Owning, managing, and renting out warehouses and distribution facilities is a sector of the real estate business that has avoided getting pulled down by the protracted housing debacle. Continued growth at real estate investment trust ProLogis (PLD), the world's leader in that business, with $38.8 billion in assets in 2,817 properties worldwide, reflects an upsurge in spite of the U.S. economic slowdown. "Expanding global trade levels will contribute to a rise in demand for PLD's properties," says Robert McMillan of Standard & Poor's (MHP), who rates the stock a buy. He sees the shares, now at 62.61, at 72 in a year. "Our solid financial and operating results in the first quarter were mostly driven by our global exposure at a time of increased uncertainty in the U.S.," says ProLogis CEO Jeffrey Schwartz. The rise in global demand has led Schwartz to form 50-50 joint ventures overseas—in China, India, Japan, Europe, and the Middle East. In five major cities in China, ProLogis operates warehouses leased to such companies as Best Buy (BBY), Fiat (FIA), and Nokia (NOK). Its $1 billion ProLogis Middle East joint venture will acquire properties in Bahrain, Kuwait, Oman, Qatar, and Saudi Arabia. The joint ventures are letting the company grow very fast, says James Feldman of UBS (UBS), who rates the stock a buy. He sees ProLogis earnings of $3.11 a share in 2008, $3.34 in 2009, and $3.65 in 2010.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

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