Prologis creates €8.2bn open-ended fund by merging European vehicles

Prologis has merged two European real estate funds to create a €8.2bn open-ended vehicle with a 106m sqft portfolio spread across 12 countries.

During its third-quarter earning report, the global logistics specialist said it had combined Prologis Targeted Europe Logistics Fund (PTELF) and Prologis European Properties Fund II to create Prologis European Logistics Fund (PELF).

It is the latest move to consolidate portfolios into large open-ended funds. PTELF had already been enlarged at the beginning of the year after subsuming assets from a joint venture between Prologis and Allianz Real Estate.

In June, IPE Real Assets reported that Prologis was transferring close to $3bn worth of assets from its balance sheet to increase the size of its $5.5bn Targeted US Logistics Fund by almost 50%.

Prologis confirmed that it had transferred $2.8bn of assets to the US fund, raising $950m from 14 new and existing investors to facilitate the transaction.

The creation of the new European fund also coincides with the emergence of a growing number of pan-European, open-ended real estate funds in the region. Just last week, Deutsche Asset Management announced it had raised €568m for a new vehicle.

The assets of PTELF will be exchanged for units in PELF, based on the fair market value of each fund at 30 September 2017. Prologis is retaining its stake in the merged fund and will hold 26%.

S&P has given the new fund a credt rating of A-minus.

“This rating acknowledges the strength of PELF’s balance sheet as well as its high-quality portfolio and management structure,” said Thomas Olinger, chief financial officer at Prologis.

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