Industrial giant Prologis’ European division has posted a net asset value of €6.46 per share – down from €6.50 last quarter – in its results for the three months to March.
Prologis European Properties’ property portfolio decreased in value by 4.6% to €2.5bn, taking into account sales and the impact of foreign exchange, including a 5.2% decline in its Continental European portfolio primarily due to German and Polish asset disposals.
The Southern European portfolio value declined by 1.6% primarily driven by France where an outward yield shift in short dated income had a notable impact. Values for both the Northern European and Central European portfolios recorded a more modest decline of 0.7%.
The UK portfolio value remained broadly stable, down 0.6% from 31 December 2011 to 31 March 2012. The strengthening of the sterling exchange rate over the quarter reduced this valuation decline to 0.2% in euro terms, to €338.9m from €339.6m at 31 December 2011.
The net initial yield of the portfolio at 31 March 2012 increased to 7.6% compared with 7.5% at 31 December 2011.
During the period PEPR took in €255.1m from the sale of 18 assets in the UK, Germany and Poland. It also completed 41 lease transactions covering around 6m sq ft.
At the end of the first quarter is portfolio was 93.6% occupied down slightly from 94.4% at the end of December.
Chief executive Peter Cassells said: “We are pleased to report steady operating and financial results in what remains an unsettled macro-economic environment.
“Portfolio occupancy and leasing activity remains 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.
“A key achievement for the first quarter was the successful completion of three portfolio sales in the UK, Germany and Poland. The disposals, in line with market values, confirm our belief that we continue to value the portfolio appropriately to market. As a result of these disposals, we have made considerable progress in reducing our loan-to-value ratio, which now stands at 44.1%.
“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 managing our assets to drive cash flow.”
bridget.o’connell@estatesgazette.com
