DENVER, Nov 01, 2005 /PRNewswire-FirstCall via COMTEX News Network/ -- ProLogis (NYSE: PLD), a leading global provider of distribution facilities and services, today reported adjusted funds from operations as defined by ProLogis (FFO) of $0.78 per diluted share for the third quarter of 2005, a 9.9% increase over $0.71 per share in the third quarter of 2004. For 2005, FFO excludes a $0.04 per share charge related to merger integration expenses, while FFO for 2004 excludes a $0.01 per share relocation expense. For the third quarter of 2005, net earnings per diluted share increased 50.0%, from $0.42 for the third quarter in 2004 to $0.63, primarily due to gains on the sale of assets that are recognized under GAAP but that are not included in ProLogis' definition of FFO.
For the nine months ended September 30, 2005, FFO was $2.15 per diluted share, up 15.0% from $1.87 in the first nine months of 2004. For 2005, FFO per share excludes $0.19 in relocation and merger integration expenses and cumulative translation losses and impairment charges related to the sale of its temperature-controlled business. For 2004, FFO per share excludes $0.03 per share in charges related to redemption of preferred shares and relocation expenses. For the nine months ended September 30, 2005, net earnings per diluted share increased 23.1%, from $1.08 in the comparable period in 2004 to $1.33, primarily due to the sale of assets as noted above.
"Across our global markets, we continue to see improvement in market conditions, with positive net absorption, strong leasing activity and further increases in occupancies," said Jeffrey H. Schwartz, chief executive officer. "ProLogis' solid financial performance was driven by strong development income, improved property operations and increased income and fees from our property funds.
"In addition, the completion of our merger with Catellus Development Corporation during the quarter added more than $4.7 billion of high-quality real estate assets, while providing excellent land positions and significantly expanding our share of key North American logistics markets."
For the year to date, ProLogis reported a 20.4% increase in FFO from its corporate distribution facilities services (CDFS) business over the same period in the prior year. "Due to the continued strength of our development business, we have raised and tightened our full-year guidance from $2.60 - $2.68 to $2.67 - $2.70 in adjusted FFO per share. Additionally, we have raised earnings per share guidance from $1.60 - $1.80 to $2.65 - $2.85 per share, driven by approximately $1.00 per share from expected sales of non-CDFS assets in the fourth quarter," Mr. Schwartz said. Additionally, the company established a range for 2006 of $2.90 to $3.02 in FFO per share and $1.50 to $1.70 in earnings per share. The company added that its FFO per share guidance does not include merger integration and corporate relocation expenses.
Operating Property Performance Continues to Improve
For the third quarter, the company reported a 1.08% increase in same-store net operating income (a 1.77% increase when straight-lined rents are excluded) and a 1.73% increase in same-store average occupancies when compared with the third quarter of 2004. The company also reported positive rent growth in its same-store pool for the first time in three years with an overall leased percentage in its stabilized portfolio of 93.7%.
"Strong customer demand is driving improvement in occupancies in North America, even as development has accelerated across a number of key markets," Mr. Schwartz said. "Overall occupancies during the quarter rose 30 basis points on average across the top 30 North American logistics markets that we track closely. As a result, rents have firmed throughout the markets and are rising in some. In Europe, distribution optimization continues to support strong leasing in our inventory developments enabling us to maintain high occupancies in our stabilized portfolio, even though some countries' economies remain stagnant. In Asia, both development and leasing activity continue to be brisk due to the relative lack of modern distribution infrastructure in that region."
Strong Leasing in CDFS Pipeline
Walter C. Rakowich, president and chief operating officer, said, "Our pace of development starts moderated in the third quarter, as we indicated it would last quarter. However, at approximately $1.8 billion of development starts year-to-date, including those in CDFS joint ventures, we are confident that we will achieve, or slightly exceed, the upper end of our projected range of $1.9 to $2.0 billion for the year. Improving global market conditions and strong customer relationships continue to support strong leasing in our record CDFS pipeline of completions, repositioned acquisitions and properties under development, which now exceeds $3.1 billion. Completed developments over the past four quarters of $1.4 billion totaling 23.5 million square feet were more than 69% leased at quarter's end, ahead of expectations.
"Additionally, we signed nearly 3.8 million square feet of new CDFS leases in the third quarter -- over 66% with repeat customers. Among the new CDFS leases signed in the quarter were agreements with YUM Brands in Shanghai, Matsushita in Tokyo, Goodyear Dunlop Tires in Madrid and International Paper in central Florida," Mr. Rakowich added.
Strong Demand for Japan Developments and Continued Progress in China
"Our completed CDFS developments in Asia were over 79% leased at quarter-end. In Japan, demand remains very strong, resulting in the vast majority of our major, multi-customer inventory facilities being fully leased upon completion. To address this steady demand, we secured land to develop ProLogis Parc Koshigaya, a 360,000 square-foot inventory facility located just north of Central Tokyo, about half of which is already leased to Sanyo Electric Logistics. We also signed an agreement to develop a facility for Hitachi in Sendai -- our first transaction in this important market located northeast of Tokyo in the Tohuku region.
"In China, we began construction of two facilities for a total of 430,000 square feet in Guangzhou at ProLogis Park Yunpu that are pre-leased to ST-Anda Logistics Co. and broke ground on our first development at the just-opened Yangshan Deep Water Port, in the Shanghai region. Leasing activity is strong, with over 327,000 square feet of leasing in newly completed facilities near Shanghai at ProLogis Park Suzhou and ProLogis Park Taopu during the quarter," Mr. Schwartz concluded.
Third Quarter 2005 Selected Financial and Operating Information
- Closed merger agreement with Catellus Development Corporation on
September 15, 2005, adding $4.7 billion in gross real estate assets.
- Achieved FFO from CDFS transactions of $71.3 million for the quarter,
compared with $75.6 million in the third quarter of 2004. FFO amounts
do not include unrecognized deferred gains of $16.4 million for the
current period and $10.1 million for the same period in 2004.
Year-to-date post-deferral, post-tax CDFS margins were 24.3%.
- Recycled $405.3 million of capital through CDFS dispositions and
contributions during the quarter and $1.04 billion year to date.
- Started new developments, including those within CDFS joint ventures,
with a total expected investment of $309 million during the quarter and
$1.8 billion year to date.
- Increased ProLogis' share of FFO from property funds to $23.4 million
for the quarter, up 6.4% from $22.0 million in the prior year.
- Grew third quarter fee income from property funds to $17.3 million, up
34.1% from $12.9 million in the prior year.
- Increased total assets owned and under management to $21.9 billion, up
from $15.9 billion at December 31, 2004.
Copies of ProLogis' third quarter 2005 supplemental information will be available from the company's website at http://ir.prologis.com or by request at 800-820-0181. The supplemental information also is available on the SEC's website at http://www.sec.gov. The related conference call will be available via a live webcast on the company's website at http://ir.prologis.com at 9:00 am Eastern Time on Tuesday, November 1, 2005. A replay of the webcast will be available on the company's website until November 15, 2005.
ProLogis is a leading provider of distribution facilities and services with 371.9 million square feet (34.6 million square meters) in 2,336 properties owned, managed and under development in 75 markets in North America, Europe and Asia as of September 30, 2005. ProLogis continues to expand the industry's first and largest global network of distribution facilities with the objective of building shareholder value. The company expects to achieve this through the ProLogis Operating System(R) and its commitment to be 'The Global Distribution Solution' for its customers, providing exceptional facilities and services to meet their expansion and reconfiguration needs.
In addition to historical information, this press release contains forward-looking statements under the federal securities laws. Because these 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. Forward-looking statements are not guarantees of future performance, involve certain risks, uncertainties and assumptions that are difficult to predict. Actual operating results may be affected by changes in general economic conditions; increased or unanticipated competitive market conditions; changes in financial markets, interest rates and foreign currency exchange rates that could adversely affect ProLogis' cost of capital, its ability to meet its financing needs and obligations and its results of operations; the availability of private capital; geopolitical concerns and uncertainties and therefore, may differ materially from what is expressed or forecasted in this press release. For a discussion of factors that could affect ProLogis' financial condition and results of operations, refer to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations -- Risk Factors" in ProLogis' Annual Report on Form 10-K/A #1 for the year ended December 31, 2004.
ProLogis
Third Quarter 2005
Unaudited Financial Results
Selected Financial Information
(in thousands, except per share amounts and percentages)
Three Months Ended Nine Months Ended
September 30, September 30,
2005(1) 2004(2) %Change 2005(1) 2004(2) %Change
Net Earnings
Attributable to
Common Shares:
Net Earnings
attributable to
Common Shares $129,402 $79,758 62.2% $261,645 $202,550 29.2%
Net Earnings per
diluted Common
Share $0.63 $0.42 50.0% $1.33 $1.08 23.1%
Funds From
Operations and
Funds From
Operations, as
adjusted:
Funds From
Operations
attributable to
Common Shares $150,837 $133,166 13.3% $387,604 $347,087 11.7%
Add back:
Excess of
redemption
values over
carrying values
of preferred
shares
redeemed(3) -- -- -- 4,236
Merger
integration
expenses(4) 8,288 -- 8,288 --
Relocation
expenses(5) 246 2,154 4,049 2,845
Cumulative
translation
losses and
impairment
charge related
to temperature-
controlled
distribution
assets(8) -- -- 26,864 --
Funds From
Operations
attributable to
Common Shares, as
adjusted $159,371 $135,320 17.8% $426,805 $354,168 20.5%
Funds From
Operations
attributable to
Common Shares per
diluted share $0.74 $0.70 5.7% $1.96 $1.84 6.5%
Add back:
Excess of
redemption
values over
carrying values
of preferred
shares
redeemed(3) -- -- -- 0.02
Merger
integration
expenses(4) 0.04 -- 0.04 --
Relocation
expenses(5) -- 0.01 0.02 0.01
Cumulative
translation
losses and
impairment
charge related
to temperature-
controlled
distribution
assets(8) -- -- 0.13 --
Funds From
Operations per
diluted Common
Share, as adjusted $0.78 $0.71 9.9% $2.15 $1.87 15.0%
EBITDA:
EBITDA $226,467 $213,776 5.9% $634,081 $582,770 8.8%
Distributions:
Actual
distributions per
Common Share(6) $0.370 $0.365 1.4% $1.110 $1.095 1.4%
Footnotes follow ProLogis' Consolidated Balance Sheets.
ProLogis
Third Quarter 2005
Unaudited Financial Results
Consolidated Statements of Earnings
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2005(1) 2004(2) 2005(1) 2004(2)
Revenues:
Rental income(9)(10)(11) $152,078 $131,124 $418,173 $398,358
Property management and other
property fund fees 17,321 12,931 50,326 36,050
Development management fees and
other CDFS income(7) 9,254 373 12,580 2,422
Total revenues 178,653 144,428 481,079 436,830
Expenses:
Rental expenses(9)(11) 38,679 33,266 113,239 102,786
General and administrative 23,816 20,678 71,589 60,381
Depreciation and amortization
(11) 46,504 41,428 130,793 123,686
Merger integration expenses(4) 8,288 -- 8,288 --
Relocation expenses(5) 246 2,154 4,049 2,845
Other expenses 3,030 1,201 6,312 3,673
Total expenses 120,563 98,727 334,270 293,371
Gains on dispositions of certain
CDFS business assets, net
(7)(11)(12)(13):
Net proceeds from dispositions 355,524 281,692 956,110 911,732
Costs of assets disposed of 290,658 227,738 762,955 777,132
Total gains, net 64,866 53,954 193,155 134,600
Operating Income 122,956 99,655 339,964 278,059
Income from unconsolidated
property funds 12,217 11,576 34,992 30,529
Income (loss) from CDFS joint
ventures and other
unconsolidated investees(14) 301 (621) 668 (1,004)
Interest expense(11)(15) (42,549) (38,126) (113,802) (114,935)
Interest and other income 3,179 829 6,356 2,037
Earnings before minority interest 96,104 73,313 268,178 194,686
Minority interest (1,327) (1,344) (3,929) (3,811)
Earnings before certain net gains
(losses) 94,777 71,969 264,249 190,875
Gains recognized on dispositions
of certain non-CDFS business
assets, net -- -- -- 6,072
Gain on partial disposition of
investment in property fund (16) -- -- -- 3,328
Foreign currency exchange gains
(losses), net(17) 4,742 (1,343) 8,323 9,882
Earnings before income taxes 99,519 70,626 272,572 210,157
Income taxes:
Current income tax expense 2,435 12,180 7,185 18,177
Deferred income tax expense 5,369 2,390 8,190 11,975
Total income taxes 7,804 14,570 15,375 30,152
Earnings from Continuing
Operations 91,715 56,056 257,197 180,005
Discontinued Operations:
Operating income attributable
to assets disposed of and held
for sale(11) 1,006 2,438 3,437 5,086
Income (losses) related to
temperature controlled
distribution assets(8) -- 3,993 (25,150) 10,841
Gains (losses) recognized on
dispositions, net(11):
Non-CDFS business assets 36,633 1,956 38,840 (887)
CDFS business assets 6,402 21,669 6,383 31,133
Total discontinued
operations 44,041 30,056 23,510 46,173
Net Earnings 135,756 86,112 280,707 226,178
Less preferred share dividends 6,354 6,354 19,062 19,392
Less excess of redemption values
over carrying values of
preferred shares redeemed(3) -- -- -- 4,236
Net Earnings Attributable to
Common Shares $129,402 $79,758 $261,645 $202,550
Weighted average Common Shares
outstanding - basic 196,323 182,213 189,768 181,451
Weighted average Common Shares
outstanding - diluted 206,760 192,043 200,022 190,751
Net Earnings per Common
Share-Basic:
Continuing operations $0.43 $0.27 $1.25 $0.86
Discontinued operations 0.23 0.17 0.13 0.26
Net Earnings Attributable
to Common Shares-Basic $0.66 $0.44 $1.38 $1.12
Net Earnings per Common
Share-Diluted:
Continuing operations $0.42 $0.26 $1.21 $0.84
Discontinued operations 0.21 0.16 0.12 0.24
Net Earnings Attributable to
Common Shares-Diluted $0.63 $0.42 $1.33 $1.08
Calculation of Net Earnings per Common Share on a Diluted Basis
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2005(1) 2004(2) 2005(1) 2004(2)
Basic Net Earnings Attributable
to Common Shares $129,402 $79,758 $261,645 $202,550
Minority interest 1,327 1,344 3,929 3,811
Diluted Net Earnings Attributable
to Common Shares $130,729 $81,102 $265,574 $206,361
Weighted average Common Shares
outstanding - Basic 196,323 182,213 189,768 181,451
Weighted average limited
partnership units, as if
converted 5,539 5,219 5,540 4,863
Incremental weighted average
effect of potentially dilutive
instruments(a) 4,898 4,611 4,714 4,437
Weighted average Common Shares
outstanding - Diluted 206,760 192,043 200,022 190,751
Diluted Net Earnings per Common
Share $0.63 $0.42 $1.33 $1.08
(a) On a weighted average basis, the total potentially dilutive
instruments outstanding were 10,499 and 10,946 for the three months
ended September 30, 2005 and 2004, respectively, and 10,898 and
11,287 for the nine months ended September 30, 2005 and 2004,
respectively.
Footnotes follow ProLogis' Consolidated Balance Sheets.
ProLogis
Third Quarter 2005
Unaudited Financial Results
Consolidated Statements of Funds From Operations
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2005(1) 2004(2) 2005(1) 2004(2)
Revenues:
Rental income(9) $154,297 $136,201 $427,299 $411,937
Property management and other
property fund fees 17,321 12,931 50,326 36,050
Development management fees
and other CDFS income(7) 9,254 373 12,580 2,422
Total revenues 180,872 149,505 490,205 450,409
Expenses:
Rental expenses(9) 39,139 34,439 115,682 106,466
General and administrative 23,816 20,678 71,589 60,381
Depreciation of non-real
estate assets 1,743 1,978 5,106 5,962
Merger integration expenses
(4) 8,288 -- 8,288 --
Relocation expenses(5) 246 2,154 4,049 2,845
Other expenses 3,030 1,201 6,312 3,673
Total expenses 76,262 60,450 211,026 179,327
Gains on dispositions of CDFS
business assets, net
(7)(11)(12)(13):
Net proceeds from
dispositions 388,945 400,675 999,300 1,144,287
Costs of assets disposed of 317,677 325,052 799,762 978,554
Total gains, net 71,268 75,623 199,538 165,733
175,878 164,678 478,717 436,815
Income from unconsolidated
property funds 23,417 21,951 69,551 56,850
Income from CDFS joint ventures
and other unconsolidated
investees(14) 911 467 2,017 867
Interest expense(15) (42,587) (38,287) (114,072) (115,601)
Interest and other income 3,179 829 6,356 2,037
Gain on partial disposition of
investment in property fund
(16) -- -- -- 3,164
Foreign currency exchange gains
(losses), net(17) 155 (459) 574 (1,787)
Current income tax expense (2,435) (12,180) (7,185) (18,177)
FFO related to temperature
controlled distribution assets
(8) -- 3,865 (25,363) 10,358
(17,360) (23,814) (68,122) (62,289)
Funds From Operations 158,518 140,864 410,595 374,526
Less preferred share dividends 6,354 6,354 19,062 19,392
Less excess of redemption
values over carrying values of
preferred shares redeemed(3) -- -- -- 4,236
Less minority interest 1,327 1,344 3,929 3,811
Funds From Operations
Attributable to Common Shares $150,837 $133,166 $387,604 $347,087
Weighted average Common Shares
outstanding - basic 196,323 182,213 189,768 181,451
Weighted average Common Shares
outstanding - diluted 206,760 192,043 200,022 190,751
Funds From Operations per
Common Share:
Basic $0.77 $0.73 $2.04 $1.91
Diluted $0.74 $0.70 $1.96 $1.84
Calculation of Funds From Operations per Common Share on a Diluted Basis
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2005(1) 2004(2) 2005(1) 2004(2)
Basic Funds From Operations
Attributable to Common Shares $150,837 $133,166 $387,604 $347,087
Minority interest 1,327 1,344 3,929 3,811
Diluted Funds From Operations
Attributable to Common Shares $152,164 $134,510 $391,533 $350,898
Weighted average Common Shares
outstanding - Basic 196,323 182,213 189,768 181,451
Weighted average limited
partnership units, as if
converted 5,539 5,219 5,540 4,863
Incremental weighted average
effect of potentially dilutive
instruments(a) 4,898 4,611 4,714 4,437
Weighted average Common Shares
outstanding - Diluted 206,760 192,043 200,022 190,751
Diluted Funds From Operations
per Common Share $0.74 $0.70 $1.96 $1.84
(a) On a weighted average basis, the total potentially dilutive
instruments outstanding were 10,499 and 10,946 for the three months
ended September 30, 2005 and 2004, respectively, and 10,898 and
11,287 for the nine months ended September 30, 2005 and 2004,
respectively.
See ProLogis' Consolidated Statements of Earnings and the Reconciliations
of Net Earnings to Funds From Operations.
Footnotes follow ProLogis' Consolidated Balance Sheets.
ProLogis
Third Quarter 2005
Unaudited Financial Results
ProLogis' Definition of Funds From Operations
ProLogis' Definition of Funds From Operations
Funds From Operations is a non-Generally Accepted Accounting Principles
(GAAP) measure that is commonly used in the real estate industry. The
most directly comparable GAAP measure to Funds From Operations is Net
Earnings. Although the National Association of Real Estate Investment
Trusts (NAREIT) has published a definition of Funds From Operations,
modifications to the NAREIT calculation of Funds From Operations are
common among REITs, as companies seek to provide financial measures that
meaningfully reflect their business. Funds From Operations, as defined
by ProLogis, is presented as a supplemental financial measure. Funds
From Operations is not used by ProLogis as, nor should it be considered
to be, an alternative to Net Earnings computed under GAAP as an indicator
of ProLogis' operating performance or as an alternative to cash from
operating activities computed under GAAP as an indicator of ProLogis'
ability to fund its cash needs.
Funds From Operations is not meant to represent a comprehensive system of
financial reporting and does not present, nor does ProLogis intend it to
present, a complete picture of its financial condition and operating
performance. ProLogis believes that GAAP Net Earnings remains the
primary measure of performance and that Funds From Operations is only
meaningful when it is used in conjunction with GAAP Net Earnings.
Further, ProLogis believes that its consolidated financial statements,
prepared in accordance with GAAP, provide the most meaningful picture of
its financial condition and its operating performance.
NAREIT's Funds From Operations measure adjusts GAAP Net Earnings to
exclude historical cost depreciation and gains and losses from the sales
of previously depreciated properties. ProLogis agrees that these two
NAREIT adjustments are useful to investors for the following reasons:
(a) historical cost accounting for real estate assets in accordance
with GAAP assumes, through depreciation charges, that the value of real
estate assets diminishes predictably over time. NAREIT stated in its
White Paper on Funds From Operations "since real estate asset values have
historically risen or fallen with market conditions, many industry
investors have considered presentations of operating results for real
estate companies that use historical cost accounting to be insufficient
by themselves." Consequently, NAREIT's definition of Funds From
Operations reflects the fact that real estate, as an asset class,
generally appreciates over time and depreciation charges required by GAAP
do not reflect the underlying economic realities.
(b) REITs were created as a legal form of organization in order to
encourage public ownership of real estate as an asset class through
investment in firms that were in the business of long-term ownership and
management of real estate. The exclusion, in NAREIT's definition of
Funds From Operations, of gains and losses from the sales of previously
depreciated operating real estate assets allows investors and analysts to
readily identify the operating results of the long-term assets that form
the core of a REIT's activities and assists in comparing those operating
results between periods.
At the same time that NAREIT created and defined its Funds From
Operations concept for the REIT industry, it also recognized that
"management of each of its member companies has the responsibility and
authority to publish financial information that it regards as useful to
the financial community." ProLogis believes that financial analysts,
potential investors and shareholders who review its operating results are
best served by a defined Funds From Operations measure that includes
other adjustments to GAAP Net Earnings in addition to those included in
the NAREIT defined measure of Funds From Operations.
The ProLogis Defined Funds From Operations measure excludes the following
items from GAAP Net Earnings that are not excluded in the NAREIT Defined
Funds From Operations measure: (i) deferred income tax benefits and
deferred income tax expenses recognized by ProLogis' taxable
subsidiaries; (ii) certain foreign currency exchange gains and losses
resulting from certain debt transactions between ProLogis and its foreign
consolidated subsidiaries and its foreign unconsolidated investees; (iii)
foreign currency exchange gains and losses from the remeasurement (based
on current foreign currency exchange rates) of certain third party debt
of ProLogis' foreign consolidated subsidiaries and its foreign
unconsolidated investees; and (iv) mark-to-market adjustments associated
with derivative financial instruments utilized to manage ProLogis'
foreign currency risks. Funds From Operations of ProLogis'
unconsolidated investees is calculated on the same basis as ProLogis.
The items that ProLogis excludes from GAAP Net Earnings, while not
infrequent or unusual, are subject to significant fluctuations from
period to period that cause both positive and negative effects on
ProLogis' results of operations, in inconsistent and unpredictable
directions. Most importantly, the economics underlying the items that
ProLogis excludes from GAAP Net Earnings are not the primary drivers in
management's decision-making process and capital investment decisions.
Period to period fluctuations in these items can be driven by accounting
for short-term factors that are not relevant to long-term investment
decisions, long-term capital structures or to long-term tax planning and
tax structuring decisions. Accordingly, ProLogis believes that investors
are best served if the information that is made available to them allows
them to align their analysis and evaluation of ProLogis' operating
results along the same lines that ProLogis' management uses in planning
and executing its business strategy.
Real estate is a capital-intensive business. Investors' analyses of the
performance of real estate companies tend to be centered on understanding
the asset value created by real estate investment decisions and
understanding current operating returns that are being generated by those
same investment decisions. The adjustments to GAAP Net Earnings that are
included in arriving at the ProLogis Defined Funds From Operations
measure are helpful to management in making real estate investment
decisions and evaluating its current operating performance. ProLogis
believes that these adjustments are also helpful to industry analysts,
potential investors and shareholders in their understanding and
evaluation of ProLogis' performance on the key measures of net asset
value and current operating returns generated on real estate investments.
While ProLogis believes that its defined Funds From Operations measure is
an important supplemental measure, neither NAREIT's nor ProLogis' measure
of Funds From Operations should be used alone because they exclude
significant economic components of GAAP Net Earnings and are, therefore,
limited as an analytical tool. Some of these limitations are:
--Depreciation and amortization of real estate assets are economic costs
that are excluded from Funds From Operations. Funds From Operations is
limited as it does not reflect the cash requirements that may be
necessary for future replacements of the real estate assets. Further,
the amortization of capital expenditures and leasing costs necessary to
maintain the operating performance of distribution properties are not
reflected in Funds From Operations.
--Gains or losses from property dispositions represent changes in the
value of the disposed properties. Funds From Operations, by excluding
these gains and losses, does not capture realized changes in the value of
disposed properties arising from changes in market conditions.
--The deferred income tax benefits and expenses that are excluded from
ProLogis' Defined Funds From Operations measure result from the creation
of a deferred income tax asset or liability that may have to be settled
at some future point. ProLogis' Defined Funds From Operations measure
does not currently reflect any income or expense that may result from
such settlement.
--The foreign currency exchange gains and losses that are excluded from
ProLogis' Defined Funds From Operations measure are generally recognized
based on movements in foreign currency exchange rates through a specific
point in time. The ultimate settlement of ProLogis' foreign currency-
denominated net assets is indefinite as to timing and amount. ProLogis'
Funds From Operations measure is limited in that it does not reflect the
current period changes in these net assets that result from periodic
foreign currency exchange rate movements.
ProLogis compensates for these limitations by using its Funds From
Operations measure only in conjunction with GAAP Net Earnings. To
further compensate, ProLogis always reconciles its Funds From Operations
measure to GAAP Net Earnings in its financial reports. Additionally,
ProLogis provides investors with its complete financial statements
prepared under GAAP, its definition of Funds From Operations, which
includes a discussion of the limitations of using ProLogis' non-GAAP
measure, and a reconciliation of ProLogis' GAAP measure (Net Earnings) to
its non-GAAP measure (Funds From Operations as defined by ProLogis) so
that investors can appropriately incorporate this ProLogis measure and
its limitations into their analyses.
ProLogis
Third Quarter 2005
Unaudited Financial Results
Consolidated Statements of EBITDA
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2005(1) 2004(2) 2005(1) 2004(2)
Revenues:
Rental income(9) $154,297 $136,201 $427,299 $411,937
Property management and other
property fund fees 17,321 12,931 50,326 36,050
Development management fees and
other CDFS income(7) 9,254 373 12,580 2,422
180,872 149,505 490,205 450,409
Expenses:
Rental expenses(9) 39,139 34,439 115,682 106,466
General and administrative 23,816 20,678 71,589 60,381
Merger integration expenses(4) 8,288 -- 8,288 --
Relocation expenses(5) 158 1,491 3,207 1,917
Other expenses 3,030 1,201 6,312 3,673
74,431 57,809 205,078 172,437
Gains on dispositions of CDFS
business assets, net
(7)(11)(12)(13) 75,374 82,869 218,640 196,139
181,815 174,565 503,767 474,111
Income from unconsolidated
property funds 41,507 34,950 122,925 95,179
Income from CDFS joint ventures
and other unconsolidated
investees(14) 1,138 676 2,715 1,586
Interest and other income 3,179 829 6,356 2,037
Gain on partial disposition of
investment in property fund(16) -- -- -- 3,164
Foreign currency exchange gains
(losses), net(17) 155 (459) 574 (1,787)
EBITDA attributable to
temperature controlled
distribution assets(8) -- 4,559 1,673 12,291
EBITDA before minority interest 227,794 215,120 638,010 586,581
Less minority interest 1,327 1,344 3,929 3,811
EBITDA $226,467 $213,776 $634,081 $582,770
See ProLogis' Consolidated Statements of Earnings and the Reconciliations
of Net Earnings to EBITDA.
Footnotes follow ProLogis' Consolidated Balance Sheets.
ProLogis' definition of EBITDA (Earnings before Interest, Taxes,
Depreciation and Amortization):
EBITDA, as computed by ProLogis, does not represent Net Earnings or cash
from operating activities that are computed in accordance with GAAP and
is not indicative of cash available to fund cash needs, which ProLogis
presents in its Consolidated Statements of Cash Flows and includes in its
Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q that are
filed with the Securities and Exchange Commission. Accordingly, the
EBITDA measure presented by ProLogis should not be considered as an
alternative to Net Earnings as an indicator of ProLogis' operating
performance, or as an alternative to cash flows from operating,
investing, or financing activities as a measure of liquidity. The EBITDA
measure presented by ProLogis will not be comparable to similarly titled
measures of other REITs.
EBITDA generally represents Net Earnings (computed in accordance with
GAAP) excluding: (i) interest expense; (ii) income tax expenses and
benefits; and (iii) depreciation and amortization expenses. In ProLogis'
computation of EBITDA the following items are also excluded: (i)
preferred dividends and charges related to the redemption of preferred
shares; (ii) the foreign currency exchange gains and losses that are also
excluded in ProLogis' definition of Funds From Operations; (iii)
impairment charges; and (iv) gains and losses from the dispositions of
non-CDFS business assets. In addition, ProLogis adjusts the gains and
losses from the contributions and sales of developed properties
recognized as CDFS income to reflect these gains and losses as if no
interest cost had been capitalized during the development of the
properties (i.e. the gains are larger since capitalized interest is not
included in the basis of the assets contributed and sold). EBITDA of
ProLogis' unconsolidated investees is calculated on the same basis as
ProLogis.
ProLogis
Third Quarter 2005
Unaudited Financial Results
Reconciliations of Net Earnings to Funds From Operations
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2005(1) 2004(2) 2005(1) 2004(2)
Reconciliation of Net Earnings to
Funds From Operations:
Net Earnings Attributable to
Common Shares $129,402 $79,758 $261,645 $202,550
Add (Deduct) NAREIT Defined
Adjustments:
Real estate related
depreciation and amortization 44,761 39,450 125,687 117,724
Funds From Operations
adjustment to gain on
partial disposition of
investment in property fund
(16) -- -- -- (164)
Reconciling items attributable
to discontinued operations:
Gains recognized on
dispositions of non-CDFS
business assets, net(11) (36,633) (1,956) (38,840) (5,426)
Real estate related
depreciation and
amortization(11) 715 1,305 2,976 4,147
Totals discontinued
operations (35,918) (651) (35,864) (1,279)
ProLogis' share of reconciling
items from unconsolidated
investees(18):
ProLogis Property Funds:
Real estate related
depreciation and
amortization 13,229 11,002 38,841 29,106
Losses (gains) on
dispositions of non-CDFS
business assets, net (469) 1 (805) (719)
Other amortization items
(19) (1,604) (902) (4,061) (2,435)
Totals ProLogis
Property Funds 11,156 10,101 33,975 25,952
Other investees(14):
Real estate related
depreciation and
amortization 367 155 1,106 290
Losses on dispositions of
non-CDFS business assets,
net -- 720 -- 1,368
Totals other investees 367 875 1,106 1,658
Totals NAREIT Defined
Adjustments 20,366 49,775 124,904 143,891
Subtotals--NAREIT
Defined Funds From
Operations 149,768 129,533 386,549 346,441
Add (Deduct) ProLogis Defined
Adjustments:
Foreign currency exchange
(gains) losses, net(17) (4,587) 884 (7,749) (11,669)
Deferred income tax expense 5,369 2,390 8,190 11,975
Reconciling items attributable
to discontinued operations:
Assets disposed of - deferred
income tax benefit(8) -- (128) (213) (242)
ProLogis' share of reconciling
items from unconsolidated
investees(18):
ProLogis Property Funds
Foreign currency exchange
(gains) losses, net(17) 44 502 (506) 754
Deferred income tax expense
(benefit) -- (228) 1,090 (385)
Totals ProLogis
Property Funds 44 274 584 369
Other investees(14):
Deferred income tax expense -- 213 -- 213
Foreign currency exchange
losses, net 243 -- 243 --
Totals other investees 243 213 243 213
Totals ProLogis Defined
Adjustments 1,069 3,633 1,055 646
ProLogis Defined Funds From
Operations Attributable
to Common Shares $150,837 $133,166 $387,604 $347,087
See ProLogis' Consolidated Statements of Earnings.
Footnotes follow ProLogis' Consolidated Balance Sheets.
ProLogis
Third Quarter 2005
Unaudited Financial Results
Reconciliations of Net Earnings to EBITDA
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2005(1) 2004(2) 2005(1) 2004(2)
Reconciliation of Net Earnings to
EBITDA:
Net Earnings Attributable to
Common Shares: $129,402 $79,758 $261,645 $202,550
Add (Deduct):
NAREIT Defined Adjustments to
compute Funds From Operations 20,366 49,775 124,904 143,891
ProLogis Defined Adjustments to
compute Funds From Operations 1,069 3,633 1,055 646
Other adjustments to compute
ProLogis' EBITDA measure:
Interest expense 42,549 38,126 113,802 114,935
Depreciation of non-real
estate assets 1,743 1,978 5,106 5,962
Depreciation of non-real
estate assets included in
relocation expenses(5) 88 663 842 928
Current income tax expense 2,435 12,180 7,185 18,177
Adjustments to CDFS gains for
interest capitalized to
disposed assets 4,105 7,246 19,102 30,406
Preferred share dividends 6,354 6,354 19,062 19,392
Excess of redemption values
over carrying values of
preferred shares redeemed
(3) -- -- -- 4,236
Reconciling items
attributable to discontinued
operations:
Interest expense(11) 38 161 270 666
Current income tax expense
(8) -- 694 172 1,933
Cumulative translation
losses and impairment
charge(8) -- -- 26,864 --
ProLogis' share of
reconciling items from
unconsolidated investees
(18):
ProLogis Property Funds:
Interest expense 16,618 12,278 49,501 36,207
Current income tax and
other expense 1,496 893 3,933 2,645
Other amortization items
(19) (23) (172) (59) (523)
Totals ProLogis
Property Funds 18,091 12,999 53,375 38,329
Other investees(14):
Interest expense 61 -- 160 --
Depreciation of non-real
estate assets 71 72 209 237
Current income tax
expense 95 137 328 482
Totals other investees 227 209 697 719
ProLogis' EBITDA measure $226,467 $213,776 $634,081 $582,770
See ProLogis' Consolidated Statements of Earnings.
Footnotes follow ProLogis' Consolidated Balance Sheets.
ProLogis
Third Quarter 2005
Unaudited Financial Results
Consolidated Balance Sheets
(in thousands)
September 30, December 31,
2005(1) 2004(2)
Assets:
Investments in real estate assets:
Industrial operating properties $8,455,139 $5,047,414
Commercial and retail operating
properties 716,894 --
Ground leases and other 547,727 --
Properties under development
(including cost of land) 869,702 575,703
Land held for development 942,186 596,001
Other investments(20) 145,422 114,613
11,677,070 6,333,731
Less accumulated depreciation 1,068,766 989,221
Net investments in real
estate assets 10,608,304 5,344,510
Investments in and advances to
unconsolidated investees:
ProLogis Property Funds(21) 777,476 839,675
CDFS joint ventures and other
unconsolidated investees(14) 273,079 68,838
Total investments in and
advances to unconsolidated
investees 1,050,555 908,513
Cash and cash equivalents 173,581 236,529
Accounts and notes receivable 335,137 92,015
Other assets 793,716 401,564
Discontinued operations-assets held
for sale(8)(11) 17,474 114,668
Total assets $12,978,767 $7,097,799
Liabilities and Shareholders' Equity:
Liabilities:
Lines of credit and short-term
borrowings $2,991,078 $960,002
Senior unsecured notes 1,869,533 1,962,316
Secured debt and assessment
bonds 1,675,407 491,643
Construction costs payable 95,395 63,509
Accounts payable and accrued
expenses 271,867 192,332
Other liabilities 552,413 196,240
Discontinued operations-assets
held for sale(8)(11) 358 62,991
Total liabilities 7,456,051 3,929,033
Minority interest 58,496 66,273
Shareholders' equity:
Series C Preferred Shares at
stated liquidation preference
of $50.00 per share 100,000 100,000
Series F Preferred Shares at
stated liquidation preference
of $25.00 per share 125,000 125,000
Series G Preferred Shares at
stated liquidation preference
of $25.00 per share 125,000 125,000
Common Shares at $.01 par value
per share 2,435 1,858
Additional paid-in capital 5,594,497 3,249,576
Accumulated other comprehensive
income(22) 156,274 194,445
Distributions in excess of net
earnings (638,986) (693,386)
Total shareholders' equity 5,464,220 3,102,493
Total liabilities and
shareholders' equity $12,978,767 $7,097,799
Footnotes follow ProLogis' Consolidated Balance Sheets.
ProLogis
Third Quarter 2005
Unaudited Financial Results
Notes to Consolidated Financial Statements
(1) On September 15, 2005, ProLogis completed its merger with Catellus
Development Corporation ("Catellus Merger"). This transaction was
accounted for using the purchase method of accounting and,
accordingly, the purchase price has been allocated to net assets
acquired based on their estimated fair values at the date of
acquisition.
The purchase price was allocated as follows (in thousands):
Consideration:
Cash $1,285,132
Stock 2,285,580
Transaction costs 41,374
Assumption of liabilities 1,749,834
Preliminary
purchase price 5,361,920
Allocation to assets (5,201,466)
Goodwill $160,454
The preliminary estimate of assets and liabilities acquired
represents management's best estimate based on currently available
information; however, such estimate may be revised. ProLogis
financed the cash portion of this transaction primarily through
borrowings on a short-term bridge facility.
(2) Certain 2004 amounts have been reclassified to conform to the 2005
presentation.
(3) On December 11, 2003, ProLogis called for the redemption of all of
the remaining 5,000,000 Series D Preferred Shares outstanding at a
price of $25.00 per share, plus $0.066 in accrued and unpaid
dividends. The redemption of these shares was completed on
January 12, 2004 at a total redemption value of $125.3 million.
During the first quarter of 2004, ProLogis recognized a charge of
$4.2 million associated with the excess of the redemption value over
the carrying value of ProLogis' remaining Series D Preferred Shares.
(4) Represents costs incurred by ProLogis related to the Catellus
Merger. ProLogis expects to incur integration costs through the
first half of 2006. These costs include merger integration and
employee transition costs as well as severance costs for certain
ProLogis employees whose responsibilities became redundant after the
Catellus Merger.
(5) Represents the costs incurred (including accrued employee
termination costs) associated with ProLogis' relocation of its
information technology and corporate accounting functions from
El Paso, Texas to Denver, Colorado and the move of its Denver
corporate headquarters to a new building in Denver. Such
relocations are expected to occur and costs are expected to be
incurred through the first quarter of 2006. Costs include
(i) employee termination costs; (ii) costs associated with the
hiring and training of new personnel and other costs including
travel and temporary facility costs; (iii) and accelerated
depreciation associated with non-real estate assets whose useful
life has been shortened due to the relocations.
(6) The annual distribution rate for 2005 is $1.48 per Common Share.
The amount of the Common Share distribution may be adjusted at the
discretion of the Board of Trustees.
(7) The corporate distribution facilities services and other real estate
development business ("CDFS business") segment primarily represents
the development of industrial distribution properties, the
acquisition and rehabilitation or acquisition and repositioning of
industrial distribution properties and other land and commercial
development activities. It is generally ProLogis' intent to either
contribute the properties to a ProLogis Property Fund in which
ProLogis has an ownership interest and acts as manager or sell the
properties to a third party. This segment's income also includes
fees earned for development activities performed on behalf of
customers or third parties and gains or losses from the dispositions
of land parcels that no longer fit into ProLogis' development plans.
ProLogis includes the income generated in the CDFS business segment
in its computation of Funds From Operations and EBITDA. Further,
ProLogis has ownership interests in various unconsolidated joint
ventures that engage in CDFS activities in Europe, the United States
and China. See note 14. During the third quarter of 2005, CDFS
income included $4.3 million of income from an investment that was
recovered and had previously been reserved against CDFS income.
(8) ProLogis owned a temperature-controlled distribution business in
France, which was sold in July 2005. The assets and liabilities are
shown as held for sale as of December 31, 2004, and the operations
are included in discontinued operations for all periods presented in
the Consolidated Financial Statements. Due to the sale and
liquidation of the business, ProLogis recognized an impairment
charge and cumulative translation losses aggregating $26,864,000
during the first half of 2005. In connection with the sale,
ProLogis received total proceeds of approximately euro 30.8 million
(the currency equivalent of approximately $36.6 million as of the
sale date) including a note receivable of euro 23.9 million (the
currency equivalent of approximately $29.0 million as of
September 30, 2005). The note bears interest at Euribor plus 1.1%
and is due in July 2006.
(9) Represents rental income earned and rental expenses incurred while
ProLogis owns a property directly. Under the terms of the
respective lease agreements, some or all of ProLogis' rental
expenses are recovered from its customers. Amounts recovered are
included as a component of rental income. Rental expenses also
include ProLogis' direct expenses associated with its management of
the ProLogis Property Funds' operations. For properties that have
been contributed to ProLogis Property Funds, ProLogis recognizes its
share of the total operations of the Property Funds under the equity
method and presents these amounts below Operating Income in its
Consolidated Statements of Earnings, Funds From Operations and
EBITDA.
(10) Amounts include straight-line rents of $1,841,000 and $2,566,000 for
the three months ended September 30, 2005 and 2004, respectively,
and $5,230,000 and $7,423,000 for the nine months ended
September 30, 2005 and 2004, respectively, and rental expense
recoveries from customers of $29,559,000 and $23,977,000 for the
three months ended September 30, 2005 and 2004, respectively, and
$80,688,000 and $74,703,000 for the nine months ended September 30,
2005 and 2004, respectively.
(11) Properties disposed of to third parties are considered to be
discontinued operations unless such properties were developed under
a pre-sale agreement. During the three months ended
September 30, 2005, ProLogis began dispositions of its entire
portfolio in three non-strategic markets-Kansas City, Oklahoma City
and Tulsa, and completed the dispositions in September and
October 2005. Of the 55 properties disposed of during 2005 (15 of
the assets were disposed of in October 2005 and are included in
assets held for sale at September 30, 2005), five properties were
CDFS business assets.
The operations of the properties disposed of in 2005 for the three
and nine months ended September 30, 2005 and 2004 and the aggregate
net gains or losses recognized upon their dispositions are presented
as discontinued operations in ProLogis' Consolidated Statements of
Earnings. In addition, the operations of the 20 properties sold
during 2004 (ten of which were CDFS business assets) are presented
as discontinued operations in ProLogis' Consolidated Statements of
Earnings for the three and nine months ended September 30, 2004.
Interest expense represents interest directly attributable to these
properties due to secured debt. These amounts are not presented as
discontinued operations in either of ProLogis' Consolidated
Statements of Funds From Operations or EBITDA. The operating
amounts that are presented as discontinued operations (other than
the net gains or losses recognized upon disposition) are as follows
(in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Rental income $2,219 $5,077 $9,126 $13,579
Rental expenses (460) (1,173) (2,443) (3,680)
Depreciation and
amortization (715) (1,305) (2,976) (4,147)
Interest expense (38) (161) (270) (666)
$1,006 $2,438 $3,437 $5,086
(12) When ProLogis contributes properties to a ProLogis Property Fund in
which it has an ownership interest, ProLogis does not recognize a
portion of the proceeds in its computation of the gain resulting
from the contribution. The amount of the proceeds that cannot be
recognized is determined based on ProLogis' continuing ownership
interest in the contributed property that arises due to ProLogis'
ownership interest in the Property Fund acquiring the property.
ProLogis defers this portion of the proceeds by recognizing a
reduction to its investment in the applicable Property Fund.
ProLogis adjusts its proportionate share of the earnings or losses
that it recognizes under the equity method from the Property Fund in
later periods to reflect the Property Fund's depreciation expense as
if the depreciation expense was computed on ProLogis' lower basis in
the contributed real estate assets rather than on the Property
Fund's basis in the contributed real estate assets. If a loss is
recognized when a property is contributed to a ProLogis Property
Fund, the entire loss is recognized. See note 13 for the amount of
cumulative gross proceeds that have not been recognized as of
September 30, 2005.
Gross proceeds deferred related to contributions during the three
months ended September 30, 2005 and 2004 were $16,403,000 and
$10,072,000, respectively, and during the nine months ended
September 30, 2005 and 2004 were $42,057,000 and $30,987,000,
respectively. When a property that ProLogis originally contributed
to a ProLogis Property Fund is disposed of to a third party,
ProLogis recognizes the amount of the gain that it had previously
deferred as a part of its CDFS income during the period that the
disposition occurs, in addition to ProLogis' proportionate share of
the gain or loss recognized by the Property Fund. Further, during
periods when ProLogis' ownership interest in a ProLogis Property
Fund decreases, ProLogis will recognize gains to the extent that
previously deferred proceeds are recognized to coincide with
ProLogis' new ownership interest in the ProLogis Property Fund.
(13) As of September 30, 2005, the cumulative gross proceeds that have
not been recognized in computing the gains from the contributions of
properties by ProLogis to ProLogis Property Funds (before subsequent
amortization) are presented below (in thousands). See note 12.
Gross Proceeds Not Recognized
CDFS Non-CDFS
Transactions Transactions Totals
ProLogis European
Properties Fund $94,393 $9,344 $103,737
ProLogis California LLC 5,350 26,129 31,479
ProLogis North American
Properties Fund I 8,278 862 9,140
ProLogis North American
Properties Fund II 7,336 -- 7,336
ProLogis North American
Properties Fund III 5,651 337 5,988
ProLogis North American
Properties Fund IV 3,805 810 4,615
ProLogis North American
Properties Fund V 23,791 871 24,662
ProLogis North American
Properties Funds VI-X 2,751 -- 2,751
ProLogis Japan Properties
Fund I 44,878 -- 44,878
Totals $196,233 $38,353 $234,586
(14) ProLogis invests in joint ventures that perform CDFS business
activities (see note 7), in Europe, China and North America.
ProLogis has a weighted ownership interest of 50% in the CDFS joint
ventures. In connection with the Catellus Merger, ProLogis acquired
interests in several entities that engage in land and commercial
development activities. In addition, ProLogis has varying ownership
interests in other unconsolidated investees which primarily operate
industrial, commercial and hotel properties.
(15) Includes amortization of deferred loan costs of $1,306,000 and
$1,370,000 for the three months ended September 30, 2005 and 2004,
respectively, and $3,673,000 and $4,183,000 for the nine months
ended September 30, 2005 and 2004, respectively. Excludes interest
that has been capitalized based on ProLogis' development activities
of $13,954,000 and $9,985,000 for the three months ended
September 30, 2005 and 2004, respectively, and $41,535,000 and
$26,671,000 for the nine months ended September 30, 2005 and 2004,
respectively. The increase in capitalized interest is due to the
significant increase in ProLogis' development activities.
(16) In June 2004, ProLogis disposed of a portion of its ownership
interest in ProLogis North American Properties Fund V. As provided
in certain formation agreements, ProLogis exchanged a certain
portion of its investment into shares of Macquarie ProLogis Trust,
the listed property trust in Australia that has an 86.0% ownership
interest in ProLogis North American Properties Fund V. Upon receipt
of the shares, they were immediately sold by ProLogis in the public
market. ProLogis recognized a net gain of $3,328,000 in its
Consolidated Statement of Earnings and a net gain of $3,164,000 on
this disposition in both its Consolidated Statements of Funds From
Operations and EBITDA.
(17) Foreign currency exchange gains and losses that are recognized as a
component of Net Earnings computed under GAAP generally result from:
(i) remeasurement and/or settlement of certain debt transactions
between ProLogis and its foreign consolidated subsidiaries and
foreign unconsolidated investees (depending on the type of loan, the
currency in which the loan is denominated and the form of ProLogis'
investment); (ii) remeasurement and/or settlement of certain third
party debt of ProLogis' foreign consolidated subsidiaries (depending
on the currency in which the loan is denominated); and
(iii) mark-to-market adjustments related to derivative financial
instruments utilized to manage foreign currency risks. ProLogis
generally excludes these types of foreign currency exchange gains
and losses from the ProLogis Defined Funds From Operations measure
and also from its computation of EBITDA.
Foreign currency exchange gains and losses that result from
transactions (including certain intercompany debt and equity
investments) that are settled in a currency other than the reporting
company's functional currency and from the settlement of derivative
financial instruments utilized to manage foreign currency risks are
included in the ProLogis Defined Funds From Operations measure and
in ProLogis' computation of EBITDA.
(18) ProLogis reports its investments in the ProLogis Property Funds,
CDFS joint ventures and other unconsolidated investees under the
equity method. For purposes of calculating Funds From Operations
and EBITDA, the Net Earnings of each of its unconsolidated investees
is adjusted to be consistent with the calculation of these measures
by ProLogis.
(19) Consists primarily of adjustments to the amounts ProLogis recognizes
under the equity method that are necessary to recognize the amount
of gains not recognized at the contribution date due to the deferral
of certain proceeds based on ProLogis' ownership interest in the
ProLogis Property Fund acquiring the property. See note 12.
(20) Other investments primarily include: (i) funds that are held in
escrow pending the completion of tax-deferred exchange transactions;
(ii) earnest money deposits associated with potential acquisitions;
(iii) costs incurred during the pre-acquisition due diligence
process; (iv) costs incurred during the pre-construction phase
related to future development projects; and (v) costs related to
ProLogis' corporate office buildings.
(21) On September 30, 2005, ProLogis acquired the remaining 80% interest
in ProLogis North American Properties Fund XII for approximately
$235.0 million. The acquisition resulted in the addition of 12
buildings aggregating 3,363,810 square feet with an investment basis
of $283.2 million, including ProLogis' original 20% investment, to
ProLogis' direct owned portfolio.
(22) Accumulated other comprehensive income includes cumulative foreign
currency translation adjustments and unrealized gains and losses
associated with derivative financial instruments that receive hedge
accounting treatment. ProLogis also recognizes its proportionate
share of the accumulated other comprehensive income balances of its
unconsolidated investees.
SOURCE ProLogis
Investor Relations, Melissa Marsden, mmarsden@prologis.com, or Media, Arthur Hodges, media@prologis.com, both of ProLogis, +1-303-576-2667
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