By Liza Helps, Property Editor, Logistics Matters

THE DEAL Is set to be completed in the first half of next year subject to shareholder approval and will create a company with a European operating portfolio of approximately 368 million ft2.

Prologis has invested in the UK and Europe, building a business with £28 billion of AUM since 1997. Over the past 28 years, Prologis has built a portfolio spanning 251 million ft2 across 12 countries and 50 markets in the region, supported by established operating, development and investment management capabilities and longstanding institutional capital partnerships. Prologis is a significant long-term investor to the UK economy, having invested £5.6 billion of capital over the past decade with a further £5.5 billion publicly committed.

Logistics Matters reported that in a H1 2006 Trading update SEGRO noted that its land bank for industrial and logistics development could provide £429 million of potential future headline rent. It said that in H1 it had already signed deals and transactions worth £53 million in new headline rent and that this included £24 million of new pre-lets signed, with further active negotiations underway, resulting in a record level of projects in the current and near-term pipeline.

Currently SEGRO, is the UK’s largest Real Estate Investment Trust, and owns and manages approximately 27 million ft2 of lettable warehouse and industrial space across the UK. In total it manages properties worth around £22 billion. 

Prologis owns and manages approximately 35.3 million ft2 of logistics warehouse space across the UK, spanning 207 buildings.

Combined they would have 62.2 million ft2 of warehouse space in the UK – the vast majority Grade A space. Rough calculations based on total Grade A space of 465 million ft2 nationwide – means the merger could see one investor developer company controlling some 13% plus of all Grade A industrial and logistics space in the UK not including future space under construction, already in the pipeline, or land controlled or under option to be developed.

The deal which SEGRO Board director will recommend to shareholders was the fourth offer from Prologis valuing each SEGRO share at 1,031.7p. The accepted offer values SEGRO at a 14% premium to its net asset value and a 39% premium over the undisturbed share price – the price per share value before the take-over machine started.

Linklaters LLP is retained as legal adviser to Prologis.

Willkie Farr & Gallagher LLP is acting as legal adviser to Prologis with respect to US securities laws.

Slaughter and May is retained as legal adviser to SEGRO.