Fir Tree Partners Believes Current Offer for ProLogis European Properties FCP Undervalues Units

LUXEMBOURG, April 27, 2011 /PRNewswire/ -- Fir Tree Partners, a private investment firm that owns approximately 4.3% of the Units of ProLogis European Properties FCP, today sent the following letter to ProLogis and ProLogis European Properties management:

    
    April 27, 2011
    
    PLD International LLC as Offeror
    Attention:  Mr. Walter Rakowich
    Chief Executive Officer
    ProLogis
    4545 Airport Way
    Denver, Colorado 80239
    
    The Board of Directors of ProLogis Management s. a r. l.
    in its capacity as management company of PEPR (as defined hereafter)
    34-38 Avenue de la Liberte
    L-1930 Luxembourg.
    
    The Board of Directors of PEPR
    c/o  Mr. Geoffrey Bell
    Chairman of the Board
    ProLogis European Properties
    780 3rd Avenue, 10th Floor
    New York, NY 10017-7053

Dear Sirs:

We write to you on behalf of Fir Tree Partners (Fir Tree) with respect to the public tender offer made by PLD International LLC (PLD) on 21 April 2011 (the PLD Tender Offer) for all of the outstanding ordinary and preferred units in ProLogis European Properties FCP (PEPR or the Fund). Fir Tree Partners is a private investment firm formed in 1994 that manages over $6.5 billion in assets. Funds managed by Fir Tree hold over 8.2 million ordinary units, representing approximately 4.3% of the ordinary units of PEPR, and over 180,000 preferred units. We believe that the PLD Tender Offer is not in the best interests of PEPR or its unitholders because it does not constitute fair value for the units of the Fund.

Fir Tree believes that the PLD Tender Offer significantly undervalues PEPR units. The PLD Tender Offer has been made at a discount to the Net Asset Value (NAV) of euro 6.32 per unit determined pursuant to European Real Estate Association (EPRA) standards (the EPRA NAV), which is the valuation metric that PEPR itself uses with respect to its assets (and which is deemed to be best practice for publicly-listed European entities). In an M&A context, buyers typically pay a premium to underlying asset value to reflect the value of control and of synergies that they may achieve. Fir Tree believes that the true value of the units is higher than EPRA NAV, since EPRA NAV is a backward-looking estimate that uses current trough-cycle rents and penalizes the Fund for short lease terms. 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. A fair offer should compensate unitholders (other than PLD) for giving up this future growth.

While the offer document suggests that PLD also considered the IFRS NAV of euro 5.62 per unit, Fir Tree does not believe that IFRS NAV is an accurate representation of the value of the units either as the Fund itself has suggested in its release dated 24 January 2011 that the underlying economic impact of the recent change in deferred tax liability is only euro 0.08 per unit rather than the nearly euro 0.70 per unit implied by the IFRS NAV.

PLD also notes that its tender offer represents a premium to the unaffected closing price of the units. We believe that the previous trading price is not a valid indicator of value because PEPR's price was artificially held down by the Fund's refusal to reinstate the regular dividend. Until recently, PEPR was one of the cheapest publicly-traded real estate entities in Europe on a number of different metrics despite having a very young portfolio located in key barrier markets, an impressive list of tenants, market-leading occupancy levels, and a conservative leverage profile. The only possible reason for the gap between the NAV and trading price of PEPR units is that PEPR is one of a handful of listed entities that does not pay a dividend.

Finally, we would like to remind the members of the PEPR Board and of the board of directors of ProLogis Management s. a r. l. (collectively the Board), and in particular of the independent directors of the PEPR Board, of their fiduciary duty and obligation to act in the best interests of PEPR and in a manner consistent with maximizing value for all unitholders. We are concerned about the conflicts of interest inherent in PLD's position as both (i) the controlling shareholder of ProLogis Management s. a. r. l., the external manager of the Fund and (ii) a potential acquirer. It is not lost on us that PLD has increased its ownership of PEPR units twice after suspending the dividend, both times at a discount to EPRA NAV. Given this conflict, it is curious that the offer document invites ProLogis Management s. a. r. l. to give its advice on the PLD Tender Offer despite the fact that it is a related party.

In light of the above, we believe that the offer should be revised using best business practice and valuation methods to ensure that the holders of units are treated fairly, are afforded a fair price for their units, and are given a genuine opportunity to make an informed decision with respect to the PLD Tender Offer.

We strongly express our hope that the Board understands and takes its fiduciary duties seriously in seeking out the best possible outcome for all the unitholders. While we are prepared to be accommodating to help the process, we respectfully reserve all our rights in respect of the PLD Tender Offer. In particular, we reserve the right to resort to the competent authorities, the Commission de Surveillance du Secteur Financier and the Authority for the Financial Markets, to take action and determine the fair price for the units, which we believe would result in a higher value being paid to unitholders than the current price. In addition, we have serious doubts that the tender offer constitutes a proper tender offer governed by the Luxembourg law of 19 May 2006, since such law per se only applies to incorporated entities, not to entities like PEPR, which is a fonds commun de placement lacking legal personality of its own.

Yours sincerely,

(sig)

Aman Kapadia

Director

About Fir Tree Partners

Fir Tree Partners is a private investment firm formed in 1994 that manages over $6.5 billion in assets.