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Prologis European Properties (PEPR) will continue to address its liquidity concerns and focus on debt refinancing this year, according to the group's newly appointed CEO Peter Cassels.

The distribution facilities fund 25%-owned by US giant Prologis, reported an IFRS loss of EUR 578 mln for the year to end-December 2008. PEPR said it was suspending its dividend until 'normality returns to the market'. The measure follows a recent announcement that the firm is selling some assets to boost its finances.

Cassels told PropertyEU on Tuesday that the company has reached an agreement with banks for refinancing a EUR 335 mln facility due to be repaid in July this year. However, the group still has to work out the debt facilities due in 2010.

'The fourth quarter has been painful,' Cassels said. 'We will continue to focus on debt refinancing. We have been approached by a consortium of German banks for a refinancing of the facility maturing next year and we hope to be able to reach a deal soon for a EUR 200-275 mln loan,' he added. The company is also in talks to extend a EUR 400 mln facility with Hypo Real Estate maturing in May 2010 for another three or four years. The company has debt of EUR 699 mln maturing in the first half of 2010 and up to EUR 900 mln in December 2010.

In order to reduce its debt, PEPR has recently cut its stake to 10% from 30% in PEPF II, a private equity fund launched in August 2007. The company had committed to invest EUR 900 mln in the fund over three years.

'In this way, we are taking out an obligation to invest EUR 520 mln by August 2010,' Cassels said. The stake was sold at a 30% discount to September 2008 NAV. This month, PEPR reached a deal with six institutional investors to sell the remaining 10% in the fund at a 37% discount.

Cassels said that the company had identified about EUR 300-400 mln of property which could be sold 'to remedy the cash flow situation.' However, he added that this will not be immediately necessary. Cassels: 'With the steps we have undertaken, this is no longer necessary, which does not mean that we are not talking to people, but that's a weight off our shoulders.'

For 2009, PEPR expects a loss of EUR 0.85 to 0.90 per share, due largely to further portfolio devaluations forecast for June and December 2009. The company has seen the value of its portfolio fall by 16.9% in the course of 2008.