DENVER-Industrial REIT ProLogis has struck a deal to sell a $505 million portfolio of US retail and mixed-use assets that it acquired in its 2005 merger with Catellus―and the Catellus name―to TPG Capital of Fort Worth. The properties to be sold, which ProLogis owns directly or through equity interests, include four shopping centers, two office buildings, 11 mixed-use projects with related land and development agreements, two residential development joint ventures, Los Angeles Union Station, certain ground leases and other right-of-way leases.

Walter C. Rakowich, ProLogis chief executive officer, said that the assets to be sold "are high-quality with good long-term prospects, but they are not in keeping with our strategy to concentrate our investment in core industrial properties in the world’s major logistics corridors." Kelvin Davis, TPG senior partner, commented that the company "is already well positioned through its diverse portfolio of high-quality, well-occupied assets in growing markets. As a standalone company, we believe the new Catellus will be in anexcellent position to capitalize on the economic recovery and build on its strong footprint.”

ProLogis and Catellus are both based in Denver, but Catellus is expected to move its headquarters to Oakland, CA after the deal closes, which is anticipated in the first quarter of 2011. Ted R. Antenucci, who joined ProLogis with the Catellus merger in 2005, will rejoin Catellus after a transition period ending in mid-2011. Mike Curless, managing director of global investments, is expected to assume Antenucci’s investment role upon Antenucci’s departure.

ProLogis said that it is anticipated that the majority of its employees associated with the retail/mixed-use properties will be offered employment with Catellus.

ProLogis will retain a preferred equity interest in Catellus of approximately $70 million, which will earn a preferred return at an annual rate of 7% for the first three years of the term, 8% for the fourth year of the term and 10% thereafter until redeemed. Partial or full redemption can occur at any time at TPG’s discretion or after the five-year anniversary at ProLogis’ discretion. ProLogis also will provide $30 million first mortgage financing on Los Angeles Union Station, which will bear interest at 7%.