Denver-based ProLogis and Bahrain-based investment firm Arcapita have formed a $1 billion (€637 million) joint venture, ProLogis Middle East, to target advanced logistics warehouse space in the Gulf Cooperation Council (GCC) region, a trade bloc comprising the six Arab states of the Persian Gulf.
ProLogis Middle East will acquire, finance, develop and manage warehousing properties in Saudi Arabia, Kuwait, Bahrain, Oman and Qatar. The venture expects to break ground on its first developments in the latter half of 2008, with an initial focus on Saudi Arabia.
“Saudi Arabia’s membership into the World Trade Organization in 2005 helped spur economic growth and consequently, demand for regional distribution space,” Joseph Ghazal, senior vice president and head of ProLogis Middle East said in a statement issued by the firms. He added that the venture will target areas near major population centers and seaports.
Atif Abdulmalik, chief executive officer of Arcapita, also noted that the Middle East currently has a “shortfall in the supply of modern, institutional-quality warehouses.” The continued strong economic growth in the region is fueling an increasing demand for high-quality distribution facilities, he said.
The joint venture expects two-thirds of the developments to be build-to-suit projects with the remainder comprising inventory, sale-leaseback and fee development transactions. Investments in Saudi Arabia will account for up to 70 percent of the ProLogis Middle East portfolio, with the balance in the remaining GCC countries, excluding the United Arab Emirates.
This is not ProLogis’ first joint venture with Arcapita. The pair partnered in 2001 to establish a series of real estate property funds to acquire industrial distribution facilities in the US. The portfolios were sold in January 2006 to a strategic buyer.
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