10-QPeriod: Q1 FY2018

Prologis, Inc. Quarterly Report for Q1 Ended Mar 31, 2018

Filed April 24, 2018For Securities:PLDPLDGP

Summary

Prologis, Inc. (PLD) reported its first-quarter 2018 results, showcasing strong operational performance and strategic capital deployment. The company's core real estate operations continue to demonstrate robust fundamentals, with high occupancy rates and a notable increase in rental rates upon lease rollovers, indicating strong demand for its logistics facilities. Strategic capital initiatives also contributed significantly, with a substantial increase in strategic capital revenues driven by promote revenues, particularly from the Prologis China Logistics Venture. Financially, Prologis reported an increase in both total revenues and net earnings compared to the prior year's period, largely bolstered by significant gains on the disposition and contribution of real estate investments. The company actively managed its debt, issuing new senior notes and paying down existing term loans, contributing to a lower weighted average interest rate. Prologis maintained compliance with all financial debt covenants, reflecting a healthy balance sheet and effective financial management. The company's strategic focus on high-barrier, high-growth markets and its well-located, high-quality logistics portfolio position it favorably for continued growth and value creation.

Financial Highlights

36 data points
Beta

Revenue

$693.66M

Net Income

$365.90M

52.7% Net Margin

EPS (Diluted)

$0.68

Total Assets

$29.67B

Cash & Equivalents

$458.10M

Free Cash Flow

$349.24M

Financial Statements
Beta
Revenue$693.66M
Operating Expenses$456.55M
Operating Income$432.22M
Interest Expense$47.24M
Net Income$365.90M
EPS (Basic)$0.69
EPS (Diluted)$0.68
Shares Outstanding (Basic)532.18M
Shares Outstanding (Diluted)554.12M

Key Highlights

  • 1Total revenues increased to $693.7 million in Q1 2018 from $629.2 million in Q1 2017.
  • 2Net earnings attributable to common stockholders rose significantly to $365.9 million ($0.68 per diluted share) in Q1 2018, compared to $203.3 million ($0.38 per diluted share) in Q1 2017.
  • 3Gains on dispositions of investments in real estate, net, were substantial at $195.1 million in Q1 2018, more than double the $97.3 million reported in Q1 2017, reflecting active capital recycling.
  • 4Strategic capital revenues more than doubled to $133.0 million in Q1 2018 from $57.0 million in Q1 2017, driven by strong promote revenues.
  • 5Occupancy remained high at 96.8% for the consolidated operating portfolio as of March 31, 2018.
  • 6The company issued $400 million in senior notes and used proceeds to pay down term loans, resulting in a lower weighted average interest rate on debt.
  • 7Prologis maintained full compliance with all financial debt covenants.

Frequently Asked Questions

Prologis is a global leader in logistics real estate. Its core business involves owning, managing, and developing high-quality logistics facilities in strategic, high-growth markets. Revenue is generated primarily through rental income from operating leases, with additional revenue streams from strategic capital initiatives, which include management fees and 'promote' revenues from co-investment ventures.

In the first quarter of 2018, Prologis showed significant financial improvement. Total revenues increased, and net earnings attributable to common stockholders more than doubled, driven by substantial gains from real estate dispositions and strong performance in its strategic capital segment. Occupancy remained high, and the company actively managed its debt, lowering its average interest rate.

The Strategic Capital segment represents Prologis's business of managing unconsolidated co-investment ventures. 'Promote revenues' are incentive fees earned when these ventures achieve certain performance thresholds. These revenues are significant as they provide an additional layer of earnings beyond traditional rental income, demonstrating Prologis's ability to generate value from its capital partnerships and expertise.

Prologis actively manages its debt. In Q1 2018, they issued new senior notes and used the proceeds to pay down existing term loans, which helped to lower the overall weighted average interest rate on their debt. The company confirmed compliance with all financial debt covenants, indicating a stable and manageable capital structure. They also utilize credit facilities for ongoing liquidity needs.