ProLogis raises €214m in European property first

News

04 May 2001

The distribution specialist is looking to raise €1.5bn over the next three years in cross-border securitisations, which has become its preferred financing option

Distribution specialist ProLogis has completed the first European cross-border property securitisation, raising €213.75m. It plans to raise around €1.5bn over the next three years.

The seven-year floating rate security is backed by the lease income from 31 of ProLogis’s European distribution warehouses in the UK, France and the Netherlands. The transaction has a 48% loan-to-value ration. This is because the ProLogis European Properties Fund, which owns the warehouses, is Luxembourg regulated and cannot take up borrowings of more than 50% LTV.

The company said it could raise around €1.5bn over three years with similar transactions, which could be backed by assets in other European countries. ProLogis said securitisation was its preferred financing option for its long-term funding. It said the predictability and stability of the income from distribution warehouses made it ideal for securitisation.

The seven-year triple-A rated bond is priced at three-month Euribor plus 35 basis points. It is a bullet transaction, where the debt is not amortised over the life of the bond. JP Morgan and ABN AMRO managed the transaction.

Jamil Farooqi of JP Morgan said: “This is a landmark transaction, as the first pan-European securitisation and the first secured on distribution properties. We have developed a structure which allows assets to be pooled from different jurisdictions and will allow other transactions to follow in the same fashion.”

He said ProLogis was expecting to price a second issue in the next nine to 12 months, but that the timing would depend on its development schedule. He said he expected other companies with pan-European property assets to follow ProLogis’ example and securitse them.

The bonds were initially oversubscribed and Farooqi said there was a great appetite from European investors for CMBS. “Investors like the diversification and high quality of the assets,” said Farooqi.

ProLogis’ European properties Fund currently has a €1.02bn (US$902m) European property portfolio.

The distribution specialist is looking to raise €1.5bn over the next three years in cross-border securitisations, which has become its preferred financing option Distribution specialist ProLogis has completed the first European cross-border property securitisation, raising €213.75m. It plans to raise around €1.5bn over the next three years. The seven-year floating rate security is backed by the lease income from 31 of ProLogis’s European distribution warehouses in the UK, France and the Netherlands. The transaction has a 48% loan-to-value ration. This is because the ProLogis European Properties Fund, which owns the warehouses, is Luxembourg regulated and cannot take up borrowings of more than 50% LTV. The company said it could raise around €1.5bn over three years with similar transactions, which could be backed by assets in other European countries. ProLogis said securitisation was its preferred financing option for its long-term funding. It said the predictability and stability of the income from distribution warehouses made it ideal for securitisation. The seven-year triple-A rated bond is priced at three-month Euribor plus 35 basis points. It is a bullet transaction, where the debt is not amortised over the life of the bond. JP Morgan and ABN AMRO managed the transaction. Jamil Farooqi of JP Morgan said: “This is a landmark transaction, as the first pan-European securitisation and the first secured on distribution properties. We have developed a structure which allows assets to be pooled from different jurisdictions and will allow other transactions to follow in the same fashion.” He said ProLogis was expecting to price a second issue in the next nine to 12 months, but that the timing would depend on its development schedule. He said he expected other companies with pan-European property assets to follow ProLogis’ example and securitse them. The bonds were initially oversubscribed and Farooqi said there was a great appetite from European investors for CMBS. “Investors like the diversification and high quality of the assets,” said Farooqi. ProLogis’ European properties Fund currently has a €1.02bn (US$902m) European property portfolio.