8-KEarnings & ResultsOther EventsExhibits & Filings

Prologis, Inc. 8-K Report, Financial Results (Jul 21, 2010)

Filed July 21, 2010For Securities:PLDPLDGP

Summary

AMB Property Corporation (the registrant, which later became Prologis, Inc. after a merger) reported its second quarter 2010 results. Key financial metrics show a decrease in Funds from Operations (FFO) as adjusted per share to $0.30 from $0.37 in the prior year's second quarter. Net income available to common stockholders also declined significantly to $0.02 per share from $0.12 year-over-year, primarily attributed to higher depreciation expenses and reduced gains from property dispositions. Despite the dip in profitability metrics, operational performance showed signs of recovery. Occupancy in the operating portfolio improved to 91.8% at the end of the quarter, up from 90.1% average occupancy during the quarter and up 130 basis points from the prior quarter. However, cash-basis same-store Net Operating Income (NOI) decreased by 6.0% year-over-year, impacted by lower average same-store occupancy and increased free rent. The company also reported significant leasing activity and strategic investment and disposition activities, including capital raises for its funds and debt reduction.

Key Highlights

  • 1FFO as adjusted per share decreased to $0.30 in Q2 2010 from $0.37 in Q2 2009.
  • 2Net income per diluted share declined to $0.02 in Q2 2010 from $0.12 in Q2 2009, driven by higher depreciation and lower property disposition gains.
  • 3Portfolio occupancy improved to 91.8% at June 30, 2010, up from 90.1% average occupancy during Q2 2010.
  • 4Cash-basis same-store NOI (excluding lease termination fees) decreased by 6.0% year-over-year, influenced by lower occupancy and increased free rent.
  • 5The company completed $42.7 million in acquisitions and $35 million in dispositions during the quarter.
  • 6Subsequent to the quarter end, the company secured $93.3 million in new third-party equity commitments for its US and European logistics funds.
  • 7Total debt was reduced by approximately $264 million during the quarter, with debt-to-assets ratio improving to 40.5% from 44.8%.

Frequently Asked Questions

The decrease in Funds from Operations (FFO) as adjusted and net income per share was primarily due to higher depreciation expenses and lower gains from the disposition of operating properties compared to the same period in the prior year. Restructuring and debt extinguishment charges also impacted FFO as adjusted.

Occupancy in the operating portfolio improved to 91.8% at the end of Q2 2010, indicating a positive trend. However, cash-basis same-store Net Operating Income (NOI) saw a year-over-year decrease of 6.0%, attributed to lower average same-store occupancy and higher levels of free rent. Additionally, average rent on renewals and rollovers decreased by 11.2% over the trailing four quarters.

AMB Property Corporation significantly reduced its debt during the quarter, decreasing its share of total debt by approximately $264 million. The debt-to-assets ratio improved to 40.5% from 44.8% in the prior quarter. Total liquidity at June 30, 2010, was approximately $1.5 billion, comprising over $1.2 billion in credit line availability and $292 million in unrestricted cash and cash equivalents.

During the quarter, the company completed a public offering of common stock, raising approximately $479 million in net proceeds, which were used for general corporate purposes and funding investments. Subsequent to the quarter, its open-ended funds received capital commitments totaling $93.3 million in third-party equity for its US and European logistics funds. The company also closed on $189 million in yen-denominated financing transactions in Japan.