ProLogis Pockets $65.6M on Sale of Korea Assets

ProLogis Inc. has sold eight wholly-owned assets and its interest in the ProLogis Korea Fund in a deal that netted the industrial real estate company $65.6 million in proceeds.

September 12, 2011
By Barbra Murray, Contributing Editor

ProLogis Inc. has sold eight wholly-owned assets and its interest in the ProLogis Korea Fund in a deal that netted the industrial real estate company $65.6 million in proceeds.

The transaction included the disposition of four properties containing a total of approximately 427,800 square feet of space and 37 acres of land, in addition to the sale of the company’s 20 percent stake in the ProLogis Korea Fund, which encompassed 12 properties featuring an aggregate 1.7 million square feet. The Korea Fund was established in 2007 with an anticipated capitalization of roughly $500 million.

Prologis’ divestment in Korea dovetails with a new corporate goal that calls for the aligning of its portfolio with its investment strategy, the refinement of its private capital business and the bolstering of its balance sheet. The retreat from Korea has been in the works for some time.

“We’ve been disappointed in what we have seen there in the course of the last three to four years,” Walter C. Rakowich, co-CEO of Prologis, said during the company’s earnings call discussing fourth quarter 2010 results in February of this year. “And that is that we really believe that what would materialize in Korea is that larger users as we’ve seen literally every place in the world, larger users would move away from ownership and more towards leasing and that the leasing market was poised to grow. And what we’re seeing after three or four years is it’s just not happening. Large users are staying home. They are occupying their own buildings that they prefer to own and the overall market is really a small to mid-company user market, which is really not akin to our global customer base. I mean frankly, there’s not a lot we can say to that in terms of synergies and there is not a lot that it really does for our business. So we have made a decision that we will be selling our Korea operation.”

ProLogis hasn’t bid a final adieu to Korea just yet. The company continues to own three fully occupied buildings totaling 594,000 square feet in the country.