A SICAF is a company which is managed by a General Partner and it is proposed that the Management Company of PEPR will act as General Partner post conversion. In addition the PEPR Board will continue its role as the Supervisory Board of the SICAF.

Following final regulatory approval of the relevant disclosure documents, PEPR intends to call an Extraordinary General Meeting (‘EGM’) for its investors to vote on the conversion proposal. The Convening Notice of EGM and a letter to investors concerning the proposed conversion, together with a Draft Information Memorandum will be sent to investors once regulatory approval is obtained. These documents will then be available on the PEPR website, www.prologis-ep.com. The Draft Information Memorandum will be issued in final form following the successful implementation of the proposed conversion.

Benefits of the proposed conversion

• Increased financial flexibility to react to any further deterioration in the real estate or credit markets by enabling PEPR to raise equity, if necessary, at a price below its net asset value per unit. This option is prohibited under the FCP structure


• Improved transparency as shareholders’ rights are enshrined in law, with greater legal precedents


• Enhanced corporate governance structure


• No impact on PEPR’s tax efficient structure


• PEPR to remain listed on Euronext Amsterdam (with no change to ISIN or indices PEPR is a component of)

Commenting on the proposed conversion, Peter Cassells, chief executive officer of PEPR, said:

“The proposed conversion into a SICAF is a prudent step to provide the management team and PEPR Board with greater flexibility to manage the future of the business. Whilst we have made significant progress with our deleveraging strategy since the beginning of the year, the weakness in the macro economic environment continues to impact the real estate and credit markets.

The proposed conversion will enable us to protect PEPR against the downside riskof further deterioration in property values and provides flexibility to address significant debt maturities of approximately €570 million in 2010.  In addition, the conversion helps position the business to exploit attractive market opportunities. As such, PEPR’s management company and Board believe the proposed conversion is in the best interests of investors as a whole and recommend that investors vote in favour of approving the conversion.”

In their capacities as investors, the PEPR Board members and ProLogis (NYSE: PLD) have indicated their intention to vote in favour of the conversion.

The conversion is subject to regulatory approval and will only be proposed to investors after regulatory approval has been obtained.

Corporate governance improvements

The management company and PEPR Board are using the conversion as an opportunity to propose certain improvements to PEPR’s corporate governance structure. Key enhancements include:

• Removal of existing voting restrictions limiting (i) the voting power of any investors to vote more than 9.9% and (ii) five or fewer investors from voting more than 50% of the units. Following conversion, each share is entitled to one vote.


• The SICAF Board will be authorised to convene and table an agenda item for an EGM.


• 10% minimum ownership threshold for shareholders to convene and/or table an agenda item for an EGM, reduced from 20% under the current FCP structure.


• New right for shareholders owning at least 10% of shares to propose a candidate for the position of Independent Board Member.


• Only Independent Board Members will participate in the nomination committee to propose successor Independent Board Members. At present, this nomination committee includes one ProLogis Board Member.


• ProLogis Board Members excluded from voting on all related party transactions involving ProLogis. At present the entire Board is entitled to vote with only limited exceptions.


• Greater authority for any one Board Member to convene and table an agenda item for a Board meeting, compared to two Independent Board Members subject to management company approval at present.

The complete Articles of Incorporation for the proposed SICAF will be included in the Draft Information Memorandum.

Morgan Stanley is acting as Financial Advisor on the conversion” (CS della Società).