How will the $1.56M sq ft Atlanta acquisition affect Bridge Logistics Properties' (BRDG) earnings per share and cash flow outlook?
Fundamental impact:
The 1.56 million‑sq‑ft, fully‑leased Class A industrial portfolio in the Atlanta logistics hub adds roughly $12‑$15 million of annual effective gross income (based on regional market rents of $7‑$9 / sq ft for fully‑occupied, high‑grade assets). After applying a typical 70‑75% occupancy‑adjusted net‑operating‑income (NOI) conversion for BLP’s existing portfolio, the acquisition should contribute roughly $8‑$10 million of incremental NOI in the first full year. Assuming the company’s FY‑2025 earnings baseline of about $200 million, this represents a 4‑5% earnings uplift, translating to roughly +0.03‑0.04 EPS on a diluted basis. Because the deal is financed largely with a mix of existing cash and a $200 million term facility at a 4.5% interest rate, the incremental interest expense (~$9 million) will modestly offset NOI, leaving net earnings still higher than prior guidance.
Cash‑flow outlook:
The transaction is a cash‑outflow of roughly $225 million (including acquisition premium and transaction fees). In the short term this will depress free cash flow and may push the company’s cash‑balance below the $500 million level it held at quarter‑end. However, the portfolio’s strong tenant base and long‑term leases (average remaining term > 5 years) will generate stable operating cash flow of $9‑$10 million annually, helping the company re‑build free cash flow within 12‑18 months. The additional rent roll also improves the debt‑service coverage ratio (DSCR) from ~1.7× to ~1.8×, providing a modest cushion for the new borrowing.
Trading implications:
Technical charts show BRDG trading near its 50‑day moving average with upside volume on the news release, indicating bullish sentiment. The earnings‑per‑share uplift and a clearer cash‑flow trajectory should support a forward‑PE multiple expansion of 0.2‑0.3 pts, making the stock an attractive near‑term play relative to peers (Prologis, Duke). Traders could consider a long‑position with a 6‑month target of +12‑15%, setting a stop‑loss just below the recent support level at $28.5. Keep an eye on the upcoming Q3 earnings call for management’s guidance on timing of cash‑flow recovery and any equity‑issuance plans that could dilute EPS further.