Global logistics specialist Prologis has combined its two European vehicles to create a €8.2 bn open-ended fund.
The merger of Prologis Targeted Europe Logistics Fund (PTELF) and Prologis European Properties Fund II (PEPF II) creates a fund with 9.8 million m2 of logistics space across 12 countries.
S&P has rated the new fund's credit at A-. '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.
Under the terms of the transaction and subsequent to the end of the third quarter, assets of PTELF will be contributed to PELF in exchange for units. The exchange will be based on the fair market value of each fund as of 30 September 2017. Prologis will retain its current ownership and hold 26% of the combined entity.
Prologis announced the creation of the new fund during its report on its global third-quarter figures.
Net earnings per diluted share was $1.63 compared with $0.52 for the same period in 2016. This year-over-year increase was driven primarily by higher gains on disposals of real estate, as well as by improved operating conditions.
Core funds from operations per diluted share was $0.67 compared with $0.73 ($0.59 before promote income) for the same period in 2016. Improved operating conditions primarily drove the $0.08 year-over-year increase on a promote-neutral basis.
'Our third quarter results reflect strong market conditions and our customers' intensifying need for well-located logistics facilities,' said Hamid Moghadam, chairman and CEO of Prologis. 'Taken together, the lack of available labour and land scarcity are becoming additional governors on new construction. These favourable conditions have elevated our mark-to-market. Our in-place rents are now below market by 14 percent globally and 18 percent in the US, extending our organic growth into the foreseeable future.'
