ProLogis European Properties results for the quarter and nine months ended 30 September 2009
Resilient financial and operational performance and significant progress on refinancing initiatives
Luxembourg - 22 October 2009 - ProLogis European Properties (Euronext: PEPR), Europe's largest owner of modern distribution facilities, today reports results for the quarter and nine months ended 30 September 2009.

Highlights
44% of €1.3 billion debt maturities due in 2009/2010 refinanced or repaid
€226 million of secured bank loans completed during the quarter
€48 million new five-year secured bank loan completed, post quarter end
Continued high portfolio occupancy of 96.3% at 30 September
80% customer retention rate for nine months to 30 September
€27.5 million of distributable cash flow generated in Q3, in line with management guidance
Further €22.2 million received from portfolio disposal agreed in Q2 2009
Negotiations in progress with regard to over €600 million of new secured debt financings
Evaluating further capital raising options as part of overall deleveraging plan

Quarter to 30 September 2009 Nine months to 30 September 2009
EPRA earnings(1) decreased to €0.14 per unit (Q3 2008: €0.16 per unit), due to the elimination of associate losses and inclusion of associate dividends in 2008
EPRA earnings(1) per unit decreased 11.4% to €0.46 (2008: €0.52 per unit), due to the elimination of associate losses and inclusion of associate dividends in 2008

IFRS earnings of €0.14 per unit (Q3 2008: €0.09 per unit), largely due to the share of IFRS losses of an associate and deferred tax charges recorded in 2008
IFRS loss of €1.11 per unit for the period (9M 2008 loss: €0.01 per unit), due to portfolio devaluations and losses on asset sales

EPRA net asset value([1]) per unit of €6.82, a slight increase compared to 30 June 2009 (€6.74 per unit) due to retained earnings for the period
EPRA net asset value(1) per unit decreased 15%, to €6.82 over the period (2008: €8.02 per unit) as a result of portfolio devaluations and asset sales

Quarter to 30 September 2009 Nine months to 30 September 2009
IFRS net asset value per unit of €6.48 (Q2 2009: €6.40 per unit)
IFRS net asset value per unit of €6.48 (2008: €7.38 per unit)

23 lease transactions covering 217,800m2, maintaining high portfolio occupancy
57 lease transactions covering 615,800m2, compared to 60 transactions covering 479,400m2 in 9M 2008

Commenting on the results, Peter Cassells, chief executive officer of PEPR, said:

"Our financial and operational performance for the first nine months of 2009 remained resilient during the continued challenging market conditions, demonstrating our unrelenting focus on portfolio occupancy and active asset management. Both our own portfolio management activities and general logistics market trends have been in line with our guidance for the year, and we remain well placed to continue to generate strong levels of income.

"Aside from maintaining portfolio performance through the downturn in the market, our immediate focus remains on deleveraging our balance sheet, by reducing or refinancing near-term debt maturities, and improving our future financial flexibility. To that end, I am pleased to report that we have successfully completed approximately €274 million of new or extended secured debt packages to date, sold €190 million of assets and repaid approximately €459 million of debt outstanding at the end of 2008.

"2009 continues to be a testing time for the European commercial property sector. As such, in addition to our debt refinancing initiatives, we are continuing to review capital raising alternatives to provide PEPR with additional financial flexibility. The plans currently being evaluated include a possible offering of fully underwritten convertible preferred units to existing unitholders and a conversion to a SICAF structure, which would enable us to raise equity at a discount to net asset value. We intend to adopt the plan that will be most beneficial to our investors and expect to announce the plan later in the fourth quarter, once we have received the appropriate approvals."

Guidance

Management has maintained their guidance for 2009, with EPRA earnings expected to be between €0.55 and €0.60 per unit for the year. IFRS losses are expected to be in the range of €1.50 to €1.70 per unit and distributable cash flow anticipated to be between €0.55 and €0.60 per unit.

The terms of PEPR's unsecured credit facility, as amended in December 2008, prohibit cash distributions whilst PEPR remains below certain financial thresholds. Accordingly, PEPR intends to use this cash to pay down debt.

Deleveraging initiatives

In December 2008 PEPR outlined a series of initiatives to delever the balance sheet and address 2009 and 2010 debt maturities. The plan included the suspension of dividends and the use of asset sales proceeds to reduce outstanding debt, the raising of new secured debt to substantially refinance the 2010 Commercial Mortgage Backed Securities ("CMBS") maturities and requesting a maturity extension for a portion of the 2010 tranches of the €900 million unsecured credit facility.

During the first nine months of 2009, PEPR has repaid or refinanced approximately €585.5 million, or 44%, of the €1.3 billion of debt due to mature in 2009 and 2010.

In the third quarter, PEPR completed the three-year extension, to March 2013, for €126.0 million of the €151.1 million secured bank loan that was due to mature in March 2010 and finalised a new £86.1 million (€100 million) four-year secured bank loan with Eurohypo AG. PEPR also received a further €22.2 million of net proceeds relating to the agreed Dutch and German portfolio disposal taking total net proceeds from that disposal to €114.5 million. The remaining €3 million of net proceeds are held in escrow and are expected to be received during the fourth quarter as certain agreed closing conditions are met.

In October, post quarter end, PEPR entered into a new €48 million five-year secured bank loan, split into two tranches - one of SEK 332.5 million (approximately €32.5 million) and another of €15.5 million - with a German landesbank. The loan is secured on a portfolio of four prime Swedish distribution facilities and represents the first secured financing by PEPR in Sweden. It will mature in October 2014 and has a blended fixed interest rate of 5.69%.

In addition, PEPR is currently in active discussions with a number of lenders with regard to six other secured finance packages representing over €600 million of commitments. Good progress has been made on all packages during the quarter and PEPR is focused on closing these expediently to eliminate outstanding 2010 maturities. To assist in the closing of these packages, PEPR intends to repay a significant portion of the remaining CMBS debt in the fourth quarter, releasing the associated secured assets into the unsecured pool.

PEPR's banking group has agreed to relax the tangible net worth covenant in its €900 million unsecured credit facility and remove the current restriction on PEPR's ability to make dividend payments, provided PEPR raises €200 million of equity. Given the current review of alternative capital raising options, PEPR is revisiting these amendments with its banking group.

An incremental equity raise remains likely, providing PEPR with an additional source of liquidity to add to the significant progress already achieved on its deleveraging initiatives.

Under a fonds commun de placement ('FCP') structure, PEPR is restricted from raising equity at a price below net asset value ('NAV'). During the third quarter PEPR convened an Extraordinary General Meeting ('EGM') to enable unitholders to vote on the conversion of PEPR's legal form from the current FCP to a Société d'Investissement à Capital Fixe ('SICAF'). This conversion would improve PEPR's financial flexibility by enabling it to issue new equity at a price below NAV. In addition, the proposed conversion was also to be used as an opportunity to improve and modernise PEPR's corporate governance.

On 28 September 2009, PEPR postponed the convened EGM following objections raised by a minority of unitholders. Whilst the proxies received for the proposed conversion indicated an overwhelming level of support for the conversion, PEPR felt it prudent to hold further discussions with investors to better understand their objections and also to re-evaluate alternative capital raising options in light of the rapid improvement in both the equity and debt capital markets since the conversion was initiated.

As such, PEPR's management and advisors are currently finalising alternatives for review by the PEPR Board and approval by the Luxembourg financial supervisory authority. These plans include the possible offering of fully underwritten convertible preferred units to existing unitholders which would be executed in multiple tranches. Such an offering would be issued at PEPR's latest NAV with an appropriately sized coupon to compensate investors for the current unit price discount to NAV. To facilitate a potential offering of up to €60 million before the year end, PEPR is currently preparing a draft prospectus which will incorporate a full portfolio valuation review as at 30 September 2009.

PEPR has not ruled out a potential conversion to a SICAF with a subsequent equity issuance at a price below NAV, if required. The management team and PEPR Board intend to adopt the plan that will be most beneficial to investors.

Regardless of which route is taken, PEPR remains fully committed to good corporate governance and confirms its intention to implement the suggested corporate governance enhancements under the recently proposed SICAF conversion at PEPR's next scheduled general meeting.

Market outlook
The pan-European economy appears to be reaching the bottom of the slump, although recovery in the real estate markets is expected to lag the economic recovery. Occupancy rates, rental levels and property values have all fallen during 2009.

Investment demand remains limited, with transaction volumes running at less than half the levels of the corresponding period last year. As such there are too few transactions to gauge property valuation movements with a high degree of precision, although property values in the UK have shown distinct signs of improvement with yields compressing since Q2 2009. Yields in Northern Europe appear to be stabilising. However, Southern and Central Europe values are still declining, albeit at a slower pace.

Occupier demand for distribution space remains weak, with pan-European market occupancy estimated to have fallen some 270 basis points since mid 2008. However, leasing market conditions vary widely and in general demand has continued to grow at a subdued pace, particularly in Northern and Southern Europe. Lease terms are becoming increasingly favourable to occupiers, resulting in continued pressure on rental levels, particularly in areas with competing space.

In this environment, PEPR's high-quality pan-European portfolio which is leased to a diverse customer base, and proactive asset management has enabled it to maintain its defensive position and to continue to deliver strong operational performance in these challenging markets.