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Prologis, Inc. Annual Report, Year Ended Dec 31, 1998

Filing Date
Filed March 24, 1999
Period End
December 31, 1998
Securities
PLDPLDGP
In the record · 2016–202610-K1110-Q328-K176

PLD filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 176 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Jan ’18Jan ’18
  2. Deal closed8-K · Feb ’20Feb ’20
  3. Leadership change8-K · Feb ’22Feb ’22
  4. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed March 24, 1999. Cited figures are marked; the original filing is the authoritative source.

This 10-K is filed by AMB Property Corporation (NYSE: AMB), not Prologis, Inc. (PLD).

The filing's own cover page and text identify the registrant as AMB Property Corporation, a Maryland REIT headquartered in San Francisco, for fiscal year ended December 31, 1998. As of year-end 1998, AMB owned 620 industrial and retail buildings/centers totaling 63.6 million rentable square feet across 30 markets: 582 industrial buildings (56.6M sq ft, 96.0% leased) and 38 grocer-anchored retail centers (7.0M sq ft, 94.6% leased). Total assets were $3.56 billiona, total debt $1.37 billion, and 1998 net income $112.6 million ($1.26 diluted EPS, or $108.95 million available to common).

Funds from operations (FFO) rose to $170.4 millionb from $147.4 million on a pro forma 1997 basis, and the company paid $1.37 annually in common dividends. The most significant strategic event is the March 9, 1999 agreement to sell 28 retail centers (5.1M sq ft) to BPP Retail, a CalPERS co-investment vehicle, for $663.4 million, plus six more centers (1.5M sq ft) to Burnham Pacific Properties for $284.4 million, subject to financing confirmation. Management expects to reinvest about $520 million in industrial properties and reduce secured debt by about $100 million, and the company is shifting to an industrial-focused portfolio concentrated in hub markets.

Closings are expected between April and December 1999, and BPP Retail's liability on default is limited to its $25 millionc deposit, which creates execution risk. Leverage is moderate, with debt-to-total market capitalization of about 38%, against a stated target of 45% or less, and the company maintains investment-grade ratings.

Key risks include California concentration (about 29.5% of annualized base rent), lease rollover (13.0% of leased square footage expiring in 1999), floating-rate exposure on the $234 milliond credit facility, earthquake exposure, and REIT compliance requirements. Insider and institutional ownership is concentrated, with the three largest holders owning about 31.1% of common stock.

02—Key points

Key Highlights

  1. Portfolio: 620 buildings/centers, 63.6M sq ft, 96.0% industrial and 94.6% retail occupancy at 12/31/98; average industrial base rent $4.55/sq ft and retail $11.98/sq ft.
  2. Pending divestiture: BPP Retail (CalPERS co-investment) to buy 28 retail centers for $663.4M, and BPP to buy six more for $284.4M, with closings expected April 1999 to December 1999.
  3. Reinvestment plan: about $520M expected to be reinvested in industrial properties and about $100M of secured debt to be repaid if the BPP Retail transactions close as scheduled.
  4. Financial performance: 1998 total revenues $358.9M (up from $56.1M in 1997 on a partial-year basis), net income $112.6M, FFO $170.4M, and 1998 dividends of $1.37 per common share.
  5. Balance sheet: total assets $3.56B, total debt $1.37B (about 38% debt-to-market-cap), $400M of 7.18% senior notes issued in 1998, and $266M of undrawn credit facility capacity.
  6. Growth activity: 1998 acquisitions of about $837.5M, including 228 industrial buildings (18.8M sq ft), and a $349.9M development pipeline of 18 projects (5.8M sq ft).
  7. Key risks: California represents about 29.5% of annualized base rent, 13.0% of leased space expires in 1999, and the BPP transactions may not close as scheduled or at all.

03—Questions

Frequently Asked Questions

  1. Is this filing from Prologis (PLD)?

    No. The filing is from AMB Property Corporation (NYSE: AMB), a Maryland REIT headquartered in San Francisco. Prologis is a different company, and the document's own cover page identifies AMB as the registrant.

  2. What is the main strategic change disclosed?

    AMB agreed in March 1999 to sell 34 retail centers totaling about 6.6M sq ft for roughly $948M in aggregate ($663.4M to BPP Retail and $284.4M to Burnham Pacific Properties). The company plans to reinvest about $520M in industrial properties and reduce secured debt by about $100M, making its portfolio predominantly industrial.

  3. What are the main risks if the BPP transactions don't close?

    Net sale proceeds would not be available to fund acquisitions and development as planned, and AMB might need to borrow more or seek other financing to repay debt. BPP Retail's liability on default is limited to its $25M deposit, so the company may have limited recourse. The transactions are subject to customary closing conditions, and the BPP deal depends on a financing confirmation.

  4. How strong is the company's balance sheet and liquidity?

    At year-end 1998, debt-to-total market capitalization was about 38% (target 45% or less), total debt was $1.37B, and cash was $25.1M. The company had about $266M of available credit under its $500M unsecured facility, which carried a 6.10% rate at year-end and matures in November 2000. The company also holds investment-grade ratings (Baa1/BBB/BBB+) on its senior notes.

  5. What are the main operating and geographic risks?

    About 22% of square footage and roughly 29.5% of annualized base rent are in California, exposing the company to local economic conditions and seismic risk. About 13% of leased space expires in 1999 and 32.9% by year-end 2000, creating rollover risk. Industrial rents rose 14.3% on renewals and rollovers in 1998, but retention rates were about 75%.

04—Continue

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