8-KMaterial AgreementsFinancial EventsExhibits & Filings

Prologis, Inc. 8-K Report, Material Agreement (Oct 30, 2015)

Filed October 30, 2015For Securities:PLDPLDGP

Summary

Prologis, Inc. (PLD), through its operating partnership Prologis, L.P., announced on October 27, 2015, the pricing of a $750 million offering of 3.750% Notes due 2025. The net proceeds, estimated at $739 million after expenses, are strategically allocated to strengthen the company's balance sheet and optimize its debt structure. A significant portion of these proceeds will be used to repurchase all outstanding principal of its 4.5% Notes due 2017 and to fund a cash tender offer for 6.875% Notes due 2020, 7.375% Notes due 2019, and 6.625% Notes due 2019. This proactive debt management indicates a move to reduce interest expenses and extend debt maturities, which is generally favorable for long-term financial health and investor returns. The remaining proceeds will be used for general corporate purposes, including other debt repayments and to reduce borrowings under credit facilities.

Key Highlights

  • 1Prologis, L.P. priced a $750 million offering of 3.750% Notes due November 1, 2025.
  • 2Estimated net proceeds from the offering are approximately $739 million.
  • 3Proceeds will be used to repurchase all outstanding 4.5% Notes due 2017.
  • 4A portion of the proceeds will fund a cash tender offer for 6.875% Notes due 2020, 7.375% Notes due 2019, and 6.625% Notes due 2019.
  • 5Remaining proceeds will be used for general corporate purposes, including other debt repayment and reduction of credit facility borrowings.
  • 6The Notes are senior unsecured obligations of Prologis, L.P. and are fully guaranteed by Prologis, Inc.
  • 7The Notes carry an interest rate of 3.750% per annum, payable semi-annually.

Frequently Asked Questions

The primary purpose of the note offering is to optimize Prologis's capital structure and reduce interest expense. Specifically, the company intends to use a significant portion of the proceeds to repurchase higher-coupon debt (4.5% Notes due 2017) and fund a tender offer for other maturing notes (6.875% Notes due 2020, 7.375% Notes due 2019, and 6.625% Notes due 2019). This allows Prologis to refinance at a lower interest rate and manage its debt maturity profile.

The new 3.750% Notes due 2025 carry a significantly lower interest rate compared to the debt being repurchased. The 4.5% Notes due 2017, the 6.875% Notes due 2020, the 7.375% Notes due 2019, and the 6.625% Notes due 2019 all have coupon rates substantially higher than 3.750%. This refinancing strategy is expected to lead to a reduction in the company's overall interest expense.

The new notes are senior unsecured obligations of Prologis, L.P., fully guaranteed by Prologis, Inc. They mature on November 1, 2025, and bear interest at a fixed rate of 3.750% per annum, payable semi-annually. The notes are redeemable at Prologis, L.P.'s option, with a make-whole premium applicable for redemptions before August 1, 2025.

By using proceeds to retire existing debt and fund a tender offer, Prologis is actively managing its liabilities. The refinancing at a lower rate is accretive to earnings. Additionally, the company indicates that remaining proceeds will be used for general corporate purposes and to repay outstanding borrowings under its global line of credit and term loan, which could improve its liquidity position and provide flexibility for future investments or operational needs.