Norway recently announced its plan to buy a 50% stake in the real estate portfolio of US-based Prologis. Norway?s sovereign wealth fund agreed to buy warehouses for 1.2 billion euros, a deal announced Thursday. According to Reuters, the deal for a stake in 195 properties across 11 European countries could just be the start of a large global real estate investment by the Norwegian wealth fund, which was established from surplus oil and gas revenue.
The deal is the second of two large transactions that helped the company strengthen its finances and focus on key markets that it outlined in the 2011 merger that created the company. This will comprise all the European property under Prologis, and about 75 percent of the properties will come from ProLogis European Properties (PEPR) which Prologis acquired earlier this year. The deal also follows the company?s announcement that it would spin off 12 of its distribution centers in Japan to a new Japanese real estate investment trust.
Green Street Advisors senior analyst, John Stewart says that the companies have a solid execution on one of the key initiatives that they have planned. Because of this, shares of Prologis coded up 2.6% on the New York Stock Exchange.
The deal will have Norway?s wealth fund receive rights to acquire 6 million shares of Prologis common stock based on the closing price of $35.64 per share while Prologis will retain the remaining percentage in the portfolio and manage the units. The agreement has an initial term of 15 years which may be extended for addition 15-year periods. The debt asset value of Prologs will fall about 36% from its current low 40s after the deal, which is expected to close in the first quarter of 2013.
Norway?s wealth fund has been building its real estate portfolio, focusing on shopping and office buildings in large areas. Reuters adds that the fund held less than 1 percent of its assets in real estate, and is expected to increase to $1.1 trillion by 2020. The fund has been buying European properties, but plans on buying in the US are still under negotiation.
Original Article: ReutersPhoto Credits: infomatique via Flickr Creative Commons?Tokyo Apartments For Sale | Tokyo Apartments For Rent | Real Estate Japan
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