(To read more on the industrial market, click here.)
DENVER-ProLogis Trust has acquired a competitor in Europe for $581 million (298 million pounds). The locally based developer of distribution facilities says it has acquired the industrial business of Parkridge Holdings, as well as a 25% interest in its non-industrial real estate operations, for a mix of cash and common stock.
The transaction gives ProLogis ownership of several assets across Europe, including an 800-acre industrial land bank in the United Kingdom capable of supporting 15 million sf of new development; Astral, Parkridge's UK logistics development business, which has under construction 10 projects totaling 5.2 million sf; recently launched operations in Western Europe; and a 50% interest in a Central European logistics development JV with 5.2 million sf built and 4.5 million sf under construction.
In a separate transaction, Parkridge's partner in the logistics JV has agreed to sell its 50% stake to ProLogis for $449 million (euro 345 million). The existing industrial properties, as well as those that are developed on land positions acquired in the transaction, are expected to be contributed by ProLogis to a ProLogis property fund.
ProLogis owns, manages or has under development assets totaling 422 million sf and $26.7 billion. The Parkridge acquisition strengthens ProLogis' landbank in Central Europe and the UK and enhances its employee base with experienced professionals. ProLogis chief executive Jeffrey Schwartz describes Parkridge as "one of our top competitors in European industrial development."
The stake in Parkridge's non-industrial operations includes two mixed-use development projects in the UK; a retail warehousing development business focused on markets in the UK, France and Spain; and a retail development business in Central Europe.
Parkridge chairman John Cutts joins ProLogis as vice chairman of Europe while continuing to focus on his role as chairman and chief executive officer of Parkridge Retail. Cutts says the remainder of the Parkridge business, which includes retail, retail warehousing, offices and leisure, will benefit "greatly" from the equity provided by the sale of the distribution division. "We look forward to a period of strong growth across Europe," he says.
For Parkridge's industrial business, ProLogis will pay $443 million (227 million pounds), net of a $98 million (50 million pounds) earn-out tied to the timing of pending land entitlements in the UK. Approximately 25.4% of the total consideration will be paid for with cash and the remainder will be funded with ProLogis common stock. For the 25% strake in retail business, ProLogis will pay $138 million (71 million pounds) in cash.
ProLogis expects to retain 23 Parkridge associates currently employed in the industrial development business. Those employees will join ProLogis' offices in those markets. Those engaged in the retail business will remain employees of Parkridge's retail operations.
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