ProLogis European Properties launches fully underwritten convertible
preferred equity offering and u
(Thomson Reuters ONE) - NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION INTO THE UNITED STATESOR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION ORDISTRIBUTION WOULD BE UNLAWFULThis press release is not a prospectus and is not an offer ofsecurities for sale, or the solicitation of an offer to buysecurities, in the United States or in any other jurisdiction otherthan the Grand Duchy of Luxembourg and the Netherlands. Thesecurities mentioned in this press release have not been and will notbe registered pursuant to the US Securities Act of 1933, as amended.They cannot be offered or sold in the United States absentregistration or an exemption from registration. No public offer ofthe securities has been or will be made in the United States or inany other jurisdiction other than the Grand Duchy of Luxembourg andthe Netherlands.This press release may contain certain forward-looking statements.These forward-looking statements involve certain risks anduncertainties that could cause actual results to differ materiallyfrom those indicated in such forward-looking statements. The companyassumes no obligation to update any forward-looking statementcontained in this press release.News releaseProLogis European Properties launches fully underwritten convertible preferred equity offering and updates on progress with deleveraging initiativesLuxembourg - 16 November 2009 - ProLogis European Properties(Euronext: PEPR), one of Europe's largest owners of moderndistribution facilities, announced today that it continues to makesignificant progress with its deleveraging activities and has updatedits Q3 2009 financial results following the recently completedportfolio revaluation required as part of these initiatives."It has been over a year since the start of the financial crisis andI am pleased to say that PEPR has acted decisively to create andimplement an action plan to steer the business through thischallenging environment," said Peter Cassells, chief executiveofficer of PEPR. "Our primary objectives were to address ?1.3 billionof debt maturities in 2009 and 2010, to reduce balance sheet risk andto increase the business' financial flexibility. We have madesignificant progress on all these initiatives and whilst there isstill some work to do, we are confident that we have placed thebusiness on a more secure footing for the future."Deleveraging initiativesConvertible preferred equityToday, PEPR announced a fully underwritten offering to existinginvestors of ?61 million of new equity in the form of perpetualconvertible preferred equity. PEPR intends to use net proceeds fromthe offering to reduce outstanding debt and for general corporatepurposes.The Preferred Units will be offered at ?5.93, a price which is equalto the revised net asset value per ordinary unit as at 30 September2009. Existing ordinary unitholders will be allocated onepreferential subscription right ("PSR") for each ordinary unit heldand will be able to subscribe for two Preferred Units in exchange for37 PSRs during the 30-day subscription period and payment of thePreferred Unit subscription price. The Preferred Units will initiallypay an annual dividend of 10.5%, payable quarterly, which may bedeferred for prudent amortisation of debt.The Preferred Units may be converted into PEPR ordinary units at thediscretion of holders at any time and may be redeemed at the issuer'sdiscretion after seven years or within 24 months if there is a changeof legal form of PEPR and if certain conditions are met. Automaticconversion 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 andunderwriter for the offer. An affiliate of ProLogis (NYSE: PLD) hascommitted to a sub-underwriting arrangement for the entire amount ofany unsubscribed PSRs.Covenant amendmentsOn 13 November 2009, PEPR received the majority approval requiredfrom its banking group to amend certain covenants within its ?900million senior unsecured credit facility. The consolidated tangiblenet worth covenant will be reduced to ?1.0 billion from ?1.1 billioncurrently, upon completion of the convertible preferred equity raisefor at least ?60 million. In addition, a further equity raise of atleast ?60 million would reduce the consolidated tangible net worthcovenant to ?900 million, providing PEPR with additional headroom towithstand further deterioration in the value of its portfolio. Theamendment also removes the restriction on PEPR to make preferreddividend payments, provided these payments do not exceed 50% ofdistributable cash flow.Suspension of dividendsThe PEPR Board suspended dividend payments with immediate effect inDecember 2008, thereby improving liquidity within the business aswell as deleveraging the business. Since that date, PEPR hasutilised the ?118.2 million of operational cash flow retained withinthe business to reduce outstanding debt.DisposalsIn December 2008 and February 2009, PEPR sold its investment andassociated future funding obligations in ProLogis European PropertiesFund II ('PEPF II) for gross proceeds of ?58.1 million. Whilst thesedisposals were achieved at a discount to book value, they werecompleted 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 ofasset sales during 2009 and has completed two portfolio disposalsproviding over ?187 million of net proceeds. In May 2009, PEPR agreedto dispose of a portfolio of nine stand-alone distribution facilitiesin Germany and The Netherlands. Net proceeds of ?114.5 million havebeen received, with a further ?3 million held in escrow which isexpected to be received during the fourth quarter once agreed closingconditions are met. In addition, in June 2009, PEPR disposed of fivedistribution facilities in the UK, generating net proceeds of £63.1million. Given the progress made with other deleveraging initiatives,PEPR does not intend to dispose of additional assets as a means ofreducing outstanding debt at this point in time. Any future disposalswill be part of PEPR's proactive asset management programme.Debt refinancing and repaymentDuring 2009, PEPR has refinanced or extended ?269 million of secureddebt, reducing short-term debt maturities, creating a balancedmaturity 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 invarious stages of review, approval and documentation. PEPR is focusedon closing these expediently to eliminate remaining 2010 maturitiesand as such has repaid ?359.1 million of the remaining CMBS debt on 5November, releasing ?482.9 million of associated secured assets intothe unsecured asset pool.Through a combination of retained dividends, asset sales, newfinancing packages and a ?244.0 million drawdown under its unsecuredcredit facility, PEPR has repaid ?818.6 million of debt maturing in2009 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. Proceedsfrom the offering, completion of new financings, operational cashflow and potential further equity issuances will be more thansufficient to meet these maturities and overall working capitalrequirements.Portfolio revaluationAs part of the offering of convertible preferred units, PEPR revaluedthe entire portfolio as at 30 September 2009. Net market valuedecreased 4.1%, excluding foreign exchange adjustments, from theprevious valuation in June 2009. The overall net market value,including the foreign exchange impact, decreased 5.0%, to ?2,843.7million from ?2,994.1 million at 30 June 2009.All markets recorded negative valuation movements over the threemonths to September 2009, with property values in continental Europefalling 4.9% compared to the UK which remained roughly flat. CentralEurope suffered the largest decline of 7.2%, to ?445.6 million,whilst property values in Northern Europe and Southern Europe fell3.3%, to ?605.3 million, and 4.8%, to ?1,334.4 million, respectively.As anticipated, the UK market has shown distinct signs ofstabilisation, with the PEPR portfolio recording a decline of only0.3% to £415.7 million from £416.8 million at 30 June 2009. Thereporting of the UK portfolio in euro was impacted by the weakeningof sterling in the third quarter of the year. The total value of theUK portfolio, including this currency impact, decreased 6.7% to?458.6 million (HY 2009: ?492.1 million).The gross yield[1] of the direct portfolio at 30 September 2009increased to 9.1% (8.5% net yield[2]) from 8.8% (8.3% net yield) at30 June 2009.An overview of the portfolio is provided on page 5.Summary of impact of portfolio revaluation on financial resultsThe ?124.1 million unrealised portfolio value decline for the thirdquarter increases IFRS losses for the nine months to 30 September2009 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 Octoberand EPRA net asset value fell to ?6.74 per unit, from ?6.82 per unitreported previously.+---------------------------------------------------------------------------------------------------------------------+|KEY FINANCIAL METRICS ||---------------------------------------------------------------------------------------------------------------------|| ||---------------------------------------------------------------------------------------------------------------------||(Unless otherwise stated, amounts are expressed in thousands of euros) ||---------------------------------------------------------------------------------------------------------------------|| Year ended | | | Nine months ended ||--------------+---+-------------------------------------+------------------------------------------------------------|| 31 Dec. 2008 | | | 30 Sept. 2009 | | 30 Sept. 2009 | | 30 Sept. 2008 ||--------------+---+-------------------------------------+------------------+---+-----------------+---+---------------|| | | | Post revaluation | | Pre revaluation | | ||--------------+---+-------------------------------------+------------------+---+-----------------+---+---------------|| | | | | | | | ||--------------+---+-------------------------------------+------------------+---+-----------------+---+---------------|| ?(3.03)| |IFRS earnings/(losses) per unit | ?(1.67)| | ?(1.11)| | ?(0.01)||--------------+---+-------------------------------------+------------------+---+-----------------+---+---------------|| ?0.67| |EPRA earnings per unit | ?0.46| | ?0.46| | ?0.52||--------------+---+-------------------------------------+------------------+---+-----------------+---+---------------|| | | | | | | | ||--------------+---+-------------------------------------+------------------+---+-----------------+---+---------------|| ?0.72| |Distributable cash flow per unit[3] | ?0.46| | ?0.46| | ?0.57||--------------+---+-------------------------------------+------------------+---+-----------------+---+---------------|| | | | | | | | ||--------------+---+-------------------------------------+------------------+---+-----------------+---+---------------|| ?7.38| |IFRS net asset value per unit | ?5.93| | ?6.48| | ?6.48||--------------+---+-------------------------------------+------------------+---+-----------------+---+---------------|| ?8.02| |EPRA net asset value per unit | ?6.74| | ?6.82| | ?11.73|+---------------------------------------------------------------------------------------------------------------------++--------------------------------------------------------------------------------------------------------------------+|SUMMARY OF FINANCIAL DEBT COVENANTS ||--------------------------------------------------------------------------------------------------------------------|| ||--------------------------------------------------------------------------------------------------------------------|| | Limit | | 30 Sept. 2009 | | 30 Sept. 2009 ||--------------------------------------------------+--------------------+---+------------------+---+-----------------|| | | | Post revaluation | | Pre revaluation ||--------------------------------------------------+--------------------+---+------------------+---+-----------------||Unsecured debt: | | | | | ||--------------------------------------------------+--------------------+---+------------------+---+-----------------||?900m unsecured facility | | | | | ||--------------------------------------------------+--------------------+---+------------------+---+-----------------||Leverage |less than 60% | | 57%| | 55%||--------------------------------------------------+--------------------+---+------------------+---+-----------------||Fixed charge coverage |at least 1.5x | | 2.1x| | 2.1x||--------------------------------------------------+--------------------+---+------------------+---+-----------------||Unencumbered interest coverage |at least 1.5x | | 2.0x| | 2.0x||--------------------------------------------------+--------------------+---+------------------+---+-----------------||Net Worth (excluding intangible assets) |at least ?1.1bn[4] | | ?1.2bn| | ?1.3bn||--------------------------------------------------+--------------------+---+------------------+---+-----------------||Unsecured debt as % of unsecured assets |less than 65% | | 59%| | 57%||--------------------------------------------------+--------------------+---+------------------+---+-----------------|| | | | | | ||--------------------------------------------------+--------------------+---+------------------+---+-----------------||?500m 2014 Eurobond | | | | | ||--------------------------------------------------+--------------------+---+------------------+---+-----------------||Secured debt as % of total assets |less than 40% | | 22%| | 21%||--------------------------------------------------+--------------------+---+------------------+---+-----------------|| | | | | | ||--------------------------------------------------+--------------------+---+------------------+---+-----------------||Fonds commun de placement structure: | | | | | ||--------------------------------------------------+--------------------+---+------------------+---+-----------------||Loan to value (total debt as percentage of gross | | | | | ||portfolio value) |less than 60%[5] | | 58.1%| | 55.7%||--------------------------------------------------+--------------------+---+------------------+---+-----------------|| | | | | | |+--------------------------------------------------------------------------------------------------------------------+Consolidated financial statements for the nine months ended 30September 2009 are available on the PEPR website,www.prologis-ep.com.PORTFOLIO OVERVIEWAS AT 30 SEPTEMBER 2009 Average number Average of Number % Annu- Gross Gross Average years of Number Market % of alised port- port- age to years of value of total rental folio folio Occu- of Number next to facili- ('MV') total Leasable leasable income ERV yield yield pancy facili- of lease lease ties [6] MV area area [7] [8] [9] [10] level ties leases break expiry Current 100% ? ? ? occu- occu- million 000m² million million pancy pancy yearsFrance 61 823 29% 1,590.6 32% 75.8 69.1 9.2% 9.3% 99.0% 8.3 73 2.5 5.7Italy 18 261 9% 522.7 11% 24.6 21.5 9.4% 9.8% 96.1% 9.3 18 5.2 5.7Spain 13 251 9% 309.5 6% 20.3 20.3 8.1% 8.1% 99.8% 6.8 21 3.5 5.0Southern 92 1,335 47% 2,422.8 49% 120.7 110.9 9.0% 9.2% 98.5% 8.1 112 3.2 5.6Belgium 5 51 1% 98.3 2% 4.4 4.1 8.6% 8.6% 100.0% 5.3 5 3.3 9.1Germany 20 223 8% 328.0 7% 20.2 19.3 9.1% 9.3% 98.0% 5.3 41 2.5 3.5Nether-lands 20 242 9% 378.5 8% 23.4 21.8 9.7% 10.4% 94.0% 9.3 33 2.1 3.8Sweden 4 88 3% 130.4 2% 7.7 6.6 8.7% 8.7% 100.0% 14.6 4 8.0 9.4Northern 49 604 21% 935.2 19% 55.7 51.8 9.2% 9.6% 96.9% 8.2 83 3.1 4.9CzechRepublic 12 93 3% 180.4 4% 8.1 7.8 8.7% 10.3% 84.7% 6.5 31 2.2 2.4Hungary 14 100 4% 182.1 4% 9.2 8.1 9.2% 10.2% 88.8% 6.4 33 2.6 4.8Poland 26 253 9% 494.5 10% 22.3 21.2 8.8% 9.5% 92.5% 7.3 77 2.6 3.1Central 52 446 16% 857.0 18% 39.6 37.1 8.9% 9.8% 90.1% 6.7 141 2.5 3.3UK 39 459 16% 705.0 14% 44.0 40.3 9.6% 9.7% 95.6% 7.7 37 4.9 8.0TOTAL 232 2,844 100% 4,920.0 100% 260.0 240.1 9.1% 9.8% 96.3% 7.9 373 3.4 5.5Vacant space (at ERV per m²) 8.3 248.4[1] Annualised rental income expressed as a percentage of net marketvalue i.e. before deduction of purchasers' costs[2] Annualised rental income expressed as a percentage of grossmarket value i.e. before deduction of purchasers' costs[3] In December 2008, PEPR suspended future dividend payments. Q42008 and all subsequent quarters' distributable cash flow hastherefore been retained in the business[4] To be reduced to ?1.0 billion upon completion of the convertibleequity raise for at least ?60 million[5] Can be exceeded up to 65% for a maximum of six months[6] An independent revaluation of the portfolio was conducted as at30 September 2009. In accordance with IFRS fair value accounting,valuations are reported net i.e. after deduction of purchasers' costs[7] Annualised rental income means the estimate of annual incomebased on the gross rental income for leases in place as at the latestvaluation date based on rates effective at that date and on theassumption that rental income from such leases will continue to bereceived for the whole of the financial year. It does not take intoaccount lease terminations, renewals, replacement of customers orother changes in rent levels in existing leases[8] ERV refers to the Estimated Rental Value calculated by theindependent third-party appraisers as at the latest valuation date[9] Annualised rental income on occupied portfolio expressed as apercentage of open market value[10] Annualised rental income on occupied portfolio plus ERV onvacant space expressed as a percentage of open market value -Ends-For further information, please contact:Investor relationsProLogis European PropertiesJennifer van der Eem+44 207 518 8708jvandereem(at)prologis.comMediaM:CommunicationsEd Orlebar / Charlotte McMullen+44 20 7920 2323 or 7920 2349orlebar(at)mcomgroup.com / mcmullen(at)mcomgroup.comAbout ProLogis European Properties (PEPR)ProLogis European Properties, or PEPR, is one of the largestpan-European owners of high quality distribution and logisticsfacilities. PEPR was established in 1999 as a closed-end, real estateinvestment fund, externally managed by a subsidiary of ProLogis, aleading global provider of industrial distribution facilities. InSeptember 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 amarket value of ?2.8 billion. The portfolio has an occupancy level of96.3% and an average of 3.4 years to the next lease break or 5.5years to lease expiry.NoticeThis document does not constitute an offer to sell, or thesolicitation of an offer to acquire or subscribe for, securities ofPEPR in the United States, Australia, Canada, Japan, theirterritories and possessions, or any other jurisdiction in which suchoffer or sale of securities would be unlawful.The securities of PEPR have not been and will not be registered underthe US Securities Act of 1933, as amended (the "Securities Act").Accordingly, the securities of PEPR may not be offered or sold in theUnited States absent registration or an applicable exemption fromregistration under the Securities Act. No public offering of thesecurities of PEPR is being made in the United States.No communication or information relating to any offer or sale ofsecurities of PEPR may be disseminated to the public in jurisdictionswhere prior registration or approval is required for that purpose. Noaction will be taken that would permit an offer of securities of PEPRin any jurisdiction where action for that purpose is required, otherthan in the Grand-Duchy of Luxembourg or The Netherlands.The release, publication or distribution of this announcement incertain jurisdictions may be restricted by law and therefore personsin such jurisdictions into which this announcement is released,published or distributed, should inform themselves about, and observesuch restrictions.This announcement does not constitute a prospectus. Any offer toacquire securities pursuant to a proposed offering will be made, andany investor should make his investment, solely on the basis ofinformation that is contained in the prospectus that is madegenerally available in the Grand-Duchy of Luxembourg and TheNetherlands in connection with such offering. Copies of theprospectus may be obtained at no cost through the website of theLuxembourg Stock Exchange and the website of PEPR.Morgan Stanley & Co. International plc is acting for ProLogisEuropean Properties and for no-one else in connection with the offerof preferred units and will not be responsible to anyone other thatProLogis European Properties for providing the protections affordedto customers of Morgan Stanley & Co, International nor for providingadvice to any other person in relation to the offer or any othermatter referred to herein.http://hugin.info/139145/R/1355092/328791.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 16.11.2009 - 09:10 Uhr
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