Prologis unveils four new funds

Prologis has formed four new property funds that will invest in distribution centres in Europe, the US, Mexico and South Korea. The new funds will have a combined capacity of over $14 bn (EUR 10 bn) and will serve as exclusive
investment vehicles for properties from Prologis' development pipeline. 'Together with the capacity in Prologis' existing funds, we now have fund agreements in place to support $33 bn of assets under management in funds - more than double the $14 bn of assets under management at the end of the second quarter,' said Jeffrey H. Schwartz, Prologis chairman and CEO (photo). 'We expect to see a commensurate rise in fund management fee income as these new equity commitments are invested over the next three years', he added.

Schwartz noted that the European and Mexican funds were oversubscribed.Prologis' European fund (European Properties Fund II) will function as an open-ended, infinitelife fund with a total capacity of up to EUR 7.5 bn, including equity of EUR 3 bn and targeted leverage of 50% to 60%. Prologis said it has identified a portfolio for contribution to the fund in the third quarter of 2007 valued at about EUR 600 mln. The assets are mainly located in the UK, Western and Central Europe. Ralf Wessel, fund manager at Prologis European Properties (PEPR), told PropertyEU that the new fund will target investment opportunities across 13 to 14 countries in Europe, including the UK, Scandinavia, Western Europe as well as Central Europe with Poland, Hungary, Czech Republic, Romania and Slovakia. 'We will target a highly-diversified well-balanced portfolio, focusing on properties with long leases. We also intend to invest no more than 25% to 30% in the same country,' Wessel said. He added that the fund will not invest in Turkey, Russia or Ukraine, while its presence in Eastern Europe will be limited as the fund is targeting a different risk profile. The fund is Prologis' second for Europe. The first was created in 1999 and topped up in 2003. PEPR 1 now owns about 5.8 million m² of industrial property in 11 countries valued at EUR 4.5 bn.

This article appears in the September edition of PropertyEU Magazine.