EUROPE – The NOK3.7trn (€506bn) Norwegian Government Pension Fund Global (Norges) has agreed to acquire 50% of a pan-European ProLogis portfolio for €1.2bn in a deal that will also make it the firm's largest private capital investor.
The 11-market, 195-asset portfolio comprises 75% of assets from the PEPR fund, which Prologis took private earlier this year, with the remainder coming from the firm's balance sheet.
The portfolio's greatest exposure is to the French market, although the portfolio also includes assets in Spain and Italy.
Under the terms of the €2.4bn joint venture agreement, Norges will also receive warrants to acquire 6m shares in the parent company.
Although he said the equity investment was "not standard practice", Guy Jaquier, chief executive of private capital at Prologis, told IP Real Estate he welcomed the move.
"We like our private capital partners to have an interest in the firm," he said.
Jaquier said the venture's extendable 15-year life was "consistent" with Norges's track record in core European markets.
"Norges's long-term strategy works well for us," he said. "As an infinite-life REIT, we have no immediate need to recycle assets."
Although there is no target for the addition of new assets to the portfolio, Jaquier said the partners would go after large portfolios to reduce the potential for overlap with medium-sized portfolio acquisitions for its other funds.
Asked whether that could include corporate acquisitions that would give them access to the portfolios, he said: "No comment."
The venture's low leverage – at below 15% of the portfolio's gross value – was one of the Norwegian fund's requirements.
Jaquier said Prologis was "indifferent" to the issue.
"We have other all-equity ventures, but we have some with 50% of leverage," he said.
Although the specifics of the deal were negotiated in recent months, it follows years of discussions between the partners.
Asked if further agreements with Norges were possible, Jaquier said there were no specific plans.
"But we like them, and I think they like us," he said.
He said the deal proved there was liquidity in the European logistics market despite a lack of recent deals.
"Here you have a sophisticated institutional investor putting money into the mother of all transactions," he said.