APG hardens stance in battle over PEPR

Dutch pension fund APG is committed to pursuing its surprise takeover offer for Prologis European Properties (PEPR) together with Sydney-listed Goodman Group and a group of like-minded investors, Patrick Kanters, Managing Director Global Real Estate at APG, told PropertyEU. 'We believe we have made a very compelling offer and trust the other PEPR unitholders will support it. We aim to bring Prologis back to the table.'

Kanters made the announcement following a press statement by Denver-based Prologis on Wednesday morning that it was not prepared to relinquish its stake in PEPR. Walter Rakowich, Prologis CEO: 'Prologis has no intent or desire to sell its interest in PEPR. Additionally we have no intention of selling or relinquishing the management of PEPR. The value proposition of PEPR has always been inextricably linked to Prologis' active ownership and management. Prologis provides unparalleled industrial management expertise, as well as a strong European operation and a global finance organisation.'

The consortium led by APG and Goodman is seeking to delist the company by acquiring for cash 100% of the ordinary units in Prologis European Properties (PEPR). The proposed offer of EUR 6 per ordinary unit would value the company at around EUR 1 bn and close the 'persistent gap between PEPR's trading price and its underlying NAV', Kanters said. On Wednesday morning, shares were trading at EUR 5.75, a rise of 15% on Tuesday’s close.

One of the key bones of contention between PEPR and APG is PEPR's management contract with Prologis. Under terms of the indicative proposal by APG and Goodman, PEPR's management rights would be transferred from Prologis to Goodman. The management contract would be valid for a limited time span, Kanters said. 'We would build in a clause to make it possible to end the management contract in line with best practices. The contract with Prologis runs until 2016 but it is practically impossible to terminate it.'

The move by APG has been described in the press as 'unprecedentedly aggressive', but Kanters claims he has no other option. 'APG is an active shareholder and we aim to maximise the value of all our assets. We have worked very hard on improving PEPR’s governance structure to close the gap between the share price and the Net Asset Value. So far the company has not taken any tangible action in this direction and there has been no improvement whatsoever.'

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