Fir Tree Partners, a New York-based investment firm that owns 4.3 percent of ProLogis European Properties, said it opposes a 1.2 billion-euro ($1.78 billion) tender offer by its largest shareholder.
The bid by ProLogis “significantly” undervalues ProLogis European, Fir Tree said today in a letter to ProLogis, which owns about 38 percent of the Luxembourg-based closed-end real estate fund.
ProLogis, a real estate investment trust based in Denver, on April 22 offered 6.10 euros per unit for the rest of ProLogis European. The offer beat a bid by APG Algemene Pensioen Groep NV and Goodman Group. ProLogis European closed today at 6.14 euros, up 2 cents, in Amsterdam.
Fir Tree said ProLogis European’s net asset value is 6.32 euros and its “true value” is even higher because commercial rents are rising as the global economy improves.
“This is just a standard hedge-fund tactic to drive up the unit price,” Walter Rakowich, chief executive officer of ProLogis, said in a telephone interview. “This is a tender offer, it is not a takeover. Unitholders can choose to tender or not.”
ProLogis was required to make a tender offer because its ownership of ProLogis European surpassed the 33.3 percent threshold, Rakowich said. The offer was 22 percent higher than the closing price of ProLogis European in Amsterdam on April 12, before the company said it planned to make an offer.
“We anticipate that going forward PEPR will realize outsized rental growth compared to the market” because it has shorter leases, Fir Tree said. “A fair offer should compensate unitholders.”
Fir Tree also said ProLogis European’s recent trading price was “artificially held down” by its decision to suspend dividends.
ProLogis plans to update investors this week on the tender offer acceptances, Rakowich said. He declined to say whether ProLogis would consider raising its offer, which expires May 6.
“I don’t think that is an appropriate question,” he said.
ProLogis is combining with AMB Property Corp. to form the world’s biggest industrial REIT. The merger is scheduled to be completed in the second quarter.
Fir Tree Partners was formed in 1994 and manages more than $6.5 billion in assets, according to the letter.