Key Takeaways
- • Prologis and Norges Bank Investment Management (NBIM) closed a €2.4 billion ($3.1 billion) joint venture, Prologis European Logistics Partners Sarl (PELP), acquiring a stabilized portfolio of 49 million square feet comprising 195 Class-A logistics facilities across European markets.
- • The venture is structured as a 50/50 partnership with equal €1.2 billion ($1.55 billion) equity commitments from both parties, giving NBIM (manager of the Norwegian Government Pension Fund Global) significant exposure to European logistics real estate.
- • PELP has an initial 15-year term with extension options for additional 15-year periods; Prologis retains the ability to reduce its ownership stake to 20 percent after the second anniversary of closing, providing liquidity optionality.
- • The venture is positioned for growth through strategic acquisitions in target European markets and may expand beyond the current portfolio of wholly-owned Prologis properties.
- • The partnership reflects confidence in Europe's industrial real estate market recovery and positions both parties to capitalize on logistics demand in key continental markets.
Summary
Prologis, Inc. and Norges Bank Investment Management announced the closing of Prologis European Logistics Partners Sarl on March 19, 2013, marking a significant €2.4 billion ($3.1 billion) joint venture targeting European logistics real estate. The transaction demonstrates confidence from a major institutional allocator—the Norwegian Government Pension Fund Global—in Prologis's European asset quality and market positioning during the post-financial crisis recovery period.
The venture acquired a stabilized portfolio of 49 million square feet (4.5 million square meters) consisting of 195 Class-A logistics facilities wholly owned by Prologis prior to closing. Structured as a 50/50 partnership, PELP features equal equity commitments of €1.2 billion ($1.55 billion) from both Prologis and NBIM, totaling the €2.4 billion fund. This equal-weighted structure underscores a balanced partnership approach where both parties share governance and economic exposure equally.
According to Hamid R. Moghadam, chairman and CEO of Prologis, the partnership reflects "a mutual, long-term investment perspective which is measured in decades," emphasizing the structural nature of the commitment. The venture is designed for growth, with provisions to acquire strategic portfolios in target European markets and complementary properties that enhance the existing asset base. The venture carries an initial 15-year term with options for extension through additional 15-year periods, providing long-term capital stability. A notable feature includes Prologis's right to reduce its ownership to 20 percent following the second anniversary of closing, allowing the company potential liquidity while maintaining minority participation.
As of December 31, 2012, Prologis owned or held investments in approximately 554 million square feet across 21 countries, positioning it as the leading global owner, operator, and developer of industrial real estate. This European venture represents a significant monetization strategy for quality assets while maintaining operational involvement and future economic participation through its residual stake.
The venture acquired a stabilized portfolio of 49 million square feet (4.5 million square meters) consisting of 195 Class-A logistics facilities wholly owned by Prologis prior to closing. Structured as a 50/50 partnership, PELP features equal equity commitments of €1.2 billion ($1.55 billion) from both Prologis and NBIM, totaling the €2.4 billion fund. This equal-weighted structure underscores a balanced partnership approach where both parties share governance and economic exposure equally.
According to Hamid R. Moghadam, chairman and CEO of Prologis, the partnership reflects "a mutual, long-term investment perspective which is measured in decades," emphasizing the structural nature of the commitment. The venture is designed for growth, with provisions to acquire strategic portfolios in target European markets and complementary properties that enhance the existing asset base. The venture carries an initial 15-year term with options for extension through additional 15-year periods, providing long-term capital stability. A notable feature includes Prologis's right to reduce its ownership to 20 percent following the second anniversary of closing, allowing the company potential liquidity while maintaining minority participation.
As of December 31, 2012, Prologis owned or held investments in approximately 554 million square feet across 21 countries, positioning it as the leading global owner, operator, and developer of industrial real estate. This European venture represents a significant monetization strategy for quality assets while maintaining operational involvement and future economic participation through its residual stake.
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