Norwegians and Prologis form EUR 2.4b JV in Europe

Prologis and Norway's massive oil-fuelled state pension fund have formed a joint venture in Europe to buy the EUR 2.4 bn logistics portfolio made up largely of assets held by the former ProLogis European Properties (PEPR) fund.

It is the first time the EUR 500 bn Norwegian Government Pension Fund Global, managed by Norges Bank Investment Management (NBIM), has strayed outside the office and retail sectors since it began direct investment in real estate two years ago.

The new entity, Prologis European Logistics Partners, is structured as a 50-50 joint venture with EUR 1.2 bn of co-investments by both NBIM and Prologis. The leverage ratio is initially expected to be less than 15% of the aggregate gross value of the venture's assets, enabling it to operate on an all-equity basis.

The joint venture is being seeded by the 4.5 million m² Class A portfolio of 195 properties across 11 European markets. About 75% of the properties come from the former ProLogis European Properties (PEPR) fund and the remaining 25% from other Prologis wholly owned assets.

The venture may grow through acquiring strategic portfolios in target markets as well as properties that complement the existing asset base, according to Prologis. In connection with the transaction, NBIM will receive a warrant to acquire 6 million shares of Prologis shares at the closing price on 19 December of $35.64 per share. The warrant will have a three-year term.

'This joint venture is a significant milestone for Prologis, as it completes our European recapitalisation ahead of schedule,' said Hamid Moghadam, co-CEO and chairman of Prologis.

The joint venture has an initial term of 15 years, which may be extended for additional 15-year periods. Prologis will have the ability to reduce its ownership to 20% following the second anniversary of closing.