Prologis, Inc. Quarterly Report for Q3 Ended Sep 30, 2013

Summary

Prologis, Inc. (PLD) reported its financial results for the third quarter and first nine months of 2013, ending September 30, 2013. The company demonstrated significant strategic execution, marked by substantial debt reduction and strengthening of its balance sheet. Key activities included the successful formation of new European and Japanese ventures (PELP and NPR), as well as the conclusion of several existing ventures, including the acquisition of partners' interests and property contributions. These transactions, along with a substantial equity offering in April 2013, led to a notable decrease in total debt from $11.8 billion at the end of 2012 to $9.1 billion by September 30, 2013, while increasing U.S. dollar net equity to 73%. The company's operational focus remains on capitalizing on rental recovery, where Prologis saw increasing rents on rollovers, and creating value through development. Despite a slight decrease in net operating income margin for the Real Estate Operations segment due to property contributions to new ventures, the overall business is positioned for growth. Investment management segment income also increased, driven by the new ventures and ongoing management services. Prologis is strategically navigating a recovering global logistics real estate market, anticipating further rent increases and value appreciation.

Key Highlights

• 1Prologis significantly reduced its total debt by $2.7 billion in the first nine months of 2013, from $11.8 billion to $9.1 billion, strengthening its balance sheet.
• 2The company successfully launched two new strategic ventures: Prologis European Logistics Partners (PELP) and Nippon Prologis REIT (NPR), and concluded or acquired partners' interests in four other ventures.
• 3An equity offering in April 2013 raised approximately $1.4 billion in net proceeds, contributing to debt reduction and strategic investments.
• 4Despite a slight decrease in the Real Estate Operations segment's net operating income margin due to property contributions to new ventures, overall rental income on a same-store basis increased by 1.89% year-over-year for the quarter.
• 5Investment Management segment income increased, driven by the formation of new ventures and fees earned from managing co-investment ventures.
• 6The company experienced positive rent changes on lease rollovers, with effective rental rates increasing by 6.2% in the third quarter of 2013 compared to previous rents on the same space.
• 7Prologis maintained strong liquidity with $1.4 billion available under its credit facilities as of September 30, 2013.

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