Denver-based ProLogis sells Chinese operations, Japanese stake for $1.3 billion

24 December 2008

Denver-based ProLogis, the world's largest owner, manager and developer of real estate, announced that it has agreed to sell its Chinese operations and its 20-per cent interest in Japan property funds to a Singapore government-owned real estate company for $1.3 billion in cash plus liabilities as part of the transaction.

The company said it expects to record a net loss on the transaction of approximately 4 to 6 per cent of the book value of the assets sold, which include some properties still under construction, interests in joint ventures and one property fund.

In a statement ProLogis said it expects "the development pipeline as of September 30, 2008  would reduced by $1.0 billion, including $255 million in costs to complete development of the assets owned directly and within Prologis' development joint ventures in China."

The company expects to close the transaction in January 2009, pending certain conditions. Proceeds from the sale will be used to reduce debt.

ProLogis reported $1.26 billion of gross proceeds from its fourth quarter contributions included a total of 59 properties in 12 countries, representing 15.2 million square feet (msf) of space.
ProLogis had $11.6 billion in debt on its books as of the third quarter of 2008.

"In one substantial step, this transaction helps ProLogis de-lever its balance sheet, relieve near-term re-financing pressure and enhance liquidity," said Walter C. Rakowich, chief executive officer of ProLogis.