AMERICAS NEWS: The logistics of capital

When the chief executive officer of private capital at Prologis, Guy Jaquier, announced his decision to retire, the San Francisco-based logistics giant decided to look at its private capital group and assess how it was being run. Ultimately, the firm determined that, rather than have all elements of Prologis Capital Partners fall under the purview of one executive, it made more sense to divide the oversight of its activities throughout its executive team. 

Previously, all private capital activities were overseen by Jaquier. However, since the firm no longer manages private capital as a separate unit and since Prologis is beginning to access other forms of capital, it made sense to reorganize the business. With Jaquier set to step down yet remain in his role for the remainder of the year, Prologis was in a good position to reassess how it manages its capital businesses.

“We came to the conclusion that there are other forms of capital we’re starting to access besides private capital, like strategic capital,” Jaquier told PERE, citing the J-REIT the firm launched in Japan and some opportunities the firm is beginning to look at in the Mexican public markets. “We don’t really manage private capital as a separate unit, so to have a standalone business defined just as private capital doesn’t make sense going forward. Consequently, having a head of private capital like me doesn’t make sense going forward.”

Rather than have just one executive committee member in charge of private capital, Prologis has made four members responsible for different portions. Moving forward, the activity known as fund development or fund structuring is now being reclassified as global strategic capital initiatives and will be overseen by the office of the general counsel. Global fund management activities will report to Prologis’ chief investment officer, while global strategic capital relations will report directly to the firm’s chairman and CEO, Hamid Moghadam. Finally, strategic capital reporting will be presided over by the firm’s CFO, Thomas Olinger.

Jaquier stressed that his decision to retire resulted in the decision to reassess and reorganize Prologis’ capital markets business, not the other way around. “I’m retiring because I can and am lucky enough to be able to do so,” he said. “That decision led us to ask, ‘What’s best for the business?’” 

Jaquier added that this reorganization ultimately marks a shift in how Prologis accesses and processes capital—not in how it raises capital. The process, he said, should be invisible to institutional investors committing to Prologis vehicles. “Except,” he noted, “that they’ll interact with an executive team as opposed to just with me.” 

Prologis has until the end of the year to transfer all of Jaquier’s responsibilities to the appropriate member of the executive team. Even after Jaquier retires from his post as private capital CEO, he will remain a voting investment committee member. 

Speaking of capital-raising activities, Prologis’ new J-REIT, Nippon Prologis REIT, is selling further units to raise ¥82.8 billion (€626 million; $808 million) of equity. The money will be used to buy eight logistics warehouses in Japan from Prologis, six from one of its funds and two from its wholly-owned portfolio, in a transaction valued at ¥132.4 billion. Meanwhile, Prologis, which has approximately $1.5 billion of real estate in Mexico, is looking at some additional opportunities in that country. However, it has not yet made any decisions on possible investment options or structures.