ProLogis Reports Fourth Quarter/Year-end 2009 Results
- Full-year FFO per Share in Line with Previous Guidance -
- Property Market Fundamentals Showing Signs of Improvement -
- Company Establishes 2010 Guidance -
DENVER, Feb. 11 /PRNewswire-FirstCall/ -- ProLogis (NYSE: PLD), a leading global provider of distribution facilities, today reported funds from operations as defined by ProLogis (FFO), excluding significant non-cash items, of $1.15 per diluted share in 2009, compared with $3.51 for 2008. (See Summary of Results table for details). These amounts reflect the add back of impairments on real estate properties, goodwill and other assets totaling $0.81 per diluted share in 2009 and $3.01 in 2008. ProLogis reported a net loss per diluted share of $0.01 for 2009, compared with a net loss of $1.82 for 2008.
For the fourth quarter, FFO, excluding significant non-cash items, was $0.13 per diluted share in 2009, compared with $0.56 in 2008. These amounts reflect the add back of impairments on real estate properties, goodwill and other assets totaling $0.78 per diluted share in the fourth quarter of 2009 and $3.04 in 2008. For the fourth quarter of 2009, the company reported a net loss per diluted share of $0.86, compared with a net loss of $3.39 in the same period of 2008.
Reconciliation to Previous Guidance
In addition to the non-cash impairment charges referred to above, the company experienced various non-recurring charges in the fourth quarter and earlier in 2009, as detailed below. FFO, excluding significant non-cash items and non-recurring charges, was $1.41 per diluted share for the full year, in line with the company’s previous guidance of $1.39 to $1.43. For the fourth quarter, FFO, excluding significant non-cash items and non-recurring charges, was $0.23 per diluted share.
Three Months Twelve Months
Ended Ended
December 31, December 31,
2009 2009
---- ----
FFO, excluding significant non-cash items $0.13 $1.15
Add (deduct) non-recurring charges:
Indemnifications related to
contributed or sold properties 0.08 0.09
Realized losses on foreign currency
transactions - 0.05
Capital markets costs 0.03 0.04
ProLogis' share of losses on sale
of fund assets - 0.03
Reduction in workforce - 0.03
Other 0.01 0.04
Adjustments to tax and
compensation-related liabilities (0.02) (0.02)
---- ----
Add summarized non-recurring charges 0.10 0.26
---- ----
FFO, excluding significant
non-cash items and non-recurring
charges $0.23 $1.41
Significant Accomplishments in 2009 Position Company for Future Opportunities
“We began 2009 with an action plan and aggressive goals related to asset dispositions, debt reduction and development portfolio leasing,” said Walter C. Rakowich, chief executive officer. “Throughout the year, we made tough choices and remained highly focused on stabilizing the company. We are pleased to have accomplished our goals, putting the company on firm financial footing and positioning us to take advantage of opportunities as market conditions improve.”
Among ProLogis’ specific goals for 2009 were to: reduce debt by $2 billion, complete $1.5 to $1.7 billion of asset dispositions and contributions to property funds (exclusive of the sale of certain Asian operations) and achieve static development portfolio leasing of 60 to 70 percent. At year end 2009, the company had reduced debt by $2.7 billion, completed $1.53 billion of property dispositions and contributions and achieved static development portfolio leasing of 68.2 percent.
Continued Signs of Stabilization and Improvement in Property Markets
“While focusing on our action plan, we also worked diligently to maintain stable occupancies in our core portfolio,” Rakowich added. “The bottoming of market occupancies and rents that we began to see in mid-2009 held up in the fourth quarter, with some markets showing improvement. For the top 31 North American markets we track, overall net demand turned positive in the fourth quarter, and we saw similar pockets of positive take-up in Europe. And, although we expect net effective rental rates on turnovers to be negative throughout 2010, we believe improving occupancies and the continued lack of new supply will pave the way for improving rental rates in 2011.”
ProLogis’ non-development portfolio was 92.4 percent leased at the end of the fourth quarter, down slightly compared with 92.7 percent leased at September 30. Same-store net operating income (SS NOI), as adjusted (excluding same-store assets associated with the company’s development portfolio), decreased 4.2 percent, a slight improvement over the third quarter SS NOI decline. Net effective rental rates on turnover of 23.6 million square feet, or 6.0 percent of the adjusted same-store pool, were down 11.7 percent for the quarter, representing an improvement over the third quarter decline.
Build-to-Suit Development Demand Supports Reductions in Land Position
“While new speculative development has remained virtually non-existent, during the fourth quarter we continued to see demand for build-to-suit development from customers whose supply chain optimization requirements could not be met with the available supply of space,” said Ted R. Antenucci, chief investment officer. ProLogis’ fourth quarter starts consisted of a 667,000-square-foot facility for a major home improvement retailer in Southern California and a 504,000-square-foot facility for a leading UK retailer in Scotland. Including joint venture partner capital contributions, total expected investment for all build-to-suit developments started in the second half of 2009 is $336 million.
“Given the continued interest from customers in build-to-suits, we expect to start $700 to $800 million of new development in 2010, primarily in Europe and Asia. We also will continue to pursue land sales, which when combined with new development, will allow us to begin to monetize roughly $350 to $400 million of land in 2010,” Antenucci added.
Strategic Repositioning of Asset Base
“In 2009, we used the proceeds from nearly $2.9 billion of contributions and dispositions, including the sale of certain Asian operations, to reduce debt and fund our development portfolio,” said Rakowich. “Having stabilized our balance sheet, we are now looking to fund new development activity in a slightly different, leverage-neutral manner. Due to improving property values and growing institutional demand for quality properties, in 2010 we plan to generate $1.3 to $1.5 billion of proceeds from sales of existing assets and contributions to funds, primarily in the United States, and use the proceeds to fund the remaining costs associated with our existing development portfolio as well as 2010 development starts. This approach will allow us to retain more of our non-US development on our balance sheet, thereby improving the geographic diversification of our direct owned assets.”
Continued Financing Progress for ProLogis and Property Funds
“We continued to focus on further extending and smoothing the debt maturities both on ProLogis’ balance sheet and in our property funds,” said William E. Sullivan, chief financial officer. “In the fourth quarter, we issued $600 million of 10-year, ProLogis senior notes and closed on a $108 million secured financing in Japan on our balance sheet. Since the beginning of the fourth quarter, we closed on euro 886 million of financings in our European funds, effectively reducing 2010 maturities within those funds to approximately euro 327 million. This is significant progress from the over euro 1.8 billion of 2010 fund debt maturities we were faced with at the beginning of 2009.”
Guidance for 2010
ProLogis established full-year 2010 FFO guidance, excluding significant non-cash items, of $0.74 to $0.78 per share, of which approximately $0.10 relates to expected gains on dispositions of development and land. Net earnings are expected to be between $0.25 and $0.29 per diluted share. A summary of the business drivers supporting ProLogis’ 2010 guidance is available at http://ir.prologis.com/2010BusinessDrivers.cfm.
Copies of ProLogis’ fourth quarter 2009 supplemental information will be available from the company’s website at http://ir.prologis.com in the “Annual & Supplemental Reports” section before open of market on Thursday, February 11, 2010. The company will host a webcast/conference call on Thursday, February 11, 2010, at 10:00 a.m. Eastern Time. The live webcast and the replay will be available on the company’s website at http://ir.prologis.com. Additionally, a podcast of the company's conference call will be available on the company's website.
About ProLogis
ProLogis is a leading global provider of distribution facilities, with more than 475 million square feet of industrial space owned and managed (44 million square meters) in markets across North America, Europe and Asia. The company leases its industrial facilities to more than 4,400 customers, including manufacturers, retailers, transportation companies, third-party logistics providers and other enterprises with large-scale distribution needs. For additional information about the company, go to www.prologis.com.
Follow ProLogis on Twitter: http://twitter.com/ProLogis
The statements above 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, they 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, general conditions in the geographic areas where we operate 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, (v) maintenance of real estate investment trust (“REIT”) status, (vi) availability of financing and capital, (vii) changes in demand for developed properties, and (viii) 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 press release.
Overview
(in thousands, except per share amounts)
Summary of Results
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- ----------------------
2009 2008 (1) 2009 2008 (1)
--------- ---------- ---------- ----------
Revenues (9) $ 260,318 $1,468,335 $1,223,082 $5,565,983
Net loss (a) $(408,459) $ (901,232) $ (2,650) $ (479,226)
Net loss per share -
Diluted (a) $ (0.86) $ (3.39) $ (0.01) $(1.82)
FFO, including
significant non-cash
items (a) $(305,761) $ (660,096) $ 138,885 $ 133,840
Add (deduct)
significant non-cash
items:
Impairment of real
estate properties 207,668 274,705 331,592 274,705
Impairment of
goodwill and other
assets 157,076 320,636 163,644 320,636
Impairment (net
gain) related to
disposed assets -
China operations - 198,236 (3,315) 198,236
Loss (gains) on
early
extinguishment of
debt 960 (90,719) (172,258) (90,719)
Our share of the
loss/impairment
recorded by PEPR
related to PEPF II - 108,195 - 108,195
Our share of
similar (gains)
losses recognized
by the property
funds, net 2,882 - 9,240 -
--------- ---------- ---------- ----------
Total adjustments
for significant
non-cash items 368,586 811,053 328,903 811,053
--------- ---------- ---------- ----------
FFO, excluding
significant non-cash
items (a) $ 62,825 $ 150,957 $ 467,788 $ 944,893
========= ========== ========== ==========
FFO per share -
Diluted, including
significant non-cash
items (a) $ (0.65) $ (2.48) $ 0.34 $ 0.50
Add (deduct) -
summarized
significant non-cash
adjustments - per
share 0.78 3.04 0.81 3.01
--------- ---------- ---------- ----------
FFO per share -
Diluted, excluding
significant non-cash
items (a) $ 0.13 $ 0.56 $ 1.15 $ 3.51
========= ========== ========== ==========
(a) These amounts are attributable to common shares.
Footnotes follow Financial Statements
Consolidated Balance Sheets
(in thousands, except per share data)
December 31, December 31,
2009 2008 (1)
----------- ------------
Assets:
Investments in real estate
assets (1):
Industrial properties:
Core $ 7,436,539 $ 7,924,507
Completed development 4,108,962 3,031,449
Properties under development 191,127 1,181,344
Land held for development 2,569,343 2,482,582
Retail and mixed use properties 291,038 358,992
Land subject to ground leases and
other 385,222 425,001
Other investments 233,665 321,397
----------- -----------
15,215,896 15,725,272
Less accumulated depreciation 1,671,100 1,583,299
----------- -----------
Net investments in real estate
assets 13,544,796 14,141,973
Investments in and
advances to
unconsolidated investees:
Property funds (2) 1,876,650 1,957,977
Other unconsolidated investees 275,073 312,016
----------- -----------
Total investments in and
advances to unconsolidated
investees 2,151,723 2,269,993
Cash and cash equivalents 34,362 174,636
Accounts and notes
receivable 136,754 244,778
Other assets (1) 1,017,780 1,126,993
Discontinued operations -
assets held for sale (2) - 1,310,754
----------- -----------
Total assets $16,885,415 $19,269,127
=========== ===========
Liabilities and Equity:
Liabilities:
Debt (1)(2)(3)(4)(5) $ 7,977,778 $10,711,368
Accounts payable and accrued expenses 455,919 658,868
Other liabilities 444,432 751,238
Discontinued operations - assets
held for sale (2) - 389,884
----------- -----------
Total liabilities 8,878,129 12,511,358
----------- -----------
Equity (6):
ProLogis shareholders' equity:
Series C preferred shares at stated
liquidation preference of $50 per
share 100,000 100,000
Series F preferred shares at stated
liquidation preference of $25 per
share 125,000 125,000
Series G preferred shares at stated
liquidation preference of $25 per
share 125,000 125,000
Common shares at $.01 par value
per share 4,742 2,670
Additional paid-in capital (1) 8,524,867 7,070,108
Accumulated other comprehensive
income (loss) 42,298 (29,374)
Distributions in excess of net
earnings (1) (934,583) (655,513)
----------- -----------
Total ProLogis shareholders'
equity 7,987,324 6,737,891
Noncontrolling interests (7) 19,962 19,878
----------- -----------
Total equity 8,007,286 6,757,769
----------- -----------
Total liabilities and equity $16,885,415 $19,269,127
=========== ===========
Footnotes follow Financial Statements
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
2009 2008 (1) 2009 2008 (1)
--------- --------- --------- ---------
Revenues:
Rental income (8) $ 227,362 $ 215,196 $ 891,095 $ 913,650
Property management and
other
fees and incentives (2) 31,563 33,815 142,763 131,011
CDFS disposition
proceeds (9):
Developed and
repositioned
properties (2) - 1,192,935 180,237 4,206,446
Acquired property
portfolios - 18,781 - 289,019
Development management and
other income 1,393 7,608 8,987 25,857
--------- --------- --------- ---------
Total revenues 260,318 1,468,335 1,223,082 5,565,983
--------- --------- --------- ---------
Expenses:
Rental expenses (10) 65,595 60,324 269,956 277,320
Investment management
expenses (10) 11,835 12,344 43,416 50,761
Cost of CDFS
dispositions (1)(9):
Developed and
repositioned
properties - 1,086,150 - 3,551,700
Acquired property
portfolios - 18,781 - 289,019
General and administrative
(4)(10)(11) 52,161 36,987 180,486 177,350
Reduction in workforce (11) - 23,131 11,745 23,131
Impairment of real estate
properties (12) 207,668 274,705 331,592 274,705
Depreciation and
amortization 84,153 97,435 315,807 317,315
Other expenses 4,617 17,446 24,025 28,104
--------- --------- --------- ---------
Total expenses 426,029 1,627,303 1,177,027 4,989,405
--------- --------- --------- ---------
Operating income (loss) (165,711) (158,968) 46,055 576,578
Other income (expense):
Earnings (loss) from
unconsolidated property
funds, net (13) (6,227) (105,024) 24,908 (69,116)
Earnings from other
unconsolidated
investees, net 301 914 3,151 13,342
Interest expense (1)(14) (107,486) (100,314) (373,305) (385,065)
Impairment of goodwill and
other assets (12) (157,076) (320,636) (163,644) (320,636)
Other income (expense), net (33,503) 2,526 (39,349) 16,522
Net gains on dispositions
of real estate
properties (9) 12,843 5,853 35,262 11,668
Foreign currency exchange
gains (losses), net (15) 728 (115,303) 35,626 (148,281)
Gains (loss) on early
extinguishment of debt (3) (960) 90,719 172,258 90,719
--------- --------- --------- ---------
Total other income
(expense) (291,380) (541,265) (305,093) (790,847)
--------- --------- --------- ---------
Loss before income
taxes (457,091) (700,233) (259,038) (214,269)
Current income tax expense
(benefit) (2) (878) 15,726 29,262 63,441
Deferred income tax expense
(benefit) (2,600) (14,834) (23,287) 4,570
--------- --------- --------- ---------
Total income taxes (3,478) 892 5,975 68,011
--------- --------- --------- ---------
Loss from continuing
operations (453,613) (701,125) (265,013) (282,280)
Discontinued
operations (16):
Income (loss) attributable
to disposed properties 1,490 (4,455) 24,163 11,049
Net gain (impairment)
related to disposed
assets - China
operations (2) - (198,236) 3,315 (198,236)
Net gains on dispositions:
Non-development
properties 21,024 1,557 220,815 9,718
Development properties
and land subject to
ground leases (2) 29,146 7,551 40,649 9,783
--------- --------- --------- ---------
Total discontinued
operations 51,660 (193,583) 288,942 (167,686)
--------- --------- --------- ---------
Consolidated net
earnings (loss) (401,953) (894,708) 23,929 (449,966)
Net earnings
attributable to
noncontrolling
interests (7) (190) (172) (1,156) (3,837)
--------- --------- --------- ---------
Net earnings (loss)
attributable to
controlling interests (1) (402,143) (894,880) 22,773 (453,803)
Less preferred share
dividends 6,316 6,352 25,423 25,423
--------- --------- --------- ---------
Net loss
attributable to
common shares $(408,459) $(901,232) $ (2,650) $(479,226)
========= ========= ========= =========
Weighted average
common shares
outstanding -Basic (6) 473,561 265,898 403,149 262,729
Weighted average common
shares outstanding -
Diluted (6) 473,561 265,898 403,149 262,729
Net earnings (loss) per share
attributable to common
shares - Basic:
Continuing operations $ (0.97) $ (2.66) $ (0.73) $ (1.18)
Discontinued operations 0.11 (0.73) 0.72 (0.64)
--------- --------- --------- ---------
Net earnings (loss) per
share attributable to
common shares - Basic $ (0.86) $ (3.39) $ (0.01) $ (1.82)
========= ========= ========= =========
Net earnings (loss) per share
attributable to common
shares -Diluted:
Continuing operations $ (0.97) $ (2.66) $ (0.73) $ (1.18)
Discontinued operations 0.11 (0.73) 0.72 (0.64)
--------- --------- --------- ---------
Net earnings (loss) per
share attributable to
common shares -Diluted $ (0.86) $ (3.39) $ (0.01) $ (1.82)
========= ========= ========= =========
Footnotes follow Financial Statements
Consolidated Statements of Funds From Operations (FFO)
(in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- ---------------------
2009 2008 (1) 2009 2008 (1)
--------- --------- --------- ----------
Revenues:
Rental income $ 229,906 $ 249,778 $ 941,587 $1,035,335
Property management
and other fees and
incentives (2) 31,563 34,466 142,856 132,038
CDFS disposition
proceeds (9):
Developed and
repositioned
properties (2) - 1,239,378 180,237 4,271,786
Acquired property
portfolios - 18,781 - 372,667
Development
management and other
income 1,393 7,822 8,987 26,344
--------- --------- --------- ----------
Total revenues 262,862 1,550,225 1,273,667 5,838,170
--------- --------- --------- ----------
Expenses:
Rental expenses (10) 66,162 73,746 284,390 319,378
Investment management
expenses (10) 11,835 12,344 43,416 50,761
Cost of CDFS
dispositions (1)(9):
Developed and
repositioned
properties - 1,126,198 - 3,610,123
Acquired property
portfolios - 18,781 - 372,667
General and
administrative
(10)(11) 52,161 45,896 181,791 199,074
Reduction in
workforce (11) - 26,431 11,745 26,431
Impairment of real
estate
properties (12) 207,668 274,705 331,592 274,705
Depreciation of
corporate assets 3,828 4,177 15,897 16,332
Other expenses 4,617 21,400 24,031 33,192
--------- --------- --------- ----------
Total expenses 346,271 1,603,678 892,862 4,902,663
--------- --------- --------- ----------
Operating FFO (83,409) (53,453) 380,805 935,507
Other income (expense):
FFO from
unconsolidated
property funds (13) 41,679 (62,039) 157,197 66,415
FFO from other
unconsolidated
investees 1,952 858 10,878 6,162
Interest expense (1) (107,486) (100,398) (373,135) (384,526)
Net gain (impairment)
related to assets
held for
sale - China
operations (2) - (198,236) 3,315 (198,236)
Impairment of
goodwill and other
assets (12) (157,076) (320,636) (163,644) (320,636)
Other income
(expense), net (33,503) 3,724 (39,277) 20,806
Net gains on
dispositions of real
estate
properties (9) 35,515 - 65,587 -
Foreign currency
exchange gains
(losses), net (503) 723 (22,571) (7,009)
Gains (loss) on early
extinguishment of
debt (3) (960) 90,719 172,258 90,719
Current income tax
benefit
(expense) (2)(17) 4,536 (16,727) (25,805) (56,170)
--------- --------- --------- ----------
Total other income
(expense) (215,846) (602,012) (215,197) (782,475)
--------- --------- --------- ----------
FFO (299,255) (655,465) 165,608 153,032
Less preferred share
dividends 6,316 6,352 25,423 25,423
Less net earnings
(loss) attributable to
noncontrolling
interests (7) 190 (1,721) 1,300 (6,231)
--------- --------- --------- ----------
FFO attributable to
common shares,
including
significant non-cash
items $(305,761) $(660,096) $ 138,885 $ 133,840
Adjustments for
significant non-cash
items 368,586 811,053 328,903 811,053
--------- --------- --------- ----------
FFO attributable to
common shares,
excluding
significant non-cash
items $ 62,825 $ 150,957 $ 467,788 $ 944,893
========= ========= ========= ==========
Weighted average common
shares outstanding -
Basic (6) 473,561 265,898 403,149 262,729
FFO per share
attributable to common
shares, including
significant non-cash
items:
Basic $ (0.65) $ (2.48) $ 0.34 $ 0.51
========= ========= ========= ==========
Diluted $ (0.65) $ (2.48) $ 0.34 $ 0.50
========= ========= ========= ==========
FFO per share
attributable to common
shares, excluding
significant non-cash
items:
Basic $ 0.13 $ 0.57 $ 1.16 $ 3.60
========= ========= ========= ==========
Diluted $ 0.13 $ 0.56 $ 1.15 $ 3.51
========= ========= ========= ==========
Footnotes follow Financial Statements
Reconciliations of Net Loss to FFO and EBITDA
(in thousands)
Reconciliation of net loss to FFO, including significant non-cash items
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- --------------------
2009 2008 (1) 2009 2008 (1)
--------- --------- -------- ---------
Net loss (a) $(408,459) $(901,232) $ (2,650) $(479,226)
Add (deduct)
NAREIT
defined
adjustments:
Real estate
related
depreciation
and amortization 80,325 93,258 299,910 300,983
Adjustments to
gains on
dispositions for
depreciation (3,183) (1,156) (5,387) (2,866)
Gains on
dispositions of
non-development/
non-CDFS
properties (3,291) (5,806) (4,937) (11,620)
Reconciling items
attributable to
discontinued
operations (16):
Gains on
dispositions of
non-development/
non-CDFS
properties (21,024) (1,557) (220,815) (9,718)
Real estate
related
depreciation
and amortization 487 9,012 11,319 33,661
--------- --------- -------- ---------
Total
discontinued
operations (20,537) 7,455 (209,496) 23,943
Our share of
reconciling
items from
unconsolidated
investees:
Real estate
related
depreciation and
amortization 40,361 51,159 154,315 155,067
Adjustment to
gains/losses
on dispositions
for depreciation (1,681) (329) (9,569) (492)
Other
amortization
items (3,954) (3,337) (11,775) (15,840)
--------- --------- -------- ---------
Total
unconsolidated
investees 34,726 47,493 132,971 138,735
--------- --------- -------- ---------
Total NAREIT
defined
adjustments 88,040 141,244 213,061 449,175
--------- --------- -------- ---------
Subtotal-
NAREIT
defined
FFO (320,419) (759,988) 210,411 (30,051)
Add (deduct)
our defined
adjustments:
Foreign
currency
exchange
losses
(gains),
net (15) (1,231) 117,145 (58,128) 144,364
Current income
tax expense (17) 3,658 - 3,658 9,656
Deferred income
tax expense
(benefit) (2,600) (15,406) (23,299) 4,073
Our share of
reconciling
items from
unconsolidated
investees:
Foreign currency
exchange losses
(gains), net (15) (947) (82) (1,737) 2,331
Unrealized
losses (gains)
on derivative
contracts, net (1,394) 18,007 (7,561) 23,005
Deferred income
tax expense
(benefit) 17,172 (19,772) 15,541 (19,538)
--------- --------- -------- ---------
Total
unconsolidated
investees 14,831 (1,847) 6,243 5,798
--------- --------- -------- ---------
Total our
defined
adjustments 14,658 99,892 (71,526) 163,891
--------- --------- -------- ---------
FFO, including
significant
non-cash
items (a) $(305,761) $(660,096) $138,885 $ 133,840
========= ========= ======== =========
Reconciliation of FFO, including significant non-cash items, to FFO,
excluding significant non-cash items
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- --------------------
2009 2008 (1) 2009 2008 (1)
--------- --------- -------- --------
FFO, including
significant
non-cash items (a) $(305,761) $(660,096) $138,885 $133,840
Add (deduct)
significant
non-cash items:
Impairment
of real estate
properties (12) 207,668 274,705 331,592 274,705
Impairment of
goodwill and
other assets (12) 157,076 320,636 163,644 320,636
Impairment
(net gain)
related to
disposed assets
- China
operations (2) - 198,236 (3,315) 198,236
Loss (gains)
on early
extinguishment
of debt (3) 960 (90,719) (172,258) (90,719)
Our share of
the loss/
impairment
recorded by
PEPR - 108,195 - 108,195
Our share of
certain (gains)
losses
recognized by
the property
funds 2,882 - 9,240 -
--------- --------- -------- --------
Total
adjustments
for significant
non-cash
items 368,586 811,053 328,903 811,053
--------- --------- -------- --------
FFO, excluding
significant
non-cash items (a) $ 62,825 $ 150,957 $467,788 $944,893
========= ========= ======== ========
Reconciliation of FFO, excluding significant non-cash items, to EBITDA
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- ----------------------
2009 2008 (1) 2009 2008 (1)
-------- -------- ---------- ----------
FFO, excluding
significant
non-cash items (a) $ 62,825 $150,957 $ 467,788 $ 944,893
Interest expense 107,486 100,398 373,135 384,526
Depreciation of
corporate assets 3,828 4,177 15,897 16,332
Current income
tax expense
(benefit)
included in FFO (4,536) 16,727 25,805 56,170
Adjustments
to gains on
dispositions
for interest
capitalized 5,251 12,637 16,795 57,632
Preferred share
dividends 6,316 6,352 25,423 25,423
Share of
reconciling
items from
unconsolidated
investees 41,284 33,812 173,682 173,900
-------- -------- ---------- ----------
Earnings before
interest, taxes,
depreciation and
amortization
(EBITDA) $222,454 $325,060 $1,098,525 $1,658,876
======== ======== ========== ==========
See Consolidated Statements of Operations and Consolidated Statements
of FFO.
Footnotes follow Financial Statements
(a) Attributable to common shares.
Calculation of Per Share Amounts
(in thousands, except per share amounts)
Net Loss Per Share
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- ---------------------
2009 (a) 2008 (a) 2009 (a) 2008 (a)
--------- --------- -------- ----------
Net loss - Basic (b) $(408,459) $(901,232) $ (2,650) $(479,226)
Noncontrolling interest
attributable to
convertible limited
partnership units (c) - - - -
--------- --------- -------- ---------
Adjusted loss -
Diluted (b) $(408,459) $(901,232) $ (2,650) $(479,226)
========= ========= ======== =========
Weighted average common
shares outstanding -
Basic 473,561 265,898 403,149 262,729
Incremental weighted
average effect of
conversion of limited
partnership units (c) - - - -
Incremental weighted
average effect of stock
awards (d) - - - -
--------- --------- -------- ---------
Weighted average common
shares outstanding -
Diluted 473,561 265,898 403,149 262,729
Net loss per share -
Diluted (b) $ (0.86) $ (3.39) $ (0.01) $ (1.82)
========= ========= ======== =========
FFO Per Share, including significant non-cash items
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- --------------------
2009 (a) 2008 (a) 2009 2008
--------- --------- -------- --------
FFO - Basic, including
significant non-cash
items (b) $(305,761) $(660,096) $138,885 $133,840
Noncontrolling interest
attributable to
convertible limited
partnership units (c) - - - -
--------- --------- -------- --------
FFO - Diluted, including
significant non-cash
items (b) $(305,761) $(660,096) $138,885 $133,840
========= ========= ======== ========
Weighted average common
shares outstanding -
Basic 473,561 265,898 403,149 262,729
Incremental weighted
average effect of
conversion of limited
partnership units (c) - - - -
Incremental weighted
average effect of stock
awards (d) - - 2,474 3,372
--------- --------- -------- --------
Weighted average common
shares outstanding -
Diluted 473,561 265,898 405,623 266,101
========= ========= ======== ========
FFO per share - Diluted,
including significant
non-cash items (b) $ (0.65) $ (2.48) $ 0.34 $ 0.50
========= ========= ======== ========
FFO Per Share, excluding significant non-cash items
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- --------------------
2009 2008 2009 2008
--------- --------- -------- --------
FFO - Basic, including
significant non-cash
items (b) $(305,761) $(660,096) $138,885 $133,840
Adjustments for
significant
non-cash items 368,586 811,053 328,903 811,053
Noncontrolling interest
attributable to
convertible
limited partnership
units (c) - 172 1,156 3,837
--------- --------- -------- --------
FFO - Diluted, excluding
significant non-cash
items (b) $ 62,825 $ 151,129 $468,944 $948,730
========= ========= ======== ========
Weighted average common
shares outstanding -
Basic 473,561 265,898 403,149 262,729
Incremental weighted
average effect of
conversion of limited
partnership units (c) - 2,551 1,100 4,447
Incremental weighted
average effect of
stock awards (d) 3,159 1,527 2,474 3,372
--------- --------- -------- --------
Weighted average common
shares outstanding -
Diluted 476,720 269,976 406,723 270,548
========= ========= ======== ========
FFO per share - Diluted,
excluding significant
non-cash items (b) $ 0.13 $ 0.56 $ 1.15 $ 3.51
========= ========= ======== ========
(a) In periods with a net loss, the inclusion of any incremental shares is
anti-dilutive, and, therefore, both basic and diluted shares are the
same.
(b) Attributable to common shares.
(c) If the impact of the conversion of limited partnership units is anti-
dilutive, the income and shares are not included in the diluted per
share calculation.
(d) Total weighted average potentially dilutive awards outstanding were
10,949 and 10,833 for the three months ended December 31, 2009 and
2008, respectively, and 11,539 and 10,204 for the year-ended December
31, 2009 and 2008, respectively. Of the potentially dilutive
instruments, 5,639 and 7,506, were anti-dilutive for the three months
ended December 31, 2009 and 2008, respectively, and 6,781 and 6,647,
were anti-dilutive for the year-ended December 31, 2009 and 2008. In a
loss period, the effect of stock awards is not included as the impact
is anti-dilutive.
Notes to Financial Statements
Please also refer to our annual and quarterly financial statements filed
with the Securities and Exchange Commission on Forms 10-K and 10-Q for
further information about us and our business. Certain 2008 amounts
included in our financial statements have been reclassified to conform to
the 2009 presentation.
(1) In May 2008, the Financial Accounting Standards Board ("FASB") issued
a new standard that requires separate accounting for the debt and
equity components of certain convertible debt. The value assigned to
the debt component is the estimated fair value of a similar bond
without the conversion feature at the time of issuance, which would
result in the debt being recorded at a discount. The resulting debt
discount is amortized through the first redeemable option date as
additional non-cash interest expense. We adopted this standard on
January 1, 2009, as required, on a retroactive basis for the
convertible notes we issued in 2007 and 2008. As a result, we
restated our 2008 results to reflect the additional interest expense
and the additional capitalized interest related to our development
activities for both properties we currently own, as well as
properties that were contributed during the applicable periods. This
restatement impacted earnings and FFO.
The following tables illustrate the impact of the restatement on our
Consolidated Balance Sheets and Consolidated Statements of Operations
and FFO for these periods (in thousands):
As of December 31, 2008
------------------------------------------
As Reported Adjustments As Restated
----------- ----------- -----------
Consolidated
Balance
Sheet:
------------
Net investments
in real
estate assets $15,706,172 $ 19,100 $15,725,272
Other assets $ 1,129,182 $ (2,189) $ 1,126,993
Debt $11,007,636 $(296,268) $10,711,368
Additional
paid in
capital $ 6,688,615 $ 381,493 $ 7,070,108
Distributions
in excess
of net earnings $ (587,199) $ (68,314) $ (655,513)
For the Three Months Ended, December 31, 2008
---------------------------------------------
As Reported Adjustments(a) As Restated
----------- -------------- -----------
(before 2009
discontinued
operations
adjustment)
Consolidated
Statements of
Operations:
--------------
Cost of CDFS
dispositions $1,102,053 $ 2,878 $1,104,931
Interest expense,
net of
capitalization $ 88,737 $ 11,289 $ 100,026
Net loss
attributable to
controlling
interests $ (880,713) $(14,167) $ (894,880)
For the Twelve Months Ended, December 31, 2008
----------------------------------------------
As Reported Adjustments (a) As Restated
----------- --------------- -----------
(before 2009
discontinued
operations
adjustment)
Consolidated
Statements of
Operations:
---------------
Cost of CDFS
dispositions $3,836,519 $ 4,200 $3,840,719
Interest expense,
net of
capitalization $ 341,305 $ 42,830 $ 384,135
Net loss
attributable to
controlling
interests $ (406,773) $(47,030) $ (453,803)
(a) The adjustments are the same in our Consolidated Statements of
FFO.
(2) On February 9, 2009, we sold our operations in China and our property
fund interests in Japan to affiliates of GIC Real Estate, the real
estate investment company of the Government of Singapore Investment
Corporation ("GIC RE"), for total cash consideration of $1.3 billion
($845 million related to China and $500 million related to the Japan
investments). We used the proceeds primarily to pay down borrowings
on our credit facilities.
All of the assets and liabilities associated with our China
operations were classified as Assets and Liabilities Held for Sale in
our accompanying Consolidated Balance Sheet as of December 31, 2008.
In the fourth quarter of 2008, based on the carrying values of these
assets and liabilities, as compared with the estimated sales proceeds
less costs to sell, we recognized an impairment of $198.2 million. In
connection with the sale in the first quarter of 2009, we recognized
a $3.3 million gain on sale. In addition, the results of our China
operations are presented as discontinued operations in our
accompanying Consolidated Statements of Operations for all periods.
All operating information presented throughout this report excludes
China operations.
In connection with the sale of our investments in the Japan property
funds, we recognized a gain of $180.2 million. The gain is reflected
as CDFS Proceeds in our Consolidated Statements of Operations and
FFO, as it represents previously deferred gains on the contribution
of properties to the property funds based on our ownership interest
in the property funds at the time of original contribution of
properties. We also recognized $20.5 million in current income tax
expense related to the Japan portion of the transaction. In April
2009, we sold one property in Japan to GIC RE for $128.1 million,
resulting in a gain on sale of $13.1 million that is reflected as
Discontinued Operations – Net Gains on Dispositions of Development
Properties and Land Subject to Ground Leases and as Net Gains on
Dispositions of Real Estate Properties in our Consolidated Statements
of Operations and FFO, respectively. The building and related
borrowings were classified as held for sale at December 31, 2008.
We continued to manage the Japan properties until July 2009. In
connection with the termination of the management agreement, we
earned a termination fee of $16.3 million that is included in
Property Management and Other Fees and Incentives in our Consolidated
Statements of Operations and FFO.
(3) During the three and twelve months ended December 31, 2009 in
connection with our announced initiatives to reduce debt, we
repurchased portions of several series of notes outstanding, the
majority of which were at a discount, and extinguished some secured
mortgage debt prior to maturity. These transactions resulted in the
recognition of net gains or losses and are summarized, as follows (in
thousands):
For the For the For the Three
Three Twelve and Twelve
Months Ended Months Ended Months Ended
December 31, December 31, December 31,
2009 2009 2008
------------ ------------ -------------
Convertible Senior
Notes:
Original principal
amount $117,736 $ 653,993 $ -
Cash purchase price $102,920 $ 454,023 $ -
Senior Notes (a):
Original principal
amount $224,506 $ 587,698 $309,722
Cash purchase price $226,754 $ 545,618 $216,805
Secured Mortgage Debt:
Original principal
amount (b) $ - $ 227,017 $ -
Cash extinguishment
price $ - $ 227,017 $ -
Total:
Original principal
amount $342,242 $1,468,708 $309,722
Cash purchase/
extinguishment price $329,674 $1,226,658 $216,805
Gain (loss) on early
extinguishment of
debt(c) $ (960) $ 172,258 $ 90,719
(a) Included in the twelve months ended December 31, 2009 is the
repurchase of euro 248.7 million ($356.4 million) original
principal amount of our Euro senior notes for euro
235.1 million ($338.7 million).
(b) In addition, there was an unamortized premium of $11.4 million
(recorded at acquisition) that was included in the calculation
of the gain on early extinguishment.
(c) Represents the difference between the recorded debt (net of the
discount or premium) and the consideration we paid to retire the
debt.
(4) On October 1, 2009, we completed a consent solicitation with regard
to certain of our senior notes, and entered into a new supplemental
indenture (the Ninth Supplemental Indenture) that amended certain
indenture covenants, defined terms and thresholds for certain events
of default.
We recognized $14.5 million in fees and expenses related to the
consent solicitation that are included in General and Administrative
Expenses ("G&A") in our Consolidated Statements of Operations and
FFO.
(5) In August 2009, we amended the Global Line, extending the maturity to
August 21, 2012 and reducing the size of our aggregate commitments to
$2.25 billion (subject to currency fluctuations) after October 2010.
The Global Line will continue to have lender commitments of $3.7
billion (subject to currency fluctuations) until October 2010,
although our borrowing capacity may be less.
In August 2009, we issued $350 million of senior notes with a stated
interest rate of 7.625% and a maturity of August 2014. On October 30,
2009, we issued $600 million of senior notes with a stated interest
rate of 7.375% and a maturity of October 2019. We used the proceeds
from both issuances primarily to repay borrowings under our Global
Line and other debt.
(6) On April 14, 2009, we completed a public offering of 174.8 million
common shares at a price of $6.60 per share and received net proceeds
of $1.1 billion that were used to repay borrowings under our credit
facilities. During the third quarter of 2009, we issued 29.8 million
shares and received gross proceeds of $331.9 million and paid
offering expenses of approximately $6.9 million under our at the
market share issuance plan.
(7) On January 1, 2009, we adopted the provisions of a new accounting
standard that requires noncontrolling interests (previously referred
to as minority interests) to be reported as a component of equity and
changes the accounting for transactions with noncontrolling interest
holders.
(8) In our Consolidated Statements of Operations, rental income includes
the following (in thousands):
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------- -------------------
2009 2008 2009 2008
-------- -------- -------- --------
Rental income $169,188 $158,259 $658,462 $669,460
Rental expense recoveries 46,621 47,591 194,775 210,934
Straight-lined rents 11,553 9,346 37,858 33,256
-------- -------- -------- --------
$227,362 $215,196 $891,095 $913,650
======== ======== ======== ========
(9) In response to market conditions, during the fourth quarter of 2008
we modified our business strategy. As a result, as of December 31,
2008, we have two operating segments - Direct Owned and Investment
Management, and we no longer have a CDFS Business segment. We
presented the results of operations of our CDFS Business segment
separately in 2008.
Our direct owned segment represents the direct, long-term ownership
of industrial properties. Our investment strategy in this segment
focuses primarily on the ownership and leasing of industrial
properties in key distribution markets. We consider these properties
to be our Core Portfolio. Also included in this segment are operating
properties we developed with the intent to contribute the properties
to an unconsolidated property fund that we previously referred to as
our "CDFS Pipeline" and, beginning December 31, 2008, we now refer to
as our Completed Development Portfolio. Our intent is to hold the
Core and Development properties, however, we may contribute either
Core or Development properties to the property funds, to the extent
there is fund capacity, or sell them to third parties. When we
contribute or sell Development properties, we recognize FFO to the
extent the proceeds received exceed our original investment (i.e.
prior to depreciation). However, beginning January 1, 2009, we now
present the results as Net Gains on Dispositions, rather than as CDFS
Disposition Proceeds and Cost of CDFS Dispositions. In addition, we
have industrial properties that are currently under development (also
included in our Development Portfolio) and land available for
development that are part of this segment as well. The investment
management segment represents the investment management of
unconsolidated property funds and joint ventures and the properties
they own.
(10) Beginning in 2009, we are reporting the direct costs associated with
our investment management segment for all periods presented as a
separate line item "Investment Management Expenses" in our
Consolidated Statements of Operations and FFO. These costs include
the property management expenses associated with the property-level
management of the properties owned by the property funds and joint
ventures (previously included in Rental Expenses) and the investment
management expenses associated with the asset management of the
property funds and joint ventures (previously included in General and
Administrative Expenses). In order to allocate the property
management expenses between the properties owned by us and the
properties owned by the property funds and joint ventures, we use the
square feet owned at the beginning of the period by the respective
portfolios. See note 2 related to the Japan properties that we no
longer manage.
(11) As we announced in the fourth quarter of 2008, in response to the
difficult economic climate, we initiated G&A reductions with a near-
term target of a 20 to 25% reduction in G&A prior to capitalization
or allocation. These initiatives include a Reduction in Workforce
("RIF") and reductions to other expenses through various cost savings
measures. Due to the changes in our business strategy in the fourth
quarter of 2008, we halted the majority of our new development
activities, which, along with lower gross G&A, has resulted in lower
capitalized G&A. Our G&A included in our Statements of Operations
consisted of the following (in thousands):
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ -------------------
2009 2008 2009 2008
------- ------- -------- --------
Gross G&A(a) $80,187 $89,299 $294,598 $400,648
Reclassed to
discontinued
operations, net of
capitalized amounts(b) - (8,906) (1,305) (21,721)
Capitalized amounts
and amounts reported
as rental and
investment management
expenses (28,026) (43,406) (112,807) (201,577)
------- ------- -------- --------
Net G&A $52,161 $36,987 $180,486 $177,350
======= ======= ======== ========
(a) Included in G&A in the fourth quarter of 2009 is $14.5 million of
fees and expenses associated with the consent solicitation
discussed in Note 4.
(b) G&A costs included in discontinued operations is net of $2.3
million and $11.3 million of capitalized costs for the three and
twelve months ended December 31, 2008, respectively.
(12) During 2009 and 2008, we recorded impairment charges of certain of
our real estate properties and other assets as outlined below (in
millions):
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------- -----------------
2009 2008 2009 2008
------ ------ ------ ------
Included in "Impairment
of Real Estate
Properties":
Land held for
development $135.8 $194.2 $137.0 $194.2
Completed and under
development properties 3.5 34.8 126.2 34.8
Retail and mixed use
properties 46.2 - 46.2 -
Land subject to ground
leases and other 17.6 - 17.6 -
Other real estate
investments 4.6 45.7 4.6 45.7
------ ------ ------ ------
Total impairment of
real estate properties $207.7 $274.7 $331.6 $274.7
Included in "Impairment
of Goodwill and Other
Assets":
Goodwill $ - $175.4 $ - $175.4
Other assets 157.1 145.2 163.6 145.2
------ ------ ------ ------
Total impairment of
goodwill and other
assets $157.1 $320.6 $163.6 $320.6
------ ------ ------ ------
Total direct owned
impairment charges
included in continuing
operations $364.8 $595.3 $495.2 $595.3
====== ====== ====== ======
The impairment charges of real estate properties that we recognized
in 2008 and 2009 were primarily based on valuations of real estate,
which had declined due to market conditions, that we no longer
expected to hold for long-term investment. Included in the 2009
impairment charges is $9.2 million that should have been recorded in
2008. This amount, along with an additional $3.0 million of deferred
tax expense, was recorded in 2009 and relates to a revision of our
estimated deferred income tax liabilities associated with our
international operations. In order to generate liquidity, we have
contributed certain completed properties to property funds (primarily
in Europe) and sold or intend to sell certain land parcels or
properties to third parties. To the extent these properties are
expected to be sold at a loss, we record an impairment charge when
the loss is known. The impairment charges related to goodwill that we
recognized in the fourth quarter of 2008 and related to other assets
that we recognized in 2009 and 2008 were similarly caused by the
decline in the real estate markets.
(13) The following table represents our share of income (loss) recognized
by the property funds related to derivative activity and the sale of
real estate properties (in thousands).
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------- ---------------------
2009 2008 2009 2008
------- --------- --------- ----------
Included in
Earnings from
Unconsolidated
Property Funds in
our Consolidated
Statements of
Operations:
Derivative gain
(loss) $1,394 $ (19,189) $ (6,306) $ (32,278)
Gain (loss) from
the sale of
properties and
impairment
charges, net $ 946 $(107,887) $ (4,831) $(106,420)
Included in FFO
from
Unconsolidated
Property Funds in
our Consolidated
Statements of
FFO:
Derivative loss $ - $ (1,182) $(13,867) $ (9,274)
Gain (loss) from
the sale of
properties and
impairment
charges, net $ 683 $(108,218) $(12,720) $(106,914)
In the fourth quarter of 2008 we recognized a loss of $108.2 million
representing our share of the loss recognized by PEPR from the sale
of its 30% ownership interest in PEPF II. We acquired PEPR's 20%
interest in PEPF II in December 2008, and PEPR sold its remaining
ownership in PEPF II of approximately 10% to third parties in early
2009.
(14) The following table presents the components of interest expense as
reflected in our Consolidated Statements of Operations (in
thousands):
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------- -------------------
2009 2008 2009 2008
-------- -------- -------- --------
Gross interest expense $101,314 $117,113 $382,899 $477,933
Amortization of
discount, net 16,494 18,451 67,542 63,676
Amortization of
deferred loan costs 5,877 3,474 17,069 12,238
-------- -------- -------- --------
Interest expense
before
capitalization 123,685 139,038 467,510 553,847
Capitalized amounts (16,199) (38,724) (94,205) (168,782)
-------- -------- -------- --------
Net interest expense $107,486 $100,314 $373,305 $385,065
======== ======== ======== ========
Gross interest expense decreased in 2009 from 2008 due to
significantly lower debt levels, offset by increases in borrowing
rates. The decrease in capitalized amounts is due to less development
activity.
(15) Included in Foreign Currency Exchange Gains (Losses), Net, for the
twelve months ended December 31, 2009 and 2008, are net foreign
currency exchange gains and losses, respectively, related to the
remeasurement of inter-company loans between the U.S. and our
consolidated subsidiaries in Japan and Europe due to the fluctuations
in the exchange rates of U.S. dollars to the yen, the euro and pound
sterling during the applicable periods. We do not include the
gains and losses related to inter-company loans in our calculation of
FFO.
(16) The operations of the properties held for sale or disposed of to
third parties and the aggregate net gains recognized upon their
disposition are presented as discontinued operations in our
Consolidated Statements of Operations for all periods presented,
unless the property was developed under a pre-sale agreement.
As discussed in Note 2 above, all of the assets and liabilities
associated with our China operations were classified as Assets and
Liabilities Held for Sale in our accompanying Consolidated Balance
Sheet as of December 31, 2008, as well as one property in Japan that
we sold in April 2009.
During 2009, other than our China operations, we disposed of land
subject to ground leases and 140 properties (aggregating 14.8 million
square feet, 3 of which were development properties) to third
parties. This includes a portfolio of 90 properties aggregating 9.6
million square feet that were sold to a single venture during the
third quarter in which we retained a 5% interest. We continue
to manage these properties. During 2008, we disposed of land subject
to ground leases and 15 properties to third parties, including 6
development properties.
The income (loss) attributable to these properties was as follows (in
thousands):
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ -------------------
2009 2008 2009 2008
------ ------- ------- --------
Rental income $2,544 $34,582 $50,492 $121,685
Rental expenses (567) (13,422) (14,434) (42,058)
Depreciation and
amortization (487) (9,012) (11,319) (33,661)
Other expenses, net - (16,603) (576) (34,917)
------ ------- ------- --------
Income (loss) attributable
to disposed properties $1,490 $(4,455) $24,163 $ 11,049
====== ======= ======= ========
For purposes of our Consolidated Statements of FFO, we do not
segregate discontinued operations. In addition, we include the gains
from disposition of land parcels and Completed Development Properties
(2009) and CDFS properties (2008) in the calculation of FFO,
including those classified as discontinued operations.
(17) In connection with purchase accounting, we record all of the acquired
assets and liabilities at the estimated fair values at the date of
acquisition. For our taxable subsidiaries, we recognize the deferred
tax liabilities that represent the tax effect of the difference
between the tax basis carried over and the fair values at the date of
acquisition. As taxable income is generated in these subsidiaries, we
recognize a deferred tax benefit in earnings as a result of the
reversal of the deferred tax liability previously recorded at the
acquisition date and we record current income tax expense
representing the entire current income tax liability. In our
calculation of FFO, we only include the current income tax expense to
the extent the associated income is recognized for financial
reporting purposes.
SOURCE ProLogis
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