the Dumbarton Bridge in Menlo Park. The property has been under Prologis’ ownership and management since 1998, and even after the sale, Prologis will carry on providing management services on Facebook’s behalf.
As a matter of fact, this purchase is expected to help Facebook’s expansion efforts in the city. For Prologis too, monetization of select infill assets amid rising pressure of urbanization and land constraints in the region comes as a strategic fit.
Last month, helped by higher occupancy, Prologis reported better-than-expected results for the fourth quarter of 2014. The company reported core FFO (funds from operations) per share of 48 cents, a cent ahead of the Zacks Consensus Estimate and a nickel above the year-ago quarter figure of 43 cents.
Encouragingly, Prologis has guided for full-year 2015 core FFO in the range of $2.04–$2.12 per share. At mid-point, this marks growth of nearly 11% from the full-year 2014 figure.
Going forward, we believe that with its solid capacity, Prologis is well poised to capitalize on the demand-supply imbalance in the industrial real estate market. The stock currently has a Zacks Rank #2 (Buy).
Investors interested in REITs may also consider stocks like Public Storage (PSA) and SL Green Realty Corp. (SLG), both carrying the same Zacks Rank as Prologis.
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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