Fitch: ProLogis' Ratings Unaffected by Recent Parkridge Asset Acquisition

Business Wire, Feb 13, 2007

NEW YORK -- Fitch's ratings of ProLogis (NYSE:PLD) (Issuer Default Rating [IDR] 'BBB ') are unaffected by its purchase of the industrial development business, 25% share of the retail business and the acquisition of an associated logistics development fund of the private United Kingdom (UK) based Parkridge.

The deal total of $1.03 billion (excluding earnouts) is being funded by roughly a 70/30 split of cash and stock, with the cash portion being supported by availability under its current unsecured credit facility and a new unsecured multi-currency term loan. Although the additional debt will push up leverage somewhat, Fitch expects that by year-end, leverage should revert to historical levels, through asset sales or other means. Additionally, the acquisition will slightly push down PLD's recurring EBITDA coverage ratios over the near term, and the bulking up of its overall development business could lead to higher levels of cash flow volatility. PLD's globally dispersed, relatively granular development portfolio and its ability to ratchet back its development program, due to short warehouse construction periods, offset concerns related to a potential slowdown in demand for industrial warehouses.

With this acquisition, ProLogis is enhancing its land bank and warehouse portfolio by purchasing 800 acres of land in the UK and a smaller component in Central Europe, 10 industrial projects in the construction phase and multiple initiated projects in Central Europe. The acquisition also includes a 25% share in Parkridge's retail business and a 100% stake in a Central European development fund. The transaction deepens PLD's footprint in Europe, especially in the UK where buildable land is scarce, and enhances its development team with the addition of 23 Parkridge development specialists. In line with PLD's existing portfolio characteristics, it is Fitch's understanding that the acquired warehouses in construction and those projects that were recently initiated will evidence the same attributes, such as strong quality of tenants and tenant diversity. Although retail is not a prime focus for PLD, the acquired share of the retail business provides a measure of diversity and enhances the modestly sized retail business brought over with the Catellus acquisition in September of 2005. At Dec. 31, 2006, retail related assets represented roughly 2% of total on balance sheet assets.

Headquartered in Denver, Colorado, ProLogis owns, manages, and develops, industrial distribution facilities in 80 markets in North America, Europe and Asia. ProLogis owns or manages over 422 million square feet and serves approximately 4,700 customers. The company's own asset base was approximately $15.9 billion at the end of the fourth quarter.

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