By Jon Peterson
San Francisco-based Prologis has signed an agreement with Oslo, Norway-based Norges Bank Investment Management sell them a 45 percent interest in 66 industrial properties in the United States for $450 million.
There are a total of eight properties in the portfolio owned by Prologis located in the greater San Francisco Bay Area located in three separate markets, according to sources familiar with the transaction. There were single assets in San Jose and South San Francisco. These were Brennan Distribution located at 595-597 Brennan in San Jose, Utah Airfreight at 250 Utah/229 Littlefield in South San Francisco.
The rest of the Bay Area assets were all in Sunnyvale. These are Moffett Distribution 1 at 360-364 West Caribbean Drive, Moffett Distribution 2 at 370-376 Caribbean Drive, Moffett Distribution 3 at 380-382 Caribbean Drive, Moffett Distribution 4 at 390-394 Caribbean Drive, Moffett Distribution 5 at 140-146 Caribbean Drive, Moffett Distribution 6 at 1383 Borregas and Moffett Distribution 7 at 1393-1395 Borregas.
The total value of the current assets in the joint venture is around $1 billion. Prologis will retain a 55 percent ownership interest in these assets. This existing portfolio is unencumbered by debt and there will be no financing put into the sale at closing.
“We are investing in a solid portfolio of logistics assets close to key transportation hubs,” says Karsten Kallevig, chief investment officer for real estate at Norges Bank in a prepared statement.
The potential sale of the portfolio involves assets in eight states across nine markets. Besides San Francisco, these include Southern California, Pennsylvania, New Jersey, Las Vegas, Chicago, Seattle, Atlanta and Miami. Prologis has owned many of these assets through two of its commingled funds. These are the North America Industrial Fund II and Prologis Institutional Alliance Fund II.
Prologis and Norges Bank could be doing more business in the future. They have signed a definitive agreement to create the Prologis U.S. Logistics Venture. The idea here is to acquire additional properties over time.
It has not been publicly disclosed have much more capital will be invested in the venture going forward. The investment focus will be on the purchase of industrial properties in global markets in the United States.
San Francisco would be a logical place for Prologis to invest going forward. The publicly traded REIT either owns or manages an existing portfolio in the region of 19.3 million square feet through the third quarter of 2013, according to its Web site. This portfolio involves 237 buildings, and the current occupancy on these assets is 92.1 percent. The only market in the United States where Prologis has a bigger presence is in Southern California where it controls 299 buildings.