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The Warsaw Voice » Real Estate » December 3, 2008
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Prudent Measures for Future Success
December 3, 2008   
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Ben Bannatyne, new general director of developer ProLogis, talks to Magdalena Fabijańczuk about the impact of the financial crisis on leading players on the modern warehousing market.

What are ProLogis' plans for the near future? What is the impact of the unstable financial market situation on industry growth and on your plans?
Due to the global financial crisis and impact on the availability of capital, ProLogis has taken several prudent measures to ensure we maintain our balance sheet strength, conserve capital resources and protect ProLogis' franchise and long-term strength. This includes halting new development starts for the foreseeable future, reducing our dividend and reducing our general and administrative expenses. While these changes are not easy, they will prepare the company to weather the current economic hardships worldwide and ensure it remains stable and successful in the years to come.

The supply of warehouse space in Poland is in the hands of a few large developers. Does this mean less competition and a more stable market?
With the meltdown of the global credit markets, access to capital became of paramount importance, thus creating opportunities for the larger, better capitalized developers. However, as the crisis continues to unfold, we believe the majority of companies are focused on reviewing their strategies and adjusting to the new market situation.

Built-to-suit type warehouses-planned and built for a specific customer-are becoming ever more popular. Do you think that built-to-suit is the future development trend for the warehouse industry? What is the percentage of tailor-made projects in ProLogis' investments?
In terms of ProLogis, the company has delivered more than $2.5 billion of built-to-suit space since the beginning of 2005. The global financial crisis and impact on availability of capital has severely reduced many developers' ability and desire to build on a speculative basis. Conversely, built-to-suit warehouse space enables developers to reduce financial risk while providing greater flexibility to customers. Moving forward, we believe this development trend will continue but at a much slower pace due to slowing in global trade and in many major economies.

There's growing interest not only in tailor-made large warehouses but also in small units. The possibility to lease space from 300 sq m is a novelty on our market. Is ProLogis also interested in this segment of the market?
Sizes of units depend on the building size and the market demand. ProLogis units vary from 1,950 sq m to 10,000 sq m and more.

ProLogis is often mentioned in the context of such terms as sustainability and "green warehouses." What does this mean in reality?
At ProLogis, sustainability is a business approach that balances environmental, societal and economic objectives. We consider sustainability and climate change to be fundamental issues and understand the importance of actively managing the impact of both our day-to-day operations as well as our development business. ProLogis places huge emphasis on sustainable development in all areas of its activities; from the initial site selection, the design, the construction and operation of facilities. We have tried and tested a wide variety of environmentally beneficial solutions, helping to reduce the impact of our facilities, either before construction or already in operation.

How do you carry out these goals on a daily basis?
In February 2007 ProLogis joined the Chicago Climate Exchange (CCX), the world's first voluntary greenhouse gas registry, reduction and trading system. Membership requires us to completely offset the "carbon footprint" associated with our business operations in the United States, and pledging to develop all new buildings according to LEED (Leadership in Energy and Environmental Design) standards in the United States, and to BREEAM (Building Research Establishment's Environmental Assessment Method) standards in the United Kingdom. We have also built facilities in Japan according to CASBEE (Comprehensive Assessment System for Building Environmental Efficiency).

BREEAM, LEED and CASBEE are viewed as robust and credible measures of sustainability in buildings. In regions where de facto green building standards do not exist, the company is evaluating using a global checklist it created in 2007, which combines best practices from LEED, BREEAM and CASBEE. ProLogis had 65 distribution facilities worldwide that were certified or applying to be certified, according to our data from September last year.
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