23/05/2007
Luxembourg – 23 May 2007
– Robert Watson, CEO of ProLogis European Properties
(Euronext: PEPR), Europe’s largest owner of modern
distribution facilities, will make the following statements at
today’s AGM to be held at 09:00am at Hotel Le Royal, 12
Boulevard Royal, L-2449, Luxembourg.
In February we reported a very strong set of results for 2006 and
at the beginning of May we were pleased to announce a significant
increase in adjusted earnings and rental income over the first
quarter of 2007. We believe that this increase demonstrates the
value of our strategy of focusing on top quality distribution
facilities in key logistics markets across Europe, thereby
generating capital appreciation and a high level of distributable
earnings.
At the end of 2006, we anticipated growing the business through the
acquisition of €200 million of newly constructed and leased
distribution facilities across Europe which had been developed by
ProLogis. The target for completing this process was no later than
October 2007 yet we have executed this strategic milestone of our
growth plan earlier than expected by acquiring 14 buildings for
€201.6 million on 28 March 2007. The remaining facility is due
to be acquired by the end of the second quarter.
Future growth will come through our opportunity to make major
investments in all of the ProLogis private equity funds and joint
ventures which will be established in Europe. Following its
acquisition of Parkridge, ProLogis’ existing European
pipeline contained US$2.7 billion of properties and a land bank of
some 5,300 acres, compared to an initial expected pipeline of
US$1.45 billion. This substantial increase in opportunity for PEPR
is very significant for our future growth. The strength of our
Balance Sheet provides us with the capacity to invest over
€600m in future opportunities.
In terms of market outlook, we see strong occupier demand in our
major markets as a result of the favourable economic climate in
continental Europe, strong global trade growth and the continuing
efforts of our customers to build more efficient and cost effective
supply chains. This is underlined by the portfolio’s leasing
status at 96.5% occupied. Our target markets continue to show yield
compression, although at a slower rate, and we anticipate the
return of rental growth given increasing land prices and
construction costs. Indeed, we have already seen this occurring in
our portfolio in the UK and Spain.
Looking more closely at the individual markets, France continues to
be a major pan-European logistics market and demand for modern
logistics space has been improving in the key sub-market of Paris.
In Italy, where we are 100% let, the economic environment is
improving, boding well for the future. We are seeing strong demand
in the dynamic Spanish market where there is a short supply of land
and properties, indeed we have experienced great success at
ProLogis Park Sant Boi and are virtually 100% leased in
Spain.
The UK market remains strong, with low yields relating to the
favourable lease structure, and over the past two to three years,
we have seen a period of sustained yield shift across all types of
property. We nevertheless believe that further yield shift is
unlikely. The fact that Germany has become the geographical centre
of the enlarged European Union has had a positive impact on demand
and the increased economic activity in the Belgian and Dutch
markets has also improved demand.
In Central Europe, yields have been converging with western levels
over the past few years while demand for industrial space remains
robust. The Czech Republic remains one of the most dynamic markets
and demand in Poland increased significantly in 2006 as a result of
the growing economy and an increased inflow of goods from west to
east. The Hungarian market is also becoming more stable. Demand for
prime modern warehouse space is growing and we believe that Hungary
has the potential to become a regional hub for south east
Europe.
We believe that we are well positioned for growth and with such a
promising outlook, we remain confident in our prospects for 2007
and beyond. In the short term, we are successfully integrating the
14 new assets into the portfolio and the completion of an
outstanding facility, as well as the future investment in
ProLogis’ sponsored private equity fund. On an ongoing basis,
we will continue to focus on offering a superior level of customer
service, growing our income through best in class operations and
investing in new state-of-the-art facilities.
-Ends-
For further information, please contact:
Investor relations
ProLogis European Properties +44 20 7518 8708
Jennifer van der Eem, VP Investor Relations
jvandereem@prologis.com
Media
M:Communications +44 20 7153 1523 or 7153 1549
Ed Orlebar / Charlotte McMullen
orlebar@mcomgroup.com /
mcmullen@mcomgroup.com
About ProLogis European Properties
(PEPR)
ProLogis European Properties, or PEPR, which
listed on Euronext Amsterdam on 22 September 2006, is a leading
pan-European owner of high quality logistics facilities. PEPR's
portfolio of real estate is located in 25 submarkets within 11
European countries. Established in 1999, PEPR is a real estate
investment fund (organised as a Luxembourg closed-ended fonds
commun de placement) externally managed by a subsidiary of
ProLogis, the largest U.S. based real estate investment trust that
operates a global network of industrial distribution
properties.
As at the end of March 2007, PEPR owned 292 distribution facilities
covering approximately 5.7 million square metres of leasable space.
PEPR’s customers are large third party logistic service
providers as well as a broad range of companies in the retail and
manufacturing sectors.