What is the primary reason for the decrease in Funds From Operations (FFO) per share and net income per share compared to the prior year?

The primary reason for the year-over-year decrease in FFO, as adjusted, and net income per share is the recognition of significantly higher development profits in the third quarter of 2009. This made the current year's comparison appear lower, even though operational leasing activity was strong.

How is the company managing its debt and financing?

AMB Property Corporation completed approximately $1.4 billion in new financings during the quarter and has an additional $1.6 billion in capital markets transactions being negotiated, including credit line renewals and a corporate term loan. These activities are aimed at extending debt maturities and potentially reducing the cost of capital for certain funds.

What is the outlook for occupancy and rental rates?

Occupancy in the operating portfolio showed improvement, increasing to 92.6% by the end of Q3 2010. However, average rent on renewals and rollovers decreased by 11.8% over the trailing four quarters, indicating continued pressure on rental rates, partly due to increased free rent concessions.

What new investments or ventures were announced?

The company made new investments totaling $110.9 million during the quarter, including acquisitions in the U.S., Europe, and Brazil. Notably, they formed AMB Mexico Fondo Logistico, a new industrial venture for Mexican pension plans, and received substantial capital commitments for their open-end funds.

PLD/PLDGP 8-K: Earnings & Results

Summary

AMB Property Corporation (which later became Prologis, Inc.) released its third-quarter 2010 financial results on October 20, 2010. The report highlights a significant decrease in Funds From Operations (FFO), as adjusted, per share, falling to $0.32 from $0.71 in the prior year's quarter. This decline is attributed primarily to higher development profits recognized in Q3 2009. Net income also saw a substantial decrease, with earnings per share dropping to $0.04 from $0.43 year-over-year, again driven by the prior year's strong development profit recognition. Despite the drop in profitability metrics, operational aspects of the business showed some positive movement. Occupancy in the operating portfolio improved to 92.6% as of September 30, 2010, up from 91.7% in the previous quarter. However, cash-basis same-store Net Operating Income (NOI) decreased by 3.0% year-over-year, impacted by increased free rent. The company also reported robust leasing activity, commencing approximately 8.1 million square feet of leases in its global operating portfolio during the quarter. Investment activity included acquisitions totaling $110.9 million and the formation of new ventures, such as AMB Mexico Fondo Logistico. The company also ended the quarter with approximately $1.7 billion in liquidity.

Key Highlights

1FFO, as adjusted, per share significantly decreased to $0.32 in Q3 2010 from $0.71 in Q3 2009, primarily due to a strong development profit recognition in the prior year.
2Net income per share also declined substantially to $0.04 in Q3 2010 from $0.43 in Q3 2009, driven by the same factor.
3Operating portfolio occupancy increased to 92.6% as of September 30, 2010, up from 91.7% at the end of Q2 2010.
4Cash-basis same-store Net Operating Income (NOI) decreased by 3.0% year-over-year due to higher levels of free rent.
5The company reported strong leasing activity, commencing 8.1 million square feet in its global operating portfolio during the quarter.
6Significant investment activity occurred, including $110.9 million in acquisitions and the establishment of the AMB Mexico Fondo Logistico venture.
7Liquidity remained strong at $1.7 billion as of September 30, 2010, providing financial flexibility.

Prologis, Inc. 8-K Report, Financial Results (Oct 20, 2010)

Summary

Key Highlights

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