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DENVER-ProLogis has four new property funds with a combined capacity of $14 billion. Each fund will own assets in one of four different geographic regions–Europe, the US, Mexico and South Korea–and will serve as the exclusive investment vehicle for properties from ProLogis’ development pipeline in that region. The funds also will have the ability to make third-party acquisitions in their respective regions.

The funds are part of the company’s strategy to grow its global customer base, redeploy capital and diversify its revenue while meeting investors return objectives. Jeffrey Schwartz, ProLogis chairman and CEO, says the new funds take to $33 billion the company’s capacity for assets under management.

“We expect to see a commensurate rise in fund management fee income as these new equity commitments are invested over the next three years,” he says. “We are building an investment management business on a scale unmatched in our industry.”

Europe fund

ProLogis European Properties Fund II will function as an open-end, infinite-life fund with a total capacity of up to euro 7.5 billion (US $10.1 billion), including equity of euro 3 billion (US $4 billion) and targeted leverage of 50% to 60%. ProLogis plans to contribute to the fund this quarter a portfolio valued at approximately euro 600 million (US $810 million) that includes recently developed, stabilized properties as well as certain facilities obtained through the company’s 2007 acquisition of Parkridge Holdings’ European industrial business.

The fund is the second for ProLogis in Europe. The first, ProLogis European Properties (PEPR), was created in 1999, expanded in 2003, and now owns approximately 62 million sf in 11 countries valued at euro 4.5 billion (US $6.1 billion) as of June 30, 2007. In September 2006, PEPR became listed on the Euronext exchange in Amsterdam.

Among the 28 institutional investors in the new European fund are ProLogis itself; ProLogis’ existing Europe fund; the CPP Investment Board, an investment organization that invests the assets of the Canada Pension Plan; and an affiliate of GIC Real Estate Pte Ltd, the real estate investment arm of the Government of Singapore Investment Corporation. GIC RE is an existing ProLogis fund investor in Europe, North America and Japan and is ProLogis’ joint venture partner in the South Korea fund.

Mexico fund

ProLogis MX Industrial Fund LP will function as a closed-end fund with a total expected capitalization of approximately $1.5 billion, including $625 million of equity and targeted leverage of 55% to 60%. The new fund will comprise nine institutional investors, six of which are repeat investors in ProLogis property funds. The fund has an initial term of 10 years and may be extended for an additional five years.

ProLogis will stoke the fund with a 3.8-million-sf portfolio of stabilized Mexico assets valued at $200 million. The portfolio is 99% leased to 31 customers. “Mexico’s large population, low labor cost and expanding middle class make it a highly compelling distribution market, while the recent shift to a more open, pro-business economy is enabling the country to enhance its competitive position in the global marketplace,” Schwartz says.

Korea fund

ProLogis Korea Fund has been established as a closed-end fund with a total expected capitalization of approximately $500 million, including $250 million of equity and targeted leverage of 50%. The fund recently completed the acquisition of its first asset, a 108,000-sf, fully leased distribution facility along the Seoul-Busan Expressway outside Seoul. The initial term of the fund is 15 years.

In addition to the new funds, ProLogis said Monday an affiliate of Citigroup has decided to convert approximately $550 million in bridge financing it provided for ProLogis acquisition of Macquarie ProLogis Trust into a 63% equity interest in a new ProLogis fund. The fund, with a total capitalization of $2.3 billion, will own the industrial assets purchased by ProLogis through its acquisition of MPR.

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