ProLogis Reports Second Quarter Results
- Total Operating Portfolio Leasing Improves Driven by Development Portfolio -
- Build-to-Suit Development and Land Monetization Ahead of Plan -
- Company Reiterates Full-year Guidance -
DENVER, July 22 /PRNewswire-FirstCall/ -- ProLogis (NYSE: PLD), a leading global provider of distribution facilities, today reported second quarter 2010 funds from operations as defined by ProLogis (FFO), excluding significant non-cash items, of $0.15 per diluted share. Of this amount, approximately $0.02 related to gains on contributions and $0.13 per diluted share was from core operations. FFO, including significant non-cash items of $0.01, was $0.14 per diluted share.
For the six months ended June 30, 2010, FFO, excluding significant non-cash items and first quarter non-recurring charges, was $0.28 per diluted share, relative to the company’s full-year 2010 guidance of $0.70 - $0.78 per diluted share. Core FFO for the first half was $0.24 relative to the company’s full-year guidance of $0.55 - $0.60 per diluted share.
The company reported a net loss of $0.05 per diluted share for the second quarter of 2010 and a net loss of $0.24 per diluted share for the six months ended June 30, 2010.
Industrial Fundamentals Remain Mixed
“Economic growth forecasts have been tempered in recent weeks, and for the most part, industrial market conditions are tracking with the expectations of a more moderate pace of recovery,” said Walter C. Rakowich, chief executive officer. “Despite these indications of slower growth, we are seeing steady activity levels with modest occupancy increases in some markets and believe rental rates have bottomed in the majority of them. For the first time since October 2007, we saw positive net absorption in the top 31 North American industrial markets of approximately 11 million square feet. In addition, customers remain focused on improving supply chain efficiencies, and with limited new supply, those with targeted requirements are increasingly pursuing build-to-suits.”
For the quarter, the company’s total industrial operating portfolio (including completed development) was 89.7 percent leased, up from 89.2 percent in the first quarter of 2010, principally driven by a 480 basis point increase in completed development leasing. Total leasing activity was 28.3 million square feet in the second quarter of 2010, in line with average leasing over the past year of 29.4 million square feet per quarter.
Customer retention during the quarter remained strong at 78.1 percent in the company’s direct owned portfolio and 81.8 percent within its property funds. In addition, more than 76 percent of the company’s new development portfolio leases were signed with repeat customers, including Emerson Electric in North America, SONY in Europe and Hitachi Transport System in Asia.
Rental rates on turnovers in the same-store portfolio declined 15.7 percent in the second quarter, with less than three percent of the transactions representing 420 basis points of the decline and the remaining 97 percent of the transactions having a weighted average rental rate decline of 11.5 percent. Occupancy in the same-store portfolio increased by 1.8 percent, while same-store net operating income declined 3.4 percent.
“We are encouraged by our increased occupancy levels and the activity we see in our markets; however, we expect rent growth comparisons to remain negative over the coming quarters, driven by turnover of leases that were put in place at or near peak rental rates,” Rakowich added.
Steady Demand for New Development
“We continued to see steady demand for new development during the quarter and made significant progress toward our goals of starting $700 to $800 million of development and monetizing $350 to $400 million of land this year,” said Ted R. Antenucci, president and chief investment officer. “During the quarter, we started $196 million of new development, which when combined with two additional build-to-suit agreements signed early in the third quarter, brings the company’s year-to-date total development starts to more than $470 million. With the addition of year-to-date third-party land sales, these activities monetize approximately $184 million of land.”
Further Improvements in Valuations Support Disposition Goal
“Valuations have continued to improve, driven by significant institutional investor demand and a favorable interest rate environment. These factors support some of the most attractive investment spreads in recent years,” Rakowich said. “We are in discussions on transactions that support our goal of $1.3 to $1.5 billion of gross proceeds from contributions and dispositions. We believe this is an excellent time to pursue our objective of selling primarily non-strategic U.S. properties, enabling us to focus on industrial real estate while enhancing the geographic diversification of our direct owned portfolio. We intend to utilize the proceeds principally to de-lever and match our development funding requirements later this year and into 2011.”
No Changes to Guidance
“Our guidance for 2010 remains unchanged, with a continued expectation of improving net operating income from our core development portfolio in addition to greater development management fees and gains to be recognized in the second half of the year. We intend to continue to pursue sales of land and non-strategic operating properties, which may create additional impairments in the second half of the year and into 2011. Consistent with our definitions of core FFO and FFO, excluding significant non-cash items, our guidance does not include the impact from any potential impairments,” said William E. Sullivan, chief financial officer.
Additional Information
Copies of ProLogis’ second quarter 2010 supplemental information are available from the company’s website at http://ir.prologis.com in the “Annual & Supplemental Reports” section. The company will host a webcast/conference call on Thursday, July 22, 2010, at 10:00 a.m. Eastern Time. The live webcast as well as the subsequent replay, including in a podcast format, will be available from the company’s website at http://ir.prologis.com.
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 | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||||
Revenues | $ | 260,731 | $ | 258,479 | $ | 520,697 | $ | 691,203 | |||||||
Net earnings (loss) (a) | $ | (23,150) | $ | 238,865 | $ | (114,279) | $ | 417,597 | |||||||
Net earnings (loss) per share - Diluted (a) | $ | (0.05) | $ | 0.58 | $ | (0.24) | $ | 1.21 | |||||||
FFO, including significant non-cash items (a) | $ | 67,844 | $ | 137,194 | $ | 74,961 | $ | 379,459 | |||||||
Add (deduct) significant non-cash items : | |||||||||||||||
Impairment of real estate properties | 367 | 84,218 | 367 | 84,218 | |||||||||||
Net gain related to disposed assets - China operations | - | - | - | (3,315) | |||||||||||
Losses (gains) on early extinguishment of debt | (975) | (143,280) | 14,258 | (161,208) | |||||||||||
Write-off deferred extension fees associated with the Global Line | 854 | - | 854 | - | |||||||||||
Our share of certain losses recognized by the property funds | 3,000 | - | 3,575 | 11,283 | |||||||||||
Total adjustments for significant non-cash items | 3,246 | (59,062) | 19,054 | (69,022) | |||||||||||
FFO, excluding significant non-cash items (a) | $ | 71,090 | $ | 78,132 | $ | 94,015 | $ | 310,437 | |||||||
FFO per share - Diluted, including significant non-cash items (a) | $ | 0.14 | $ | 0.34 | $ | 0.16 | $ | 1.10 | |||||||
Add (deduct) - summarized significant non-cash adjustments - per share | 0.01 | (0.15) | 0.04 | (0.20) | |||||||||||
FFO per share - Diluted, excluding significant non-cash items (a) | $ | 0.15 | $ | 0.19 | $ | 0.20 | $ | 0.90 | |||||||
(a) These amounts are attributable to common shares. Footnotes follow Financial Statements | |||||||||||||||
Consolidated Balance Sheets | |||||||||||
(in thousands, except per share data) | |||||||||||
June 30, | December 31, | ||||||||||
2010 | 2009 | ||||||||||
Assets: | |||||||||||
Investments in real estate assets: | |||||||||||
Industrial properties: | |||||||||||
Core | $ | 7,486,076 | $ | 7,436,539 | |||||||
Core - completed development | 4,002,407 | 4,108,962 | |||||||||
Properties under development | 199,434 | 191,127 | |||||||||
Land held for development | 2,282,223 | 2,569,343 | |||||||||
Retail and mixed use properties | 303,428 | 302,838 | |||||||||
Land subject to ground leases and other | 430,349 | 373,422 | |||||||||
Other investments | 249,643 | 233,665 | |||||||||
14,953,560 | 15,215,896 | ||||||||||
Less accumulated depreciation | 1,801,602 | 1,671,100 | |||||||||
Net investments in real estate assets | 13,151,958 | 13,544,796 | |||||||||
Investments in and advances to unconsolidated investees: | |||||||||||
Property funds | 1,776,646 | 1,876,650 | |||||||||
Other unconsolidated investees | 280,166 | 275,073 | |||||||||
Total investments in and advances to unconsolidated investees | 2,056,812 | 2,151,723 | |||||||||
Cash and cash equivalents | 25,102 | 34,362 | |||||||||
Accounts and notes receivable | 153,193 | 136,754 | |||||||||
Other assets | 1,011,414 | 1,017,780 | |||||||||
Total assets | $ | 16,398,479 | $ | 16,885,415 | |||||||
Liabilities and Equity: | |||||||||||
Liabilities: | |||||||||||
Debt (1) | $ | 8,176,178 | $ | 7,977,778 | |||||||
Accounts payable and accrued expenses | 397,685 | 455,919 | |||||||||
Other liabilities | 465,250 | 444,432 | |||||||||
Total liabilities | 9,039,113 | 8,878,129 | |||||||||
Equity: | |||||||||||
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 | 4,767 | 4,742 | |||||||||
Additional paid-in capital | 8,566,388 | 8,524,867 | |||||||||
Accumulated other comprehensive income (loss) (2) | (386,546) | 42,298 | |||||||||
Distributions in excess of net earnings | (1,192,677) | (934,583) | |||||||||
Total ProLogis shareholders' equity | 7,341,932 | 7,987,324 | |||||||||
Noncontrolling interests | 17,434 | 19,962 | |||||||||
Total equity | 7,359,366 | 8,007,286 | |||||||||
Total liabilities and equity | $ | 16,398,479 | $ | 16,885,415 | |||||||
Footnotes follow Financial Statements | |||||||||||
Consolidated Statements of Operations | ||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||
June 30, | June 30, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||
Revenues: | ||||||||||||||
Rental income (3) | $ | 229,790 | $ | 224,882 | $ | 460,018 | $ | 440,974 | ||||||
Property management and other fees and incentives | 28,307 | 31,774 | 56,969 | 65,408 | ||||||||||
CDFS disposition proceeds (4) | - | - | - | 180,237 | ||||||||||
Development management and other income | 2,634 | 1,823 | 3,710 | 4,584 | ||||||||||
Total revenues | 260,731 | 258,479 | 520,697 | 691,203 | ||||||||||
Expenses: | ||||||||||||||
Rental expenses | 65,274 | 68,884 | 132,851 | 135,600 | ||||||||||
Investment management expenses | 9,931 | 10,819 | 20,250 | 21,395 | ||||||||||
General and administrative (5) | 38,921 | 41,450 | 80,927 | 89,693 | ||||||||||
Reduction in workforce (5) | - | 6,868 | - | 11,330 | ||||||||||
Impairment of real estate properties | 367 | 84,218 | 367 | 84,218 | ||||||||||
Depreciation and amortization | 87,476 | 76,941 | 173,675 | 151,391 | ||||||||||
Other expenses | 4,649 | 4,584 | 8,916 | 11,003 | ||||||||||
Total expenses | 206,618 | 293,764 | 416,986 | 504,630 | ||||||||||
Operating income | 54,113 | (35,285) | 103,711 | 186,573 | ||||||||||
Other income (expense): | ||||||||||||||
Earnings (loss) from unconsolidated property funds, net | (44) | 17,398 | 5,850 | 19,496 | ||||||||||
Earnings from other unconsolidated investees, net | 3,348 | 1,342 | 5,427 | 3,543 | ||||||||||
Interest expense (6) | (118,920) | (83,049) | (228,899) | (175,981) | ||||||||||
Other income (expense), net | (1,370) | 859 | (1,542) | 4,175 | ||||||||||
Net gains on dispositions of real estate properties (7) | 10,959 | 7,904 | 22,766 | 8,792 | ||||||||||
Foreign currency exchange gains (losses), net (8) | (7,206) | (9,025) | (3,518) | 21,512 | ||||||||||
Gain (loss) on early extinguishment of debt, net (1) | 975 | 143,280 | (46,658) | 161,208 | ||||||||||
Total other income (expense) | (112,258) | 78,709 | (246,574) | 42,745 | ||||||||||
Earnings (loss) before income taxes | (58,145) | 43,424 | (142,863) | 229,318 | ||||||||||
Current income tax expense (4) | 598 | 12,577 | 10,351 | 34,766 | ||||||||||
Deferred income tax benefit | (40,847) | (8,771) | (42,398) | (15,599) | ||||||||||
Total income taxes | (40,249) | 3,806 | (32,047) | 19,167 | ||||||||||
Earnings (loss) from continuing operations | (17,896) | 39,618 | (110,816) | 210,151 | ||||||||||
Discontinued operations (9): | ||||||||||||||
Income attributable to disposed properties | 327 | 8,897 | 592 | 20,649 | ||||||||||
Net gain related to disposed assets - China operations (4) | - | - | - | 3,315 | ||||||||||
Net gains on dispositions: | ||||||||||||||
Non-development properties | 979 | 185,521 | 9,062 | 185,521 | ||||||||||
Development properties and land subject to ground leases | - | 11,692 | 65 | 11,503 | ||||||||||
Total discontinued operations | 1,306 | 206,110 | 9,719 | 220,988 | ||||||||||
Consolidated net earnings (loss) | (16,590) | 245,728 | (101,097) | 431,139 | ||||||||||
Net earnings attributable to noncontrolling interests | (191) | (494) | (444) | (804) | ||||||||||
Net earnings (loss) attributable to controlling interests | (16,781) | 245,234 | (101,541) | 430,335 | ||||||||||
Less preferred share dividends | 6,369 | 6,369 | 12,738 | 12,738 | ||||||||||
Net earnings (loss) attributable to common shares | $ | (23,150) | $ | 238,865 | $ | (114,279) | $ | 417,597 | ||||||
Weighted average common shares outstanding - Basic | 476,791 | 406,539 | 475,898 | 342,183 | ||||||||||
Weighted average common shares outstanding - Diluted | 476,791 | 409,504 | 475,898 | 345,106 | ||||||||||
Net earnings (loss) per share attributable to common shares - Basic: | ||||||||||||||
Continuing operations | $ | (0.05) | $ | 0.08 | $ | (0.26) | $ | 0.57 | ||||||
Discontinued operations | - | 0.51 | 0.02 | 0.65 | ||||||||||
Net earnings (loss) per share attributable to common shares - Basic | $ | (0.05) | $ | 0.59 | $ | (0.24) | $ | 1.22 | ||||||
Net earnings (loss) per share attributable to common shares - Diluted: | ||||||||||||||
Continuing operations | $ | (0.05) | $ | 0.08 | $ | (0.26) | $ | 0.57 | ||||||
Discontinued operations | - | 0.50 | 0.02 | 0.64 | ||||||||||
Net earnings (loss) per share attributable to common shares - Diluted | $ | (0.05) | $ | 0.58 | $ | (0.24) | $ | 1.21 | ||||||
Footnotes follow Financial Statements | ||||||||||||||
Consolidated Statements of Funds From Operations (FFO) | |||||||||||||
(in thousands, except per share amounts) | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||
Revenues: | |||||||||||||
Rental income | $ | 230,249 | $ | 242,920 | $ | 461,167 | $ | 486,455 | |||||
Property management and other fees and incentives | 28,307 | 31,774 | 56,969 | 65,501 | |||||||||
CDFS disposition proceeds (4) | - | - | - | 180,237 | |||||||||
Development management and other income | 2,634 | 1,823 | 3,710 | 4,584 | |||||||||
Total revenues | 261,190 | 276,517 | 521,846 | 736,777 | |||||||||
Expenses: | |||||||||||||
Rental expense | 65,395 | 73,985 | 133,281 | 149,354 | |||||||||
Investment management expenses | 9,931 | 10,819 | 20,250 | 21,395 | |||||||||
General and administrative (5) | 38,921 | 41,450 | 80,927 | 90,998 | |||||||||
Reduction in workforce (5) | - | 6,868 | - | 11,330 | |||||||||
Impairment of real estate properties | 367 | 84,218 | 367 | 84,218 | |||||||||
Depreciation of corporate assets | 3,106 | 3,969 | 6,501 | 8,087 | |||||||||
Other expenses | 4,649 | 4,584 | 8,916 | 11,009 | |||||||||
Total expenses | 122,369 | 225,893 | 250,242 | 376,391 | |||||||||
Operating FFO | 138,821 | 50,624 | 271,604 | 360,386 | |||||||||
Other income (expense): | |||||||||||||
FFO from unconsolidated property funds | 39,665 | 34,874 | 73,701 | 71,617 | |||||||||
FFO from other unconsolidated investees | 4,843 | 2,966 | 8,475 | 7,979 | |||||||||
Interest expense | (118,920) | (83,049) | (228,899) | (175,811) | |||||||||
Other income (expense), net | (1,370) | 859 | (1,542) | 4,247 | |||||||||
Net gains on dispositions of real estate properties (7)(10) | 10,756 | 15,986 | 20,251 | 17,557 | |||||||||
Foreign currency exchange gains (losses), net | 232 | (8,906) | 711 | (22,386) | |||||||||
Gain (loss) on early extinguishment of debt, net (1) | 975 | 143,280 | (46,658) | 161,208 | |||||||||
Current income tax expense (4)(10) | (598) | (12,577) | (9,500) | (34,967) | |||||||||
Net gain related to disposed assets - China operations (4) | - | - | - | 3,315 | |||||||||
Total other income (expense) | (64,417) | 93,433 | (183,461) | 32,759 | |||||||||
FFO | 74,404 | 144,057 | 88,143 | 393,145 | |||||||||
Less preferred share dividends | 6,369 | 6,369 | 12,738 | 12,738 | |||||||||
Less net earnings attributable to noncontrolling interests | 191 | 494 | 444 | 948 | |||||||||
FFO attributable to common shares, including significant non-cash items | $ | 67,844 | $ | 137,194 | $ | 74,961 | $ | 379,459 | |||||
Adjustments for significant non-cash items | 3,246 | (59,062) | 19,054 | (69,022) | |||||||||
FFO attributable to common shares, excluding significant non-cash items | $ | 71,090 | $ | 78,132 | $ | 94,015 | $ | 310,437 | |||||
Weighted average common shares outstanding - Basic | 476,791 | 406,539 | 475,898 | 342,183 | |||||||||
FFO per share attributable to common shares, including significant non-cash items: | |||||||||||||
Basic | $ | 0.14 | $ | 0.34 | $ | 0.16 | $ | 1.11 | |||||
Diluted | $ | 0.14 | $ | 0.34 | $ | 0.16 | $ | 1.10 | |||||
FFO per share attributable to common shares, excluding significant non-cash items: | |||||||||||||
Basic | $ | 0.15 | $ | 0.19 | $ | 0.20 | $ | 0.91 | |||||
Diluted | $ | 0.15 | $ | 0.19 | $ | 0.20 | $ | 0.90 | |||||
Footnotes follow Financial Statements | |||||||||||||
Reconciliations of Net Earnings (Loss) to FFO and EBITDA | ||||||||||||||||
(in thousands) | ||||||||||||||||
Reconciliation of net earnings (loss) to FFO, including significant non-cash items | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net earnings (loss) (a) | $ | (23,150) | $ | 238,865 | $ | (114,279) | $ | 417,597 | ||||||||
Add (deduct) NAREIT defined adjustments: | ||||||||||||||||
Real estate related depreciation and amortization | 84,370 | 72,972 | 167,174 | 143,304 | ||||||||||||
Adjustments to gains on dispositions for depreciation | (203) | (452) | (1,832) | (1,203) | ||||||||||||
Adjustments to (gains on) dispositions of non-development properties | - | (3,158) | 103 | (1,535) | ||||||||||||
Reconciling items attributable to discontinued operations: (9) | ||||||||||||||||
Gains on dispositions of non-development properties | (979) | (185,521) | (9,062) | (185,521) | ||||||||||||
Real estate related depreciation and amortization | 11 | 4,040 | 127 | 10,502 | ||||||||||||
Total discontinued operations | (968) | (181,481) | (8,935) | (175,019) | ||||||||||||
Our share of reconciling items from unconsolidated investees: | ||||||||||||||||
Real estate related depreciation and amortization | 39,191 | 37,664 | 76,832 | 75,981 | ||||||||||||
Adjustment to gains/losses on dispositions for depreciation | - | (6,578) | - | (6,578) | ||||||||||||
Other amortizations items | (3,515) | (2,571) | (6,989) | (6,161) | ||||||||||||
Total unconsolidated investees | 35,676 | 28,515 | 69,843 | 63,242 | ||||||||||||
Total NAREIT defined adjustments | 118,875 | (83,604) | 226,353 | 28,789 | ||||||||||||
Subtotal-NAREIT defined FFO | 95,725 | 155,261 | 112,074 | 446,386 | ||||||||||||
Add (deduct) our defined adjustments: | ||||||||||||||||
Foreign currency exchange losses (gains), net (8) | 7,438 | 119 | 4,229 | (43,829) | ||||||||||||
Deferred income tax benefit | (40,847) | (8,771) | (42,398) | (15,611) | ||||||||||||
Our share of reconciling items from unconsolidated investees: | ||||||||||||||||
Foreign currency exchange losses (gains), net (8) | 2,731 | (1,885) | 1,944 | (234) | ||||||||||||
Unrealized losses (gains) on derivative contracts, net | 2,485 | (4,105) | (1,575) | (5,959) | ||||||||||||
Deferred income tax expense (benefit) | 312 | (3,425) | 687 | (1,294) | ||||||||||||
Total unconsolidated investees | 5,528 | (9,415) | 1,056 | (7,487) | ||||||||||||
Total our defined adjustments | (27,881) | (18,067) | (37,113) | (66,927) | ||||||||||||
FFO, including significant non-cash items (a) | $ | 67,844 | $ | 137,194 | $ | 74,961 | $ | 379,459 | ||||||||
Reconciliation of FFO, including significant non-cash items to FFO, excluding significant non-cash items | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
FFO, including significant non-cash items (a) | $ | 67,844 | $ | 137,194 | $ | 74,961 | $ | 379,459 | ||||||||
Add (deduct) significant non-cash items: | ||||||||||||||||
Impairment of real estate properties | 367 | 84,218 | 367 | 84,218 | ||||||||||||
Net gain related to disposed assets - China operations (4) | - | - | - | (3,315) | ||||||||||||
Losses (gains) on early extinguishment of debt (1) | (975) | (143,280) | 14,258 | (161,208) | ||||||||||||
Write-off deferred extension fees associated with Global Line | 854 | - | 854 | - | ||||||||||||
Our share of certain losses recognized by the property funds | 3,000 | - | 3,575 | 11,283 | ||||||||||||
Total adjustments for significant non-cash items | 3,246 | (59,062) | 19,054 | (69,022) | ||||||||||||
FFO, excluding significant non-cash items (a) | $ | 71,090 | $ | 78,132 | $ | 94,015 | $ | 310,437 | ||||||||
Reconciliation of FFO, excluding significant non-cash items, to EBITDA | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
FFO, excluding significant non-cash items (a) | $ | 71,090 | $ | 78,132 | $ | 94,015 | $ | 310,437 | ||||||||
Interest expense | 118,066 | 83,049 | 228,045 | 175,811 | ||||||||||||
Depreciation of corporate assets | 3,106 | 3,969 | 6,501 | 8,087 | ||||||||||||
Current income tax expense included in FFO | 598 | 12,577 | 10,351 | 34,967 | ||||||||||||
Adjustments to gains on dispositions for interest capitalized | 677 | 4,181 | 1,270 | 6,939 | ||||||||||||
Preferred share dividends | 6,369 | 6,369 | 12,738 | 12,738 | ||||||||||||
Our share of reconciling items from unconsolidated investees | 44,075 | 34,576 | 95,542 | 86,464 | ||||||||||||
Earnings before interest, taxes, depreciation, and amortization (EBITDA) | $ | 244,981 | $ | 222,853 | $ | 448,462 | $ | 635,443 | ||||||||
(a) Attributable to common shares. See Consolidated Statements of Operations and Consolidated Statements of FFO | ||||||||||||||||
Calculation of Per Share Amounts | |||||||||||||
(in thousands, except per share amounts) | |||||||||||||
Net Earnings (Loss) Per Share | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2010 (a) | 2009 | 2010 (a) | 2009 | ||||||||||
Net earnings (loss) - Basic (b) | $ | (23,150) | $ | 238,865 | $ | (114,279) | $ | 417,597 | |||||
Noncontrolling interest attributable to convertible limited partnership units (c) | - | 494 | - | 804 | |||||||||
Adjusted net earnings (loss) - Diluted (b) | $ | (23,150) | $ | 239,359 | $ | (114,279) | $ | 418,401 | |||||
Weighted average common shares outstanding - Basic | 476,791 | 406,539 | 475,898 | 342,183 | |||||||||
Incremental weighted average effect of conversion of limited partnership units (c) | - | 1,235 | - | 1,235 | |||||||||
Incremental weighted average effect of stock awards (d) | - | 1,730 | - | 1,688 | |||||||||
Weighted average common shares outstanding - Diluted (e) | 476,791 | 409,504 | 475,898 | 345,106 | |||||||||
Net earnings (loss) per share - Diluted (b) | $ | (0.05) | $ | 0.58 | $ | (0.24) | $ | 1.21 | |||||
FFO Per Share, including significant non-cash items | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||
FFO - Basic, including significant non-cash items (b) | $ | 67,844 | $ | 137,194 | $ | 74,961 | $ | 379,459 | |||||
Noncontrolling interest attributable to convertible limited partnership units (c) | - | - | - | 804 | |||||||||
FFO - Diluted, including significant non-cash items (b) | $ | 67,844 | $ | 137,194 | $ | 74,961 | $ | 380,263 | |||||
Weighted average common shares outstanding - Basic | 476,791 | 406,539 | 475,898 | 342,183 | |||||||||
Incremental weighted average effect of conversion of limited partnership units (c) | - | - | - | 1,235 | |||||||||
Incremental weighted average effect of stock awards (d) | 2,876 | 1,730 | 3,045 | 1,688 | |||||||||
Weighted average common shares outstanding - Diluted (e) | 479,667 | 408,269 | 478,943 | 345,106 | |||||||||
FFO per share - Diluted, including significant non-cash items (b) | $ | 0.14 | $ | 0.34 | $ | 0.16 | $ | 1.10 | |||||
FFO Per Share, excluding significant non-cash items | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||||
FFO - Basic, including significant non-cash items (b) | $ | 67,844 | $ | 137,194 | $ | 74,961 | $ | 379,459 | |||||||
Adjustments for significant non-cash items | 3,246 | (59,062) | 19,054 | (69,022) | |||||||||||
Noncontrolling interest attributable to convertible limited partnership units (c) | - | - | - | 804 | |||||||||||
FFO - Diluted, excluding significant non-cash items (b) | $ | 71,090 | $ | 78,132 | $ | 94,015 | $ | 311,241 | |||||||
Weighted average common shares outstanding - Basic | 476,791 | 406,539 | 475,898 | 342,183 | |||||||||||
Incremental weighted average effect of conversion of limited partnership units (c) | - | - | - | 1,235 | |||||||||||
Incremental weighted average effect of stock awards (d) | 2,876 | 1,730 | 3,045 | 1,688 | |||||||||||
Weighted average common shares outstanding - Diluted (e) | 479,667 | 408,269 | 478,943 | 345,106 | |||||||||||
FFO per share - Diluted, excluding significant non-cash items (b) | $ | 0.15 | $ | 0.19 | $ | 0.20 | $ | 0.90 | |||||||
(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 of the limited partnerships are not included | |||||||||||||||
(d) Total weighted average potentially dilutive awards outstanding were 11,382 and 12,147 for the three months ended June 30, 2010 and 2009, | |||||||||||||||
(e) The shares underlying the convertible debt have not been included because the impact would be anti-dilutive. | |||||||||||||||
Notes to Financial Statements | |
Please refer to our annual and quarterly financial statements filed with the Securities and Exchange Commission on Forms 10-K and 10-Q for | |
(1) During the three and six months ended June 30, 2010 and 2009, in connection with our announced initiatives to stagger and extend our debt | |
Three Months Ended | Six Months Ended | |||||||||||||
June 30, | June 30, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||
Convertible Senior Notes (a): | ||||||||||||||
Original principal amount | $ | 249,603 | $ | 473,057 | $ | 739,642 | $ | 521,257 | ||||||
Cash purchase price | $ | 229,328 | $ | 313,256 | $ | 694,422 | $ | 338,077 | ||||||
Senior Notes: | ||||||||||||||
Original principal amount | $ | - | $ | 343,192 | $ | 422,476 | $ | 343,192 | ||||||
Cash purchase price | $ | - | $ | 302,090 | $ | 449,382 | $ | 302,090 | ||||||
Secured Mortgage Debt: | ||||||||||||||
Original principal amount | $ | - | $ | - | $ | 45,140 | $ | - | ||||||
Cash repayment price | $ | - | $ | - | $ | 46,659 | $ | - | ||||||
Total: | ||||||||||||||
Original principal amount | $ | 249,603 | $ | 816,249 | $ | 1,207,258 | $ | 864,449 | ||||||
Cash purchase / repayment price | $ | 229,328 | $ | 615,346 | $ | 1,190,463 | $ | 640,167 | ||||||
Gain (loss) on early extinguishment of debt, net (b) | $ | 975 | $ | 143,280 | $ | (46,658) | $ | 161,208 | ||||||
(a) Although the cash purchase price is less than the principal amount outstanding, the repurchase of these notes resulted in a non-cash | ||||||||||||||
(b) Represents the difference between the recorded debt (including unamortized related debt issuance costs, premiums and discounts) | ||||||||||||||
(2) The net losses recognized in Accumulated Other Comprehensive Income (Loss) for the six months ended June 30, 2010 in our Consolidated (3) In our Consolidated Statements of Operations, rental income includes the following (in thousands): | ||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||
Rental income | $ | 167,970 | $ | 162,900 | $ | 336,189 | $ | 322,222 | |||||
Rental expense recoveries | 51,613 | 52,218 | 102,335 | 100,298 | |||||||||
Straight-lined rents | 10,207 | 9,764 | 21,494 | 18,454 | |||||||||
$ | 229,790 | $ | 224,882 | $ | 460,018 | $ | 440,974 | ||||||
(4) 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 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 (5) In the fourth quarter of 2008, in response to the difficult economic climate, we initiated general and administrative expense ("G&A") reductions. | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||
Gross G&A expense | $ | 63,577 | $ | 69,320 | $ | 130,733 | $ | 147,160 | |||||
Reported as rental expense | (4,831) | (4,852) | (9,833) | (9,787) | |||||||||
Reported as investment management expenses | (9,931) | (10,819) | (20,250) | (21,395) | |||||||||
Capitalized amounts | (9,894) | (12,199) | (19,723) | (26,285) | |||||||||
Net G&A | $ | 38,921 | $ | 41,450 | $ | 80,927 | $ | 89,693 | |||||
(6) The following table presents the components of interest expense as reflected in our Consolidated Statements of Operations (in thousands): | |||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||
June 30, | June 30, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||
Gross interest expense | $ | 113,225 | $ | 88,377 | $ | 218,234 | $ | 190,237 | ||||||
Amortization of discount, net | 12,198 | 16,630 | 27,532 | 35,343 | ||||||||||
Amortization of deferred loan costs | 7,435 | 2,873 | 13,917 | 6,249 | ||||||||||
Interest expense before capitalization | 132,858 | 107,880 | 259,683 | 231,829 | ||||||||||
Capitalized amounts | (13,938) | (24,831) | (30,784) | (55,848) | ||||||||||
Net interest expense | $ | 118,920 | $ | 83,049 | $ | 228,899 | $ | 175,981 | ||||||
Gross interest expense increased in 2010 from 2009 due to increased borrowing rates. The decrease in capitalized amounts in 2010 from 2009 (7) Included in Net Gains on Dispositions of Real Estate Properties for the six months ended June 30, 2010 is a gain of $1.1 million from the sale of land (8) Included in Foreign Currency Exchange Gains (Losses), Net, for the six months ended June 30, 2010 and 2009, are net foreign currency (9) The operations of the properties held for sale and properties that are disposed of to third parties during a period, including the aggregate net During the six months ended June 30, 2010, we disposed of 9 properties to third parties aggregating 0.7 million square feet, none of which | ||||||||||||||
The income attributable to these properties and our China operations was as follows (in thousands): | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||
Rental income | $ | 459 | $ | 18,038 | $ | 1,149 | $ | 45,481 | |||||
Rental expenses | (121) | (5,101) | (430) | (13,754) | |||||||||
Depreciation and amortization | (11) | (4,040) | (127) | (10,502) | |||||||||
Other expenses, net | - | - | - | (576) | |||||||||
Income attributable to disposed properties | $ | 327 | $ | 8,897 | $ | 592 | $ | 20,649 | |||||
For purposes of our Consolidated Statements of FFO, we do not segregate discontinued operations. In addition, we include the gains from (10) The net gains on dispositions of real properties presented in our Consolidated Statements of FFO are net of related taxes | |||||||||||||
SOURCE ProLogis
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