Prologis European Properties AGM Statement
Annual General Meeting Statement
Wednesday 27 May 2009
Luxembourg - 27 May 2009 - Peter Cassells, 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 from 09:00am CET / 08:00am BST at Sofitel
Luxembourg Hotel, 6 rue du Fort Niedergruenewald, Quartier EuropÃ©en
Nord, Plateau de Kirchberg, L-2015, Luxembourg.
In February this year, PEPR reported strong operating performance for
2008, demonstrating the benefit of invaluable customer relationships
which ultimately deliver industry-leading occupancy levels across
Europe. In addition, we have made difficult decisions to safeguard
the investments of our unitholders in an environment dominated by
credit dislocation and declining asset values. We suspended
dividends for the foreseeable future, immediately improving liquidity
and took the significant step of disposing of our current and future
investment in ProLogis European Properties Fund II. This disposal,
whilst at a discount to book value, significantly improves future
liquidity by removing the requirement to invest a further Â¤522
million by August 2010.
Our first quarter results, announced in April, were in line with our
forecasts in spite of the continued turmoil in the financial markets
and the uncertain economic outlook, reflecting the secure cash flows
derived from our portfolio and the relatively stable nature of the
logistics real estate market. We have continued to make good progress
with our actions to improve financial flexibility and overall
liquidity within the business. We repaid early Â¤335.9 million of
secured debt, crystallising Â¤43 million of cash flow from the
unwinding of related derivates and releasing over Â¤550 million of
properties into our unsecured asset pool. We have successfully agreed
terms on Â¤235 million of new secured bank loans, subject to final
credit committee approval, and have negotiations underway with a
number of other liquidity sources for further funding. Furthermore,
we have agreed the disposal of a portfolio of assets, generating some
Â¤115 million of net proceeds.
We remain in a period of turbulence in the consumer, financial and
real estate markets, with concerns over the global economic slowdown.
Investment demand remains limited and focused on prime buildings in
prime locations, with the resultant lack of transactional evidence
leading to uncertainty over portfolio values. However, we are
beginning to see increased levels of investment transactions in the
UK and renewed activity in our sector in continental Europe.
Although it is still too early to say to what extent this is an
indication of confidence returning, it is nonetheless encouraging.
Occupier demand for distribution space has weakened following a
slowing macro-economic climate across all markets, with customers
taking longer to make decisions and requesting shorter, more flexible
leases. Rental levels are under downward pressure as reduced
economic activity leads to a growing need for occupiers to minimise
operating costs. However, this requirement to reduce costs combined
with the lack of new supply of comparable distribution space has led
to an increase in customers remaining in place.
PEPR's future priorities
Our immediate priorities are a continued focus on deleveraging the
business, reducing balance sheet risk and smoothing the future debt
maturity profile. We are resolute on finalising discussions with
lenders in relation to new secured financing, on maintaining an open
dialogue with our banking partners and are making good progress with
further portfolio disposals. In addition, we are exploring all
potential deleveraging options to ensure we are well positioned for
In summary, we are pleased with our sustained operational
performance, our resilient financial results and the positive steps
made with our deleveraging initiatives, particularly given the
challenging economic environment. Our modern pan-European portfolio,
combined with strong customer relationships and local market
expertise leaves us confident of successfully managing the immediate
challenges in a difficult market.
For further information, please contact:
ProLogis European Properties +44 20 7518 8708
Jennifer van der Eem, VP Investor Relations
M:Communications +44 20 7153 1523 or 7153 1549
Ed Orlebar / Charlotte McMullen
firstname.lastname@example.org / email@example.com
About ProLogis European Properties (PEPR)
ProLogis European Properties, or PEPR, which listed on Euronext
Amsterdam on 22 September 2006, is the largest pan-European owner of
high quality distribution and logistics facilities. 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 (NYSE: PLD), a leading global provider of
industrial distribution facilities.
As at 31 March 2009, PEPR has a portfolio of 246 buildings, covering
5.2 million square metres in 11 European countries, with an estimated
net open market value of Â¤3.4 billion. The portfolio has an
occupancy level of 97.0% and an average of 3.9 years to the next
lease break or 6.2 years to lease expiry.
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