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) --


(PLD) - Get Prologis, Inc. Report

shares surged 8% amid tremendously heavy volume Thursday after the

real estate investment trust confirmed it's in merger talks with

AMB Properties

( AMB).

ProLogis, a REIT that owns, operates and develops mainly industrial properties in North America, Europe and Asia, said it and AMB, a San Francisco-based industrial REIT, are conducting ongoing discussions about a potential combination of the two companies. AMB confirmed the talks in a separate press release.

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The merger would likely be structured as "an all-stock, at-market transaction, based upon the unaffected trading prices of the two companies' stock prior to media reports of a possible merger," ProLogis said in its statement.

ProLogis said the talks may not necessarily result in a definitive agreement, and would not commit to a timeframe in which such an agreement would take place.

"ProLogis and AMB have issued press releases in response to media reports and intend to make no further comment regarding their discussions or negotiations unless and until a definitive agreement is reached or discussions are terminated," said both companies in their respective statements.

ProLogis shares closed 8% higher at $15.87. Nearly 33 million shares changed hands, more than six times the issue's trailing three-month daily average volume of 5.7 million.

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AMB shares added 3.5% to close at $34.01. The REIT saw just under 8.5 million shares in play during Thursday's session vs. its average daily churn of 1.3 million.

Focused competitors in the industrial REIT sector, according to

Revere Research, include

Digital Realty Trust

(DLR) - Get Digital Realty Trust, Inc. Report


DCT Industrial Trust



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Digital Realty's primary holdings are datacenters, digital storage facilities which are used by companies to maintain their internet presence or beef up their data networks. Datacenters are expensive to build and maintain, and as such, supply is relatively inelastic.

Digital Realty said earlier this week its rental revenue more than doubled last year.

Nearly 8% of Digital Realty's signed leases last year where U.S.-based, with the remainder based in its European portfolio. In December

Digital Realty reported plans to expand into the Singapore market as well.

DCT owns, operates and develops high-quality bulk distribution and light industrial properties in high-volume distribution markets in the U.S. and Mexico.

DCT, which was recently listed among the

10 Top Buy-Rated Real Estate Stocks for 2011, was upgraded to neutral from underweight earlier this month and its stock price was set at $5, by analysts at

JPMorgan Chase


JPMorgan analyst Anthony Paolone citing his view that DCT's stock price offers relatively "decent" value to investors for the upgrade. He added that the company's " economically leveraged properties such as industrial should see more of a benefit as the recovery continues to unfold."

Paolone also believes DCT "is gaining some traction on the capital deployment front, and we suspect that its earnings should begin to turn the corner in 2011."

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Keefe, Bruyette & Woods's Sheila McGrath highlighted DCT as one of her top REIT picks, saying that "although the company will continue to be negatively impacted by weak economy, it has the balance sheet strength to navigate through this challenging market and emerge as a beneficiary with external growth opportunities over the next several years."

She added that DCT's 86.9% occupancy remains below stability "which we believe should allow for more potential upside as markets recover." McGrath also said that "DCT's internal growth profile can surprise on the upside by driving occupancy and acquisition opportunities are starting to emerge."

Digital Realty shares closed 1.1% higher Thursday at $53.80 while DCT rose 1.9% to close at $5.78.

-- Written by Miriam Marcus Reimer in New York.

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