APG Algemene Pensioen Groep N.V., as manager of the APG Strategic Real Estate Pool, and Goodman Group are pleased to advise that they are considering making an offer together with a group of like-minded investors to acquire for cash 100% of the ordinary units in ProLogis European Properties FCP ('PEPR') (the 'Proposed Transaction'). APG and Goodman recently submitted an indicative, non-binding proposal concerning the Proposed Transaction ('Indicative Proposal') to ProLogis. The Indicative Proposal also contemplates the transfer of PEPR's management rights from ProLogis to Goodman.
The Proposed Transaction cannot be executed without ProLogis' support. However, thus far, ProLogis has rejected APG and Goodman's Indicative Proposal.
Were the transaction to proceed, funding would be provided by APG, Goodman and a group of like-minded major pension and sovereign wealth funds who have expressed a willingness to participate (the 'Consortium').
Rationale
APG and Goodman believe a transaction on the terms of the Proposed Transaction which would contemplate cash consideration of 6.00 per ordinary unit would provide a compelling value proposition for all unitholders that, in the view of APG and Goodman, would close the persistent gap between PEPR's trading price and its underlying NAV. It would produce demonstrable value and certainty of cash exit for all PEPR unitholders. In addition, the Proposed Transaction would resolve widely held concerns regarding PEPR's strategy and governance structure.
The Proposed Transaction would also mitigate concerns that have arisen in respect of the additional conflicts of interest that will result from the proposed merger of ProLogis and AMB. Following this merger, and taking into account the recently announced joint venture between AMB and Allianz, there would be a total of five ProLogis/AMB vehicles that invest in core European logistics assets and may therefore be competing for the same business opportunities in the same territory.
It is currently envisaged that upon a successful transaction APG and Goodman would each hold a circa 25% interest in the privatized entity with the balance of the equity required to implement the Proposed Transaction to be provided by other members of the Consortium, all of whom are leading global real estate investors.
The Indicative Proposal and the Proposed Transaction would be subject to (among other conditions) satisfactory completion of full due diligence, receipt of all necessary consents, regulatory approvals, agreement on final documentation and the transfer of PEPR's management rights from ProLogis to Goodman.
Goodman has indicated its willingness to act as operational partner to the Consortium and to discuss fair cash compensation with ProLogis for relinquishing its rights as manager of PEPR.
APG and Goodman are seeking the full support and endorsement of ProLogis Management Sarl (as PEPR's management company), ProLogis (as owner of PEPR's management company and major investor in PEPR) and the Independent Directors of the Board of PEPR. In this regard, APG and Goodman are seeking access to non-public information so as to be able to complete their due diligence in a timely manner. In parallel with the completion of due diligence, APG and Goodman would expect to negotiate with ProLogis and with PEPR to agree definitive terms of the Indicative Proposal.
APG and Goodman have approached ProLogis and proposed to enter into a constructive dialogue on the Indicative Proposal and the Proposed Transaction in the interest of all PEPR unitholders. However, thus far, ProLogis has rejected APG and Goodman's Indicative Proposal.
APG and Goodman note that, under the current governance structure of PEPR, the full support and endorsement of ProLogis is necessary to enable the Proposed Transaction to be effected given ProLogis' position as the largest PEPR unitholder and its Management Agreement with PEPR by way of ProLogis Management Sarl. APG and Goodman would expect, however, that the directors of ProLogis Management
