* Investor says ProLogis offer too low
* ProLogis shares close down 1 cent
(Adds CEO comment, Fir Tree comment, background, byline)
By Ilaina Jonas
NEW YORK, April 27 A hedge fund with a 4.3
percent stake in ProLogis' (PLD.N) publicly traded European
fund said the price ProLogis has offered for ProLogis European
Properties FCP (PEPR) PEPR.AS is unfairly low.
In a letter to Walter Rakowich, the chief executive of
warehouse and distribution center owner ProLogis, Fir Tree
Partners argued on Wednesday that ProLogis' offer of 6.10 euros
per share falls short of ProLogis' own estimate of the value of
PEPR's properties of 6.32 euros per share.
Fir Tree said in the letter that even that estimate
undervalued the property. Fir Tree has $6.5 billion of assets
PEPR owns some of the highest quality warehouse and
distribution centers in key markets of France, the UK, Central
Europe, Italy and Spain, according to research firm Green
"Given the improvement of the global economy and the fact
that very little new supply has been created in the last three
years, we anticipate that going forward PEPR will realize
outsized rental growth compared to the market as a result of
its shorter lease breaks," Fir Tree director Aman Kapadia wrote
in the letter.
"A fair offer should compensate unit holders for giving up
this future growth," he wrote.
Denver-based ProLogis raised its stake in PEPR to 38
percent from 33 percent, which triggered a mandatory tender
offer for the shares it did not own. The tender offer expires
ProLogis was prompted to act after Dutch pension manager
Algemene Pension Groep NV and Australian warehouse and
distribution center owner Goodman Group (GMG.AX) offered 6
euros per share.
"I think this is a standard hedge fund tactic to drive up
price," Rakowich told Reuters. "This is a tender offer, not a
take over. No unit holder is required to tender."
ProLogis spun off the fund in an initial public offering in
2006 and controls the board. It also manages the fund and
receives fees for doing so.
ProLogis has said that its offering price represents a 22
percent premium over PEPRs share price. But Fir Tree argued
that PEPR's price has been artificially deflated because it has
not reinstated a regular dividend.
If it does not receive what it considers a fair price, Fir
Tree said it would appeal to the Commission de Surveillance du
Secteur Financier and the Authority for the Financial Markets,
to determine a "fair price for the units."
However, Rakowich said the Commission de Surveillance du
Secteur Financier already has approved its offer.
ProLogis is about to merge with AMB Property Corp AMB.N.
(Reporting by Ilaina Jonas)
(Reporting by Ilaina Jonas; editing by Andre Grenon)