PEPR Results for the quarter and year ended 31 December 2009

Thursday, 11. February 2010 09:01
News release

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 earning[1] decreased to €0.05 * EPRA earnings[1] per ordinary
per ordinary unit (Q4 2008: €0.15 unit decreased €0.13 to €0.54
per unit) due to decreased rental (2008: €0.67 per unit), due to
income, one-time CMBS termination decreased rental income, one-time
costs and the loss of dividends from CMBS termination costs and the
ProLogis European Properties Fund II loss of dividends from PEPF II,
("PEPF II"), partially offset by partially offset by lower
lower finance expenses  operating and finance expenses

* IFRS earnings of €0.04 per ordinary * IFRS loss of €1.62 per ordinary
unit (Q4 2008 loss: €3.02 per unit), unit for the year (2008 loss:
due to improving portfolio values in €3.03 per unit), related to a
Q4 2009 and losses related to PEPF slowdown in portfolio value
II in 2008  declines in 2009 and losses
related to PEPF II in 2008,
offset by losses on property
disposals

* EPRA net asset value('NAV')[1] per * EPRA NAV[1] per ordinary unit
ordinary unit of €6.15, broadly flat decreased23%, to €6.15 over the
compared to 30 September 2009 (€6.18 period (2008: €8.02 per unit) as
per unit)  a result of declining portfolio
values and asset sales, partially
offset by lower levels of debt

* IFRS NAV per ordinary unit increased * IFRS NAV per ordinary unit fell
to €5.97 (Q3 2009: €5.93 per unit)  13.6% to €5.97 (2008: €7.38 per
unit)

* 31 lease transactions covering * 88 lease transactions covering
331,600m2, maintaining high 947,300m2, compared to 82
portfolio occupancy with almost transactions covering 661,700m2
double Q4 2008 activity  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."

Guidance

EPRA earnings for 2010 are expected to be between€0.45 and €0.50 per ordinary
unit, reflecting the anticipated increase in PEPR's finance costs, preferred
dividend payments and management assumptions for rental decline and stable
occupancy levels for the year. In addition, management projections reflect an
anticipated improvement in the average sterling exchange rate.

Distributable cash flow, after payment of preferred dividends, is forecast to be
between €0.45 and €0.50 per unit. The terms of PEPR's €900 million unsecured
credit facility currently prohibit cash distributions to ordinary unitholders.
As a result, PEPR does not contemplate paying ordinary dividends in 2010,
although it intends to revert to paying an ordinary dividend as soon as it is
prudent to do so and when permitted under the terms of the €900 million
facility.

Deleveraging initiatives

In December 2008, PEPR outlined a series of initiatives to improve liquidity and
address upcoming debt maturities. The plan included the suspension of dividends
and the use of asset sales proceeds to reduce outstanding debt, the raising of
new debt to substantially refinance the 2010 Commercial Mortgage Backed
Securities ("CMBS") maturities and a maturity extension for a portion or all of
the 2010 tranches of the €900 million unsecured credit facility.

Since then, PEPR has completed and received proceeds on eight new or extended
loan agreements totalling €807.7 million, of which €554.8 million was agreed
with new lenders to PEPR. In addition, PEPR has received net proceeds of €189.1
million from portfolio sales and €54.1 million from the preferred equity raise,
whilst retaining €134.4 million of distributable cash flow.

The new loan agreements comprise €366.8 million completed and funded during
2009:

* A three-year extension, to March 2013, for €126.0 million of the €151.1
million secured bank loan with Deutsche Pfandbriefbank AG that was
originally due to mature in March 2010. The loan is secured by a portfolio
of 24 Central European distribution facilities.

* A new £86.1 million (€100.0 million) four-year secured bank loan with
Eurohypo AG. The loan is secured by a portfolio of 15 UK distribution
facilities and will mature in July 2013.

* A new five-year secured bank loan for approximately €48.0 million, split
into two tranches, with Helaba (Landesbank Hessen-Thüringen). The first
tranche is for SEK 332.5 million (approximately €32.5 million) and the
second for €15.5 million. The facility is secured by a portfolio of four
distribution facilities in Sweden, the first time PEPR has used its Swedish
assets for specific financing, and will mature in October 2014.

* A new €45.3 million three-year secured bank loan with Helaba. The loan is
secured by a portfolio of six Dutch assets and will mature in January 2013.

* A new £43.0 million (approximately €47.5 million), three and a quarter year,
secured bank loan with Crédit Agricole CIB, formerly Calyon. The loan is
secured by a portfolio of 10 UK assets and will mature in March 2013.


Plus a further €440.9 million of transactions completed since year end:

* A €300 million pan-European syndicated loan with six European lenders with
Goldman Sachs as sole arranger. The syndicate includes Deutsche
Pfandbriefbank AG (as Facility and Security Agent), AXA, BAWAG P.S.K.,
Credit Foncier de France, M&G Investments and ING Real Estate Finance. The
loan is secured by a portfolio of 39 properties located in four countries
and will mature in January 2014.

* A €74.5 million loan, of which €66.9 million has been received and a further
€7.6 million committed, with Deutsche Pfandbriefbank AG. The €66.9 million
tranche is secured by a portfolio of nine French and UK assets and will
mature in December 2013.

* A €74.0 million four-year secured loan, split into two tranches, with
Berlin-Hannoversche Hypothekenbank AG. The first tranche of €48.3 million
was received in December 2009 with the remainder received in January. The
loan is secured by a portfolio of 17 German and Polish assets and will
mature in January 2014.


In addition, PEPR has decided to reduce the principal of the €300 million
revolving portion of the €900 million unsecured credit facility by €200 million
to €100 million, saving PEPR €0.8 million in undrawn facility fees for the
remainder of 2009. This reduction is effective from 12 February 2010.

PEPR closed on two portfolio disposals during the first half of 2009, one for a
total of €119.5 million related to Dutch and German assets and one for £64.4
million for UK assets. PEPR received net proceeds of €189.1 million in relation
to these disposals.

In November 2009, PEPR launched a €61.1 million equity offerin the form of fully
underwritten perpetual convertible preferred units ("Preferred Units"). The
Preferred Units were offered at €5.93 per unit, equal to the net asset value per
ordinary unit as at 30 September 2009. The Preferred Units will initially pay an
annual dividend of 10.5%, payable quarterly, which may be deferred to allow for
the 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.

Proceeds from these activities have enabled PEPR to significantly strengthen its
Balance Sheet, which after the prepayment of €17.0 million in February 2010,
includes only €73.6 million of remaining CMBS debt to be repaid before May
2010. The next debt maturity date is December 2012. The continued retention of
distributable cash flow and the options of additional asset sales and a further
equity raise, as allowed by the Management Regulations, leave PEPR well
positioned for the future.

Portfolio revaluation

The entire portfolio was independently revalued at 31 December 2009, with net
market value decreasing 0.4%, excluding foreign exchange adjustments, from the
valuation carried out at 30 September 2009. The overall net market value,
including the impact of foreign exchange, remained broadly flat at €2,839.2
million as compared to €2,843.7 million at end September 2009.

Portfolio net market value decreased 4.5%, excluding foreign exchange
adjustments, from the usual bi-annual valuation in June 2009. The overall net
market value, including the impact of foreign exchange, decreased 5.2%, to
€2,839.2 million from €2,994.1 million at end June 2009.

The continental European assets recorded negative valuation movements over the
six months to December 2009, with an overall decline of 6.2%, to €2,345.7
million to €2,502.1 million. Property values in Central Europe fell furthest,
down 7.5% in the three months to end September 2009 and a further 2.3% to end
December 2009, driven by a reduction in estimated rental values as well as a
continued upwards yield shift of around 40 basis points.

The Northern and Southern European portfolios suffered similar valuation
decreases over the second half of 2009, declining 3.3% and 4.7% respectively in
the quarter ended 30 September 2009 and a further decline of 2.0% and 1.2% by
the end of the year. The key drivers for this were falling rental values in
Southern Europe and a further repricing of shorter dated income across the
portfolio.

The UK witnessed a sharp correction in values in the second half of the year,
remaining roughly flat at £415.7 million in the three months to 30 September
2009 and increasing 5.5% to £439.2 million by the end of 2009, driven by
improving market sentiment and strong demand from institutions, UK retail funds
and overseas investors. The weakening of the sterling exchange rate during the
second half of 2009 impacted these improved valuations, with the total value of
the UK portfolio increasing only 0.3%, to €493.5 million from €492.0 million at
end June 2009.

Reflecting these valuation declines, the gross yield[2] of the portfolio at 31
December 2009 increased to 9.1% (8.7% net yield[1]) from 8.8% (8.3% net yield)
at 30 June 2009.

Portfolio performance

ProLogis (NYSE: PLD), PEPR's external manager, has maintained strong leasing
momentum during the fourth quarter, with 31 lease transactions covering 331,600
square metres being completed. Three leases, covering 47,900 square metres, are
new leases in Italy, Poland and Spain. A further two leases were expansions,
adding 4,400 square metres to existing customers' supply chains. The remaining
26 leases were lease renewals with customers such as Eurofred, Geodis, Goodyear
Dunlop, Iron Mountain, Johnson & Johnson and L'Oreal.

These transactions resulted in a weighted average rental decline of 8.5% over
the expiring rental level and an average of 3.4 years to lease break, or 5.9
years to lease expiry on the new leases. These are in line with market rental
decreases of between 5-15% across the markets and are encouraging given strong
occupier demand for shorter leases during the downturn.

However, the final quarter of the year also saw three of PEPR's customers
default on their leases, totalling 40,200 square metres or 0.8% of annualised
rental income. These defaults were anticipated and had been fully provided for.
PEPR remains focused on monitoring customer performance to minimise future risk.
Total accounts receivable from customers for 2009 decreased to €46.9 million
from €63.2 million at 30 September 2009 and from €60.1 million at 31 December
2008. At the end of 2009, PEPR held a €2.5 million provision for bad and
doubtful debts.

Of the 76 lease breaks and expiries during 2009, covering 655,900 square metres,
only 22 were exercised representing 159,000 square metres. This resulted in an
excellent customer retention rate of 76% for the year. Furthermore, this high
retention rate has continued into 2010. Of the 36 lease breaks or expiries due
as at 31 December 2009 or during Q1 2010, covering 337,000 square metres, the
known retention rate is 60% based on agreements already concluded with
occupiers.

During the first half of 2009, PEPR agreed to dispose of a portfolio of nine
stand-alone assets in Germany and The Netherlands to Curzon Capital Partners II,
managed by AEW Europe, for €119.5 million. The portfolio comprises some 229,000
square metres of distribution space at four locations in Germany and three
locations in The Netherlands. In addition, PEPR sold five distribution
facilities, covering 79,700 square metres, in the UK to an affiliate of Harbert
European Real Estate Fund II, L.P. and Harbert European Real Estate Fund II
(Parallel), L.P. (collectively, "Harbert"), generating net proceeds of £64.4
million. The sale of both these portfolios had a €9.2 million impact on rental
income for the remainder of year and represents some €16 million on an
annualised basis.

At the end of December 2009, the portfolio comprised 232 distribution
facilities, covering 4.9 million square metres across 11 European countries with
a net market value of €2.8 billion. The portfolio risk profile remains
attractive, with occupancy at an industry-leading 96.1%, a diversified customer
base, and on average 3.2 years to next lease break or 5.3 years to lease expiry.
An overview of the portfolio is provided on page 21 of the full statement
attached.

Like-for-like portfolio

--------------------------------------------------------------------------------
LIKE-FOR-LIKE PORTFOLIO OVERVIEW

AS AT 31 DECEMBER 2009
-----------------------+------------------+-----------------+-------------------
| | 31 |
% of |31 December   |December   |31 December
+------------ +---------- +------------
Port-| | |
folio|2009 2008 Change|2009 2008 Change |2009 2008 Change
| | |
| Annualised rent | Net Open Market |
|in € per leasable | Value | Occupancy
by m2| m² | In € per m² | %
-----------------------+------------------+-----------------+-------------------
Southern[4] 49%|49.83 50.75 -1.8%| 545 639 -14.8%|98.6% 99.1% -0.5%
| | |
Northern[5] 19%|58.07 56.78 +2.3%| 632 721 -12.3%|94.5% 93.8% +0.7%
| | |
Central[6] 18%|44.84 46.94 -4.5%| 508 626 -18.9%|88.5% 95.4% -6.9%
| | |
UK[7] 14%|64.31 64.71 -0.6%| 698 737 -5.2%|98.6% 96.6% +2.0%
------+------------------+-----------------+-------------------
Total / Averages 100%|52.60 53.23 -1.2%| 577 666 -13.4%|96.1% 97.1% -1.0%
| | |

The like-for-like portfolio includes all properties owned by PEPR as at 31
December 2009.

On a like-for-like basis, average annualised rent per square metre decreased
1.2% over the year, as the increased rent and occupancy in Northern Europe we re
more than offset by reducing rents on rolling leases, particularly in Central
and Southern Europe, and increased portfolio vacancy.

Over the year, the total open market value per square metre of the like-for-like
portfolio decreased by 13.4%, with continental European countries recording
valuation decreases of between 12.3% and 18.9% and the UK showing signs of
improvement, down 5.2% on the year after having recovered 5.5% in the second
half.

Market outlook

Europe's logistics property markets appear to be approaching the bottom of the
cycle, with investment yields either stabilising or beginning to compress across
a number of markets. The movement was led by the UK, which has seen a
significant rebound in yields during the second half of 2009, with the core
markets of Western Europe also stabilising prior to the end of the year. Central
Europe may be expected to follow as investor confidence returns.

Whilst investment transactions in the logistics sector fell to around €6 billion
in 2009 from €12 billion the previous year, the volume of transactions increased
steadily throughout the year from the low point in the first quarter. With some
moderate improvement in the availability of bank financing, there is growing
evidence that more investors are returning to the market for both prime and
mid-range properties, though demand remains concentrated in the traditional core
markets.

New speculative development starts have ground to a halt across all markets and
occupancy rates in many locations have stopped slipping. Net effective rents,
however, remain under downward pressure. Looking ahead, although the majority of
the European economies are forecast to recover earlier, we do not expect to see
material improvement in the occupier markets until late 2010.

Corporate Governance

As previously announced, PEPR remains committed to implementing the corporate
governance improvements originally envisaged under the proposedsociété
d'investissement à capital fixe ('SICAF') conversion and intends to propose a
number of amendments to the Management Regulations at the 2010 Annual General
Meeting.

Key enhancements that may be implemented under the current legal structure
include the removal of voting right restrictions; lowering of the threshold to
propose items for an AGM agenda from 20% to 3% and a Board on which only
independent board members may vote on ProLogis related issues.

PEPR will evaluate a potential legal structure conversion to a SICAF once the
appropriate changes have been made to Luxembourg law.

Financial results

Earnings

IFRS earnings for the fourth quarter of €7.5 million increased exponentially
compared to the IFRS loss of €577.0 million reported for the same period in
2008, primarily due to lower portfolio fair value movements and the losses
recorded in 2008 in relation to PEPR's investment in and disposal of PEPF II. Q4
2009 IFRS earnings were negatively impacted by lower rental income, €4.9 million
of early termination fees related to interest rate swaps associated with the
€376.1 million of CMBS debt repaid and prepaid during the quarter and the
write-off of €3.3 million legal structure conversion costs.

EPRA earnings, which provide a guide to underlying business performance,
decreased from €28.4 million for Q4 2008 to €10.1 million in Q4 2009. The
reduction is due to the early termination of CMBS interest rate swaps and the
receipt of €6.2 million of dividends from PEPF II in Q4 2008. In addition,
rental income declined by €7.8 million between the two periods reflecting
portfolio disposals, lower UK sourced income when measured in euro due to
sterling's decline, lower market rents on new lease agreements and the marginal
decline in portfolio occupancy. This decline was partially offset by lower
finance costs.

PEPR recorded an IFRS loss of €310.6 million for 2009, compared to a loss of
€577.9 million for 2008, the difference primarily reflecting the €282.4 million
of losses recorded in relation to PEPR's investment in and disposal of PEPF II
during that year. 2009 IFRS results were negatively impacted by €42.6 million of
losses on property disposals, lower rental income, €10.0 million of early
termination fees related to interest rate swaps associated with CMBS debt repaid
during the year and a €3.3 million write-off of legal structure conversion
costs. These impacts were partially offset by a lower unrealised portfolio
valuation decline, lower operating and finance costs and an increased tax
benefit as compared to 2008.

EPRA earnings for the year decreased 18.8% to €103.6 million from €127.7 million
in 2008, due to a €26.9 million decrease in rental income and the €10.0 million
early termination of CMBS interest rate swaps, partially offset by lower
operating and finance costs for the year. In addition, 2008 included the receipt
of €15.9 million of dividends from PEPF II.

A reconciliation between IFRS and EPRA earnings is shown on page 14 of the full
statement attached.

Total revenue

Fourth quarter rental and other property income fell by €7.9 million to €63.7
million (Q4 2008: €71.6 million), primarily related to the loss of €4.5 million
of rental income from the portfolio sales, a €1.2 million fall in UK sourced
income when measured in euro and a further element due to declining rents on new
lease agreements and declining occupancy levels.

Rental and property income for the year fell by 9.4% to €265.8 million (2008:
€293.3 million), as a result of the loss of €9.2 million of rental income from
the portfolio sales and a €7.0 million fall in UK sourced income when measured
in euro, with the remainder due to the decrease in rental levels over the year
and the modest decline in portfolio occupancy. In addition, as previously
reported, 2008 included a €9.4 million non-recurring adjustment relating to
rental income originally agreed when the properties were acquired and ultimately
settled in 2008.

Operating expenses

Total operating expenses comprise the cost of operating the portfolio and
managing PEPR as a listed real estate fund.

Cost of rental activities includes ground rents paid, property management fees,
the provision for bad debt and other non-recoverable property related expenses.
The cost of rental activities remained broadly flat in Q4 2009 at €7.0 million
as compared to Q4 2008 (€7.3 million).

For the year as a whole, cost of rental activities decreased 18.5 % to €26.4
million (2008: €32.4 million) largely as a result of €3.2 million of bad debt
expense being recorded in 2008 in relation to customers defaults, compared to
€1.3 million in 2009. In addition, property management fees declined 19.7%, to
€14.7 million for the year (2008: €18.3 million) as they are directly correlated
to gross portfolio value which has been impacted by portfolio disposals and
valuation movements.

Fund expenses comprise the non-property related costs associated within our
business, including fund management, custodian and professional fees. These
expenses increased by €3.4 million to €6.5 million in Q4 2009 primarily due to
the write-off of €3.3 million of legal structure conversion costs.

For the year, fund expenses increased by €1.8 million to €14.1 million,
primarily due to the write-off of legal structure conversion cost, partially
offset by the €1.0 million non-reclaimable VAT expense recorded in 2008.
Underlying fund management fees declined €1.2 million, to €4.9 million from €6.1
million in 2008. These fund management fees are directly correlated to the gross
market value of the portfolio.

Profit/(loss) on disposal of investment properties

Net loss on disposal of €42.7 million for 2009 relates to the two completed
portfolio disposals. The first, nine Dutch and German assets sold to AEW and the
second the disposal of five UK assets to Harbert.

Property fair value movements

Total property fair value movements for Q4 2009 resulted in a small net loss of
€15.0 million compared to a net loss of €370.6 million recorded in Q4 2008.
Apart from the improvement in market conditions in the latter part of 2009
compared to 2008, this difference also reflects the additional portfolio
revaluation completed at 30 September 2009, where the portfolio fair value fell
by a net €124.1 million during the third quarter. On a like-for-like basis,
total portfolio value movement for the second half of 2009 resulted in a net
loss of €139.1 million compared to the net loss for the corresponding period in
2008.

Total property fair value movements for 2009 resulted in a net loss of €445.8
million, comprising €476.3 million of revaluations losses, partially offset by
€6.9 million of revaluation gains and a €23.6 million reduction in associated
provision for purchasers' costs.

Further details on the portfolio valuation movements are provided in
thePortfolio revaluation section on page 4 of the full statement attached.

Financing

Interest income for the year decreased to €2.4 million from €5.3 million in
2008, driven by lower levels of cash and lower interest rates received on
deposits during the period, offset by the receipt of a €1.3 million dividend
from PEPF II in Q1 2009.

Finance costs for the period, comprise interest expense, debt amortisation
charges and foreign exchange gains/losses.

--------------------------------------------------------------------------
FINANCE EXPENSE


--------------------------------------------------------------------------
(Unless otherwise stated, amounts are expressed in thousands of euros)

  Year ended 31 December

  2009 2008

Interest expense 96,173 108,321

Amortisation of initial borrowing costs 10,524 6,403

Net foreign currency (gains)/losses 1,092 1,400
----------- -----------------
  107,789   116,124


--------------------------------------------------------------------------


Interest expense for the year decreased 11.2% compared to 2008, primarily
related to the repayment of €793.5 million of CMBS debt during the year and the
low floating interest rate associated with the €900 million unsecured credit
facility, partially offset by increased borrowing during 2008 to invest in PEPF
II. Average interest rates have declined from 5.3% in 2008 to 4.6% in 2009. In
addition, the 2009 charge includes €10.0 million of early termination fees on
interest rate swaps associated with CMBS debt repaid during the year.

Amortisation charges increased by €4.1 million in 2009 as a result of €1.1
million of accelerated amortisation related to the early retirement of CMBS
debt. In addition, PEPR incurred fees relating to the €366.8 million of new or
extended debt facilities completed during the year and the tangible net worth
covenant amendments in the €900 million unsecured credit facility.

ProLogis European Properties Fund II ("PEPF II")

PEPF II is a private equity fund, established by ProLogis, to acquire assets
from both ProLogis' development pipeline in Europe and from third-parties. In
August 2007, PEPR committed to invest €900 million over a three-year period in
PEPF II for a 30% stake.

In December 2008 and February 2009, PEPR sold its entire investment and
associated future funding obligations in PEPF II, receiving cash proceeds of
€58.1 million and eliminating future funding obligations of €522 million. As a
result of this transaction, PEPR has no stake in PEPF II and no future funding
obligations.

PEPR received a pro-rata distribution of €1.3 million from PEPF II for the first
quarter of 2009.

Debt structure

PEPR's financing structure utilises a mix of secured and unsecured debt sources.
At the end of 2009, 31% of outstanding debt was secured against specific pools
of assets with no recourse to the security of other debt or assets elsewhere
within the business.

PEPR has a number of financial debt covenants within its credit facilities. At
the end of December 2009, PEPR was in compliance with all covenants.


--------------------------------------------------------------------------------
SUMMARY OF FINANCIAL DEBT COVENANTS


--------------------------------------------------------------------------------
Limit 31 Dec. 2009   30 Sep. 2009

Unsecured debt:

€900m unsecured credit facility

Leverage less than 60% 55% 55%

Fixed charge coverage a least 1.5x 2.0x 2.1x

Unencumbered interest coverage a least 1.5x 2.0x 2.0x

Net Worth (excluding Intangible
assets) at least €1.0bn €1.2bn €1.3bn

Unsecured debt as % of
unsecured assets less than 65% 61% 57%



€500m 2014 Eurobond

Secured debt as % of total
assets less than 40% 17% 21%



Fonds commun de placement
structure:

Loan to value (total debt as
percentage of gross portfolio
value) - see page 15 less than 60%[8] 55.0% 55.7%


--------------------------------------------------------------------------------

In addition to the covenants in the table above, the €500 million Eurobond is
redeemable at par if there is a change of control of PEPR and a subsequent
downgrade of PEPR's credit rating to Ba1 or below within 120 days. On 19 June
2009, PEPR was downgraded to a Ba1 rating, with negative outlook, by Moody's
Investors Service.

The only financial covenant applicable to the CMBS is that income received from
the secured assets must exceed interest cost by at least 1.5 times for each
quarter. A breach of this ratio does not constitute a default but does require
cash trapping within the breached CMBS pool until the breach is remedied. As at
15 October 2009, the most recent reporting date, this ratio was 2.8x for CMBS
III and 2.9x for the CMBS IV.

Total outstanding debt as at 31 December 2009 was €1,638.9 million, a 21.7%
decrease since year end 2008 (€2,094.1 million), primarily due to the early
repayment of €944.6 million of CMBS and secured bank debt and the elimination of
€4.25 million of the €500 million Eurobond, partially offset by €411.8 million
of new or extended debt facilities and the €73.0 million increase in funds drawn
under the €300 million revolving portion of the unsecured credit facility. At
the end of 2009, €227.0 million remains undrawn under the facility and PEPR has
€64.5 million cash on its Balance Sheet.

In January 2010, PEPR repaid all outstanding debt under the 2010 tranches of the
€900 million unsecured credit facility. In addition, with effect from 12
February 2010, PEPR has reduced the principal under the revolving portion of
that facility to €100 million from €300 million. As a result PEPR has access to
€100 million of undrawn debt facilities.

The weighted average interest rate for 2009 decreased to 4.6% compared to 5.3%
in 2008, primarily due to the 200 basis point decrease in European market
interest rates during the period. At 31 December 2009, 61% of PEPR's debt was at
fixed rates of interest, with the remaining floating debt based on EURIBOR or
LIBOR with margins varying between 215 to 270 basis points on the €900 million
unsecured credit facility.

PEPR expects the average interest rate for 2010 to increase as a result of the
175 basis point increase in the €500 million unsecured Eurobond coupon, that
came into effect on 23 October 2009, due to Moody's Investors Service credit
rating downgrade in June 2009. In addition, the average interest rate will be
impacted by the fixed rates achieved on new debt facilities and the higher
proportion of debt at fixed rates of interest.

An overview of PEPR's outstanding debt is on page 20 of the full statement
attached.

Tax

The overall tax position for 2009 is a credit of €58.0 million compared to a
credit of €48.9 million in 2009. In both years, the current income tax expense
was more than offset by large deferred tax credits related to portfolio
valuation declines recorded during those years.

The current income tax expense of €31.5 million for 2009 represents a €7.9
million increase over the 2008 (€23.6 million), of which €5.7 million relates to
income tax on capital gains generated by the AEW asset sale. Adjusting for this
one-off tax expense, the 2009 current income tax expense represents an effective
tax rate of 19.9% for the year, using EPRA pre-tax earnings as a proxy for
taxable income, compared to 15.7% for 2008.

Distributable cash flow and distributions

In December 2008, PEPR suspended future dividend payments as part of the
business' strategic initiatives to improve liquidity and as a condition for a
debt covenant amendment on PEPR's €900 million unsecured credit facility. Under
the current terms of that facility, PEPR is prohibited from paying an ordinary
dividend until either PEPR raises €200 million of aggregate new equity (of which
€61.1 million has been raised) or the facility is repaid.

Distributable cash flow of €15.4 million, or €0.08 per ordinary unit, for Q4
2009 will therefore be retained in the business to reduce debt and improve
liquidity. Distributable cash flow for 2009 equalled €0.55 per unit, or €104.2
million.

PEPR intends to revert to paying an ordinary dividend as soon as it is prudent
to do so and when permitted under the terms of the €900m unsecured credit
facility.



Earnings webcast and conference call details:

We invite you to access the live presentation webcast and conference call, held
today,Thursday 11 February 2010, at 12 noon CET, by clicking on the link
entitled ""Fourth Quarter and Year End 2009 Financial Results Webcast" located
on the homepage of our website, www.prologis-ep.com
.

To participate in the conference call please dial:

Toll free Toll

International -- +44 (0)1452 555 566

France 0805 632 056 +33 (0)1 76 74 24 28

Luxembourg 800 27512 --

The Netherlands 0800 023 5091 +31 (0) 20 717 6886

UK 0800 694 0257 +44 (0)844 493 3800

US 1 866 966 9439 --


A replay of the presentation webcast and a transcript of the call will be
available in the Investor Relations section of the PEPR
website,www.prologis-ep.com .

A replay of the conference call will be available from 4pm CET on Thursday 11
February 2010 until Wednesday 24 February 2010. To access the replay please
dial, using passcode 49982957#:

Toll free Toll

International -- +44 (0)1452 550 000

UK 0800 953 1533 +44 (0)845 245 5205

US 1 866 247 4222 --


For further information, please contact:


Investor relations Media
ProLogis European Properties M:Communications
Jennifer van der Eem Ed Orlebar / Charlotte McMullen
+44 207 518 8708 +44 20 7920 2323 or 7920 2349
jvandereem@prologis.com orlebar@mcomgroup.com
/
mcmullen@mcomgroup.com




[1] Based on EPRA (European Public Real Estate Association)Best Practices Policy
Recommendations, issued in July 2009
[2] Annualised rental income expressed as a percentage of net open market value
i.e. after deduction of purchasers' costs
[3] Annualised rental income expressed as a percentage of gross open market
value i.e. before deduction of purchasers' costs
[4]Southern Europe comprises France, Italy and Spain
[5] Northern Europe comprises Belgium, Germany, The Netherlands and Sweden
[6] Central Europe comprises the Czech Republic, Hungary and Poland
[7] terling comparative figures have been re-translated using the December 2009
exchange rate for open market values and an average 2009exchange rate for rental
income.
[8] Can be exceeded up to 65% for a maximum of six months


Please click here to view the full statement


[HUG#1383360]





PEPR Q4 2009: http://hugin.info/139145/R/1383360/342232.pdf
Related Links: 
Author:
Hugin
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