PEPR to focus on further deleveraging in 2012

Prologis European Properties (PEPR) plans to improve its credit rating in 2012 through further deleveraging, the Amsterdam-listed distribution space specialist said at the announcement of its 2011 results this week.

In line with this goal, the company said it is selling a UK logistics portfolio to US private equity firm Blackstone for EUR 180 mln. In the final quarter of 2011, PEPR sold two non-core assets for EUR 33.7 mln in the UK and Germany.

PEPR reduced its outstanding debt by EUR 28.3 mln to EUR 1.4 bn in the three months to end-December 2011, bringing its loan-to-value ratio to 46.7% by year-end. The company said it now has no outstanding debt maturities until December this year, when EUR 123.1 mln outstanding under a senior unsecured credit facility becomes due.

'Our focus for 2012 will be to improve our credit rating through further deleveraging of our business. As such, we are finalising the sale of a portfolio of assets and will continue to enhance value through selective additional capital recycling initiatives,' Peter Cassells, CEO of PEPR said. PEPR returned to an investment grade credit rating last August.

Adjusted EPRA earnings for ordinary unitholders fell to EUR 75 mln in 2011, or EUR 0.38 per ordinary unit, from EUR 85.9 mln or EUR 0.45 per ordinary unit in 2010. Rental and other property income fell nearly 7% to EUR 236.9 mln in 2011, primarily reflecting a EUR 6.3 mln reduction in rental income.

PEPR's portfolio market value decreased by 1.1% over 2011, excluding foreign exchange adjustments and disposals. The overall market value, taking into account these impacts, declined by 7.8% to EUR 2.6 bn at end-December 2010.

The company said it will retain its distributable cash flow, which fell to EUR 68.5 mln in 2011, or EUR 0.45 per unit, for the foreseeable future to further deleverage the balance sheet. However, it will pay a preferred dividend of EUR 0.159122 for the fourth quarter to holders of its Class A (1) convertible preferred units on 14 February.

Click on the link below to read: Blackstone acquires Prologis industrial portfolio for EUR 252m