10-QPeriod: Q3 FY2011

Prologis, Inc. Quarterly Report for Q3 Ended Sep 30, 2011

Filed November 8, 2011For Securities:PLDPLDGP

Summary

Prologis, Inc. (PLD) filed its Form 10-Q for the period ending September 30, 2011, which detailed significant activities and financial results following the merger with AMB Property Corporation and the acquisition of ProLogis European Properties (PEPR). The company reported a net loss attributable to common shareholders of $118.2 million for the nine months ended September 30, 2011, a deterioration from the prior year's loss of $110.2 million. This loss was significantly impacted by merger and integration expenses, as well as a $103.8 million impairment charge related to investments in property funds. Despite the net loss, Prologis saw substantial growth in its asset base, with net investments in real estate properties more than doubling from $11.3 billion at the end of 2010 to $23.7 billion by September 30, 2011, driven by the aforementioned merger and acquisition. Rental income also saw a significant increase, reflecting the expanded portfolio. The company maintained a strong focus on strengthening its financial position, aiming to reduce leverage and improve debt coverage ratios, while also exploring opportunities to develop and acquire new properties to meet evolving customer needs in the industrial real estate market.

Financial Highlights

38 data points
Beta

Net Income

$65.84M

EPS (Diluted)

$0.12

Total Assets

$28.59B

Cash & Equivalents

$216.75M

Free Cash Flow

$120.84M

Financial Statements
Beta
Operating Expenses$389.80M
Operating Income$78.29M
Interest Expense$135.86M
Net Income$65.84M
EPS (Basic)$0.12
EPS (Diluted)$0.12
Shares Outstanding (Basic)458.26M
Shares Outstanding (Diluted)462.41M

Key Highlights

  • 1Significant increase in total assets to $28.6 billion as of September 30, 2011, up from $14.9 billion at December 31, 2010, driven by the merger with AMB and acquisition of PEPR.
  • 2Net loss attributable to common shares was $118.2 million for the nine months ended September 30, 2011, compared to a loss of $110.2 million for the same period in 2010.
  • 3Rental income for the nine months ended September 30, 2011, increased significantly to $960.8 million from $568.8 million in the prior year.
  • 4Total debt increased substantially to $12.1 billion at September 30, 2011, from $6.5 billion at December 31, 2010, reflecting debt assumed through the merger and acquisitions.
  • 5Merger, acquisition, and other integration expenses totaled $121.7 million for the nine months ended September 30, 2011, a significant cost related to recent transformative transactions.
  • 6The company repurchased $243.3 million of debt during the nine months ended September 30, 2011, as part of its strategy to manage its debt profile.
  • 7Occupancy in the consolidated operating portfolio increased to 89.4% at September 30, 2011, from 85.9% at December 31, 2010.

Frequently Asked Questions

The primary drivers for the substantial increase in Prologis' asset base were the completion of the merger with AMB Property Corporation on June 3, 2011, and the acquisition of ProLogis European Properties (PEPR) in May 2011. These transactions significantly expanded the company's real estate holdings.

The net loss of $118.2 million for the nine months ended September 30, 2011, was primarily influenced by significant merger, acquisition, and integration expenses totaling $121.7 million, as well as a $103.8 million impairment charge on investments in property funds. This represents a slight increase in net loss compared to the $110.2 million loss reported for the same period in 2010.

Following the merger and acquisition, Prologis' total debt increased significantly to $12.1 billion from $6.5 billion. The company actively managed this debt by issuing new debt, repurchasing $243.3 million of outstanding debt securities, and entering into new credit facilities totaling approximately $1.75 billion. They also aim to strengthen their financial position and reduce leverage over time.

The outlook for Prologis' operating portfolio and rental income appears positive, supported by solid fundamentals in U.S. industrial markets and continued demand in Europe and emerging markets. Rental income for the first nine months of 2011 rose to $960.8 million, reflecting the expanded portfolio and increased occupancy rates, which improved to 89.4% by September 30, 2011.