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11/02/2010

This news release may contain certain ‘forward-looking statements’. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes of results expressed or implied by such forward-looking statements.

Any forward-looking statements made by or on behalf of PEPR speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their accuracy or completeness or the basis on which they were prepared. PEPR does not undertake to update forward-looking statements to reflect any changes in PEPR’s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

Information contained in this news release relating to PEPR should not be relied upon as an indicator of future performance.

ProLogis European Properties results for the quarter and year ended 31 December 2009

2009 deleveraging initiatives completed

Luxembourg – 11 February 2010 – ProLogis European Properties (Euronext: PEPR), one of Europe’s largest owners of modern distribution facilities, today reports results for the quarter and year ended 31 December 2009.

Highlights

  • 94.5% of €1.3 billion debt maturities due in 2009/2010 refinanced or repaid, primarily due to:
    • €366.8 million of new or extended secured financings completed during the year
    • €440.9 million of new secured financings completed, post year end
    • €61.1 million of convertible preferred equity raised
    • €189.1 million of net proceeds from completed asset sales

  • Record levels of leasing activity deliver sustained high occupancy of 96.1%
    • 76% customer retention rate achieved in the year

  • 5.2% valuation decrease on the portfolio since 30 June 2009 (4.5% excluding foreign exchange adjustments) with only a 0.4% decrease in Q4 2009
     
Quarter to 31 December 2009   Year to 31 December 2009
  • EPRA earnings(1) decreased to €0.05 per ordinary unit (Q4 2008: €0.15 per unit) due to decreased rental income, one-time CMBS termination costs and the loss of dividends from ProLogis European Properties Fund II (“PEPF II”), partially offset by lower finance expenses
  • IFRS earnings of €0.04 per ordinary unit (Q4 2008 loss: €3.02 per unit), due to improving portfolio values in Q4 2009 and losses related to PEPF II in 2008
  • EPRA net asset value(‘NAV’)( ) per ordinary unit of €6.15, broadly flat compared to 30 September 2009 (€6.18 per unit)
  • IFRS NAV per ordinary unit increased to €5.97 (Q3 2009: €5.93 per unit)
  • 31 lease transactions covering 331,600m2, maintaining high portfolio occupancy with almost double Q4 2008 activity
  
  • EPRA earnings(1) per ordinary unit decreased €0.13 to €0.54 (2008: €0.67 per unit), due to decreased rental income, one-time CMBS termination costs and the loss of dividends from PEPF II, partially offset by lower operating and finance expenses
  • IFRS loss of €1.62 per ordinary unit for the year (2008 loss: €3.03 per unit), related to a slowdown in portfolio value declines in 2009 and losses related to PEPF II in 2008, offset by losses on property disposals
  • EPRA NAV(1) per ordinary unit decreased 23%, to €6.15 over the period (2008: €8.02 per unit) as a result of declining portfolio values and asset sales, partially offset by lower levels of debt
  • IFRS NAV per ordinary unit fell 13.6% to €5.97 (2008: €7.38 per unit)
  • 88 lease transactions covering 947,300m2, compared to 82 transactions covering 661,700m2 in 2008

 

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

"2009 has been an incredibly active year for PEPR, with an absolute focus on maintaining industry leading portfolio occupancy, deleveraging the business in one of the toughest markets in recent history and meeting guidance targets. We are delighted to have maintained consistently high occupancy levels throughout the market downturn and delivered record levels of leasing. We completed close to 950,000 square metres of leasing transactions, resulting in an extremely high level of customer retention for the year.

"This consistently strong operational performance and our modern portfolio in a stable investment class has enabled us to attract a disproportionate share of all new commercial real estate debt financing in what remains an extremely tight and conservative credit market. Our recently announced €300 million loan is one of the first Pan-European syndicated real estate loans closed since the beginning of the global financial crisis.

"By addressing our debt maturities and paying down a significant part of outstanding debt, we have successfully completed our objectives for the year and put PEPR on a firm footing for the future. Throughout the downturn, we retained our position as the owner of the largest and most geographically diverse portfolio of logistics and distribution facilities in Europe. As the markets return to a more normalised environment, we will continue to execute our core strategy of active asset management to generate capital appreciation and a high level of distributable cash flow for our investors.

"As outlined in September, PEPR remains committed to enhancing its corporate governance and plans to propose a number of amendments to the Management Regulations at PEPR’s forthcoming AGM. In the meantime, we retain the flexibility to raise additional capital in the form of further convertible preferred units if required.

"Whilst 2009 was a testing time for the European commercial property sector, there are signs of improvement in investment market sentiment across the majority of countries and particularly the UK. However, we remain cautious over net occupier demand and short-term rental declines. Our operational priority for 2010 is to ensure we benefit from any improvements in occupier demand and continue to drive cash flow from the portfolio through proactive asset management and exemplary customer service."

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