Prologis forms EUR2.4bn joint venture with Norges Bank Investment Management
Prologis has formed Prologis European Logistics Partners, a euro-denominated joint venture with Norges Bank Investment Management (NBIM), the manager of the Norwegian Government Pension Fund Global.
The venture will acquire a portfolio of distribution facilities wholly owned by Prologis in 11 target European global markets.
Prologis European Logistics Partners will be structured as a 50/50 joint venture with an equity commitment of EUR2.4bn (USD3.1bn), which includes a EUR1.2bn (USD1.55bn) co-investment by both NBIM and Prologis. The leverage ratio is initially expected to be less than 15 per cent of the aggregate gross value of the venture's assets, which will be repaid upon maturity, enabling the venture to operate on an all-equity basis.
Upon closing, the venture will acquire a stabilised portfolio of 195 properties totalling approximately 49 million square feet (4.5 million square meters); about 75 per cent of the properties coming from the former ProLogis European Properties (PEPR) fund and the remaining 25 per cent coming from other Prologis wholly owned assets.
The venture may grow through acquiring strategic portfolios in target markets and, where appropriate, properties that complement the existing asset base. In connection with the transaction, NBIM will receive a warrant to acquire six million shares of Prologis common stock based on the closing price of USD35.64 per share on 19 December, 2012. The warrant will have a three-year term.
"This joint venture is a significant milestone for Prologis, as it completes our European recapitalisation ahead of schedule," says Hamid R Moghadam, co-chief executive and chairman, Prologis. "Our private capital business serves as a powerful growth engine for the company, allowing us to continue to serve our growing global customer base, while redeploying capital efficiently and increasing and diversifying our revenue."
"Our participation in the Prologis European Logistics Partners venture advances our strategy of investing in high-quality properties," says Karsten Kallevig, chief investment officer for real estate, NBIM. "We are very pleased to be teaming up with a partner of Prologis' caliber as we enter the market for industrial real estate, and we look forward to working together on future endeavours."
The venture has an initial term of 15 years, which may be extended for additional 15-year periods. Prologis will have the ability to reduce its ownership to 20 per cent following the second anniversary of closing.
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