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Why Liberty Property Trust Jumped on Monday

By Joe Tenebruso - Oct 28, 2019 at 8:09PM

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A larger rival has its sights set on Liberty's logistics-focused portfolio.

What happened

Shares of Liberty Property Trust (LPT) climbed nearly 14% on Oct. 28, after the commercial real estate company said it would be acquired.

So what

Prologis, a global leader in logistics real estate, is purchasing Liberty for $12.6 billion, including debt. The all-stock deal will see investors receive 0.675 Prologis shares for each Liberty share they hold. The transaction is expected to close in the first quarter of 2020, pending shareholder and regulatory approval.

A person drawing a picture of a big fish eating a smaller fish.

Prologis is gobbling up Liberty Property Trust. Image source: Getty Images.

Prologis said that acquiring Liberty would fortify its presence in Chicago, Houston, and parts of Pennsylvania, New Jersey, and California.

"Liberty's logistics assets are highly complementary to our U.S. portfolio and this acquisition increases our holdings and growth potential in several key markets," Prologis Chairman and CEO Hamid Moghadam said in a press release. "The strategic fit between the portfolios allows us to capture immediate cost and long-term revenue synergies."

Now what

Prologis expects to realize more than $120 million in cost synergies from the merger. It also expects the deal to boost its annual core funds from operations (FFO) by as much as $0.14 to $0.16 per share after asset sales. Prologis intends to sell approximately $3.5 billion of assets, including $2.8 billion of noncore logistics properties and $700 million of office properties.

"The execution of this transaction is further evidence of the strength of Prologis' balance sheet and will create significant additional capital from the future sale of the non-core assets," Prologis CFO Thomas Olinger said. "The combination of these portfolios will drive incremental Core FFO growth and long-term shareholder value."

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Liberty Property Trust Stock Quote
Liberty Property Trust
Prologis, Inc. Stock Quote
Prologis, Inc.
$134.41 (1.14%) $1.51

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