Last Week in REITs: O Enters the Data Center Space, June Jobs Cool

Research evidence excerpt

Last Week in REITs: O Enters the Data Center Space, June Jobs Cool

BX's stake in their NoVa JV at

a 6.5% cap rate, ~100 bps wider than the ~5.5% market clearing rate mgmt indicated the assets

would trade at, effectively capturing embedded value on day one. The favorable spread reflects

BX's willingness to exit ahead of its original timeline via a direct negotiation with DLR, rather

than any asset-level concern. We view the transaction favorably given the discount to market and

increasing ownership in '27/'28 stabilized assets in the top data center market in the world. The

assets represent ~9% of NOI and benefit from contractual rent escalators of ~3.6%, above the

company average around 3.0%. From a funding perspective, DLR is assuming BX's share of the JV

debt (~$600M), with the remaining consideration representing the equity value and capital required

to complete the developments. Despite near-term dilution from the $2.3B equity issuance, the

transaction is accretive in '27 and '28 as developments stabilize and rents commence, with the

below-market entry price amplifying the yield on incremental capital deployed.

PLD Argues Scale and Capital Can Unlock SEGRO's Potential: Last week, Prologis released a

Jonathan Petersen * | Equity Analystpresentation that takes its case directly to SEGRO shareholders, arguing that SEGRO's development

+1 (212) 284-1705 | jpetersen@jefferies.com

and data center opportunities would be more valuable within the PLD's platform given its scale,

capital resources, and data center expertise, while also offering shareholders an immediate Joe Dickstein * | Equity Analyst

+1 (212) 778-8771 | jdickstein1@jefferies.com

premium through the 925p/share proposal. On deal dynamics, investors continue to debate