Prologis Inc. (PLD), an owner of warehouses and retail distribution centers, said Sunday that it has agreed to acquire industrial property owner KTR Capital Partners for $5.9 billion. The company also reported an increase in funds from operations or FFO for the first quarter and raised its core FFO outlook range for fiscal 2015.
The acquisition by Prologis includes the real estate assets and operating platform of KTR Capital Partners and its affiliates. The properties comprise KTR Capital's three co-investment funds.
Prologis noted that KTR Capital's 60 million square foot operating portfolio being acquired comprises 322 properties and aligns with the company's own investment strategy with about 95 percent overlap with its existing U.S. portfolio.
Specifically, Prologis noted that the transaction will enhance its position in Southern California, New Jersey, Chicago, South Florida, Seattle and Dallas. The acquisition also includes 3.6 million square feet of development-in-progress and a land bank with a build-out potential of 6.8 million square feet.
The acquisition will be made by Prologis U.S. Logistics Venture or USLV, a 55-45 consolidated joint venture with Norges Bank Investment Management, manager of the Norwegian Government Pension Fund Global.
The purchase price of $5.9 billion includes the assumption of about $700 million of secured mortgage debt and the issuance of up to $230 million of common limited partnership units in Prologis L.P. to KTR Capital.
Hamid Moghadam, chairman and CEO of Prologis said, "This transaction will deliver accretive returns to our shareholders and will enhance our important and successful partnership with NBIM, which will now exceed $11 billion on two continents."
Prologis expects the transaction to close in the next 30 to 60 days.
Further, the company expects the transaction to be accretive to its forecasted annual core funds from operations or core FFO by about $0.14 per share, on a stabilized basis. This represents 7 percent growth from the midpoint of Prologis' 2015 guidance.
In a separate statement, Prologis reported that its funds from operations or FFO for the first quarter increased to $238.73 million from $215.85 million in the year-ago period. Core funds from operations were $0.49 per share, compared with $0.43 per share in the same period last year.
Net earnings attributable to common stockholders jumped to $345.21 million or $0.65 per share from $4.67 million or $0.01 per share in the prior-year quarter. Revenues for the quarter grew 6 percent to $462.85 million from $434.68 million in the prior year.
Looking ahead to fiscal 2015, Prologis raised its core FFO guidance to a range of $2.07 to $2.13 per share from the prior range of $2.04 to $2.12 per share, representing 12 percent growth at the midpoint compared with full year 2014. The company expects to recognize reported full-year net earnings of $0.98 to $1.04 per share.
The company noted that the revised guidance for 2015 does not include any impact from the KTR Capital Partners transaction.
PLD closed Friday's trading at $42.88, down $0.09 or 0.21 percent on a volume of 3.45 million shares.
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