Prologis completes oversubscribed maximum tender offer for five series

By Susanna Moon

Chicago, Sept. 6 - Prologis, Inc. said investors had tendered about $489.4 million of notes issued by operating subsidiary Prologis, LP in the maximum tender offer by the end of the offer at 11:59 p.m. on Sept. 5.

The company accepted for purchase all of the tendered priority level 1 notes and about $220 million principal amount of priority level 2 notes with a proration factor of 64%, because the offer was oversubscribed, according to a press release.

Prologis said it did not accept any priority level 3 notes for purchase.

Investors had tendered about $488.9 million of the notes as of 5 p.m. ET on Aug. 21, the early tender date.

As previously announced, the company began two cash tender offers for a total of eight note series issued by Prologis, LP and by its indirect wholly owned subsidiary, Prologis, or the trust.

The any and all cash offer for three series of notes began on Aug. 8 and ended at 11:59 p.m. ET on Aug. 14.

Maximum offer breakdown

The breakdown for the tendered notes in the maximum tender offer is as follows:

• $127,188,000 of Prologis' $250 million 6.625% notes due Dec. 1, 2019, with priority level 1, and all of the tendered notes were accepted for purchase;

• $332,882,000 of Prologis' $540,066,000 6.875% notes due March 15, 2020, with priority level 2, and $212,696,000 of the notes were accepted;

• $11,415,000 of the trust's $20,972,000 6.875% notes due March 15, 2020, with priority level 2, and $7,273,000 of the notes were accepted;

• $17,207,000 of Prologis' $96,182,000 7.625% notes due July 1, 2017, with priority level 3, and none of these notes were accepted; and

• $685,000 of the trust's $3,818,000 7.625% notes due July 1, 2017, with priority level 3, and none of these notes were accepted.

Offer background

Prologis said on Aug. 19 that it lifted the maximum principal amount to be accepted in operating subsidiary Prologis, LP's maximum tender offer for several series of notes.

The company offered to purchase the maximum principal amount of notes that it can buy, including accrued interest, up to any difference between $750 million, revised from $500 million, and the total amount paid for the notes purchased in the first offer, the any and all offer.

As noted before, the remaining amount that may be paid in the total payment for the maximum tender offer was $419.6 million.

Pricing for maximum offer

Pricing for the maximum tender offer also was set at 2 p.m. ET on Aug. 22 using a fixed spread over the yield based on the bid-side price of the 1.375% Treasury note due July 31, 2018.

The total purchase price per $1,000 principal amount was set at $1,173.96 for the 6.625% notes, $1,186 for the 6.875% notes, $1,186 for the trust's 6.875% notes, $1,187.74 for the 7.625% notes and $1,187.74 for the trust's 7.625% notes.

The spread was 180 bps for the 6.625% notes, 185 bps for the two series of 6.875% notes and 75 bps for the two series of 7.625% notes.

The reference yield was 1.695% for all five series of notes. The tender offer yield was 3.495% for the 6.625% notes, 3.545% for the two series of 6.875% notes and 2.445% for the two series of 7.625% notes.

The total purchase price included a $30.00 early tender payment for each $1,000 of notes tendered by 5 p.m. ET on Aug. 21, the early tender date.

Holders who tendered their notes after the early deadline will receive the total payment less the early tender payment, or $1,143.96 for the 6.625% notes, $1,156 for the two series of 6.875% notes and $1,157.74 for the two series of 7.625% notes.

The hypothetical total purchase price per $1,000 principal amount was $1,193.55 for the 6.625% notes, $1,205.79 for the 6.875% notes, $1,205.79 for the trust's 6.875% notes, $1,200.58 for the 7.625% notes and $1,200.58 for the trust's 7.625% notes.

The hypothetical payment for both series of 6.875% notes was calculated based on a yield to the optional redemption date of Dec. 16, 2019 using a redemption price of par. The hypothetical payment for the other series of notes was calculated based on a yield to maturity.

The company also will pay accrued interest.

Any and all tender offers

The company previously said it paid $330.4 million as the total payment in the offer for any and all of the three other series of notes.

Pricing for each $1,000 principal amount of notes in the any and all offer was as follows:

• $1,221.93 for Prologis' $125 million 7.5% notes due June 30, 2018;

• $1,232.05 for Prologis' $386.36 million 7.375% notes due Oct. 30, 2019; and

• $1,232.05 for the trust's $10.28 million 7.375% notes due Oct. 30, 2019.

Pricing was set at 2 p.m. ET on Aug. 14 using a fixed spread over the reference yield of 1.47% based on the bid-side price of the 1.375% Treasury note due July 31, 2018. The fixed spread was 115 basis points for the 7.5% notes and 175 bps for both series of 7.375% notes.

The tender offers were conditioned on completing financing, which was satisfied when the company priced $1.25 billion of notes in 5.5- and 10-year tranches at the tight end of talk on Aug. 8, as reported by Prospect News.

Prologis said it was not soliciting consents from any noteholders in connection with the tender offers.

The dealer managers were Citigroup Global Markets Inc. (800 558-3745 or collect 212 723-6106) and Goldman Sachs & Co. (800 828-3182 and collect 212 902-5183). The information agent was Global Bondholder Services Corp. (866 470-4200 or collect 212 430-3774).

San Francisco-based Prologis is an owner, operator and developer of industrial real estate in global and regional markets.

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