UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______________ to ______________
Commission File Number:
Prologis, L.P.
(Exact name of registrant as specified in its charter)
Maryland (Prologis, Inc.) Delaware (Prologis, L.P.) |
|
94-3281941 (Prologis, Inc.) 94-3285362 (Prologis, L.P.) |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address or principal executive offices) |
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(Zip Code) |
(
(Registrants’ telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class |
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Trading Symbol(s) |
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Name of Each Exchange on Which Registered |
Prologis, Inc. |
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Common Stock, $0.01 par value |
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New York Stock Exchange |
Prologis, L.P. |
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1.375% Notes due 2020 |
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PLD/20A |
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New York Stock Exchange |
Prologis, L.P. |
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1.375% Notes due 2021 |
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PLD/21 |
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New York Stock Exchange |
Prologis, L.P. |
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3.000% Notes due 2022 |
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PLD/22 |
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New York Stock Exchange |
Prologis, L.P. |
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3.375% Notes due 2024 |
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PLD/24 |
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New York Stock Exchange |
Prologis, L.P. |
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3.000% Notes due 2026 |
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PLD/26 |
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New York Stock Exchange |
Prologis, L.P. |
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2.250% Notes due 2029 |
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PLD/29 |
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New York Stock Exchange |
Prologis, L.P. |
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Floating Rate Notes due 2020 |
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PLD/20B |
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New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing for the past 90 days.
Prologis, Inc. |
|
☒ |
No |
☐ |
Prologis, L.P. |
Yes |
☒ |
No |
☐ |
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter periods that the registrant was required to submit such files).
Prologis, Inc. |
Yes |
☒ |
No |
☐ |
Prologis, L.P. |
Yes |
☒ |
No |
☐ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Prologis, Inc.: |
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Large accelerated filer ☒ |
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Accelerated filer ☐ |
Non-accelerated filer ☐ |
Smaller reporting company ☐ |
Emerging growth company ☐ |
Prologis, L.P.: |
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Large accelerated filer ☐ |
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Accelerated filer ☐ |
Non-accelerated filer ☒ |
Smaller reporting company ☐ |
Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).
Prologis, Inc. |
Yes |
☐ |
No |
☒ |
Prologis, L.P. |
Yes |
☐ |
No |
☒ |
The number of shares of Prologis, Inc.’s common stock outstanding at July 17, 2019, was approximately
EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the period ended June 30, 2019, of Prologis, Inc. and Prologis, L.P. Unless stated otherwise or the context otherwise requires, references to “Prologis, Inc.” or the “Parent” mean Prologis, Inc. and its consolidated subsidiaries; and references to “Prologis, L.P.” or the “Operating Partnership” or the “OP” mean Prologis, L.P., and its consolidated subsidiaries. The terms “the Company,” “Prologis,” “we,” “our” or “us” means the Parent and the OP collectively.
The Parent is a real estate investment trust (a “REIT”) and the general partner of the OP. At June 30, 2019, the Parent owned 97.12% common general partnership interest in the OP and 100% of the preferred units in the OP. The remaining 2.88% common limited partnership interests are owned by unaffiliated investors and certain current and former directors and officers of the Parent.
We operate the Parent and the OP as one enterprise. The management of the Parent consists of the same members as the management of the OP. These members are officers of the Parent and employees of the OP or one of its subsidiaries. As sole general partner, the Parent has control of the OP through complete responsibility and discretion in the day-to-day management and therefore, consolidates the OP for financial reporting purposes. Because the only significant asset of the Parent is its investment in the OP, the assets and liabilities of the Parent and the OP are the same on their respective financial statements.
We believe combining the quarterly reports on Form 10-Q of the Parent and the OP into this single report results in the following benefits:
• |
enhances investors’ understanding of the Parent and the OP by enabling investors to view the business as a whole in the same manner as management views and operates the business; |
• |
eliminates duplicative disclosure and provides a more streamlined and readable presentation as a substantial portion of the Company’s disclosure applies to both the Parent and the OP; and |
• |
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports. |
It is important to understand the few differences between the Parent and the OP in the context of how we operate the Company. The Parent does not conduct business itself, other than acting as the sole general partner of the OP and issuing public equity from time to time. The OP holds substantially all the assets of the business, directly or indirectly. The OP conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for net proceeds from equity issuances by the Parent, which are contributed to the OP in exchange for partnership units, the OP generates capital required by the business through the OP’s operations, incurrence of indebtedness and issuance of partnership units to third parties.
The presentation of noncontrolling interests, stockholders’ equity and partners’ capital are the main areas of difference between the consolidated financial statements of the Parent and those of the OP. The differences in the presentations between stockholders’ equity and partners’ capital result from the differences in the equity and capital issuances in the Parent and in the OP.
The preferred stock, common stock, additional paid-in capital, accumulated other comprehensive income (loss) and distributions in excess of net earnings of the Parent are presented as stockholders’ equity in the Parent’s consolidated financial statements. These items represent the common and preferred general partnership interests held by the Parent in the OP and are presented as general partner’s capital within partners’ capital in the OP’s consolidated financial statements. The common limited partnership interests held by the limited partners in the OP are presented as noncontrolling interest within equity in the Parent’s consolidated financial statements and as limited partners’ capital within partners’ capital in the OP’s consolidated financial statements.
To highlight the differences between the Parent and the OP, separate sections in this report, as applicable, individually discuss the Parent and the OP, including separate financial statements and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure of the Parent and the OP, this report refers to actions or holdings as being actions or holdings of Prologis.
PROLOGIS
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
PROLOGIS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
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June 30, 2019 |
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December 31, |
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(Unaudited) |
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2018 |
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ASSETS |
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Investments in real estate properties |
$ |
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$ |
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Less accumulated depreciation |
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Net investments in real estate properties |
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Investments in and advances to unconsolidated entities |
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Assets held for sale or contribution |
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Net investments in real estate |
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Lease right-of-use assets |
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Cash and cash equivalents |
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Other assets |
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Total assets |
$ |
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$ |
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LIABILITIES AND EQUITY |
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Liabilities: |
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Debt |
$ |
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$ |
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Lease liabilities |
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Accounts payable and accrued expenses |
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Other liabilities |
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Total liabilities |
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Equity: |
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Prologis, Inc. stockholders’ equity: |
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Series Q preferred stock at stated liquidation preference of $ shares issued and outstanding and December 31, 2018 |
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Common stock; $ June 30, 2019 and December 31, 2018, respectively |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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( |
) |
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( |
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Distributions in excess of net earnings |
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( |
) |
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( |
) |
Total Prologis, Inc. stockholders’ equity |
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Noncontrolling interests |
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Total equity |
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Total liabilities and equity |
$ |
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$ |
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The accompanying notes are an integral part of these Consolidated Financial Statements.
1
PROLOGIS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2019 |
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2018 |
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2019 |
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2018 |
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Revenues: |
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Rental |
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$ |
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$ |
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$ |
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$ |
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Strategic capital |
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Development management and other |
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Total revenues |
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Expenses: |
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Rental |
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Strategic capital |
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General and administrative |
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Depreciation and amortization |
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Other |
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Total expenses |
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Operating income before gains on real estate transactions, net |
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Gains on real estate transactions, net |
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Operating income |
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Other income (expense): |
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Earnings from unconsolidated entities, net |
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Interest expense |
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( |
) |
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( |
) |
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( |
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( |
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Interest and other income, net |
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Foreign currency and derivative gains, net |
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Gains (losses) on early extinguishment of debt, net |
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( |
) |
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( |
) |
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( |
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Total other income (expense) |
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( |
) |
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Earnings before income taxes |
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Total income tax expense |
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Consolidated net earnings |
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Less net earnings attributable to noncontrolling interests |
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Net earnings attributable to controlling interests |
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Less preferred stock dividends |
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Net earnings attributable to common stockholders |
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$ |
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$ |
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$ |
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$ |
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Weighted average common shares outstanding – Basic |
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Weighted average common shares outstanding – Diluted |
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Net earnings per share attributable to common stockholders – Basic |
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$ |
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$ |
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$ |
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$ |
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Net earnings per share attributable to common stockholders – Diluted |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these Consolidated Financial Statements.
2
PROLOGIS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2019 |
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2018 |
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2019 |
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2018 |
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Consolidated net earnings |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss): |
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Foreign currency translation gains (losses), net |
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( |
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( |
) |
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( |
) |
Unrealized gains (losses) on derivative contracts, net |
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( |
) |
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( |
) |
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( |
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Comprehensive income |
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Net earnings attributable to noncontrolling interests |
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( |
) |
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( |
) |
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( |
) |
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( |
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Other comprehensive loss (income) attributable to noncontrolling interests |
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( |
) |
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Comprehensive income attributable to common stockholders |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these Consolidated Financial Statements.
3
PROLOGIS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands)
Three Months Ended June 30, 2019 and 2018
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Common Stock |
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Accumulated |
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Distributions |
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Number |
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Additional |
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Other |
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in Excess of |
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Non- |
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Preferred |
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of |
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Par |
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Paid-in |
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Comprehensive |
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Net |
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controlling |
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Total |
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Stock |
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Shares |
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Value |
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Capital |
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Income (Loss) |
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Earnings |
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Interests |
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Equity |
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Balance at April 1, 2019 |
$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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$ |
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Consolidated net earnings |
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- |
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- |
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- |
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- |
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- |
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Effect of equity compensation plans |
|
- |
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- |
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- |
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Capital contributions |
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- |
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- |
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- |
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- |
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- |
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- |
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Redemption of noncontrolling interests |
|
- |
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- |
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- |
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( |
) |
|
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( |
) |
Foreign currency translation losses, net |
|
- |
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- |
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- |
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- |
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( |
) |
|
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- |
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( |
) |
|
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( |
) |
Unrealized losses on derivative contracts, net |
|
- |
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|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
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|
( |
) |
|
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( |
) |
Reallocation of equity |
|
- |
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- |
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|
- |
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( |
) |
|
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- |
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- |
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- |
|
Dividends ($ and other |
|
- |
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- |
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- |
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( |
) |
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- |
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( |
) |
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( |
) |
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( |
) |
Balance at June 30, 2019 |
$ |
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$ |
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$ |
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|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
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|
$ |
|
|
Balance at April 1, 2018 |
$ |
|
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$ |
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$ |
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|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
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|
$ |
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|
Consolidated net earnings |
|
- |
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|
- |
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|
- |
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|
- |
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|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of equity compensation plans |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
Capital contributions |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
Redemption of noncontrolling interests |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Foreign currency translation losses, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Unrealized gains on derivative contracts, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
Reallocation of equity |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
Dividends ($ and other |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2018 |
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
Six Months Ended June 30, 2019 and 2018
|
|
|
|
|
Common Stock |
|
|
|
|
|
|
Accumulated |
|
|
Distributions |
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
Number |
|
|
|
|
|
|
Additional |
|
|
Other |
|
|
in Excess of |
|
|
Non- |
|
|
|
|
|
|||||
|
Preferred |
|
|
of |
|
|
Par |
|
|
Paid-in |
|
|
Comprehensive |
|
|
Net |
|
|
controlling |
|
|
Total |
|
||||||||
|
Stock |
|
|
Shares |
|
|
Value |
|
|
Capital |
|
|
Income (Loss) |
|
|
Earnings |
|
|
Interests |
|
|
Equity |
|
||||||||
Balance at January 1, 2019 |
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
Consolidated net earnings |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of equity compensation plans |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
Capital contributions |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
Redemption of noncontrolling interests |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Contribution to Brazil venture |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Foreign currency translation gains, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
Unrealized losses on derivative contracts, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Reallocation of equity |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
Dividends ($ and other |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2019 |
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
Balance at January 1, 2018 |
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
Consolidated net earnings |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of equity compensation plans |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
Capital contributions |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
Redemption of noncontrolling interests |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Foreign currency translation losses, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Unrealized losses on derivative contracts, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Reallocation of equity |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
Dividends ($ and other |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2018 |
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
The accompanying notes are an integral part of these Consolidated Financial Statements.
4
PROLOGIS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
|
Six Months Ended |
|
|||||
|
|
June 30, |
|
|||||
|
|
2019 |
|
|
2018 |
|
||
Operating activities: |
|
|
|
|
|
|
|
|
Consolidated net earnings |
|
$ |
|
|
|
$ |
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Straight-lined rents and amortization of above and below market leases |
|
|
( |
) |
|
|
( |
) |
Equity-based compensation awards |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
Earnings from unconsolidated entities, net |
|
|
( |
) |
|
|
( |
) |
Operating distributions from unconsolidated entities |
|
|
|
|
|
|
|
|
Decrease in operating receivables from unconsolidated entities |
|
|
|
|
|
|
|
|
Amortization of debt discounts, net and debt issuance costs |
|
|
|
|
|
|
|
|
Gains on real estate transactions, net |
|
|
( |
) |
|
|
( |
) |
Unrealized foreign currency and derivative gains, net |
|
|
( |
) |
|
|
( |
) |
Losses on early extinguishment of debt, net |
|
|
|
|
|
|
|
|
Deferred income tax expense (benefit) |
|
|
|
|
|
|
( |
) |
Increase in accounts receivable, lease right-of-use assets and other assets |
|
|
( |
) |
|
|
( |
) |
Decrease in accounts payable and accrued expenses, lease liabilities and other liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
Real estate development |
|
|
( |
) |
|
|
( |
) |
Real estate acquisitions |
|
|
( |
) |
|
|
( |
) |
Tenant improvements and lease commissions on previously leased space |
|
|
( |
) |
|
|
( |
) |
Property improvements |
|
|
( |
) |
|
|
( |
) |
Proceeds from dispositions and contributions of real estate properties |
|
|
|
|
|
|
|
|
Investments in and advances to unconsolidated entities |
|
|
( |
) |
|
|
( |
) |
Return of investment from unconsolidated entities |
|
|
|
|
|
|
|
|
Proceeds from repayment of notes receivable backed by real estate |
|
|
|
|
|
|
|
|
Proceeds from the settlement of net investment hedges |
|
|
|
|
|
|
|
|
Payments on the settlement of net investment hedges |
|
|
( |
) |
|
|
( |
) |
Net cash provided by (used in) investing activities |
|
|
|
|
|
|
( |
) |
Financing activities: |
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock |
|
|
|
|
|
|
|
|
Dividends paid on common and preferred stock |
|
|
( |
) |
|
|
( |
) |
Noncontrolling interests contributions |
|
|
|
|
|
|
|
|
Noncontrolling interests distributions |
|
|
( |
) |
|
|
( |
) |
Settlement of noncontrolling interests |
|
|
( |
) |
|
|
( |
) |
Tax paid for shares withheld |
|
|
( |
) |
|
|
( |
) |
Debt issuance costs paid |
|
|
( |
) |
|
|
( |
) |
Net proceeds from (payments on) credit facilities |
|
|
|
|
|
|
( |
) |
Repurchase of and payments on debt |
|
|
( |
) |
|
|
( |
) |
Proceeds from the issuance of debt |
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
Effect of foreign currency exchange rate changes on cash |
|
|
|
|
|
|
( |
) |
Net increase in cash and cash equivalents |
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period |
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
|
|
|
$ |
|
|
See Note 12 for information on noncash investing and financing activities and other information.
The accompanying notes are an integral part of these Consolidated Financial Statements.
5
PROLOGIS, L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands)
|
|
|
|
|
|
|
|
|
June 30, 2019 |
|
|
December 31, |
|
||
|
(Unaudited) |
|
|
2018 |
|
||
ASSETS |
|
|
|
|
|
|
|
Investments in real estate properties |
$ |
|
|
|
$ |
|
|
Less accumulated depreciation |
|
|
|
|
|
|
|
Net investments in real estate properties |
|
|
|
|
|
|
|
Investments in and advances to unconsolidated entities |
|
|
|
|
|
|
|
Assets held for sale or contribution |
|
|
|
|
|
|
|
Net investments in real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease right-of-use assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
|
Other assets |
|
|
|
|
|
|
|
Total assets |
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND CAPITAL |
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
Debt |
$ |
|
|
|
$ |
|
|
Lease liabilities |
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
|
|
|
|
|
|
Other liabilities |
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital: |
|
|
|
|
|
|
|
Partners’ capital: |
|
|
|
|
|
|
|
General partner – preferred |
|
|
|
|
|
|
|
General partner – common |
|
|
|
|
|
|
|
Limited partners – common |
|
|
|
|
|
|
|
Limited partners – Class A common |
|
|
|
|
|
|
|
Total partners’ capital |
|
|
|
|
|
|
|
Noncontrolling interests |
|
|
|
|
|
|
|
Total capital |
|
|
|
|
|
|
|
Total liabilities and capital |
$ |
|
|
|
$ |
|
|
The accompanying notes are an integral part of these Consolidated Financial Statements.
6
PROLOGIS, L.P.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per unit amounts)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Strategic capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development management and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income before gains on real estate transactions, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains on real estate transactions, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from unconsolidated entities, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Interest and other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency and derivative gains, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains (losses) on early extinguishment of debt, net |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
Total other income (expense) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less net earnings attributable to noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less preferred unit distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to common unitholders |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common units outstanding – Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common units outstanding – Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per unit attributable to common unitholders – Basic |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per unit attributable to common unitholders – Diluted |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
The accompanying notes are an integral part of these Consolidated Financial Statements.
7
PROLOGIS, L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
Consolidated net earnings |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gains (losses), net |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Unrealized gains (losses) on derivative contracts, net |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to noncontrolling interests |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other comprehensive loss (income) attributable to noncontrolling interests |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Comprehensive income attributable to common unitholders |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these Consolidated Financial Statements.
8
PROLOGIS, L.P.
CONSOLIDATED STATEMENTS OF CAPITAL
(Unaudited)
(In thousands)
Three Months Ended June 30, 2019 and 2018
|
General Partner |
|
|
Limited Partners |
|
|
Non- |
|
|
|
|
|
|||||||||||||||||||||||||||
|
Preferred |
|
|
Common |
|
|
Common |
|
|
Class A Common |
|
|
controlling |
|
|
|
|
|
|||||||||||||||||||||
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Interests |
|
|
Total |
|
||||||||||
Balance at April 1, 2019 |
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Consolidated net earnings |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of equity compensation plans |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Capital contributions |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
Redemption of limited partners units |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Foreign currency translation gains (losses), net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Unrealized losses on derivative contracts, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Reallocation of capital |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
Distributions ($ |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2019 |
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Balance at April 1, 2018 |
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Consolidated net earnings |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of equity compensation plans |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Capital contributions |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
Redemption of noncontrolling interests |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Redemption of limited partners units |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Foreign currency translation losses, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Unrealized gains on derivative contracts, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
Reallocation of capital |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
Distributions ($ |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2018 |
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Six Months Ended June 30, 2019 and 2018
|
General Partner |
|
|
Limited Partners |
|
|
Non- |
|
|
|
|
|
|||||||||||||||||||||||||||
|
Preferred |
|
|
Common |
|
|
Common |
|
|
Class A Common |
|
|
controlling |
|
|
|
|
|
|||||||||||||||||||||
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Interests |
|
|
Total |
|
||||||||||
Balance at January 1, 2019 |
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Consolidated net earnings |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of equity compensation plans |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Capital contributions |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
Redemption of noncontrolling interests |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Redemption of limited partners units |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Contribution to Brazil venture |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Foreign currency translation gains, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses on derivative contracts, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Reallocation of capital |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
Distributions ($ |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2019 |
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Balance at January 1, 2018 |
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Consolidated net earnings |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of equity compensation plans |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Capital contributions |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
Redemption of noncontrolling interests |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Redemption of limited partners units |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Foreign currency translation losses, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Unrealized losses on derivative contracts, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Reallocation of capital |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
Distributions ($ |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2018 |
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
The accompanying notes are an integral part of these Consolidated Financial Statements.
9
PROLOGIS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
|
Six Months Ended |
|
|||||
|
|
June 30, |
|
|||||
|
|
2019 |
|
|
2018 |
|
||
Operating activities: |
|
|
|
|
|
|
|
|
Consolidated net earnings |
|
$ |
|
|
|
$ |
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Straight-lined rents and amortization of above and below market leases |
|
|
( |
) |
|
|
( |
) |
Equity-based compensation awards |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
Earnings from unconsolidated entities, net |
|
|
( |
) |
|
|
( |
) |
Operating distributions from unconsolidated entities |
|
|
|
|
|
|
|
|
Decrease in operating receivables from unconsolidated entities |
|
|
|
|
|
|
|
|
Amortization of debt discounts, net and debt issuance costs |
|
|
|
|
|
|
|
|
Gains on real estate transactions, net |
|
|
( |
) |
|
|
( |
) |
Unrealized foreign currency and derivative gains, net |
|
|
( |
) |
|
|
( |
) |
Losses on early extinguishment of debt, net |
|
|
|
|
|
|
|
|
Deferred income tax expense (benefit) |
|
|
|
|
|
|
( |
) |
Increase in accounts receivable, lease right-of-use assets and other assets |
|
|
( |
) |
|
|
( |
) |
Decrease in accounts payable and accrued expenses, lease liabilities and other liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
Real estate development |
|
|
( |
) |
|
|
( |
) |
Real estate acquisitions |
|
|
( |
) |
|
|
( |
) |
Tenant improvements and lease commissions on previously leased space |
|
|
( |
) |
|
|
( |
) |
Property improvements |
|
|
( |
) |
|
|
( |
) |
Proceeds from dispositions and contributions of real estate properties |
|
|
|
|
|
|
|
|
Investments in and advances to unconsolidated entities |
|
|
( |
) |
|
|
( |
) |
Return of investment from unconsolidated entities |
|
|
|
|
|
|
|
|
Proceeds from repayment of notes receivable backed by real estate |
|
|
|
|
|
|
|
|
Proceeds from the settlement of net investment hedges |
|
|
|
|
|
|
|
|
Payments on the settlement of net investment hedges |
|
|
( |
) |
|
|
( |
) |
Net cash provided by (used in) investing activities |
|
|
|
|
|
|
( |
) |
Financing activities: |
|
|
|
|
|
|
|
|
Proceeds from issuance of common partnership units in exchange for contributions from Prologis, Inc. |
|
|
|
|
|
|
|
|
Distributions paid on common and preferred units |
|
|
( |
) |
|
|
( |
) |
Noncontrolling interests contributions |
|
|
|
|
|
|
|
|
Noncontrolling interests distributions |
|
|
( |
) |
|
|
( |
) |
Settlement of noncontrolling interests |
|
|
( |
) |
|
|
( |
) |
Redemption of common limited partnership units |
|
|
( |
) |
|
|
( |
) |
Tax paid for shares of the Parent withheld |
|
|
( |
) |
|
|
( |
) |
Debt issuance costs paid |
|
|
( |
) |
|
|
( |
) |
Net proceeds from (payments on) credit facilities |
|
|
|
|
|
|
( |
) |
Repurchase of and payments on debt |
|
|
( |
) |
|
|
( |
) |
Proceeds from the issuance of debt |
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
Effect of foreign currency exchange rate changes on cash |
|
|
|
|
|
|
( |
) |
Net increase in cash and cash equivalents |
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period |
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
|
|
|
$ |
|
|
See Note 12 for information on noncash investing and financing activities and other information.
The accompanying notes are an integral part of these Consolidated Financial Statements.
10
PROLOGIS, INC. AND PROLOGIS, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. GENERAL
Business. Prologis, Inc. (or the “Parent”) commenced operations as a fully integrated real estate company in 1997, elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and believes the current organization and method of operation will enable it to maintain its status as a REIT. The Parent is the general partner of Prologis, L.P. (or the “Operating Partnership” or “OP”). Through the OP, we are engaged in the ownership, acquisition, development and management of logistics facilities with a focus on key markets in 19 countries on four continents. We invest in real estate through wholly owned subsidiaries and other entities through which we co-invest with partners and investors. We maintain a significant level of ownership in these co-investment ventures, which may be consolidated or unconsolidated based on our level of control of the entity. Our current business strategy consists of
For each share of preferred or common stock the Parent issues, the OP issues a corresponding preferred or common partnership unit, as applicable, to the Parent in exchange for the contribution of the proceeds from the stock issuance. At June 30, 2019, the Parent owned a
As the sole general partner of the OP, the Parent has complete responsibility and discretion in the day-to-day management and control of the OP and we operate the Parent and the OP as one enterprise. The management of the Parent consists of the same members as the management of the OP. These members are officers of the Parent and employees of the OP or one of its subsidiaries. As general partner with control of the OP, the Parent is the primary beneficiary and therefore consolidates the OP. Because the Parent’s only significant asset is its investment in the OP, the assets and liabilities of the Parent and the OP are the same on their respective financial statements.
Basis of Presentation. The accompanying Consolidated Financial Statements are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and are presented in our reporting currency, the U.S. dollar. References herein to the translation of activity for significant nonrecurring transactions are at the rate in effect at the date of the transaction. All material intercompany transactions with consolidated entities have been eliminated.
The accompanying unaudited interim financial information has been prepared according to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in our annual financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations. Our management believes that the disclosures presented in these financial statements are adequate to make the information presented not misleading. In our opinion, all adjustments and eliminations, consisting only of normal recurring adjustments, necessary to present fairly the financial position and results of operations for both the Parent and the OP for the reported periods have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. The accompanying unaudited interim financial information should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC, and other public information.
Reclassifications. Upon adoption of the new lease standard, rental recoveries for 2018 have been reclassified to Rental Revenues in the Consolidated Statements of Income to conform to the 2019 financial statement presentation.
New Accounting Pronouncements.
New Accounting Standards Adopted
Leases. In February 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update (“ASU”) that provided the principles for the recognition, measurement, presentation and disclosure of leases. The guidance amended the existing accounting standards, including the requirement that lessees recognize right-of-use assets and lease liabilities for leases with terms greater than twelve months in the Consolidated Balance Sheets. Additional guidance and targeted improvements to the February 2016 ASU were made through the issuance of supplementary ASUs in July 2018, December 2018 and March 2019. We refer to all three ASUs collectively as the “new lease standard.”
11
We adopted the new lease standard on January 1, 2019 and applied it to leases that were in place on the effective date. Results for reporting periods beginning January 1, 2019 are presented under the new lease standard.
We elected the package of practical expedients and were not required to reassess the following upon adoption: (i) whether an expired or existing contract met the definition of a lease; (ii) the lease classification at January 1, 2019 for existing leases; and (iii) whether leasing costs previously capitalized as initial direct costs would continue to be amortized. This allowed us to continue to account for our
existing ground and office space leases as operating leases, however, any new or renewed ground leases after January 1, 2019 may be classified as financing leases unless they meet certain conditions to be considered a lease involving land owned by a government unit or authority. Upon adoption, we did not have an adjustment to the opening balance of retained earnings due to the election of these practical expedients.
• |
As a lessor. The new lease standard required that lessors expense, on an as-incurred basis, certain initial direct costs that are not incremental in negotiating a lease. Initial direct costs include the salaries and related costs for employees directly working on leasing activities. Prior to January 1, 2019, these costs were capitalizable in Other Assets and therefore the new lease standard resulted in certain of these costs being expensed as incurred through Rental Expenses. During the three and six months ended June 30, 2018, we capitalized $ |
We adopted the practical expedient that allowed us to not separate expenses reimbursed by our customers (“rental recoveries”) from the associated rental revenue if certain criteria were met. We assessed these criteria and concluded that the timing and straight-line pattern of transfer to the lessee for rental revenue and the associated rental recoveries are the same and as our leases qualify as operating leases, we accounted for and presented rental revenue and rental recoveries as a single component under Rental Revenues in our Consolidated Statements of Income for the three and six months ended June 30, 2019. As a result of our adoption of this practical expedient, we also presented $
• |
As a lessee. At January 1, 2019 we recognized Lease Right-of-Use (“ROU”) Assets and Lease Liabilities, principally for our ground and office space leases, in which we are the lessee, on the Consolidated Balance Sheets. |
See Note 3 for further disclosure around our adoption of the new lease standard.
Derivatives and Hedging. In August 2017, the FASB issued an ASU that simplified the application of hedge accounting guidance in current GAAP and improved the reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its consolidated financial statements. Among the simplification updates, the ASU eliminated the requirement in current GAAP to separately recognize periodic hedge ineffectiveness. Mismatches between the changes in value of the hedged item and hedging instrument may still occur but they will no longer be separately reported. The ASU required the presentation of the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported. We adopted the ASU on January 1, 2019 on a modified retrospective basis and there was no adjustment to the opening balance of retained earnings.
NOTE 2. DCT TRANSACTION
We acquired DCT Industrial Trust Inc. and DCT Industrial Operating Partnership LP (collectively “DCT”) on
The DCT Transaction was completed for $
Through the DCT Transaction, we acquired a portfolio of logistics real estate assets that consisted of
The aggregate equity consideration of approximately $
Number of Prologis shares and units issued upon conversion of DCT shares and units at August 21, 2018 |
|
|
|
Multiplied by price of Prologis' common stock on August 21, 2018 |
$ |
|
|
Fair value of Prologis shares and units issued |
$ |
|
|
12
We accounted for the DCT Transaction as an asset acquisition and as a result the transaction costs of $
Under acquisition accounting, the total purchase price was allocated to the DCT net tangible and identifiable intangible assets acquired and liabilities assumed based on their relative fair values as follows (in millions):
Net investments in real estate |
$ |
|
|
Intangible assets, net of intangible liabilities |
|
|
|
Cash and other assets |
|
|
|
Debt |
|
( |
) |
Accounts payable, accrued expenses and other liabilities |
|
( |
) |
Noncontrolling interests |
|
( |
) |
Total purchase price, including transaction costs |
$ |
|
|
NOTE 3. REAL ESTATE
Investments in real estate properties consisted of the following (dollars and square feet in thousands):
|
Square Feet |
|
|
Number of Buildings |
|
|
|
|
||||||||||||||
|
June 30, |
|
|
December 31, |
|
|
June 30, |
|
|
December 31, |
|
|
June 30, |
|
December 31, |
|
||||||
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
2018 |
|
||||||
Operating properties: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings and improvements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
Improved land |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development portfolio, including land costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prestabilized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Properties under development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other real estate investments (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investments in real estate properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investments in real estate properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
At June 30, 2019 and December 31, 2018, our land is comprised of |
(2) |
Included in other real estate investments were: (i) non-logistics real estate; (ii) land parcels that are ground leased to third parties; (iii) our corporate headquarters; (iv) costs related to future development projects, including purchase options on land; (v) earnest money deposits associated with potential acquisitions; and (vi) infrastructure costs related to projects we are developing on behalf of others. |
Acquisitions
The following table summarizes our real estate acquisition activity (dollars and square feet in thousands, except for acres of land):
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
Number of operating properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Square feet of operating properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acres of land |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition cost of net investments in real estate properties (1) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
Includes the acquisition cost of properties classified in other real estate investments of $ |
On July 15, 2019, we entered into a merger agreement to acquire the wholly-owned real estate assets of Industrial Property Trust Inc. (“IPT”) for approximately $
13
customary closing conditions. Following the closing, we intend to hold the portfolio through either one or both of our U.S. co-investment ventures.
Dispositions
The following table summarizes our gains on real estate transactions, net (dollars and square feet in thousands):
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
Contributions to unconsolidated entities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Square feet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds (1) (2) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Gains on contributions, net (1) (2) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Dispositions to third parties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Square feet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds (1) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Gains on dispositions, net (1) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gains on contributions and dispositions, net |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Gain on partial redemption of investment in an unconsolidated co-investment venture (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gains on real estate transactions, net |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
Includes the contribution and disposition of land parcels. |
(2) |
In January 2019, we formed Prologis Brazil Logistics Venture (“PBLV”), a Brazilian unconsolidated co-investment venture, with one partner. We contributed an initial portfolio of real estate properties to PBLV consisting of |
(3) |
See Note 4 for more information on this transaction. |
Leases
As a Lessor
We lease our operating properties to customers under agreements that are classified as operating leases. We recognize the total minimum lease payments provided for under the leases on a straight-line basis over the lease term. Generally, under the terms of our leases, the majority of our rental expenses, including common area maintenance, real estate taxes and insurance, are recovered from our customers. We record amounts reimbursed by customers in the period that the applicable expenses are incurred, which is generally ratably throughout the term of the lease. The reimbursements are recognized in Rental Revenues in the Consolidated Statements of Income as we are the primary obligor with respect to purchasing and selecting goods and services from third-party vendors and bearing the associated credit risk. We perform credit analyses of our customers prior to the execution of our leases and continue these analyses on an ongoing basis in order to ensure the collectability of rental revenue.
The following table summarizes the minimum lease payments due from our customers on leases with lease periods
2019 |
|
$ |
|
|
2020 |
|
|
|
|
2021 |
|
|
|
|
2022 |
|
|
|
|
2023 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
|
These amounts do not reflect future rental revenue from the renewal or replacement of existing leases and exclude reimbursements of operating expenses and rental increases that are not fixed.
14
As a Lessee
We have approximately
The following table summarizes the fixed, future minimum rental payments, excluding variable costs, which are discounted by our incremental borrowing rates to calculate the lease liabilities of our operating leases in which we are the lessee and for which the lease has commenced (in thousands):
|
|
June 30, 2019 |
|
|
December 31, 2018 |
|
||
2019 |
|
$ |
|
|
|
$ |
|
|
2020 |
|
|
|
|
|
|
|
|
2021 |
|
|
|
|
|
|
|
|
2022 |
|
|
|
|
|
|
|
|
2023 |
|
|
|
|
|
|
|
|
Thereafter |
|
|
|
|
|
|
|
|
Total undiscounted rental payments |
|
|
|
|
|
$ |
|
|
Less imputed interest |
|
|
|
|
|
|
|
|
Total lease liabilities |
|
$ |
|
|
|
|
|
|
The weighted average remaining lease term for our operating leases was 32 and
NOTE 4. UNCONSOLIDATED ENTITIES
Summary of Investments
We have investments in entities through a variety of ventures. We co-invest in entities that own multiple properties with partners and investors and we provide asset and property management services to these entities, which we refer to as co-investment ventures. These entities may be consolidated or unconsolidated, depending on the structure, our partner’s participation and other rights and our level of control of the entity. This note details our investments in unconsolidated co-investment ventures, which are related parties and are accounted for using the equity method of accounting. See Note 7 for more detail regarding our consolidated investments that are not wholly owned.
We also have other ventures, generally with one partner and that we do not manage, which we account for using the equity method. We refer to our investments in all entities accounted for using the equity method, both unconsolidated co-investment ventures and other ventures, collectively, as unconsolidated entities.
The following table summarizes our investments in and advances to our unconsolidated entities (in thousands):
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2019 |
|
|
2018 |
|
||
Unconsolidated co-investment ventures |
|
$ |
|
|
|
$ |
|
|
Other ventures |
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
Unconsolidated Co-Investment Ventures
The following table summarizes the Strategic Capital Revenues we recognized in the Consolidated Statements of Income related to our unconsolidated co-investment ventures (in thousands):
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
Recurring fees |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Transactional fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Promote revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total strategic capital revenues from unconsolidated co-investment ventures (1) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
15
(1) |
|
The following table summarizes the key property information, financial position and operating information of our unconsolidated co-investment ventures (not our proportionate share) and the amounts we recognized in the Consolidated Financial Statements related to our unconsolidated co-investment ventures (dollars and square feet in millions):
|
U.S. |
|
|
Other Americas |
|
|
Europe |
|
|
Asia |
|
|
Total |
|
|||||||||||||||||||||||||
As of: |
Jun 30, 2019 |
|
|
Dec 31, 2018 |
|
|
Jun 30, 2019 (1) |
|
|
Dec 31, 2018 |
|
|
Jun 30, 2019 |
|
|
Dec 31, 2018 |
|
|
Jun 30, 2019 |
|
|
Dec 31, 2018 |
|
|
Jun 30, 2019 |
|
|
Dec 31, 2018 |
|
||||||||||
Key property information: |
|
|
|
|
|
|
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|
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|
Ventures |
|
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|
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|
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|
|
|
|
Operating properties |
|
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|
|
|
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|
|
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|
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|
|
|
Square feet |
|
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|
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|
|
|
|
|
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|
Financial position: |
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|
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|
Total assets ($) |
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|
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|
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|
|
|
Third-party debt ($) |
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|
|
|
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|
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|
Total liabilities ($) |
|
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|
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|
|
|
|
|
|
|
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|
|
Our investment balance ($) (2) |
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|
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|
|
Our weighted average ownership (3) (4) |
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
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|
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|
|
U.S. |
|
|
Other Americas |
|
|
Europe |
|
|
Asia |
|
|
Total |
|
|||||||||||||||||||||||||
Operating Information: |
Jun 30, 2019 |
|
|
Jun 30, 2018 |
|
|
Jun 30, 2019 (1) |
|
|
Jun 30, 2018 |
|
|
Jun 30, 2019 |
|
|
Jun 30, 2018 |
|
|
Jun 30, 2019 |
|
|
Jun 30, 2018 |
|
|
Jun 30, 2019 |
|
|
Jun 30, 2018 |
|
||||||||||
For the three months ended: |
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|
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|
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|
Total revenues ($) |
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|
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|
|
Net earnings ($) |
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|
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|
|
|
|
|
|
|
|
|
|
|
|
Our earnings from unconsolidated co-investment ventures, net ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
|
For the six months ended: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
Total revenues ($) |
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our earnings from unconsolidated co-investment ventures, net ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
Equity Commitments Related to Certain Unconsolidated Co-Investment Ventures
At June 30, 2019, our remaining equity commitments were $
16
NOTE 5. ASSETS HELD FOR SALE OR CONTRIBUTION
We have investments in certain real estate properties that met the criteria to be classified as held for sale or contribution at June 30, 2019 and December 31, 2018. At the time of classification, these properties were expected to be sold to third parties or were recently stabilized and expected to be contributed to unconsolidated co-investment ventures within twelve months. The amounts included in Assets Held for Sale or Contribution represented real estate investment balances and the related assets and liabilities for each property.
Assets held for sale or contribution consisted of the following (dollars and square feet in thousands):
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2019 |
|
|
2018 |
|
||
Number of operating properties |
|
|
|
|
|
|
|
|
Square feet |
|
|
|
|
|
|
|
|
Total assets held for sale or contribution |
|
$ |
|
|
|
$ |
|
|
Total liabilities associated with assets held for sale or contribution – included in Other Liabilities |
|
$ |
|
|
|
$ |
|
|
NOTE 6. DEBT
All debt is incurred by the OP or its consolidated subsidiaries.
|
|
June 30, 2019 |
|
|
December 31, 2018 |
|
||||||||||
|
|
Weighted Average Interest Rate (1) |
|
|
Amount Outstanding (2) |
|
|
Weighted Average Interest Rate (1) |
|
|
Amount Outstanding (2) |
|
||||
Credit facilities |
|
|
|
% |
|
$ |
|
|
|
|
|
% |
|
$ |
|
|
Senior notes |
|
|
|
% |
|
|
|
|
|
|
|
% |
|
|
|
|
Term loans and unsecured other |
|
|
|
% |
|
|
|
|
|
|
|
% |
|
|
|
|
Secured mortgage |
|
|
|
% |
|
|
|
|
|
|
|
% |
|
|
|
|
Total |
|
|
|
% |
|
$ |
|
|
|
|
|
% |
|
$ |
|
|
(1) |
The interest rates presented represent the effective interest rates (including amortization of debt issuance costs and the noncash premiums or discounts) at the end of the period for the debt outstanding and include the impact of undesignated and designated interest rate swaps, which effectively fix the interest rate on our variable rate debt. |
(2) |
We borrow in the functional currencies of the countries where we invest. Included in the outstanding balances were borrowings denominated in the following currencies: |
|
|
|
June 30, 2019 |
|
|
December 31, 2018 |
|
||||||||||
|
|
|
Amount Outstanding |
|
|
% of Total |
|
|
Amount Outstanding |
|
|
% of Total |
|
||||
|
British pound sterling |
|
$ |
|
|
|
|
|
% |
|
$ |
|
|
|
|
|
% |
|
Canadian dollar |
|
|
|
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|
Euro |
|
|
|
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|
Japanese yen |
|
|
|
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|
U.S. dollar |
|
|
|
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|
Total |
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
Credit Facilities
In January 2019, we recast our global senior credit facility (the “Global Facility”), under which we may draw in British pounds sterling, Canadian dollars, euro, Japanese yen, Mexican pesos and U.S. dollars on a revolving basis up to $
We also have a Japanese yen revolver (the “Revolver”) with availability of ¥
17
ratings of the OP. The Revolver is scheduled to mature in
We refer to the Global Facility and the Revolver, collectively, as our “Credit Facilities.”
The following table summarizes information about our Credit Facilities at June 30, 2019 (in millions):
|
|
|
|
|
Aggregate lender commitments |
|
$ |
|
|
Less: |
|
|
|
|
Borrowings outstanding |
|
|
|
|
Outstanding letters of credit |
|
|
|
|
Current availability |
|
$ |
|
|
Senior Notes
In March 2019, we completed a private placement for ¥
Term Loans
In January 2019, we entered into
In March 2019, we entered into an unsecured Japanese yen term loan agreement (the “March 2019 Yen Term Loan”) under which we can draw Japanese yen in an aggregate amount not to exceed ¥
We repaid the outstanding balance of ¥
During the six months ended June 30, 2019 and 2018, we paid down $
Long-Term Debt Maturities
Principal payments due on our debt for the remainder of 2019 and for each year through the period ended December 31, 2023, and thereafter were as follows at June 30, 2019 (in thousands):
|
|
Unsecured |
|
|
|
|
|
|
|
|||||||||||
|
|
Credit |
|
|
Senior |
|
|
Term Loans |
|
|
Secured |
|
|
|
|
|
||||
Maturity |
|
Facilities |
|
|
Notes |
|
|
and Other |
|
|
Mortgage |
|
|
Total |
|
|||||
2019 (1) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
2020 (1) (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thereafter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums (discounts), net |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
( |
) |
Debt issuance costs, net |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
We expect to repay the amounts maturing in the next twelve months with cash generated from operations, proceeds from dispositions of real estate properties, or as necessary, with additional borrowings. |
(2) |
Included in the 2020 maturities was the 2017 Term Loan that can be extended until 2022. |
(3) |
Included in the 2023 maturities was the Global Facility that can be extended until 2024. |
18
Financial Debt Covenants
We have $
Guarantee of Finance Subsidiary Debt
In 2018, we formed finance subsidiaries as part of our operations in Europe (Prologis Euro Finance LLC), Japan (Prologis Yen Finance LLC) and the United Kingdom (Prologis Sterling Finance LLC).
These entities are
NOTE 7. NONCONTROLLING INTERESTS
Prologis, L.P.
We report noncontrolling interests related to several entities we consolidate but of which we do not own 100% of the equity. These entities include two real estate partnerships that have issued limited partnership units to third parties. Depending on the specific partnership agreements, these limited partnership units are redeemable for cash or, at our option, into shares of the Parent’s common stock, generally at a rate of
Prologis, Inc.
The noncontrolling interests of the Parent include the noncontrolling interests described above for the OP, as well as the limited partnership units in the OP that are not owned by the Parent.
The following table summarizes our ownership percentages and noncontrolling interests and the consolidated entities’ total assets and total liabilities (dollars in thousands):
|
Our Ownership Percentage |
|
|
Noncontrolling Interests |
|
|
Total Assets |
|
|
Total Liabilities |
|
||||||||||||||||||||
|
Jun 30, 2019 |
|
|
Dec 31, 2018 |
|
|
Jun 30, 2019 |
|
|
Dec 31, 2018 |
|
|
Jun 30, 2019 |
|
|
Dec 31, 2018 |
|
|
Jun 30, 2019 |
|
|
Dec 31, 2018 |
|
||||||||
Prologis U.S. Logistics Venture |
|
|
% |
|
|
|
% |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Other consolidated entities (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Prologis, L.P. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited partners in Prologis, L.P. (2) (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Prologis, Inc. |
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
(2) |
|
(3) |
|
NOTE 8. LONG-TERM COMPENSATION
Equity-Based Compensation Plans and Programs
Prologis Outperformance Plan (“POP”)
We allocate participation points to participants under our POP corresponding to three-year performance periods beginning every January 1. The fair value of the awards is measured at the grant date and amortized over the period from the grant date to the date at
19
which the awards vest, which ranges from
We granted participation points for the 2019 – 2021 performance period in January 2019, with a fair value of $
The Outperformance Hurdle was met for the 2016 – 2018 performance period, which resulted in awards being earned at December 31, 2018. Initial awards of $
Other Equity-Based Compensation Plans and Programs
Our other equity-based compensation plans and programs include (i) the Prologis Promote Plan (“PPP”); (ii) the annual long-term incentive (“LTI”) equity award program (“Annual LTI Award”); and (iii) the annual bonus exchange program. Awards under these plans and programs may be issued in the form of restricted stock units (“RSUs”) or LTIP Units at the participant’s election. RSUs and LTIP Units are valued based on the market price of the Parent’s common stock on the date the award is granted and the grant date value is charged to compensation expense over the service period, which beginning in February 2018 was lengthened from three to
Summary of Award Activity
RSUs
The following table summarizes the activity for RSUs for the six months ended June 30, 2019 (units in thousands):
|
|
|
|
|
|
Weighted Average |
|
|
|
|
Unvested RSUs |
|
|
Grant Date Fair Value |
|
||
Balance at January 1, 2019 |
|
|
|
|
|
$ |
|
|
Granted |
|
|
|
|
|
|
|
|
Vested and distributed |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Balance at June 30, 2019 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
LTIP Units
The following table summarizes the activity for LTIP Units for the six months ended June 30, 2019 (units in thousands):
|
|
Vested |
|
|
Unvested |
|
|
Unvested Weighted Average |
|
|||
|
|
LTIP Units |
|
|
LTIP Units |
|
|
Grant Date Fair Value |
|
|||
Balance at January 1, 2019 |
|
|
|
|
|
|
|
|
|
$ |
|
|
Granted |
|
|
- |
|
|
|
|
|
|
|
|
|
Vested LTIP Units |
|
|
|
|
|
|
( |
) |
|
|
|
|
Vested POP LTIP Units (1) |
|
|
|
|
|
|
- |
|
|
N/A |
|
|
Conversion to common limited partnership units |
|
|
( |
) |
|
|
- |
|
|
N/A |
|
|
Balance at June 30, 2019 |
|
|
|
|
|
|
|
|
|
$ |
|
|
20
(1) |
Vested units were based on the POP performance criteria being met for the 2016 – 2018 performance period and represented the earned award amount. See above for further discussion on the POP. |
NOTE 9. EARNINGS PER COMMON SHARE OR UNIT
We determine basic earnings per share or unit based on the weighted average number of shares of common stock or units outstanding during the period. We compute diluted earnings per share or unit based on the weighted average number of shares or units outstanding combined with the incremental weighted average effect from all outstanding potentially dilutive instruments.
The computation of our basic and diluted earnings per share and unit was as follows (in thousands, except per share and unit amounts):
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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Prologis, Inc. |
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2019 |
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2018 |
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2019 |
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|
2018 |
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Net earnings attributable to common stockholders – Basic |
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$ |
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$ |
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$ |
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$ |
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Net earnings attributable to exchangeable limited partnership units (1) |
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Adjusted net earnings attributable to common stockholders – Diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted average common shares outstanding – Basic |
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Incremental weighted average effect on exchange of limited partnership units (1) |
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Incremental weighted average effect of equity awards |
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Weighted average common shares outstanding – Diluted (2) |
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Net earnings per share attributable to common stockholders: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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|
|
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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Prologis, L.P. |
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2019 |
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2018 |
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2019 |
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2018 |
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Net earnings attributable to common unitholders |
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$ |
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$ |
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$ |
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$ |
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Net earnings attributable to Class A Units |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Net earnings attributable to common unitholders – Basic |
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Net earnings attributable to Class A Units |
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Net earnings attributable to exchangeable other limited partnership units |
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Adjusted net earnings attributable to common unitholders – Diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted average common partnership units outstanding – Basic |
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Incremental weighted average effect on exchange of Class A Units |
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Incremental weighted average effect on exchange of other limited partnership units |
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Incremental weighted average effect of equity awards of Prologis, Inc. |
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Weighted average common units outstanding – Diluted (2) |
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Net earnings per unit attributable to common unitholders: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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(1) |
The exchangeable limited partnership units include the units as discussed in Note 7. Earnings allocated to the exchangeable OP units not held by the Parent have been included in the numerator and exchangeable common units have been included in the denominator for the purpose of computing diluted earnings per share for all periods as the per share and unit amount is the same. |
21
(2) |
Our total weighted average potentially dilutive shares and units outstanding consisted of the following: |
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2019 |
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2018 |
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2019 |
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2018 |
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Class A Units |
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Other limited partnership units |
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Equity awards |
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Prologis, L.P. |
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Common limited partnership units |
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Prologis, Inc. |
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NOTE 10. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Derivative Financial Instruments
In the normal course of business, our operations are exposed to market risks, including the effect of changes in foreign currency exchange rates and interest rates. We may enter into derivative financial instruments to offset these underlying market risks. There have been no significant changes in our policy or strategy from what was disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018.
The following table presents the fair value of our derivative financial instruments recognized within Other Assets and Other Liabilities on the Consolidated Balance Sheets (in thousands):
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June 30, 2019 |
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December 31, 2018 |
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Asset |
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Liability |
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Asset |
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Liability |
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Undesignated derivatives |
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Foreign currency contracts |
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Forwards |
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Brazilian real |
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$ |
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$ |
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$ |
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$ |
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British pound sterling |
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Canadian dollar |
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Euro |
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Japanese yen |
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Mexican peso |
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Interest rate swaps |
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U.S. dollar |
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