Gordon Keiser, chief executive of Prologis European Properties (PEPR), has responded with ‘disappointment’ after Moody’s downgraded its corporate credit rating.
Moody’s downgraded PEPR to Baa2 with a negative outlook from Baa1, citing the ‘general weakness in the commercial property market’ as its reason.
‘The downturn is expected to increase the level of customer business failure, notably in the smaller third-party logistics players space, put upward pressure on yields thereby reducing portfolio net asset value, and require the company to undertake strategic measures that were not originally planned,’ Moody’s said.
Keiser responded: ‘We are disappointed with the ratings action that Moody's has taken, particularly given the significant progress we have made to improve liquidity, strengthen our balance sheet and position PEPR for long-term success.’
He said the company had reduced future funding requirements, suspended distributions, negotiated debt covenant requirements, made progress on 2009 debt refinancing and had devised a plan to manage the company’s debt in 2010.
‘We have successfully executed on the disposal of two-thirds of our investment in ProLogis European Properties Fund II, significantly reducing future funding requirements; suspended distributions for the foreseeable future; agreed the necessary debt covenant requirements; made good progress on the 2009 debt refinancing and have devised a plan to manage the 2010 debt maturities.
‘We believe that as we continue to progress with our strategic initiatives and meet our
financial obligations under these challenging credit market conditions, we will ultimately justify a return to a more appropriate credit rating,’ he said.