PEPR books loss in Q1, reduces LTV below 45%

European distribution space specialist ProLogis European Properties (PEPR) has reported an IFRS loss of EUR 21 mln for the first quarter of 2012. This compares with earnings of EUR 12 mln for the same period in 2011.

PEPR's Q1 figures were influenced by the sale of 18 non-core assets in the UK, Germany and Poland in three transactions for a total of EUR 255 mln.

The IFRS loss was due to a EUR 28.5 mln rise in property devaluations and a EUR 17.4 mln million loss on the property disposals. This was offset by a EUR 6.9 mln deferred income tax benefit in Q1 2012 compared to a EUR 4.2 mln deferred income tax charge in the comparable period.

Adjusted EPRA earnings for ordinary unit-holders - which PEPR said provided a better guide to underlying business performance - increased to EUR 22 mln in Q1 2012 (Q1 2011: EUR 19.4 mln).

Rental and other property income for the first quarter of 2012 decreased to EUR 56.5 mln (Q1 2011: EUR 60 mln), primarily due to the loss of almost EUR 3 mln of rental income from the property disposals and a EUR 1.2 mln drop in rental income given lower market rents on new lease agreements.

Total outstanding debt at end-March 2012 came to EUR 1.1 bn, a EUR 201 mln decrease since end-December 2011. PEPR has no outstanding debt maturities in 2012.

The disposals and strong leasing activity reduced PEPR's loan-to-value ratio to below 45%. Some 41 lease transactions covering 540,900 m² were concluded in Q1 this year.

CEO Peter Cassells said: 'Portfolio occupancy and leasing activity remain high and our 80% retention rate for the quarter demonstrates the strength of our customer relationships. In addition, we have seen positive rental growth in prime markets where there is limited supply.

'During this period of ongoing economic uncertainty, we will remain focused on reducing our loan-to-value ratio further by retaining earnings, while continuing to actively manage our assets to drive cash flow.'

PEPR had a EUR 2.5bn property portfolio at end-March 2012.