EUROPE - Dutch asset manager Algemene Pensioen Groep (APG) is calling on unit holders of ProLogis European Properties (PEPR) to back its proposed takeover of the listed real estate fund together with Goodman Group.
APG and Goodman submitted an informal, non-binding, indicative proposal to acquire PEPR on Tuesday, which they claimed was backed by a group of large pension and sovereign wealth funds.
But US-based ProLogis, which is the external manager of the logistics property fund and owns a third of PEPR's shares, has rejected the offer.
Walter Rakowich, chief executive at ProLogis, said: "ProLogis has no intent or desire to sell its interest in PEPR. Additionally, we have no intention of selling or relinquishing the management of PEPR."
Patrick Kanters, managing director for global real estate at APG, said the asset manager was now calling on remaining unit holders to put pressure on ProLogis to come "back to the table".
APG and Goodman have offered to take PEPR private by acquiring 100% of its shares in a cash deal valued at €6 per share. Were ProLogis to accept it, the agreement would ultimately see Goodman assume management of the fund.
Kanters said APG and Goodman were open to other proposals from ProLogis, including alternative structures, but only "provided they represent better value to unit holders" than the existing proposal.
APG said its offer should be "compelling" for all unit holders - including ProLogis itself - and that the takeover would help reduce PEPR's existing discount to net asset value (NAV).
Kanters said the gap between PEPR's share price and its underlying value was down to the poor governance structure in place.
APG has long been campaigning to improve its existing governance structure at PEPR, which does not allow unit holders to vote to replace the fund's manager, ever since the fund was listed on Euronext Amsterdam in 2006.
"It is one of the poorest governance structures we see in the European listed industry," Kanters said. "All our actions ever since the IPO [initial public offering] have been geared to improving the governance structure ... and to close the gap between intrinsic value and share price."
However, Rakowich has argued that the value proposition of PEPR has always been "inextricably linked" to ProLogis's active ownership and management.
He said: "ProLogis provides unparalleled industrial management expertise, as well as a strong European operation and a global finance organisation.
"In addition, ProLogis's significant ownership stake in PEPR ensures that, as an external manager, our interests are fully aligned with those of PEPR's unit holders.
"These advantages benefit all unit holders and they represent some of the key reasons why unit holders invest in PEPR."
APG has also highlighted potential conflicts of interests regarding the planned merger between ProLogis and AMB Property Corporation, which will see the merged company manage five separate real estate funds, all targeting the core European logistics sector at the same time, including AMB's recently announced joint venture with Allianz Real Estate.
"These five different vehicles will all focus on the same European logistics market and chase similar business opportunities," Kanters said.
"The plans for the merger have further deteriorated the outlook for PEPR to run a decent portfolio management."
ProLogis has offered to continue a dialogue with APG regarding what it describes as "a range of value-enhancing alternatives in a professional and cooperative fashion with the objective of finding a mutually satisfactory way forward that will serve the interests of all PEPR unit holders".
Rakowich said: "APG had acknowledged in related discussions that it intended to use the timing of our pending merger to exert undo influence, and we regret APG and Goodman have elected to pursue this matter in the media."