DEAL WATCH 2012: End-of-year deal flurry

A slew of big-ticket deals in the final weeks of 2012 came after a lacklustre Q3 which saw risk-averse investors tread water

Prologis proved the finish is more important than the start when it rounded off a year of ups and downs by sealing a 50:50 joint venture with Norway’s €430 bn state pension fund - the largest investor by volume in European real estate last year, according to a ranking by PropertyEU Research.

The deal enabled Prologis to recapitalise a headache portfolio and bring a major equity partner on board for future expansion. The bulk of the assets covered in the €2.4 bn joint venture came from the Prologis European Properties
(PEPR) fund. Earlier in the year, Prologis delisted the company after buying back all its units to thwart an attempted
takeover by other major investors in the vehicle. The buyback left Prologis, the Denver-based global leader in distribution space, with a dilemma: for some time the company had been working to deleverage and de-risk. Adding 210 distribution facilities across 11 European countries to the balance sheet had not been part of the long-term business plan. The Norwegian fund may not be a white knight but its interests dovetailed quite fortuitously with those of the vendor Prologis had already added to its coffers earlier in December by doing business with Blackstone - third in
our 2012 investor ranking. The New-York based private equity giant, agreed to pay €215 mln for 16 assets located in various logistics markets around France. Explaining the rationale behind the disposal, Francois Rispe, managing director of Southern Europe at Prologis, said: ‘Despite the very high standard of the properties, they no longer align with the Prologis investment strategy, so we took the decision to sell and redeploy our capital.’

BILLION-EURO BUYS
The German market ended 2012 on a particularly upbeat note: just before Christmas Signa Holdings, the investment
vehicle of Austrian businessman Rene Benko, snapped up 17 Karstadt department stores including the KaDeWe in Berlin, for over €1 bn. KaDeWe comprises 60,000 m2 of retail space and is described as the largest department store in continental Europe, second in size only to Harrods in London. Two weeks earlier Lone Star, a Texas-based private equity firm, bought the state-owned property company TLG Immobilien for €1.1 bn. The deal was the largest commercial real estate transaction in Germany of 2012 and the country’s biggest privatisation in five years. The
portfolio comprises around 780 assets ranging from offices and shopping centres to hotels and retirement homes.

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