ProLogis (PLD), one of the leading global providers of distribution facilities, has recently obtained €124.3 million of secured funding to repay its debt. The financing had a blended fixed-rate coupon of 4.26% and was used to pay off the outstanding line of credit of ProLogis European Properties Fund II.
About €75 million was procured from Eurohypo AG. The three-year term loan is secured by 14 distribution facilities in Poland and has an initial loan-to-value of 60%.
The remaining €49.3 million loan was collateralized by five distribution facilities in Belgium and The Netherlands. The five-year interest-only loan from ING has an initial loan-to-value of 60%.
ProLogis owns and manages interests in over 2,500 distribution facilities, service offices and properties spanning 475 million square feet of space (including properties under development), of which approximately 2.2 million square feet are located in Canada.
The company leases its industrial facilities to over 4,400 customers, which mostly include manufacturers, retailers, transportation companies, third-party logistics providers and other enterprises with large-scale distribution needs.
Although the overall global economy is gradually improving, industrial real estate leasing conditions remained mixed with a revival in leasing activities in the U.K. and Europe, but were soft in the U.S. The continued troubles in the residential sector are also weighing on commercial property operations.
The credit crunch has widened the bid-ask spread between buyers and sellers of commercial real estate, which has caused deal volumes to fall dramatically. In addition, rise in market vacancies will impact ProLogis’ ability to push through rental rate increases. Consequently, we maintain our Neutral rating on ProLogis.
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