NETHERLANDS - APG, the asset manager of ABP pension fund, has called on fellow shareholders in Prologis European Properties (PEPR) to block the company from raising new equity unless they are given the option to replace PEPR's manager.

The Dutch pensions giant has written a letter to all fellow investors, requesting their help in pushing for changes to PEPR's governance structure, ahead of an extraordinary general meeting (EGM) at the end of the month.

The EGM is being held so sharedholders can vote on PEPR's proposals to convert from a fonds commun de placement (FCP) to a société d'investissement à capital fixe (SICAF), which will allow the company to raise new equity at a discount to net asset value.

APG is in support of PEPR's decision to convert its legal structure but said the EGM was a rare opportunity for investors to push for better governance provisions.

In a letter seen by IPE Real Estate, APG said it had urged PEPR to modernise its governance structure with a number of amendments, including giving shareholders the power to remove an external manager at any time if 67% voted in favour.

However, PEPR has stressed that the management contract, which has been in place since its initial public offering in 2006, "is not subject to renegotiation".

A PEPR spokesperson said: "The SICAF conversion will provide a number of corporate governance enhancements, and will give PEPR the ability to issue equity at a discount to NAV that it currently lacks.

"PEPR and its board believe it is very important that we have this financial flexibility - particularly in the current challenging environment.

"We note that APG is supportive of the conversion in principle and would urge them to vote in favour of it."

PEPR's proposed conversion would enable them to raise new equity more easily, which could potentially be used to prevent the entity from breaching covenants on its underlying properties in the future.

The other amendments sought by APG were for the restriction in the investment policy to allow for investments in direct assets only, and that shareholders with more than 1% of share capital should be able to place items on the agenda of annual general meetings (AGM) or EGMs.

"PEPR investors normally have no say over major decisions," the letter said. "Hence this conversion into a SICAF is the only time that investors can exercise some influence as a two thirds majority is needed to approve the conversion. We ask for your support."

Once other shareholders have responded to the letter, APG is intending to provide PEPR with the total number of votes it expects will oppose the conversion should the demands not be met.

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