ProLogis Closes Japanese Financing - Analyst Blog

ProLogis (PLD), one of the leading global providers of distribution facilities, recently completed a $113 million (10 billion yen) financing to repay its debt. The financing was obtained through a "tokutei mokuteki kaisha" (TMK), a tax-favored, special-purpose vehicle created in Japan for acquiring and holding Japanese assets. Secured by real estate assets, the TMK issues corporate bonds, which can be bought by Japanese and non-Japanese investors.
 
The financing has a maturity period of three years and is collateralized by ProLogis Parc Osaka II, a multi-tenant facility that is over 95% leased and located in Osaka, Japan. Proceeds from the financing were used to pay down the global lines of credit.
 
ProLogis owns and manages interests in over 2,500 distribution facilities spanning 475 million square feet (including properties under development) of space. In response to the economic realities of constrained credit and rapidly deteriorating industrial real estate fundamentals, ProLogis has stopped all new development starts and early-stage developments. The company is currently concentrating on increasing its liquidity and de-leveraging its balance sheet.
 
With the financing agreement, ProLogis has displayed the unique strength of its large and diversified unencumbered asset base. Shares are now attractively valued relative to peer group averages and underlying NAV. We think the company has done an adequate job of addressing debt maturities and will be able to tide over the credit crunch.
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