Prologis Announces Fourth Quarter and Full Year 2012 Earnings Results - Record 40.5 million square feet of leasing in Q4; 145 million in 2012 -

- Occupancy increases to 94.0 percent at year end -

- $1.3 billion in contributions and dispositions in Q4; $2.7 billion in 2012 -

- Ahead of schedule on 10 Quarter Strategic Plan -

SAN FRANCISCO, Feb. 6, 2013 /PRNewswire/ -- Prologis, Inc. (NYSE: PLD), the leading global owner, operator and developer of industrial real estate, today reported results for the fourth quarter and full year 2012.

Core funds from operations (Core FFO) per fully diluted share was $0.42 for the fourth quarter 2012 compared to $0.44 for the same period in 2011. Core FFO per fully diluted share for full year 2012 was $1.74 compared to $1.58 for full year 2011.

Net loss per fully diluted share was $0.50 for the fourth quarter 2012 compared to a net loss of $0.10 for the same period in 2011. Net loss per share was $0.18 for the full year 2012 compared to a net loss of $0.51 for the same period in 2011. The net loss for the quarter and year was principally due to impairment charges and losses on the early extinguishment of debt which were partially offset by gains on acquisitions and dispositions of real estate.

"This marks the first full year as a combined company and Prologis delivered very strong results," said Hamid Moghadam, chairman and CEO, Prologis. "We are ahead of schedule on our 10 Quarter Plan and we've built a solid foundation upon which we will continue to grow the company."

Operating Portfolio Metrics
The company leased a record 40.5 million square feet (3.8 million square meters) in its combined operating and development portfolios in the fourth quarter, and 145.3 million square feet (13.5 million square meters) in the full year 2012. Prologis ended the quarter with 94.0 percent occupancy in its operating portfolio, up 90 basis points over the prior quarter and 180 basis points over year end 2011. Tenant retention in the quarter was 87.3 percent, with tenant renewals totaling 25.1 million square feet (2.3 million square meters).

"Our team did an exceptional job setting another quarterly record for leasing around the globe," said Moghadam. "Increasing demand and lack of supply remain the theme in most markets, and we expect our overall rent change on rollover to turn positive this year. In the United States, in particular, occupancy in our small spaces increased 280 basis points year over year, and we expect this trend will continue given improvements in the housing market."

Same-store net operating income (NOI) increased 0.1 percent in the fourth quarter and 1.3 percent in the full year 2012. Rental rates on leases signed in the fourth quarter same-store pool decreased by 2.4 percent from in-place rents.

Dispositions and Contributions
Prologis completed $1.3 billion in contributions and dispositions in the fourth quarter, of which more than $1.0 billion was Prologis' share. This includes approximately:

  • $878 million of third-party building and land dispositions primarily in the United States and Europe, of which $700 million was the company's share; and
  • $401 million of contributions to Prologis European Properties Fund II, Prologis Europe Logistics Venture, Prologis Targeted Europe Logistics Fund, and joint ventures in Brazil, of which $325 million was the company's share.

In the full year 2012, contributions and dispositions totaled $2.7 billion, of which more than $2.1 billion was the company's share.

Additionally, the company has approximately $5 billion of operating portfolio assets in Japan and Europe scheduled for contribution in the first quarter of 2013, in connection with Nippon Prologis REIT (NPR) and Prologis European Logistics Partners Sàrl (PELP), subject to the listing of NPR and customary closing conditions. The combination of these transactions, in conjunction with fourth quarter activity, positions the company ahead of its 10 Quarter Plan.

"We continue to make excellent progress executing on our priority to realign our portfolio," said Thomas Olinger, chief financial officer, Prologis. "These dispositions and contributions reflect the diversity of our activities as well as the market's demand for high quality industrial real estate."

Development Starts and Building Acquisitions
Committed capital during the fourth quarter 2012 totaled approximately $1.2 billion, of which $909 million was Prologis' share, including:

  • Development starts of $727 million, of which $613 million was Prologis' share. These starts totaled 7.3 million square feet (675,000 square meters), and monetized $190 million of land. The company's estimated share of value creation on development starts in the fourth quarter was $71 million.
  • Acquisitions of $458 million, including $276 million in buildings with a stabilized capitalization rate of 7.4 percent and an investment of $182 million in land and land infrastructure. Of the total acquisitions, $295 million was Prologis' share.

Capital committed during the year totaled approximately $2.5 billion, of which $2.0 billion was the company's share. This included development starts of $1.6 billion, of which 57 percent were build-to-suits, and acquisitions of $983 million, including $544 million in buildings with a stabilized capitalization rate of 7.3 percent and an investment of $439 million in land and land infrastructure.

At quarter end, Prologis' global development pipeline comprised 22.5 million square feet (2.1 million square meters), with a total expected investment of $2.1 billion, of which Prologis' share was $1.9 billion. The company's share of estimated value creation at stabilization is expected to be $354 million, with a weighted average stabilized yield of 7.8 percent and a margin of approximately 19 percent.

Private Capital Activity
In 2012, Prologis raised or received commitments for $1.9 billion in new, third-party equity. This was primarily due to PELP, and also included Prologis Targeted U.S. Logistics Fund and Prologis Targeted Europe Logistics Fund.

The company continued streamlining its co-investment ventures into fewer, more profitable and differentiated investment vehicles, rationalizing six funds in 2012.

In the fourth quarter, Prologis concluded the Prologis North American Fund I. Two of the fund's assets were sold to third parties with the remaining portfolio divided up between the partners, of which Prologis' share was $117 million.

Capital Markets
Prologis completed approximately $1.1 billion of capital markets activity in the fourth quarter and $4.8 billion for the full year 2012. This includes debt financings, re-financings, and pay-downs.

Subsequent to quarter end, the company paid off $141 million of its 1.875 percent convertible notes and repaid $319 million of secured debt.

Guidance for 2013
Prologis established a full-year 2013 Core FFO guidance range of $1.60 to $1.70 per diluted share. On a GAAP basis, the company expects to recognize a range of a net loss of ($0.07) per share to net earnings of $0.03 per share. From a fourth quarter run rate perspective, this slight decline from 2012 is primarily due to near-term dilution from disposition and contribution activities, which are expected to significantly deleverage the company by the end of the first quarter.

The Core FFO and earnings guidance reflected above excludes any potential future gains (losses) recognized from real estate transactions. In reconciling from net earnings to Core FFO, Prologis makes certain adjustments, including but not limited to real estate depreciation and amortization expense, impairment charges, deferred taxes, early extinguishment of debt, and unrealized gains or losses on foreign currency or derivative activity.

The difference between the company's Core FFO and net earnings guidance for 2013 predominantly relates to real estate depreciation and recognized gains on real estate transactions.

The principal drivers supporting Prologis' 2013 guidance include the following:

  • Year end occupancy in its operating portfolio between 94 to 95 percent (consistent with historical seasonal trends, the company expects occupancy to decrease in the first quarter and trend higher through the remainder of the year);
  • Same-store NOI growth of 1.5 to 2.5 percent, excluding the impact of foreign exchange movements;
  • Development starts of $1.5 to $1.8 billion, of which approximately 75 percent is expected to be the company's share;
  • Building acquisitions of $400 to $600 million, of which approximately 35 percent is expected to be the company's share;
  • Building and land dispositions and contributions of $7.5 to $10.0 billion, of which approximately 60 percent is expected to be the company's share; and
  • A euro exchange rate of $1.35; and a yen exchange rate of JPY 92 per U.S. dollar.

Webcast and Conference Call Information
The company will host a webcast /conference call to discuss quarterly results, current market conditions and future outlook today, Feb. 6, 2013, at 12:00 p.m. U.S. Eastern Time. Interested parties are encouraged to access the live webcast by clicking the microphone icon located near the top of the opening page of the Prologis Investor Relations website (http://ir.prologis.com). Interested parties also can participate via conference call by dialing  +1 877-256-7020 (from the U.S. and Canada toll free) or +1 973-409-9692 (from all other countries) and enter conference code 86463676

A telephonic replay will be available from Feb. 6 through March 6 at +1 855-859-2056 (from the U.S. and Canada) or +1 404-537-3406 (from all other countries), with conference code 86463676. The webcast and podcast replay will be posted when available in the "Financial Information" section of Investor Relations on the Prologis website.

About Prologis
Prologis, Inc., is the leading owner, operator and developer of industrial real estate, focused on global and regional markets across the Americas, Europe and Asia. As of Dec. 31, 2012, Prologis owned or had investments in, on a consolidated basis or through unconsolidated joint ventures, properties and development projects expected to total approximately 554 million square feet (51.5 million square meters) in 21 countries. The company leases modern distribution facilities to more than 4,500 customers, including manufacturers, retailers, transportation companies, third-party logistics providers and other enterprises.

The statements in this release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which Prologis operates, management's beliefs and assumptions made by management. Such statements involve uncertainties that could significantly impact Prologis' financial results. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements, which generally are not historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to rent and occupancy growth, development activity and changes in sales or contribution volume of developed properties, disposition activity, general conditions in the geographic areas where we operate, synergies to be realized from our recent merger transaction, our debt and financial position, our ability to form new property funds and the availability of capital in existing or new property funds — are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained and therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some of the factors that may affect outcomes and results include, but are not limited to: (i) national, international, regional and local economic climates, (ii) changes in financial markets, interest rates and foreign currency exchange rates, (iii) increased or unanticipated competition for our properties, (iv) risks associated with acquisitions, dispositions and development of properties, (v) maintenance of real estate investment trust ("REIT") status and tax structuring, (vi) availability of financing and capital, the levels of debt that we maintain and our credit ratings, (vii) risks related to our investments in our co-investment ventures and funds, including our ability to establish new co-investment ventures and funds, (viii) risks of doing business internationally, including currency risks, (ix) environmental uncertainties, including risks of natural disasters, and (x) those additional factors discussed in reports filed with the Securities and Exchange Commission by Prologis under the heading "Risk Factors." Prologis undertakes no duty to update any forward-looking statements appearing in this release



Three months ended December 31,



Year ended December 31,

(dollars in thousands, except per share data)


2012


2011



2012


2011 (A)


Revenues


$    517,557


$    456,777



$ 2,005,961


$ 1,451,327


Net loss available for common stockholders


(228,713)


(45,459)



(80,946)


(188,110)


FFO, as defined by Prologis


(88,199)


134,147



552,435


411,688


Core FFO


195,816


203,945



813,863


593,917


AFFO


110,786


147,934



563,180


431,450


Adjusted EBITDA


376,940


386,965



1,516,263


1,514,150














Per common share - diluted:












Net loss available for common stockholders


$         (0.50)


$         (0.10)



$        (0.18)


$         (0.51)



FFO, as defined by Prologis


(0.19)


0.29



1.19


1.10



Core FFO


0.42


0.44



1.74


1.58





































(A)AMB and Prologis completed a merger (the "Merger") in June 2011. The financial results presented throughout this supplemental include Prologis for the full period and AMB results from the date of the Merger going forward. 








December 31, 2012


September 30, 2012


December 31, 2011

Assets:










Investments in real estate assets:











Operating properties

$

22,608,248


$

23,304,246


$

21,552,548



Development portfolio


951,643



774,821



860,531



Land


1,794,364



1,924,626



1,984,233



Other real estate investments


454,868



457,373



390,225







25,809,123



26,461,066



24,787,537



Less accumulated depreciation


2,480,660



2,389,214



2,157,907





Net investments in properties


23,328,463



24,071,852



22,629,630


Investments in and advances to unconsolidated entities


2,195,782



2,242,075



2,857,755


Notes receivable backed by real estate


188,000



243,979



322,834


Assets held for sale


26,027



376,642



444,850





Net investments in real estate


25,738,272



26,934,548



26,255,069















Cash and cash equivalents


100,810



158,188



176,072


Restricted cash


176,926



172,515



71,992


Accounts receivable


171,084



181,855



147,999


Other assets


1,123,053



1,129,316



1,072,780





Total assets

$

27,310,145


$

28,576,422


$

27,723,912














Liabilities and Equity:










Liabilities:











Debt 

$

11,790,794


$

12,578,060


$

11,382,408



Accounts payable, accrued expenses, and other liabilities


1,746,015



1,823,841



1,886,030





Total liabilities


13,536,809



14,401,901



13,268,438















Equity:











Stockholders' equity:












Preferred stock


582,200



582,200



582,200




Common stock 


4,618



4,609



4,594




Additional paid-in capital 


16,411,855



16,395,797



16,349,328




Accumulated other comprehensive loss


(233,563)



(165,100)



(182,321)




Distributions in excess of net earnings


(3,696,093)



(3,335,757)



(3,092,162)





Total stockholders' equity


13,069,017



13,481,749



13,661,639



Noncontrolling interests


653,125



639,631



735,222



Noncontrolling interests - limited partnership unitholders


51,194



53,141



58,613





Total equity


13,773,336



14,174,521



14,455,474





Total liabilities and equity

$

27,310,145


$

28,576,422


$

27,723,912















Three Months Ended


Twelve Months Ended





December 31,


December 31,





2012

2011


2012

2011 (A)

Revenues:











Rental income

$

481,743

$

415,226


$

1,869,224

$

1,294,872


Private capital revenue


31,715


40,230



126,779


137,619


Development management and other income


4,099


1,321



9,958


18,836



 Total revenues 


517,557


456,777



2,005,961


1,451,327














Expenses:











Rental expenses


131,696


110,169



505,499


358,559


Private capital expenses


16,134


15,734



63,820


54,962


General and administrative expenses


60,608


50,797



228,068


195,161


Merger, acquisition and other integration expenses


28,103


18,772



80,676


140,495


Impairment of real estate properties


243,138


21,237



252,914


21,237


Depreciation and amortization


187,770


180,628



739,981


552,849


Other expenses


9,414


9,789



26,556


24,031



Total expenses


676,863


407,126



1,897,514


1,347,294














Operating income (loss)


(159,306)


49,651



108,447


104,033














Other income (expense):











Earnings from unconsolidated co-investment ventures, net


10,414


904



25,703


49,326


Earnings from other unconsolidated joint ventures, net


815


3,016



5,973


10,609


Interest income 


5,107


5,780



22,299


19,843


Interest expense


(123,623)


(129,055)



(507,484)


(468,072)


Impairment of other assets


-


(22,609)



(16,135)


(126,432)


Gain (loss) on acquisitions and dispositions of investments in real estate, net


24,639


(2,966)



305,607


111,684


Foreign currency and derivative gains (losses) and other income (expenses), net


(2,567)


(3,584)



(19,918)


33,337


Gain (loss) on early extinguishment of debt, net


(19,033)


556



(14,114)


258



Total other income (expense)


(104,248)


(147,958)



(198,069)


(369,447)














Loss before income taxes


(263,554)


(98,307)



(89,622)


(265,414)


Income tax expense (benefit) - current and deferred


3,364


(8,184)



3,580


1,776

Loss from continuing operations


(266,918)


(90,123)



(93,202)


(267,190)

Discontinued operations:











Income attributable to disposed properties and assets held for sale