Prologis has completed its long-term fund consolidation process after combining the last of its real estate vehicles to create a €8.2 billion platform, the company said in its third-quarter earnings results last week.
The San Francisco-based global logistics specialist brought together its Prologis Targeted Europe Logistics Fund and Prologis European Properties Fund II to form Prologis European Logistics Fund, which will be one of the largest open-ended platforms in Europe.
The vehicle will comprise a 106 million-square-foot portfolio spread across 12 countries, with around 70 percent of the assets located in the UK, Germany, Poland and France. To put the size of its newly-merged fund in context, Chinese sovereign wealth fund CIC paid Blackstone $12.25 billion for its 132 million square foot European logistics platform, Logicor.
In 2011, Prologis merged with rival US warehouse specialist AMB Property Corporation to create a $14.2 billion company. The two firms said at the time that the merger was timed to coincide with an anticipated surge in global demand for distribution warehouses.
The merger gave Prologis access to emerging markets such as Brazil and China, while AMB benefited from its partner’s exposure to Europe.
Following the merger, Prologis embarked on a long-term consolidation and simplification of its funds business, which at the time managed around 21 vehicles, including 13 focused on North America, one on Brazil, three on Asia and four on Europe. Since then it has reduced the number of vehicles it manages to eight, including two publicly-traded funds, two private funds and four joint ventures. Three of the vehicles target Europe, two are aimed at the US, and one each focused on Japan, China and Mexico.
Following the creation of PELF, S&P has rated the vehicle’s credit at A-, a rating which Prologis chief financial officer Thomas Olinger described as “acknowledging the strength of PELF’s balance sheet and high-quality portfolio.”