ProLogis to Purchase 20 Percent Interest in ProLogis European Properties Fund II Currently Held by ProLogis European Properties
December 19 2008 - 8:35AM
PR Newswire (US)
- Transaction Enhances PEPR's Liquidity - DENVER, Dec. 19
/PRNewswire-FirstCall/ -- ProLogis (NYSE:PLD), the world's largest
owner, manager and developer of distribution facilities, announced
today that it has agreed to purchase units representing a 20
percent interest in ProLogis European Properties Fund II (PEPF II)
from ProLogis European Properties (Euronext: PEPR) for
approximately euro 43 ($61.1) million. "In a difficult environment,
this agreement between ProLogis and PEPR benefits the shareholders
of both companies," said Walter C. Rakowich, chief executive
officer. "ProLogis' expanded ownership interest in PEPF II's
high-quality properties at an attractive price will yield greater
current income to ProLogis. At the same time, PEPR will be relieved
of the majority of its funding requirements to PEPF II, which
enhances PEPR's liquidity and financial flexibility. "We believe
this offers the best solution to PEPR's near-term liquidity issues,
while also offering ProLogis shareholders the prospect of enhanced
shareholder returns through increased ownership in PEPF II and
future upside from this portfolio of fully leased, recently
developed European industrial facilities," Rakowich added. "This
opportunity to purchase fund units at a discount to NAV is a unique
situation driven by PEPR's public market valuation and is in no way
applicable to our other, privately held fund structures. We are
cognizant of PEPR's liquidity issues and recommended this solution
to PEPR's board in our role as PEPR's external manager to benefit
both companies' stakeholders," Rakowich concluded. Terms of the
Transaction Following the close of the transaction, ProLogis will
own 37 percent of PEPF II units, comprising its previous 17 percent
direct ownership stake and the 20 percent purchased from PEPR.
ProLogis will assume euro 348 ($494.2) million of PEPR's future
equity commitments, which will be deducted from gross contribution
proceeds received by ProLogis over the next two years. The euro 43
million ($61.1 million) unit purchase price implies a discount of
approximately 30 percent to existing NAV and future funding
obligations. ProLogis is contractually obligated to maintain a 20
percent interest in PEPF II. PEPR will retain a 10 percent
ownership stake in PEPF II, which it will seek to sell to third
parties. If there is demand for more than the 10 percent of PEPF II
units to be offered by PEPR at better pricing than agreed to with
ProLogis, ProLogis will either sell the units purchased by it,
including the future funding obligation, and deliver the
incremental net proceeds to PEPR, or match the higher price for its
20 percent stake. If ProLogis is not required to match a higher
sales price, PEPR retains a 12-month option to repurchase the
two-thirds stake from ProLogis at the same price per unit.
Following this transaction, PEPR expects to have sufficient
liquidity from the sale of PEPF II units, the elimination of
two-thirds of its funding requirement for PEPF II, the elimination
of its dividend for the foreseeable future and the remaining
capacity on its line of credit to repay its debt maturing in 2009.
For further details, please refer to PEPR's press release at
http://www.prologis-ep.com/ The transaction is expected to close on
December 22, 2008. ProLogis' Action Plan On November 13, 2008,
ProLogis outlined an action plan to de-leverage its balance sheet
by at least $2 billion. The plan includes re-financing and/or
renegotiating debt maturities on ProLogis' balance sheet and in its
property funds, targeting regional portfolio sales, shrinking its
development pipeline through fund contributions and a halt in new
development starts, and retaining capital through G&A
reductions and lowering the dividend. About ProLogis ProLogis is
the world's largest owner, manager and developer of distribution
facilities, with operations in 136 markets across North America,
Europe and Asia. The company has $40.8 billion of assets owned,
managed and under development, comprising 548 million square feet
(51 million square meters) in 2,898 properties as of September 30,
2008. ProLogis' customers include manufacturers, retailers,
transportation companies, third-party logistics providers and other
enterprises with large-scale distribution needs. About ProLogis
European Properties (PEPR) ProLogis European Properties, or PEPR,
is the largest pan-European owner of high quality distribution and
logistics facilities. Established in 1999, PEPR is a real estate
investment fund (organised as a Luxembourg closed-ended fonds
commun de placement) externally managed by a subsidiary of
ProLogis. As at 30 September 2008, PEPR has a portfolio of 364
buildings, owned both directly and indirectly, covering 8.0 million
square metres in 12 European countries, with an open market value
estimated at euro 6.0 billion. Of the combined portfolio, PEPR's
directly owned properties comprise 246 buildings, covering 5.2
million square metres in 11 European countries, with an open market
value estimated at euro 3.9 billion. DATASOURCE: ProLogis CONTACT:
Investor Relations, Melissa Marsden, +1-303-567-5622, or , or
Media, Krista Shepard, +1-303-567-5907, or , both of ProLogis; or
Financial Media, Suzanne Dawson of Linden Alschuler & Kaplan,
Inc., +1-212-329-1420, or Web Site: http://www.prologis.com/
http://www.prologis-ep.com/
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