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Monday, Dec 5, 2022

Prologis Closes $23B Buy of Duke Realty

Industrial Giant Adds Nearly 1M+ SF in OC

The country’s largest industrial real estate owner, Prologis Inc. (NYSE: PLD), has added north of 1 million square feet of Orange County real estate to its portfolio after closing on its $23 billion acquisition of Duke Realty Corp. (NYSE DRE), the Indianapolis-based industrial developer whose West Coast operations were based in Irvine.

Duke Realty managed a nearly 20-million-square-foot Southern California portfolio out of an office at the 200 Spectrum Center tower and counted a sizeable number of industrial holdings in the region.

Records indicate that local figure tops 1 million square feet, a notable addition to Prologis’ already expansive holdings in OC.

Lower Sales Price

The San Francisco-based industrial owner announced in June it would acquire Duke for $26 billion, in the largest commercial real estate transaction in the U.S. since the start of the pandemic.

The deal closed on Oct. 3 for a slightly less figure, $23 billion, which includes the assumption of debt.

Shares of Prologis are off about 40% this year and are down some 15% since the time the Duke buy was first announced. Its market cap was around $74 billion as of early last week.

In total, Prologis adds 142 million square feet across 480 logistics buildings in 19 U.S. markets, including Southern California, New Jersey, South Florida, Chicago, Dallas and Atlanta.

It also adds 7 million square feet of buildings under development and 17 million square feet of developable land, and more than 500 new customers.

“In addition to the day-one accretion and avenues for further earnings growth, this acquisition gives us an even stronger ability to support our customers and their growth,” Prologis co-founder, CEO and Chairman Hamid Moghadam said in a statement.

Duke in OC

Duke remained active in OC investments up to the completion of the deal.

This summer it completed the purchase of a 10.7-acre collection of older buildings in Los Alamitos. The eight parcels, whose buildings total around 250,000 square feet, traded for $77.2 million, according to property records.

A future industrial redevelopment is likely for the site, located about a block north of Katella Avenue, and about a half mile west of the Los Alamitos Race Course, which counts a Cypress address.

The just-bought Los Alamitos site is roughly a 3-mile drive down Katella from one of Duke’s more prominent local developments of late, a new Amazon facility in Cypress at the former Mitsubishi Motors campus. That project runs about 188,000 square feet.

Los Alamitos holds a number of Duke’s local holdings, with other industrial properties focused in North Orange County cities including Fullerton, Orange, Buena Park, Brea and Anaheim.

Duke officials said earlier this year that it planned to invest more than $500 million in development projects in Southern California this year.

Duke recently said it has 3.6 million square feet of development in the pipeline for Southern California.

Prologis Holdings

Prologis also counts several notable local projects.

In Fullerton, it paid $123.7 million in 2019 for a 663,000-square-foot portion of the recently built Beckman Business Center.

Earlier this year, Prologis paid $96 million for Lake Forest’s Pacific Vista office campus; an industrial conversion is expected.­­

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