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Prologis Closes Acquisition Of DCT Industrial Trust For $8.5 Bln

Prologis Inc. (PLD) said that it has completed its all-stock acquisition of DCT Industrial Trust Inc. (DCT) for $8.5 billion, including the assumption of debt.

In connection with the transaction, each share of DCT common stock was converted into 1.02 shares of Prologis common stock.

As a result of the closely aligned portfolios and business strategies, the combined company expects immediate corporate G&A savings and significant scale economies within its operating portfolio. The company also expects to extract additional value from the platform initiatives currently underway at Prologis.

Prologis will refinance $1.8 billion of DCT's debt, of which approximately $850 million was paid off at closing with the remainder to be retired in the third quarter of 2018. The company expects the blended interest rate associated with the refinancings to be approximately 2.5%, generating an estimated $38 million in annual interest savings.

The cumulative interest savings will more than offset the estimated $58 million of one-time debt extinguishment costs related to the refinancing activity. The total transaction costs are expected to be approximately $80 million, with the majority of the costs incurred by Prologis being capitalized.

The acquisition is expected to be accretive to 2018 core funds from operations per share by $0.02, in line with the previously estimated Core FFO per share accretion of $0.06-$0.08 on an annualized basis. As a result, Prologis has increased its 2018 Core FFO guidance range to $3.00 to $3.04 per share from $2.98 to $3.02 per diluted share.

The acquisition is expected to be dilutive to net earnings per diluted share primarily due to the impact of non-cash real estate depreciation. As a result, Prologis has decreased its full-year 2018 net earnings guidance range to $2.67 to $2.73 per diluted share from $2.80 to $2.86 per diluted share.

Effective immediately, former DCT president and chief executive officer Philip L. Hawkins has joined the Prologis board of directors.

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