What is the main reason for the decrease in third-quarter EPS compared to the previous year?

The decrease in third-quarter 2003 diluted EPS to $0.26 from $0.30 in the prior year was primarily due to a $0.04 per share charge related to the accounting treatment of preferred stock redemption costs, as mandated by EITF Issue D-42.

What is SFAS 150 and why is it relevant to Prologis?

SFAS 150 is an accounting standard concerning certain financial instruments with characteristics of both liabilities and equity. It is relevant to Prologis because the FASB was reviewing its application to minority interests in finite-lived entities. Any decision could significantly impact how Prologis accounts for minority interests in its joint ventures, potentially affecting its reported financial statements, including EPS and balance sheet figures.

How did Prologis manage its real estate portfolio in the third quarter?

Prologis engaged in both dispositions and acquisitions. It sold a retail asset and nine industrial buildings for a total of $102.2 million, with dispositions averaging a 7.9% cash capitalization rate. Concurrently, it acquired 13 industrial buildings totaling 839,300 square feet for $57.4 million, expanding its presence in key markets.

What is Funds From Operations (FFO) and how did it perform?

FFO is a supplemental earnings measure used by REITs, defined by NAREIT as net income less gains/losses from property sales plus real estate depreciation and amortization. For Q3 2003, FFO per diluted share was $0.48, down from $0.58 in Q3 2002. Excluding certain accounting changes, FFOPS was $0.52 for Q3 2003 compared to $0.58 in Q3 2002.

PLD/PLDGP 8-K SEC Disclosure

Summary

Prologis, Inc. (PLD), formerly known as AMB Property Corporation, filed this 8-K on October 29, 2003, to report its third-quarter 2003 financial results. The company reported third-quarter diluted EPS of $0.26, down from $0.30 in the prior year, largely due to a $0.04 charge related to preferred stock redemption costs. Year-to-date, EPS was $1.15, an increase from $0.94 in 2002. The report also highlights the company's ongoing review by the FASB regarding SFAS 150 and its potential impact on accounting for minority interests. This accounting change could significantly affect reported earnings and balance sheet figures if implemented in its current form. The company demonstrated active investment and disposition strategies during the quarter. Prologis sold a retail asset and nine industrial buildings, realizing gains and an average cash capitalization rate of 7.9%. Simultaneously, it acquired 13 industrial buildings and commenced development on two new projects, expanding its portfolio and development pipeline. The company also undertook financing activities, including the redemption of its Series A Cumulative Redeemable Preferred Stock and securing $137 million in long-term debt for its joint ventures. Additionally, Eugene F. Reilly joined the senior management team as Executive Vice President, North American Development.

Key Highlights

1Third quarter 2003 diluted EPS was $0.26, compared to $0.30 in Q3 2002. Year-to-date EPS was $1.15, up from $0.94 in 2002.
2A $0.04 per share charge related to preferred stock redemption costs (EITF Issue D-42) impacted Q3 2003 EPS, with the pro forma EPS being $0.31.
3The company is awaiting a FASB decision on SFAS 150 concerning minority interests, which could materially impact financial reporting.
4Industrial portfolio occupancy stood at 92.0% as of September 30, 2003, a decrease from 94.4% in the prior year.
5The company actively managed its portfolio by selling $102.2 million in non-strategic assets and acquiring $57.4 million in new properties.
6Prologis commenced development on approximately 1.6 million square feet and has a committed pipeline of $207.5 million through 2005.
7All outstanding 8.5% Series A Cumulative Redeemable Preferred Stock was redeemed during the quarter.

Prologis, Inc. 8-K Report (Oct 29, 2003)

Summary

Key Highlights

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