ProLogis’ European property business has sold its remaining one-third stake in ProLogis European Properties Fund II to six investors, it has revealed.
Unveiling its annual results, ProLogis European Properties said it had sold the stake to six “high-quality institutional investors” for €14.4 million ($18.6 million), an implied 37 percent discount to the value of its investment. It did not name the parties that have taken up the shares.
The sale follows the divestment of two-thirds of its stake to ProLogis last year for €43.7 million as well as the cancellation of future funding obligations to the vehicle.
ProLogis European Properties Fund II is a private equity fund, established by ProLogis to acquire assets from both ProLogis’ development pipeline in Europe and from third-parties.
ProLogis has had to unwind its 2007 commitment to invest €900 million to the fund over three years in order to pay down debt. “These transactions significantly reduce [the company’s] debt requirements over the next eighteen months by €522 million and enable the business to focus on further deleveraging initiatives,” it said.
ProLogis European Properties received €15.9 million of distributions from the fund in 2008, including a pro-rata dividend of €6.2 million for the fourth quarter. This corresponded to a 7 percent annualised cash return. However, at the year end it wrote down its investment by €205.6 million.
Peter Cassells, chief executive office, said: “We have successfully amended our most pressing debt covenant and disposed of our entire investment in [the fund]. The disposal reduces outstanding and, more significantly, eliminates our obligation to finance further investments of €522 million in PEPF II over the next 18 months. We continue to aggressively take actions to strengthen the balance sheet, improve liquidity through active and open dialogue with our banking partners, complete new leases and renewals and serve our customer base so as to return the best possible long-term performance to our investors.”