PEPR shareholder opposes EUR 1.2b bid by Prologis

Fir Tree Partners, a New York-based private investment firm that owns 4.3% of Prologis European Properties (PEPR), has said it opposes a EUR 1.2 bn tender offer by PEPR's parent company and largest shareholder, Prologis.

In a letter to Prologis on Thursday, Fir Tree Partners said it believes the bid 'is not in the best interests of PEPR because it does not constitute fair value for the units of the fund'. 'Fir Tree believes that the offer significantly undervalues PEPR units,' director Aman Kapadia wrote in the note.

Denver-based Prologis, which owns about 38% of the Euronext-listed closed-end real estate fund, announced details last week of a mandatory cash tender offer of EUR 6.10 per unit for all the outstanding units in the fund it does not already own in PEPR. The bid, which expires on May 6, was made in response to an earlier offer of EUR 6 made by Algemene Pensioen Groep (APG) of the Netherlands and the Goodman Group of Australia.

Fir Tree Partners, which manages over $6.5 bn in assets, noted that PEPR's net asset value is EUR 6.32 under EPRA standards but its 'true value' is even higher because commercial rents are rising as the global economy improves. 'In an M&A context, buyers typically pay a premium to underlying asset value to reflect the value of control and of synergies that they may achieve,' Fir Tree said.

'Given the improvement of the global economy and the fact that very little new supply has been created in the last three years, we anticipate that going forward PEPR will realize outsized rental growth compared to the market as a result of its shorter lease breaks. A fair offer should compensate unitholders for giving up this future growth.'

Fir Tree also said PEPR's trading price was 'artificially held down' by its refusal to reinstate the regular dividend.

Commenting on Prologis' tender offer, PEPR said on Thursday that its management company, Prologis Management, will review the offer document and provide a 'reasoned opinion' in relation to the offer as soon as practicable.

The company has engaged Deutsche Bank as financial advisor as well as Arendt & Medernach and Freshfields Bruckhaus Deringer as legal counselors.

PEPR's portfolio comprises 232 distribution facilities, covering 4.9 million m² across 11 European countries with an estimated net market value of EUR 2.8 bn.

Prologis is currently finalising a merger with AMB Property Corporation which will create the world's biggest industrial REIT.