This press release is not a prospectus and is not an offer of securities for sale, or the solicitation of an offer to buy securities, in the United States or in any other jurisdiction other than the Grand Duchy of Luxembourg and the Netherlands. The securities mentioned in this press release have not been and will not be registered pursuant to the US Securities Act of 1933, as amended. They cannot be offered or sold in the United States absent registration or an exemption from registration. No public offer of the securities has been or will be made in the United States or in any other jurisdiction other than the Grand Duchy of Luxembourg and the Netherlands.

This press release may contain certain forward-looking statements. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements. The company assumes no obligation to update any forward-looking statement contained in this press release.

Luxembourg – 16 November 2009 – ProLogis European Properties (Euronext: PEPR), one of Europe’s largest owners of modern distribution facilities, announced today that it continues to make significant progress with its deleveraging activities and has updated its Q3 2009 financial results following the recently completed portfolio revaluation required as part of these initiatives.

"It has been over a year since the start of the financial crisis and I am pleased to say that PEPR has acted decisively to create and implement an action plan to steer the business through this challenging environment," said Peter Cassells, chief executive officer of PEPR. "Our primary objectives were to address €1.3 billion of debt maturities in 2009 and 2010, to reduce balance sheet risk and to increase the business’ financial flexibility. We have made significant progress on all these initiatives and whilst there is still some work to do, we are confident that we have placed the business on a more secure footing for the future."

Deleveraging initiatives

Convertible preferred equity

Today, PEPR announced a fully underwritten offering to existing investors of €61 million of new equity in the form of perpetual convertible preferred equity. PEPR intends to use net proceeds from the offering to reduce outstanding debt and for general corporate purposes.

The Preferred Units will be offered at €5.93, a price which is equal to the revised net asset value per ordinary unit as at 30 September 2009. Existing ordinary unitholders will be allocated one preferential subscription right ("PSR") for each ordinary unit held and will be able to subscribe for two Preferred Units in exchange for 37 PSRs during the 30-day subscription period and payment of the Preferred Unit subscription price. The Preferred Units will initially pay an annual dividend of 10.5%, payable quarterly, which may be deferred for prudent amortisation of debt.

The Preferred Units may be converted into PEPR ordinary units at the discretion of holders at any time and may be redeemed at the issuer’s discretion after seven years or within 24 months if there is a change of legal form of PEPR and if certain conditions are met. Automatic conversion occurs after seven years if certain conditions are met.

A prospectus is available on the PEPR website, www.prologis-ep.com.

Morgan Stanley is acting as financial advisor, sole bookrunner and underwriter for the offer. An affiliate of ProLogis (NYSE: PLD) has committed to a sub-underwriting arrangement for the entire amount of any unsubscribed PSRs.

Covenant amendments

On 13 November 2009, PEPR received the majority approval required from its banking group to amend certain covenants within its €900 million senior unsecured credit facility. The consolidated tangible net worth covenant will be reduced to €1.0 billion from €1.1 billion currently, upon completion of the convertible preferred equity raise for at least €60 million. In addition, a further equity raise of at least €60 million would reduce the consolidated tangible net worth covenant to €900 million, providing PEPR with additional headroom to withstand further deterioration in the value of its portfolio. The amendment also removes the restriction on PEPR to make preferred dividend payments, provided these payments do not exceed 50% of distributable cash flow.

Suspension of dividends

The PEPR Board suspended dividend payments with immediate effect in December 2008, thereby improving liquidity within the business as well as deleveraging the business. Since that date, PEPR has utilised the €118.2 million of operational cash flow retained within the business to reduce outstanding debt.

Disposals

In December 2008 and February 2009, PEPR sold its investment and associated future funding obligations in ProLogis European Properties Fund II (‘PEPF II) for gross proceeds of €58.1 million. Whilst these disposals were achieved at a discount to book value, they were completed quickly, in an extremely challenging market environment, and more importantly eliminated PEPR’s commitment to invest a further €522 million in PEPF II before August 2010.

As part of its deleveraging plans, PEPR targeted €200 million of asset sales during 2009 and has completed two portfolio disposals providing over €187 million of net proceeds. In May 2009, PEPR agreed to dispose of a portfolio of nine stand-alone distribution facilities in Germany and The Netherlands. Net proceeds of €114.5 million have been received, with a further €3 million held in escrow which is expected to be received during the fourth quarter once agreed closing conditions are met. In addition, in June 2009, PEPR disposed of five distribution facilities in the UK, generating net proceeds of £63.1 million. Given the progress made with other deleveraging initiatives, PEPR does not intend to dispose of additional assets as a means of reducing outstanding debt at this point in time. Any future disposals will be part of PEPR’s proactive asset management programme.

Debt refinancing and repayment

During 2009, PEPR has refinanced or extended €269 million of secured debt, reducing short-term debt maturities, creating a balanced maturity profile and decreasing overall balance sheet risk:

• €126.0 million three-year extension of a secured loan agreement with Deutsche Pfandbriefbank AG, from original expiry of March 2010 to March 2013.
• £86.1 million (€95.0 million) new four-year loan agreement with Eurohypo AG, secured on UK assets, maturing in July 2013.
• €48.0 million new five-year loan agreement with a German landesbank, split into two tranches –SEK 332.5 million (approximately €32.5 million) and €15.5 million. The loan is secured on Swedish distribution facilities and matures in October 2014.

There are six other financing packages totalling over €630 million in various stages of review, approval and documentation. PEPR is focused on closing these expediently to eliminate remaining 2010 maturities and as such has repaid €359.1 million of the remaining CMBS debt on 5 November, releasing €482.9 million of associated secured assets into the unsecured asset pool.

Through a combination of retained dividends, asset sales, new financing packages and a €244.0 million drawdown under its unsecured credit facility, PEPR has repaid €818.6 million of debt maturing in 2009 and 2010:

• €25.1 million pay down of Deutsche Pfandbriefbank AG secured loan principal as part of three-year extension.
• €793.5 million repayment of Commercial Mortgage Backed Securities, reducing the principal outstanding on these securities to €90.6 million from €884.1 million at the end of 2008.

As a result, total debt still outstanding in 2010 has been reduced to €634 million, the majority of which matures in December. Proceeds from the offering, completion of new financings, operational cash flow and potential further equity issuances will be more than sufficient to meet these maturities and overall working capital requirements.

Portfolio revaluation

As part of the offering of convertible preferred units, PEPR revalued the entire portfolio as at 30 September 2009. Net market value decreased 4.1%, excluding foreign exchange adjustments, from the previous valuation in June 2009. The overall net market value, including the foreign exchange impact, decreased 5.0%, to €2,843.7 million from €2,994.1 million at 30 June 2009.

All markets recorded negative valuation movements over the three months to September 2009, with property values in continental Europe falling 4.9% compared to the UK which remained roughly flat. Central Europe suffered the largest decline of 7.2%, to €445.6 million, whilst property values in Northern Europe and Southern Europe fell 3.3%, to €605.3 million, and 4.8%, to €1,334.4 million, respectively.

As anticipated, the UK market has shown distinct signs of stabilisation, with the PEPR portfolio recording a decline of only 0.3% to £415.7 million from £416.8 million at 30 June 2009. The reporting of the UK portfolio in euro was impacted by the weakening of sterling in the third quarter of the year. The total value of the UK portfolio, including this currency impact, decreased 6.7% to €458.6 million (HY 2009: €492.1 million).

The gross yield¹ of the direct portfolio at 30 September 2009 increased to 9.1% (8.5% net yield ) from 8.8% (8.3% net yield²) at 30 June 2009.

An overview of the portfolio is provided on page 5.

Summary of impact of portfolio revaluation on financial results

The €124.1 million unrealised portfolio value decline for the third quarter increases IFRS losses for the nine months to 30 September 2009 to €318.1 million, or €1.67 per unit, from €211.3 million, or €1.11 per unit, reported on 22 October 2009.

IFRS net asset value decreased by €105.3 million, or €0.55 per unit, to €5.93 per unit as compared to €6.48 per unit reported in October and EPRA net asset value fell to €6.74 per unit, from €6.82 per unit reported previously.

For further information, please contact:

Investor relations
ProLogis European Properties
Jennifer van der Eem
+44 207 518 8708
jvandereem@prologis.com

Media
M:Communications
Ed Orlebar / Charlotte McMullen
+44 20 7920 2323 or 7920 2349
orlebar@mcomgroup.com / mcmullen@mcomgroup.com

About ProLogis European Properties (PEPR)

ProLogis European Properties, or PEPR, is one of the largest pan-European owners of high quality distribution and logistics facilities. PEPR was established in 1999 as a closed-end, real estate investment fund, externally managed by a subsidiary of ProLogis, a leading global provider of industrial distribution facilities. In September 2006, PEPR was listed on Euronext Amsterdam.

As at 30 September 2009, PEPR has a portfolio of 232 buildings, covering 4.9 million square metres in 11 European countries, with a market value of €2.8 billion. The portfolio has an occupancy level of 96.3% and an average of 3.4 years to the next lease break or 5.5 years to lease expiry.

Notice

This document does not constitute an offer to sell, or the solicitation of an offer to acquire or subscribe for, securities of PEPR in the United States, Australia, Canada, Japan, their territories and possessions, or any other jurisdiction in which such offer or sale of securities would be unlawful.

The securities of PEPR have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act"). Accordingly, the securities of PEPR may not be offered or sold in the United States absent registration or an applicable exemption from registration under the Securities Act. No public offering of the securities of PEPR is being made in the United States.

No communication or information relating to any offer or sale of securities of PEPR may be disseminated to the public in jurisdictions where prior registration or approval is required for that purpose. No action will be taken that would permit an offer of securities of PEPR in any jurisdiction where action for that purpose is required, other than in the Grand-Duchy of Luxembourg or The Netherlands.

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published or distributed, should inform themselves about, and observe such restrictions.

This announcement does not constitute a prospectus. Any offer to acquire securities pursuant to a proposed offering will be made, and any investor should make his investment, solely on the basis of information that is contained in the prospectus that is made generally available in the Grand-Duchy of Luxembourg and The Netherlands in connection with such offering. Copies of the prospectus may be obtained at no cost through the website of the Luxembourg Stock Exchange and the website of PEPR.

Morgan Stanley & Co. International plc is acting for ProLogis European Properties and for no-one else in connection with the offer of preferred units and will not be responsible to anyone other that ProLogis European Properties for providing the protections afforded to customers of Morgan Stanley & Co, International nor for providing advice to any other person in relation to the offer or any other matter referred to herein.

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