(Updates with Moghadam’s comments on asset sales starting in eighth paragraph.)
July 27 (Bloomberg) -- Prologis, the world’s largest warehouse owner, got a $500 million pledge from the Oregon Public Employees Retirement Fund to buy stakes in industrial properties around the world over the next five years.
The Oregon Investment Council, which oversees more than $59 billion in assets, voted to invest in the Prologis-OPERF Global Industrial Venture, starting with $100 million for a European logistics fund. The council approved the allocation today at its monthly meeting in Tigard, Oregon.
Prologis will manage the Oregon investment in a format similar to a separate account, according to a presentation today by Hamid Moghadam, the company’s co-chief executive officer, and Guy Jaquier, its head of private capital. As Prologis creates new funds to invest internationally, the pension will choose whether to contribute to them. Once Oregon has invested $500 million with Prologis, a portion of its investment, up to 15 percent, can be used to buy company stock.
The Oregon pension will receive a discount on management fees, according to a document prepared for today’s meeting by the Oregon Treasury’s investment staff.
Prologis merged with AMB Property Corp. in June in the largest-ever combination of U.S. real estate investment trusts, forming a company with $46 billion of managed and owned real estate. Prologis is based in San Francisco.
Global Expansion Planned
Moghadam is seeking to expand abroad as economic growth increases demand for industrial space. He said in a June interview that Prologis plans to double its Asia holdings to a quarter of its total portfolio value. About 12 percent of the REIT’s holdings are in the region now, according to research firm Green Street Advisors Inc.
The merged company also wants to expand its investment- management business, which has almost $26 billion in assets in 22 funds and ventures, according to Moghadam.
“There are some non-strategic assets we plan to sell, mostly from the Prologis side,” over the next year, Moghadam told the council today. “Our plan is to continue to de-lever by recycling assets on the balance sheet.”
Prologis has about $2 billion of global credit lines that haven’t been drawn upon, he said.
“We’re trying to manage excess liquidity in the near term,” given that debt maturities aren’t imminent, Moghadam said. Prologis’s 20 largest tenants account for only about 20 percent of the company’s rent roll, “so we don’t have any undue risk to any credit,” he said.
--With assistance from Dan Levy in San Francisco. Editors: Daniel Taub, Christine Maurus
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