What is the primary financial impact of this agreement for Prologis?

The primary financial impact is a reduction in interest expense. Prologis, through its subsidiary AMB Property, L.P., is refinancing $100 million of debt carrying a 6.9% coupon with new debt carrying a 5.094% coupon, resulting in annual interest savings.

Who is Teachers Insurance and Annuity Association of America in this transaction?

Teachers Insurance and Annuity Association of America is the counterparty to the Exchange Agreement and the sole initial purchaser of the new 5.094% Notes Due 2015. They previously held the REPS that were exchanged.

Are there any conditions or options related to the new notes after issuance?

Yes, the Exchange Agreement provides AMB Property, L.P. the option to require Teachers to return the Notes for cancellation in exchange for an equivalent dollar amount under first mortgage loans secured by properties, under certain conditions and limits, until July 11, 2008. Additionally, if Teachers decides to sell any Notes, AMB Property, L.P. has a right of first refusal to repurchase them.

What is the purpose of the REPS (Reset Put Securities)?

The REPS were a form of debt previously issued by AMB Property, L.P. The term 'Reset Put Securities' suggests they had features allowing for interest rate adjustments (reset) and the ability for the holder to 'put' or sell them back to the issuer under certain conditions. In this case, Morgan Stanley exercised a call right on the REPS, and Teachers purchased them before exchanging them for the new, lower-interest notes.

PLD/PLDGP 8-K: Material Agreements

Summary

Prologis, Inc. (through its subsidiary AMB Property, L.P.) has entered into an Exchange Agreement with Teachers Insurance and Annuity Association of America, effective July 8, 2005. This agreement facilitates the issuance of $112.5 million in new 5.094% Notes Due 2015 by AMB Property, L.P. These new notes are being exchanged for AMB Property, L.P.'s outstanding $100 million in 6.9% Reset Put Securities (REPS) Due 2015, currently held by Teachers. The transaction effectively lowers the interest expense for AMB Property, L.P. by refinancing higher-coupon debt with lower-coupon debt. The new notes are guaranteed by Prologis, Inc. and mature in 2015.

Key Highlights

1AMB Property, L.P. issued $112.5 million in 5.094% Notes Due 2015.
2The new notes were issued in exchange for $100 million of 6.9% Reset Put Securities (REPS) Due 2015.
3This transaction effectively reduces the interest rate on the exchanged debt from 6.9% to 5.094%.
4The new notes are guaranteed by Prologis, Inc.
5The exchange was facilitated by an Exchange Agreement with Teachers Insurance and Annuity Association of America.
6The REPS were called by Morgan Stanley & Co. International and subsequently sold to Teachers before the exchange.
7The Exchange Agreement includes provisions allowing AMB Property, L.P. to potentially exchange the new notes for first mortgage loans secured by properties.

Prologis, Inc. 8-K Report, Material Agreement (Jul 13, 2005)

Summary

Key Highlights

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