10-QPeriod: Q2 FY2009

Prologis, Inc. Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 7, 2009For Securities:PLDPLDGP

Summary

In the second quarter of 2009, AMB Property Corporation (AMB) reported a net loss of $94.3 million, or $(0.86) per diluted share, a significant decrease compared to the net income of $157.4 million, or $1.11 per diluted share, in the same period of 2008. This downturn was primarily driven by substantial real estate impairment losses totaling $161.1 million, reflecting the challenging economic environment and declining real estate valuations. Despite the net loss, AMB's core real estate operations demonstrated some resilience, with rental revenues from same-store properties decreasing by 17.1% year-over-year for the quarter, largely due to portfolio changes and lower occupancy. The company also made progress in strengthening its balance sheet by reducing debt by approximately $750 million and increasing its available credit lines. Management is focused on cost reduction, with a 33% reduction in global headcount, and is actively seeking to monetize assets to preserve liquidity.

Key Highlights

  • 1Net loss of $94.3 million for the six months ended June 30, 2009, compared to a net income of $157.4 million in the prior year period.
  • 2Significant real estate impairment losses of $161.1 million recognized during the six months ended June 30, 2009, indicating adverse market conditions.
  • 3Total revenues decreased by 17.0% to $309.4 million for the six months ended June 30, 2009, compared to $372.7 million in the prior year.
  • 4Secured and unsecured debt reduced by approximately $750 million year-to-date, improving the company's balance sheet and liquidity.
  • 5Occupancy in the owned and managed portfolio stood at 90.5% at June 30, 2009, a decrease from 95.2% in the prior year.
  • 6General and administrative expenses decreased by 17.9% due to cost reduction initiatives, including a 33% reduction in global headcount.
  • 7Parent company completed a common equity offering in March 2009, raising approximately $552.3 million in net proceeds, which were used to repay debt.

Frequently Asked Questions

The company reported a significant net loss primarily due to substantial real estate impairment losses totaling $161.1 million recognized during the period. These impairments reflect the challenging economic conditions and declining valuations of real estate assets.

AMB Property Corporation has been actively managing its balance sheet by reducing its total debt by approximately $750 million year-to-date through debt repayments and repurchases. Additionally, the company increased its available credit lines and raised approximately $552.3 million in net proceeds from a common equity offering in March 2009, which were used to repay debt, thereby enhancing its liquidity position.

As of June 30, 2009, the occupancy percentage for the company's owned and managed portfolio was 90.5%, which is a decrease from 95.2% in the same period of the prior year. This reflects the broader market conditions impacting demand for industrial real estate.

In response to the challenging economic environment, the company implemented a broad-based cost reduction plan. This plan included a significant reduction in global headcount by approximately 33% as of June 30, 2009, leading to a decrease in general and administrative expenses.