Deals

ProLogis pockets $845m from China sale to pay down debt

The industrial development and investment firm has today received $845m from the sale of its China and Japan operations to GIC Real Estate. It is expected to close the $140m sale of its Misato Park to GIC Real Estate in the next month.

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ProLogis has received the second cash payment from its $1.35 billion sale of its China operations and Japan fund interests to GIC Real Estate.

The Denver-based industrial developer and investor said in a statement it had received $845 million from the property arm of the Government of Singapore Investment Corporation after receiving $500 million in February. GIC Real Estate assumed all liabilities of ProLogis Asian Operations in the deal.

The money will be used to pay down debt owed by ProLogis.

The firm also said it expected to close the $140 million sale of the Tokyo industrial park, Misato II, to GIC Real Estate in the next 30 days. The park is in Misato City, north of Tokyo in the Saitama prefecture. The proceeds of this sale will be realised as gains in the second quarter of 2009.

Walter Rakowich, ProLogis chief executive officer, said the sales would help the firm delever its balance sheet by “$2 billion by the end of 2009”. ProLogis added it had dealt with half of its 2009 fund-related maturities, and would announce further asset sale plans in the next three months.

ProLogis has taken numerous steps to reduce its debt load over the past six months, including extending and refinancing loans secured against its ProLogis North American Industrial Fund III and the ProLogis California Fund. The firm also plans to repay the €335.9 million CMBS debt tied to the listed ProLogis European Properties unit early on 5 April.

Since the deal was first announced, GIC Real Estate has rebranded ProLogis Asian Operations to Global Logistic Properties (GLP), led by former ProLogis chairman Jeffrey Schwartz.

GLP’s assets in China include 20.7 million square feet of property, ProLogis’ interests in five China joint ventures and one property fund, a 30 percent interest in retail joint venture SZITIC and 713 acres of land. In Japan, GLP bought out ProLogis’ 20 percent interest in its Japan funds thus obtaining full ownership.

ProLogis and GIC jointly established operations in Japan beginning in 2002 and raised two funds, ProLogis Japan Properties I and II. ProLogis and GIC were the funds’ only investors.