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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2022

 

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:  001-13545 (Prologis, Inc.)  001-14245 (Prologis, L.P.)

 

Prologis, Inc.

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)

 

(I.R.S. Employer

Identification No.)

 

 

 

Pier 1, Bay 1, San Francisco, California

 

94111

(Address or principal executive offices)

 

(Zip Code)

 

(415) 394-9000

(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:

 

 

 

Title of Each Class

 

Trading Symbol(s)

 

Name of Each Exchange on Which Registered

Prologis, Inc.

 

Common Stock, $0.01 par value

 

PLD

 

New York Stock Exchange

Prologis, L.P.

 

3.000% Notes due 2026

 

PLD/26

 

New York Stock Exchange

Prologis, L.P.

 

2.250% Notes due 2029

 

PLD/29

 

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.

Yes

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.:

 

 

 

 

Large accelerated filer   

Accelerated filer   

Non-accelerated filer   

Smaller reporting company   

Emerging growth company    

 

Prologis, L.P.:

 

 

 

 

Large accelerated filer   

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 August 4, 2022, was approximately 740,378,000.

 

 

 


 

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended June 30, 2022, 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, 2022, the Parent owned 97.28% common general partnership interest in the OP and substantially all of the preferred units in the OP. The remaining 2.72% 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

 

 

 

 

 

Page

Number

 

PART I.

 

Financial Information

 

 

 

 

 

Item 1.

Financial Statements

 

1

 

 

 

            Prologis, Inc.:

 

 

 

 

 

 

Consolidated Balance Sheets – June 30, 2022 and December 31, 2021

 

1

 

 

 

 

Consolidated Statements of Income – Three and Six Months Ended June 30, 2022 and 2021

 

2

 

 

 

 

Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2022 and 2021

 

3

 

 

 

 

Consolidated Statements of Equity – Three and Six Months Ended June 30, 2022 and 2021

 

4

 

 

 

 

Consolidated Statements of Cash Flows – Six Months Ended June 30, 2022 and 2021

 

5

 

 

 

            Prologis, L.P.:

 

 

 

 

 

 

Consolidated Balance Sheets – June 30, 2022 and December 31, 2021

 

6

 

 

 

 

Consolidated Statements of Income – Three and Six Months Ended June 30, 2022 and 2021

 

7

 

 

 

 

Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2022 and 2021

 

8

 

 

 

 

Consolidated Statements of Capital – Three and Six Months Ended June 30, 2022 and 2021

 

9

 

 

 

 

Consolidated Statements of Cash Flows – Six Months Ended June 30, 2022 and 2021

 

10

 

 

 

            Prologis, Inc. and Prologis, L.P.:

 

 

 

 

 

 

Notes to the Consolidated Financial Statements

 

11

 

 

 

 

Note 1. General

 

11

 

 

 

 

Note 2. Real Estate

 

12

 

 

 

 

Note 3. Unconsolidated Entities

 

13

 

 

 

 

Note 4. Assets Held for Sale or Contribution

 

15

 

 

 

 

Note 5. Debt

 

15

 

 

 

 

Note 6. Noncontrolling Interests

 

17

 

 

 

 

Note 7. Long-Term Compensation

 

18

 

 

 

 

Note 8. Earnings Per Common Share or Unit

 

19

 

 

 

 

Note 9. Financial Instruments and Fair Value Measurements

 

20

 

 

 

 

Note 10. Business Segments

 

24

 

 

 

 

Note 11. Supplemental Cash Flow Information

 

26

 

 

 

 

Reports of Independent Registered Public Accounting Firm

 

27

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

29

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

48

 

 

 

Item 4.

Controls and Procedures

 

49

 

PART II.

 

Other Information

 

 

 

 

 

Item 1.

Legal Proceedings

 

49

 

 

 

Item 1A.

Risk Factors

 

49

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

49

 

 

 

Item 3.

Defaults Upon Senior Securities

 

49

 

 

 

Item 4.

Mine Safety Disclosures

 

50

 

 

 

Item 5.

Other Information

 

50

 

 

 

Item 6.

Exhibits

 

50

 

 

 

 

 

 


Index

 

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. Financial Statements

 

PROLOGIS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

June 30, 2022

 

 

December 31, 2021

 

ASSETS

 

 

 

 

 

 

 

Investments in real estate properties

$

55,271,030

 

 

$

53,005,190

 

Less accumulated depreciation

 

8,251,995

 

 

 

7,668,187

 

Net investments in real estate properties

 

47,019,035

 

 

 

45,337,003

 

Investments in and advances to unconsolidated entities

 

8,443,644

 

 

 

8,610,958

 

Assets held for sale or contribution

 

403,617

 

 

 

669,688

 

Net investments in real estate

 

55,866,296

 

 

 

54,617,649

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

437,515

 

 

 

556,117

 

Other assets

 

3,460,006

 

 

 

3,312,454

 

Total assets

$

59,763,817

 

 

$

58,486,220

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

Debt

$

18,040,832

 

 

$

17,715,054

 

Accounts payable and accrued expenses

 

1,042,086

 

 

 

1,252,767

 

Other liabilities

 

1,806,961

 

 

 

1,776,189

 

Total liabilities

 

20,889,879

 

 

 

20,744,010

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

Prologis, Inc. stockholders’ equity:

 

 

 

 

 

 

 

Series Q preferred stock at stated liquidation preference of $50 per share; $0.01 par value;

     1,279 shares issued and outstanding and 100,000 preferred shares authorized at

          June 30, 2022 and December 31, 2021

 

63,948

 

 

 

63,948

 

Common stock; $0.01 par value; 740,360 shares and 739,827 shares issued and outstanding at

     June 30, 2022 and December 31, 2021, respectively

 

7,404

 

 

 

7,398

 

Additional paid-in capital

 

35,573,940

 

 

 

35,561,608

 

Accumulated other comprehensive loss

 

(328,761

)

 

 

(878,253

)

Distributions in excess of net earnings

 

(740,764

)

 

 

(1,327,828

)

Total Prologis, Inc. stockholders’ equity

 

34,575,767

 

 

 

33,426,873

 

Noncontrolling interests

 

4,298,171

 

 

 

4,315,337

 

Total equity

 

38,873,938

 

 

 

37,742,210

 

Total liabilities and equity

$

59,763,817

 

 

$

58,486,220

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

1

 


Index

 

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

$

1,093,452

 

 

$

1,014,763

 

 

$

2,170,313

 

 

$

2,036,419

 

Strategic capital

 

 

156,239

 

 

 

129,387

 

 

 

290,164

 

 

 

249,348

 

Development management and other

 

 

2,389

 

 

 

6,692

 

 

 

10,731

 

 

 

13,391

 

Total revenues

 

 

1,252,080

 

 

 

1,150,842

 

 

 

2,471,208

 

 

 

2,299,158

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

 

270,465

 

 

 

245,133

 

 

 

546,139

 

 

 

523,017

 

Strategic capital

 

 

57,052

 

 

 

45,099

 

 

 

108,863

 

 

 

94,549

 

General and administrative

 

 

83,114

 

 

 

74,342

 

 

 

157,760

 

 

 

152,374

 

Depreciation and amortization

 

 

402,313

 

 

 

392,736

 

 

 

798,960

 

 

 

790,311

 

Other

 

 

11,621

 

 

 

7,194

 

 

 

21,210

 

 

 

10,638

 

Total expenses

 

 

824,565

 

 

 

764,504

 

 

 

1,632,932

 

 

 

1,570,889

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income before gains on real estate transactions, net

 

 

427,515

 

 

 

386,338

 

 

 

838,276

 

 

 

728,269

 

Gains on dispositions of development properties and land, net

 

 

105,802

 

 

 

187,361

 

 

 

316,008

 

 

 

361,004

 

Gains on other dispositions of investments in real estate, net

 

 

-

 

 

 

127,167

 

 

 

584,835

 

 

 

143,790

 

Operating income

 

 

533,317

 

 

 

700,866

 

 

 

1,739,119

 

 

 

1,233,063

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from unconsolidated entities, net

 

 

79,594

 

 

 

72,419

 

 

 

156,556

 

 

 

139,468

 

Interest expense

 

 

(60,293

)

 

 

(68,412

)

 

 

(124,357

)

 

 

(139,693

)

Interest and other income, net

 

 

6,227

 

 

 

715

 

 

 

7,280

 

 

 

5,461

 

Foreign currency and derivative gains (losses), net

 

 

138,155

 

 

 

(6,080

)

 

 

185,511

 

 

 

74,072

 

Losses on early extinguishment of debt, net

 

 

(730

)

 

 

-

 

 

 

(18,895

)

 

 

(187,453

)

Total other income (expense)

 

 

162,953

 

 

 

(1,358

)

 

 

206,095

 

 

 

(108,145

)

Earnings before income taxes

 

 

696,270

 

 

 

699,508

 

 

 

1,945,214

 

 

 

1,124,918

 

Income tax expense

 

 

(49,834

)

 

 

(49,195

)

 

 

(79,056

)

 

 

(74,912

)

Consolidated net earnings

 

 

646,436

 

 

 

650,313

 

 

 

1,866,158

 

 

 

1,050,006

 

Less net earnings attributable to noncontrolling interests

 

 

35,043

 

 

 

50,137

 

 

 

103,980

 

 

 

82,483

 

Net earnings attributable to controlling interests

 

 

611,393

 

 

 

600,176

 

 

 

1,762,178

 

 

 

967,523

 

Less preferred stock dividends

 

 

1,538

 

 

 

1,551

 

 

 

3,069

 

 

 

3,083

 

Net earnings attributable to common stockholders

 

$

609,855

 

 

$

598,625

 

 

$

1,759,109

 

 

$

964,440

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding – Basic

 

 

740,637

 

 

 

739,190

 

 

 

740,506

 

 

 

739,105

 

Weighted average common shares outstanding – Diluted

 

 

766,074

 

 

 

764,652

 

 

 

765,859

 

 

 

764,724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share attributable to common stockholders – Basic

 

$

0.82

 

 

$

0.81

 

 

$

2.38

 

 

$

1.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share attributable to common stockholders – Diluted

 

$

0.82

 

 

$

0.81

 

 

$

2.36

 

 

$

1.30

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

2

 


Index

 

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Consolidated net earnings

 

$

646,436

 

 

$

650,313

 

 

$

1,866,158

 

 

$

1,050,006

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gains (losses), net

 

 

332,517

 

 

 

(18,586

)

 

 

522,040

 

 

 

153,173

 

Unrealized gains on derivative contracts, net

 

 

28,979

 

 

 

4,810

 

 

 

42,328

 

 

 

9,631

 

Comprehensive income

 

 

1,007,932

 

 

 

636,537

 

 

 

2,430,526

 

 

 

1,212,810

 

Net earnings attributable to noncontrolling interests

 

 

(35,043

)

 

 

(50,137

)

 

 

(103,980

)

 

 

(82,483

)

Other comprehensive loss (income) attributable to noncontrolling interests

 

 

(9,137

)

 

 

207

 

 

 

(14,876

)

 

 

(4,185

)

Comprehensive income attributable to common stockholders

 

$

963,752

 

 

$

586,607

 

 

$

2,311,670

 

 

$

1,126,142

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.


3

 


Index

 

 

 PROLOGIS, INC.

 

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands)

 

Three Months Ended June 30, 2022 and 2021

 

 

 

 

 

 

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 April 1, 2022

$

63,948

 

 

 

740,189

 

 

$

7,402

 

 

$

35,546,263

 

 

$

(681,120

)

 

$

(764,425

)

 

$

4,290,134

 

 

$

38,462,202

 

Consolidated net earnings

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

611,393

 

 

 

35,043

 

 

 

646,436

 

Effect of equity compensation plans

 

-

 

 

 

36

 

 

 

1

 

 

 

16,900

 

 

 

-

 

 

 

-

 

 

 

24,452

 

 

 

41,353

 

Capital contributions

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,649

 

 

 

10,649

 

Redemption of noncontrolling interests

 

-

 

 

 

135

 

 

 

1

 

 

 

6,272

 

 

 

-

 

 

 

-

 

 

 

(29,992

)

 

 

(23,719

)

Foreign currency translation gains, net

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

324,163

 

 

 

-

 

 

 

8,354

 

 

 

332,517

 

Unrealized gains on derivative

     contracts, net

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

28,196

 

 

 

-

 

 

 

783

 

 

 

28,979

 

Reallocation of equity

 

-

 

 

 

-

 

 

 

-

 

 

 

4,505

 

 

 

-

 

 

 

-

 

 

 

(4,505

)

 

 

-

 

Dividends ($0.79 per common share)

     and other distributions

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(587,732

)

 

 

(36,747

)

 

 

(624,479

)

Balance at June 30, 2022

$

63,948

 

 

 

740,360

 

 

$

7,404

 

 

$

35,573,940

 

 

$

(328,761

)

 

$

(740,764

)

 

$

4,298,171

 

 

$

38,873,938

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 April 1, 2021

$

63,948

 

 

 

739,746

 

 

$

7,397

 

 

$

35,454,066

 

 

$

(1,021,551

)

 

$

(2,495,343

)

 

$

4,376,686

 

 

$

36,385,203

 

Consolidated net earnings

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

600,176

 

 

 

50,137

 

 

 

650,313

 

Effect of equity compensation plans

 

-

 

 

 

(780

)

 

 

(8

)

 

 

9,263

 

 

 

-

 

 

 

-

 

 

 

17,265

 

 

 

26,520

 

Capital contributions

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,241

 

 

 

4,241

 

Redemption of noncontrolling interests

 

-

 

 

 

54

 

 

 

1

 

 

 

2,362

 

 

 

-

 

 

 

-

 

 

 

(76,558

)

 

 

(74,195

)

Consolidation of other venture

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

25,759

 

 

 

25,759

 

Foreign currency translation losses, net

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(18,255

)

 

 

-

 

 

 

(331

)

 

 

(18,586

)

Unrealized gains on derivative

     contracts, net

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,686

 

 

 

-

 

 

 

124

 

 

 

4,810

 

Reallocation of equity

 

-

 

 

 

-

 

 

 

-

 

 

 

(32,847

)

 

 

-

 

 

 

-

 

 

 

32,847

 

 

 

-

 

Dividends ($0.63 per common share)

     and other distributions

 

-

 

 

 

-

 

 

 

-

 

 

 

(1

)

 

 

-

 

 

 

(468,181

)

 

 

(55,079

)

 

 

(523,261

)

Balance at June 30, 2021

$

63,948

 

 

 

739,020

 

 

$

7,390

 

 

$

35,432,843

 

 

$

(1,035,120

)

 

$

(2,363,348

)

 

$

4,375,091

 

 

$

36,480,804

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2022 and 2021

 

 

 

 

 

 

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, 2022

$

63,948

 

 

 

739,827

 

 

$

7,398

 

 

$

35,561,608

 

 

$

(878,253

)

 

$

(1,327,828

)

 

$

4,315,337

 

 

$

37,742,210

 

Consolidated net earnings

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,762,178

 

 

 

103,980

 

 

 

1,866,158

 

Effect of equity compensation plans

 

-

 

 

 

326

 

 

 

4

 

 

 

21,117

 

 

 

-

 

 

 

-

 

 

 

60,399

 

 

 

81,520

 

Capital contributions

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

11,083

 

 

 

11,083

 

Redemption of noncontrolling interests

 

-

 

 

 

207

 

 

 

2

 

 

 

9,572

 

 

 

-

 

 

 

-

 

 

 

(59,562

)

 

 

(49,988

)

Foreign currency translation gains, net

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

508,315

 

 

 

-

 

 

 

13,725

 

 

 

522,040

 

Unrealized gains on derivative

     contracts, net

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

41,177

 

 

 

-

 

 

 

1,151

 

 

 

42,328

 

Reallocation of equity

 

-

 

 

 

-

 

 

 

-

 

 

 

(18,347

)

 

 

-

 

 

 

-

 

 

 

18,347

 

 

 

-

 

Dividends ($1.58 per common share)

     and other distributions

 

-

 

 

 

-

 

 

 

-

 

 

 

(10

)

 

 

-

 

 

 

(1,175,114

)

 

 

(166,289

)

 

 

(1,341,413

)

Balance at June 30, 2022

$

63,948

 

 

 

740,360

 

 

$

7,404

 

 

$

35,573,940

 

 

$

(328,761

)

 

$

(740,764

)

 

$

4,298,171

 

 

$

38,873,938

 

 

 

 

 

 

 

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, 2021

$

63,948

 

 

 

739,381

 

 

$

7,394

 

 

$

35,488,634

 

 

$

(1,193,739

)

 

$

(2,394,690

)

 

$

4,353,033

 

 

$

36,324,580

 

Consolidated net earnings

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

967,523

 

 

 

82,483

 

 

 

1,050,006

 

Effect of equity compensation plans

 

-

 

 

 

(420

)

 

 

(5

)

 

 

13,302

 

 

 

-

 

 

 

-

 

 

 

44,563

 

 

 

57,860

 

Capital contributions

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,361

 

 

 

4,361

 

Redemption of noncontrolling interests

 

-

 

 

 

59

 

 

 

1

 

 

 

2,595

 

 

 

-

 

 

 

-

 

 

 

(108,163

)

 

 

(105,567

)

Consolidation of other venture

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

25,759

 

 

 

25,759

 

Foreign currency translation gains, net

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

149,244

 

 

 

-

 

 

 

3,929

 

 

 

153,173

 

Unrealized gains on derivative

     contracts, net

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,375

 

 

 

-

 

 

 

256

 

 

 

9,631

 

Reallocation of equity

 

-

 

 

 

-

 

 

 

-

 

 

 

(71,663

)

 

 

-

 

 

 

-

 

 

 

71,663

 

 

 

-

 

Dividends ($1.26 per common share)

     and other distributions

 

-

 

 

 

-

 

 

 

-

 

 

 

(25

)

 

 

-

 

 

 

(936,181

)

 

 

(102,793

)

 

 

(1,038,999

)

Balance at June 30, 2021

$

63,948

 

 

 

739,020

 

 

$

7,390

 

 

$

35,432,843

 

 

$

(1,035,120

)

 

$

(2,363,348

)

 

$

4,375,091

 

 

$

36,480,804

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

4

 


Index

 

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2022

 

 

2021

 

Operating activities:

 

 

 

 

 

 

 

 

Consolidated net earnings

 

$

1,866,158

 

 

$

1,050,006

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Straight-lined rents and amortization of above and below market leases

 

 

(72,666

)

 

 

(72,910

)

Equity-based compensation awards

 

 

78,352

 

 

 

58,521

 

Depreciation and amortization

 

 

798,960

 

 

 

790,311

 

Earnings from unconsolidated entities, net

 

 

(156,556

)

 

 

(139,468

)

Operating distributions from unconsolidated entities

 

 

192,210

 

 

 

196,751

 

Decrease (increase) in operating receivables from unconsolidated entities

 

 

(34,951

)

 

 

6,585

 

Amortization of debt discounts and debt issuance costs, net

 

 

4,275

 

 

 

4,168

 

Gains on dispositions of development properties and land, net

 

 

(316,008

)

 

 

(361,004

)

Gains on other dispositions of investments in real estate, net

 

 

(584,835

)

 

 

(143,790

)

Unrealized foreign currency and derivative gains, net

 

 

(154,965

)

 

 

(83,382

)

Losses on early extinguishment of debt, net

 

 

18,895

 

 

 

187,453

 

Deferred income tax expense

 

 

17,557

 

 

 

13,858

 

Decrease in accounts receivable and other assets

 

 

99,859

 

 

 

5,383

 

Decrease in accounts payable and accrued expenses and other liabilities

 

 

(110,808

)

 

 

(46,579

)

Net cash provided by operating activities

 

 

1,645,477

 

 

 

1,465,903

 

Investing activities:

 

 

 

 

 

 

 

 

Real estate development

 

 

(1,462,010

)

 

 

(997,328

)

Real estate acquisitions

 

 

(1,869,426

)

 

 

(830,574

)

Tenant improvements and lease commissions on previously leased space

 

 

(175,480

)

 

 

(148,037

)

Property improvements

 

 

(55,816

)

 

 

(41,129

)

Proceeds from dispositions and contributions of real estate

 

 

1,653,597

 

 

 

1,829,576

 

Investments in and advances to unconsolidated entities

 

 

(112,848

)

 

 

(366,644

)

Return of investment from unconsolidated entities

 

 

37,252

 

 

 

46,135

 

Proceeds from the settlement of net investment hedges

 

 

26,487

 

 

 

-

 

Payments on the settlement of net investment hedges

 

 

(771

)

 

 

(8,000

)

Net cash used in investing activities

 

 

(1,959,015

)

 

 

(516,001

)

Financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

-

 

 

 

743

 

Dividends paid on common and preferred stock

 

 

(1,175,114

)

 

 

(936,181

)

Noncontrolling interests contributions

 

 

11,083

 

 

 

4,361

 

Noncontrolling interests distributions

 

 

(166,289

)

 

 

(102,793

)

Settlement of noncontrolling interests

 

 

(49,988

)

 

 

(105,567

)

Tax paid with shares withheld

 

 

(23,970

)

 

 

(17,472

)

Debt and equity issuance costs paid

 

 

(28,119

)

 

 

(20,483

)

Net proceeds from (payments on) credit facilities

 

 

127,454

 

 

 

(170,230

)

Repurchase of and payments on debt

 

 

(751,114

)

 

 

(2,185,209

)

Proceeds from the issuance of debt

 

 

2,285,021

 

 

 

2,617,854

 

Net cash provided by (used in) financing activities

 

 

228,964

 

 

 

(914,977

)

 

 

 

 

 

 

 

 

 

Effect of foreign currency exchange rate changes on cash

 

 

(34,028

)

 

 

(31,565

)

Net increase (decrease) in cash and cash equivalents

 

 

(118,602

)

 

 

3,360

 

Cash and cash equivalents, beginning of period

 

 

556,117

 

 

 

598,086

 

Cash and cash equivalents, end of period

 

$

437,515

 

 

$

601,446

 

 

See Note 11 for information on noncash investing and financing activities and other information.

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

 

5

 


Index

 

 

PROLOGIS, L.P.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

June 30, 2022

 

 

December 31, 2021

 

ASSETS

 

 

 

 

 

 

 

Investments in real estate properties

$

55,271,030

 

 

$

53,005,190

 

Less accumulated depreciation

 

8,251,995

 

 

 

7,668,187

 

Net investments in real estate properties

 

47,019,035

 

 

 

45,337,003

 

Investments in and advances to unconsolidated entities

 

8,443,644

 

 

 

8,610,958

 

Assets held for sale or contribution

 

403,617

 

 

 

669,688

 

Net investments in real estate

 

55,866,296

 

 

 

54,617,649

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

437,515

 

 

 

556,117

 

Other assets

 

3,460,006

 

 

 

3,312,454

 

Total assets

$

59,763,817

 

 

$

58,486,220

 

 

 

 

 

 

 

 

 

LIABILITIES AND CAPITAL

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

Debt

$

18,040,832

 

 

$

17,715,054

 

Accounts payable and accrued expenses

 

1,042,086

 

 

 

1,252,767

 

Other liabilities

 

1,806,961

 

 

 

1,776,189

 

Total liabilities

 

20,889,879

 

 

 

20,744,010

 

 

 

 

 

 

 

 

 

Capital:

 

 

 

 

 

 

 

Partners’ capital:

 

 

 

 

 

 

 

General partner – preferred

 

63,948

 

 

 

63,948

 

General partner – common

 

34,511,819

 

 

 

33,362,925

 

Limited partners – common

 

590,224

 

 

 

557,097

 

Limited partners – Class A common

 

374,526

 

 

 

360,702

 

Total partners’ capital

 

35,540,517

 

 

 

34,344,672

 

Noncontrolling interests

 

3,333,421

 

 

 

3,397,538

 

Total capital

 

38,873,938

 

 

 

37,742,210

 

Total liabilities and capital

$

59,763,817

 

 

$

58,486,220

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

6

 


Index

 

 

PROLOGIS, L.P.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per unit amounts)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

$

1,093,452

 

 

$

1,014,763

 

 

$

2,170,313

 

 

$

2,036,419

 

Strategic capital

 

 

156,239

 

 

 

129,387

 

 

 

290,164

 

 

 

249,348

 

Development management and other

 

 

2,389

 

 

 

6,692

 

 

 

10,731

 

 

 

13,391

 

Total revenues

 

 

1,252,080

 

 

 

1,150,842

 

 

 

2,471,208

 

 

 

2,299,158

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

 

270,465

 

 

 

245,133

 

 

 

546,139

 

 

 

523,017

 

Strategic capital

 

 

57,052

 

 

 

45,099

 

 

 

108,863

 

 

 

94,549

 

General and administrative

 

 

83,114

 

 

 

74,342

 

 

 

157,760

 

 

 

152,374

 

Depreciation and amortization

 

 

402,313

 

 

 

392,736

 

 

 

798,960

 

 

 

790,311

 

Other

 

 

11,621

 

 

 

7,194

 

 

 

21,210

 

 

 

10,638

 

Total expenses

 

 

824,565

 

 

 

764,504

 

 

 

1,632,932

 

 

 

1,570,889

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income before gains on real estate transactions, net

 

 

427,515

 

 

 

386,338

 

 

 

838,276

 

 

 

728,269

 

Gains on dispositions of development properties and land, net

 

 

105,802

 

 

 

187,361

 

 

 

316,008

 

 

 

361,004

 

Gains on other dispositions of investments in real estate, net

 

 

-

 

 

 

127,167

 

 

 

584,835

 

 

 

143,790

 

Operating income

 

 

533,317

 

 

 

700,866

 

 

 

1,739,119

 

 

 

1,233,063

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from unconsolidated entities, net

 

 

79,594

 

 

 

72,419

 

 

 

156,556

 

 

 

139,468

 

Interest expense

 

 

(60,293

)

 

 

(68,412

)

 

 

(124,357

)

 

 

(139,693

)

Interest and other income, net

 

 

6,227

 

 

 

715

 

 

 

7,280

 

 

 

5,461

 

Foreign currency and derivative gains (losses), net

 

 

138,155

 

 

 

(6,080

)

 

 

185,511

 

 

 

74,072

 

Losses on early extinguishment of debt, net

 

 

(730

)

 

 

-

 

 

 

(18,895

)

 

 

(187,453

)

Total other income (expense)

 

 

162,953

 

 

 

(1,358

)

 

 

206,095

 

 

 

(108,145

)

Earnings before income taxes

 

 

696,270

 

 

 

699,508

 

 

 

1,945,214

 

 

 

1,124,918

 

Income tax expense

 

 

(49,834

)

 

 

(49,195

)

 

 

(79,056

)

 

 

(74,912

)

Consolidated net earnings

 

 

646,436

 

 

 

650,313

 

 

 

1,866,158

 

 

 

1,050,006

 

Less net earnings attributable to noncontrolling interests

 

 

17,612

 

 

 

33,284

 

 

 

54,278

 

 

 

55,362

 

Net earnings attributable to controlling interests

 

 

628,824

 

 

 

617,029

 

 

 

1,811,880

 

 

 

994,644

 

Less preferred unit distributions

 

 

1,538

 

 

 

1,551

 

 

 

3,069

 

 

 

3,083

 

Net earnings attributable to common unitholders

 

$

627,286

 

 

$

615,478

 

 

$

1,808,811

 

 

$

991,561

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common units outstanding – Basic

 

 

753,610

 

 

 

752,065

 

 

 

753,420

 

 

 

751,883

 

Weighted average common units outstanding – Diluted

 

 

766,074

 

 

 

764,652

 

 

 

765,859

 

 

 

764,724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per unit attributable to common unitholders – Basic

 

$

0.82

 

 

$

0.81

 

 

$

2.38

 

 

$

1.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per unit attributable to common unitholders – Diluted

 

$

0.82

 

 

$

0.81

 

 

$

2.36

 

 

$

1.30

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

 

7

 


Index

 

 

PROLOGIS, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Consolidated net earnings

 

$

646,436

 

 

$

650,313

 

 

$

1,866,158

 

 

$

1,050,006

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gains (losses), net

 

 

332,517

 

 

 

(18,586

)

 

 

522,040

 

 

 

153,173

 

Unrealized gains on derivative contracts, net

 

 

28,979

 

 

 

4,810

 

 

 

42,328

 

 

 

9,631

 

Comprehensive income

 

 

1,007,932

 

 

 

636,537

 

 

 

2,430,526

 

 

 

1,212,810

 

Net earnings attributable to noncontrolling interests

 

 

(17,612

)

 

 

(33,284

)

 

 

(54,278

)

 

 

(55,362

)

Other comprehensive loss (income) attributable to noncontrolling interests

 

 

640

 

 

 

(319

)

 

 

485

 

 

 

157

 

Comprehensive income attributable to common unitholders

 

$

990,960

 

 

$

602,934

 

 

$

2,376,733

 

 

$

1,157,605

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.


8

 


Index

 

 

PROLOGIS, L.P.

CONSOLIDATED STATEMENTS OF CAPITAL

(Unaudited)

(In thousands)

 

Three Months Ended June 30, 2022 and 2021

 

 

General Partner

 

 

Limited Partners

 

 

Non-

 

 

 

 

 

 

Preferred

 

 

Common

 

 

Common

 

 

Class A Common

 

 

controlling

 

 

Total

 

 

Units

 

 

Amount

 

 

Units

 

 

Amount

 

 

Units

 

 

Amount

 

 

Units

 

 

Amount

 

 

Interests

 

 

Capital

 

Balance at April 1, 2022

 

1,279

 

 

$

63,948

 

 

 

740,189

 

 

$

34,108,120

 

 

 

12,949

 

 

$

596,682

 

 

 

8,595

 

 

$

369,402

 

 

$

3,324,050

 

 

$

38,462,202

 

Consolidated net earnings

 

-

 

 

 

-

 

 

 

-

 

 

 

611,393

 

 

 

-

 

 

 

10,823

 

 

 

-

 

 

 

6,608

 

 

 

17,612

 

 

 

646,436

 

Effect of equity compensation plans

 

-

 

 

 

-

 

 

 

36

 

 

 

16,901

 

 

 

1

 

 

 

24,452

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

41,353

 

Capital contributions

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,649

 

 

 

10,649

 

Redemption of limited partners units

 

-

 

 

 

-

 

 

 

135

 

 

 

6,273

 

 

 

(288

)

 

 

(29,992

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(23,719

)

Foreign currency translation gains

     (losses), net

 

-

 

 

 

-

 

 

 

-

 

 

 

324,163

 

 

 

-

 

 

 

5,472

 

 

 

-

 

 

 

3,522

 

 

 

(640

)

 

 

332,517

 

Unrealized gains on

     derivative contracts, net

 

-

 

 

 

-

 

 

 

-

 

 

 

28,196

 

 

 

-

 

 

 

477

 

 

 

-

 

 

 

306

 

 

 

-

 

 

 

28,979

 

Reallocation of capital

 

-

 

 

 

-

 

 

 

-

 

 

 

4,505

 

 

 

-

 

 

 

(4,752

)

 

 

-

 

 

 

247

 

 

 

-

 

 

 

-

 

Distributions ($0.79 per common unit)

     and other

 

-

 

 

 

-

 

 

 

-

 

 

 

(587,732

)

 

 

-

 

 

 

(12,938

)

 

 

-

 

 

 

(5,559

)

 

 

(18,250

)

 

 

(624,479

)

Balance at June 30, 2022

 

1,279

 

 

$

63,948

 

 

 

740,360

 

 

$

34,511,819

 

 

 

12,662

 

 

$

590,224

 

 

 

8,595

 

 

$

374,526

 

 

$

3,333,421

 

 

$

38,873,938

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General Partner

 

 

Limited Partners

 

 

Non-

 

 

 

 

 

 

Preferred

 

 

Common

 

 

Common

 

 

Class A Common

 

 

controlling

 

 

Total

 

 

Units

 

 

Amount

 

 

Units

 

 

Amount

 

 

Units

 

 

Amount

 

 

Units

 

 

Amount

 

 

Interests

 

 

Capital

 

Balance at April 1, 2021

 

1,279

 

 

$

63,948

 

 

 

739,746

 

 

$

31,944,569

 

 

 

12,856

 

 

$

555,176

 

 

 

8,595

 

 

$

348,048

 

 

$

3,473,462

 

 

$

36,385,203

 

Consolidated net earnings

 

-

 

 

 

-

 

 

 

-

 

 

 

600,176

 

 

 

-

 

 

 

10,397

 

 

 

-

 

 

 

6,456

 

 

 

33,284

 

 

 

650,313

 

Effect of equity compensation plans

 

-

 

 

 

-

 

 

 

(780

)

 

 

9,255

 

 

 

30

 

 

 

17,265

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

26,520

 

Capital contributions

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,241

 

 

 

4,241

 

Redemption of limited partners units

 

-

 

 

 

-

 

 

 

54

 

 

 

2,363

 

 

 

(655

)

 

 

(76,558

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(74,195

)

Consolidation of other venture

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

25,759

 

 

 

25,759

 

Foreign currency translation gains

     (losses), net

 

-

 

 

 

-

 

 

 

-

 

 

 

(18,255

)

 

 

-

 

 

 

(441

)

 

 

-

 

 

 

(209

)

 

 

319

 

 

 

(18,586

)

Unrealized gains on derivative

     contracts, net

 

-

 

 

 

-

 

 

 

-

 

 

 

4,686

 

 

 

-

 

 

 

74

 

 

 

-

 

 

 

50

 

 

 

-

 

 

 

4,810

 

Reallocation of capital

 

-

 

 

 

-

 

 

 

-

 

 

 

(32,847

)

 

 

-

 

 

 

34,667

 

 

 

-

 

 

 

(1,820

)

 

 

-

 

 

 

-

 

Distributions ($0.63 per common unit)

     and other

 

-

 

 

 

-

 

 

 

-

 

 

 

(468,182

)

 

 

-

 

 

 

(10,254

)

 

 

-

 

 

 

(5,558

)

 

 

(39,267

)

 

 

(523,261

)

Balance at June 30, 2021

 

1,279

 

 

$

63,948

 

 

 

739,020

 

 

$

32,041,765

 

 

 

12,231

 

 

$

530,326

 

 

 

8,595

 

 

$

346,967

 

 

$

3,497,798

 

 

$

36,480,804

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2022 and 2021

 

 

General Partner

 

 

Limited Partners

 

 

Non-

 

 

 

 

 

 

Preferred

 

 

Common

 

 

Common

 

 

Class A Common

 

 

controlling

 

 

Total

 

 

Units

 

 

Amount

 

 

Units

 

 

Amount

 

 

Units

 

 

Amount

 

 

Units

 

 

Amount

 

 

Interests

 

 

Capital

 

Balance at January 1, 2022

 

1,279

 

 

$

63,948

 

 

 

739,827

 

 

$

33,362,925

 

 

 

12,354

 

 

$

557,097

 

 

 

8,595

 

 

$

360,702

 

 

$

3,397,538

 

 

$

37,742,210

 

Consolidated net earnings

 

-

 

 

 

-

 

 

 

-

 

 

 

1,762,178

 

 

 

-

 

 

 

30,679

 

 

 

-

 

 

 

19,023

 

 

 

54,278

 

 

 

1,866,158

 

Effect of equity compensation plans

 

-

 

 

 

-

 

 

 

326

 

 

 

21,121

 

 

 

838

 

 

 

60,399

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

81,520

 

Capital contributions

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

11,083

 

 

 

11,083

 

Redemption of limited partners units

 

-

 

 

 

-

 

 

 

207

 

 

 

9,574

 

 

 

(530

)

 

 

(59,562

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(49,988

)

Foreign currency translation gains

     (losses), net

 

-

 

 

 

-

 

 

 

-

 

 

 

508,315

 

 

 

-

 

 

 

8,694

 

 

 

-

 

 

 

5,516

 

 

 

(485

)

 

 

522,040

 

Unrealized gains on

     derivative contracts, net

 

-

 

 

 

-

 

 

 

-

 

 

 

41,177

 

 

 

-

 

 

 

704

 

 

 

-

 

 

 

447

 

 

 

-

 

 

 

42,328

 

Reallocation of capital

 

-

 

 

 

-

 

 

 

-

 

 

 

(18,347

)

 

 

-

 

 

 

18,392

 

 

 

-

 

 

 

(45

)

 

 

-

 

 

 

-

 

Distributions ($1.58 per common unit)

     and other

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,175,124

)

 

 

-

 

 

 

(26,179

)

 

 

-

 

 

 

(11,117

)

 

 

(128,993

)

 

 

(1,341,413

)

Balance at June 30, 2022

 

1,279

 

 

$

63,948

 

 

 

740,360

 

 

$

34,511,819

 

 

 

12,662

 

 

$

590,224

 

 

 

8,595

 

 

$

374,526

 

 

$

3,333,421

 

 

$

38,873,938

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General Partner

 

 

Limited Partners

 

 

Non-

 

 

 

 

 

 

Preferred

 

 

Common

 

 

Common

 

 

Class A Common

 

 

controlling

 

 

Total

 

 

Units

 

 

Amount

 

 

Units

 

 

Amount

 

 

Units

 

 

Amount

 

 

Units

 

 

Amount

 

 

Interests

 

 

Capital

 

Balance at January 1, 2021

 

1,279

 

 

$

63,948

 

 

 

739,381

 

 

$

31,907,599

 

 

 

12,142

 

 

$

523,954

 

 

 

8,595

 

 

$

345,553

 

 

$

3,483,526

 

 

$

36,324,580

 

Consolidated net earnings

 

-

 

 

 

-

 

 

 

-

 

 

 

967,523

 

 

 

-

 

 

 

16,674

 

 

 

-

 

 

 

10,447

 

 

 

55,362

 

 

 

1,050,006

 

Effect of equity compensation plans

 

-

 

 

 

-

 

 

 

(420

)

 

 

13,297

 

 

 

1,085

 

 

 

44,563

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

57,860

 

Capital contributions

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,361

 

 

 

4,361

 

Redemption of limited partners units

 

-

 

 

 

-

 

 

 

59

 

 

 

2,596

 

 

 

(996

)

 

 

(108,163

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(105,567

)

Consolidation of other venture

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

25,759

 

 

 

25,759

 

Foreign currency translation gains

     (losses), net

 

-

 

 

 

-

 

 

 

 

 

 

 

149,244

 

 

 

-

 

 

 

2,470

 

 

 

-

 

 

 

1,616

 

 

 

(157

)

 

 

153,173

 

Unrealized gains on derivative

     contracts, net

 

-

 

 

 

-

 

 

 

-

 

 

 

9,375

 

 

 

-

 

 

 

155

 

 

 

-

 

 

 

101

 

 

 

-

 

 

 

9,631

 

Reallocation of capital

 

-

 

 

 

-

 

 

 

-

 

 

 

(71,663

)

 

 

-

 

 

 

71,297

 

 

 

-

 

 

 

366

 

 

 

-

 

 

 

-

 

Distributions ($1.26 per common unit)

     and other

 

-

 

 

 

-

 

 

 

-

 

 

 

(936,206

)

 

 

-

 

 

 

(20,624

)

 

 

-

 

 

 

(11,116

)

 

 

(71,053

)

 

 

(1,038,999

)

Balance at June 30, 2021

 

1,279

 

 

$

63,948

 

 

 

739,020

 

 

$

32,041,765

 

 

 

12,231

 

 

$

530,326

 

 

 

8,595

 

 

$

346,967

 

 

$

3,497,798

 

 

$

36,480,804

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

9

 


Index

 

PROLOGIS, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2022

 

 

2021

 

Operating activities:

 

 

 

 

 

 

 

 

Consolidated net earnings

 

$

1,866,158

 

 

$

1,050,006

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Straight-lined rents and amortization of above and below market leases

 

 

(72,666

)

 

 

(72,910

)

Equity-based compensation awards

 

 

78,352

 

 

 

58,521

 

Depreciation and amortization

 

 

798,960

 

 

 

790,311

 

Earnings from unconsolidated entities, net

 

 

(156,556

)

 

 

(139,468

)

Operating distributions from unconsolidated entities

 

 

192,210

 

 

 

196,751

 

Decrease (increase) in operating receivables from unconsolidated entities

 

 

(34,951

)

 

 

6,585

 

Amortization of debt discounts and debt issuance costs, net

 

 

4,275

 

 

 

4,168

 

Gains on dispositions of development properties and land, net

 

 

(316,008

)

 

 

(361,004

)

Gains on other dispositions of investments in real estate, net

 

 

(584,835

)

 

 

(143,790

)

Unrealized foreign currency and derivative gains, net

 

 

(154,965

)

 

 

(83,382

)

Losses on early extinguishment of debt, net

 

 

18,895

 

 

 

187,453

 

Deferred income tax expense

 

 

17,557

 

 

 

13,858

 

Decrease in accounts receivable and other assets

 

 

99,859

 

 

 

5,383

 

Decrease in accounts payable and accrued expenses and other liabilities

 

 

(110,808

)

 

 

(46,579

)

Net cash provided by operating activities

 

 

1,645,477

 

 

 

1,465,903

 

Investing activities:

 

 

 

 

 

 

 

 

Real estate development

 

 

(1,462,010

)

 

 

(997,328

)

Real estate acquisitions

 

 

(1,869,426

)

 

 

(830,574

)

Tenant improvements and lease commissions on previously leased space

 

 

(175,480

)

 

 

(148,037

)

Property improvements

 

 

(55,816

)

 

 

(41,129

)

Proceeds from dispositions and contributions of real estate

 

 

1,653,597

 

 

 

1,829,576

 

Investments in and advances to unconsolidated entities

 

 

(112,848

)

 

 

(366,644

)

Return of investment from unconsolidated entities

 

 

37,252

 

 

 

46,135

 

Proceeds from the settlement of net investment hedges

 

 

26,487

 

 

 

-

 

Payments on the settlement of net investment hedges

 

 

(771

)

 

 

(8,000

)

Net cash used in investing activities

 

 

(1,959,015

)

 

 

(516,001

)

Financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common partnership units in exchange for contributions from Prologis, Inc.

 

 

-

 

 

 

743

 

Distributions paid on common and preferred units

 

 

(1,212,410

)

 

 

(967,921

)

Noncontrolling interests contributions

 

 

11,083

 

 

 

4,361

 

Noncontrolling interests distributions

 

 

(128,993

)

 

 

(71,053

)

Redemption of common limited partnership units

 

 

(49,988

)

 

 

(105,567

)

Tax paid with shares of the Parent withheld

 

 

(23,970

)

 

 

(17,472

)

Debt and equity issuance costs paid

 

 

(28,119

)

 

 

(20,483

)

Net proceeds from (payments on) credit facilities

 

 

127,454

 

 

 

(170,230

)

Repurchase of and payments on debt

 

 

(751,114

)

 

 

(2,185,209

)

Proceeds from the issuance of debt

 

 

2,285,021

 

 

 

2,617,854

 

Net cash provided by (used in) financing activities

 

 

228,964

 

 

 

(914,977

)

 

 

 

 

 

 

 

 

 

Effect of foreign currency exchange rate changes on cash

 

 

(34,028

)

 

 

(31,565

)

Net increase (decrease) in cash and cash equivalents

 

 

(118,602

)

 

 

3,360

 

Cash and cash equivalents, beginning of period

 

 

556,117

 

 

 

598,086

 

Cash and cash equivalents, end of period

 

$

437,515

 

 

$

601,446

 

 

See Note 11 for information on noncash investing and financing activities and other information.

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

 

10

 


Index

 

 

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” or “IRC”), 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 two operating business segments: Real Estate Operations and Strategic Capital. Our Real Estate Operations segment represents the ownership and development of logistics properties. Our Strategic Capital segment represents the management of unconsolidated co-investment ventures and other ventures. See Note 10 for further discussion of our business segments. Unless otherwise indicated, the Notes to the Consolidated Financial Statements apply to both the Parent and the OP. The terms “the Company,” “Prologis,” “we,” “our” or “us” means the Parent and OP collectively.

 

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, 2022, the Parent owned a 97.28% common general partnership interest in the OP and substantially all of the preferred units in the OP. The remaining 2.72% common limited partnership interests, which include Class A common limited partnership units (“Class A Units”) in the OP, are owned by unaffiliated investors and certain current and former directors and officers of the Parent. Each partner’s percentage interest in the OP is determined based on the number of OP units held, including the number of OP units into which Class A Units are convertible, compared to total OP units outstanding at each period end and is used as the basis for the allocation of net income or loss to each partner. At the end of each reporting period, a capital adjustment is made in the OP to reflect the appropriate ownership interest for each of the common unitholders. These adjustments are reflected in the line items Reallocation of Equity in the Consolidated Statements of Equity of the Parent and Reallocation of Capital in the Consolidated Statements of Capital of the OP.

 

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. 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, 2021, as filed with the SEC, and other public information.

 

Accounting Pronouncements.

Reference Rate Reform. In March 2020, the Financial Accounting Standards Board issued an Accounting Standard Update (“ASU”) that provided practical expedients to address existing guidance on contract modifications and hedge accounting due to the expected market transition from the London Inter-bank Offered Rate (“LIBOR”) and other interbank offered rates (together “IBORs”) to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). We refer to this transition as “reference rate reform.” The ASU was effective upon issuance on a prospective basis beginning January 1, 2020, and we elected to adopt the ASU over time as our reference rate reform activities occurred. 

 

In March 2021, the Financial Conduct Authority formally announced that the publication of LIBOR was ending and confirmed that U.S. dollar LIBOR-indexed rates would cease to be published after June 30, 2023. In June 2022, we modified the base rate of the aggregate lender commitments in U.S. dollars from U.S. dollar LIBOR to SOFR for both of our global senior credit facilities. See Note 5 for more information on these modifications. There was no material impact on our Consolidated Financial Statements due to the adoption of this ASU. We do not anticipate modifying any derivative financial instruments, as none are impacted by this ASU at June 30, 2022.

11

 


Index

 

 

Proposed Merger. On June 11, 2022, we entered into a definitive agreement (the “Merger Agreement”) with Duke Realty Corporation (“Duke Realty”) and Duke Realty Limited Partnership. The purchase price consideration will be determined on the closing date as this is a stock-for-stock transaction based upon a fixed exchange ratio. The estimated acquisition price is approximately $25.5 billion including the assumption of debt. The transaction is subject to approval by the stockholders of Prologis and the shareholders of Duke Realty and other closing conditions and is expected to be consummated in the fourth quarter of 2022.

 

NOTE 2. REAL ESTATE

 

Investments in real estate properties consisted of the following (dollars and square feet in thousands):

 

 

Square Feet

Number of Buildings

 

 

 

Jun 30,

 

Dec 31,

 

Jun 30,

 

Dec 31,

 

Jun 30,

 

Dec 31,

 

 

2022

 

2021

 

2022

 

2021

 

2022

 

2021

 

Operating properties:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Buildings and improvements

 

455,186

 

 

444,413

 

 

2,350

 

 

2,310

 

$

33,071,616

 

$

32,159,514

 

Improved land

 

 

 

 

 

 

 

 

 

 

 

 

 

12,636,656

 

 

12,294,246

 

Development portfolio, including

     land costs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prestabilized

 

11,120

 

 

6,325

 

 

28

 

 

16

 

 

1,198,958

 

 

710,091

 

Properties under development

 

33,476

 

 

28,638

 

 

99

 

 

83

 

 

2,266,480

 

 

2,019,249

 

Land (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

2,855,734

 

 

2,519,590

 

Other real estate investments (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

3,241,586

 

 

3,302,500

 

Total investments in real estate

     properties

 

 

 

 

 

 

 

 

 

 

 

 

 

55,271,030

 

 

53,005,190

 

Less accumulated depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

8,251,995

 

 

7,668,187

 

Net investments in real estate

     properties

 

 

 

 

 

 

 

 

 

 

 

 

$

47,019,035

 

$

45,337,003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

At June 30, 2022 and December 31, 2021, our land was comprised of 6,114 and 6,227 acres, respectively.

 

(2)

Included in other real estate investments were: (i) non-strategic real estate assets acquired that we do not intend to operate long-term; (ii) land parcels we own and lease to third parties; (iii) non-industrial real estate assets that we intend to redevelop into industrial properties; and (iv) costs associated with potential acquisitions and future development projects, including purchase options on land.

 

Acquisitions

 

The following table summarizes our real estate acquisition activity (dollars and square feet in thousands):

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Number of operating properties

 

 

12

 

 

 

10

 

 

 

13

 

 

 

11

 

Square feet

 

 

1,491

 

 

 

2,088

 

 

 

1,794

 

 

 

2,113

 

Acquisition cost of net investments in real estate, excluding land and

     other real estate investments

 

$

181,881

 

 

$

284,106

 

 

$

264,082

 

 

$

289,149

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acres of land

 

 

628

 

 

 

445

 

 

 

1,206

 

 

 

706

 

Acquisition cost of land

 

$

801,860

 

 

$

351,709

 

 

$

984,144

 

 

$

575,716

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition cost of other real estate investments

 

$

379,803

 

 

$

173,807

 

 

$

603,214

 

 

$

173,807

 

 

12

 


Index

 

 

Dispositions

 

The following table summarizes our dispositions of net investments in real estate which include contributions to unconsolidated co-investment ventures and dispositions to third parties (dollars and square feet in thousands):

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Dispositions of development properties and land, net (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of properties

 

 

4

 

 

 

11

 

 

 

11

 

 

 

19

 

Square feet

 

 

1,180

 

 

 

5,174

 

 

 

3,763

 

 

 

9,461

 

Net proceeds

 

$

235,194

 

 

$

676,387

 

 

$

677,749

 

 

$

1,446,200

 

Gains on dispositions of development properties and land, net

 

$

105,802

 

 

$

187,361

 

 

$

316,008

 

 

$

361,004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other dispositions of investments in real estate, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of properties

 

 

-

 

 

 

42

 

 

 

102

 

 

 

43

 

Square feet

 

 

-

 

 

 

5,778

 

 

 

8,676

 

 

 

6,254

 

Net proceeds

 

$

-

 

 

$

572,430

 

 

$

1,264,280

 

 

$

595,772

 

Gains on other dispositions of investments in real estate, net

 

$

-

 

 

$

127,167

 

 

$

584,835

 

 

$

143,790

 

 

(1)

The gains we recognize in Gains on Dispositions of Development Properties and Land, Net are primarily driven by the contribution of newly developed properties to our unconsolidated co-investment ventures and occasionally sales to a third party.  

 

Leases

 

We recognized lease right-of-use assets of $492.1 million and $459.4 million within Other Assets and lease liabilities of $483.7 million and $448.4 million within Other Liabilities, for land and office space leases in which we are the lessee, on the Consolidated Balance Sheets at June 30, 2022 and December 31, 2021, respectively.

 

NOTE 3. 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 management 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 accounted for using the equity method of accounting. See Note 6 for more detail regarding our consolidated investments that are not wholly owned.

 

We also have investments in other ventures, generally with one partner, which we account for using the equity method. We refer to our investments in both unconsolidated co-investment ventures and other ventures, collectively, as unconsolidated entities.

 

The following table summarizes our investments in and advances to unconsolidated entities (in thousands):

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Unconsolidated co-investment ventures

 

$

7,669,680

 

 

$

7,825,455

 

Other ventures

 

 

773,964

 

 

 

785,503

 

Total

 

$

8,443,644

 

 

$

8,610,958

 

  

13

 


Index

 

 

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,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Recurring fees

 

$

115,806

 

 

$

96,845

 

 

$

229,043

 

 

$

187,882

 

Transactional fees

 

 

17,519

 

 

 

18,199

 

 

 

34,748

 

 

 

39,077

 

Promote revenue

 

 

19,514

 

 

 

10,636

 

 

 

19,514

 

 

 

12,251

 

Total strategic capital revenues from unconsolidated

     co-investment ventures (1)

 

$

152,839

 

 

$

125,680

 

 

$

283,305

 

 

$

239,210

 

 

(1)

These amounts exclude strategic capital revenues from other ventures.

 

The following table summarizes the key property information, financial position and operating information of our unconsolidated co-investment ventures on a U.S. GAAP basis (not our proportionate share) and the amounts we recognized in the Consolidated Financial Statements related to these ventures (dollars and square feet in millions):

 

 

U.S.

 

 

Other Americas (1)

 

 

Europe

 

 

Asia

 

 

Total

 

At:

Jun 30,

2022

 

 

Dec 31,

2021

 

 

Jun 30,

2022

 

 

Dec 31,

2021

 

 

Jun 30,

2022

 

 

Dec 31,

2021

 

 

Jun 30,

2022

 

 

Dec 31,

2021

 

 

Jun 30,

2022

 

 

Dec 31,

2021

 

Key property information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ventures

 

1

 

 

 

1

 

 

 

2

 

 

 

2

 

 

 

2

 

 

 

2

 

 

 

3

 

 

 

3

 

 

 

8

 

 

 

8

 

Operating properties

 

732

 

 

 

732

 

 

 

260

 

 

 

254

 

 

 

843

 

 

 

818

 

 

 

205

 

 

 

203

 

 

 

2,040

 

 

 

2,007

 

Square feet

 

123

 

 

 

122

 

 

 

58

 

 

 

56

 

 

 

205

 

 

 

198

 

 

 

82

 

 

 

82

 

 

 

468

 

 

 

458

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial position:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets ($)

 

11,614

 

 

 

11,619

 

 

 

3,548

 

 

 

3,349

 

 

 

18,281

 

 

 

18,373

 

 

 

9,513

 

 

 

10,746

 

 

 

42,956

 

 

 

44,087

 

Third-party debt ($)

 

3,069

 

 

 

3,069

 

 

 

1,151

 

 

 

1,052

 

 

 

3,990

 

 

 

3,737

 

 

 

3,685

 

 

 

4,157

 

 

 

11,895

 

 

 

12,015

 

Total liabilities ($)

 

3,724

 

 

 

3,717

 

 

 

1,261

 

 

 

1,116

 

 

 

5,935

 

 

 

5,619

 

 

 

4,115

 

 

 

4,685

 

 

 

15,035

 

 

 

15,137

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Our investment balance ($) (2)

 

2,390

 

 

 

2,393

 

 

 

865

 

 

 

840

 

 

 

3,665

 

 

 

3,712

 

 

 

750

 

 

 

880

 

 

 

7,670

 

 

 

7,825

 

Our weighted average ownership (3)

 

26.9

%

 

 

27.0

%

 

 

40.4

%

 

 

40.8

%

 

 

31.0

%

 

 

30.9

%

 

 

15.1

%

 

 

15.1

%

 

 

27.2

%

 

 

26.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

Other Americas (1)

 

 

Europe

 

 

Asia

 

 

Total

 

Operating Information:

Jun 30,

2022

 

 

Jun 30,

2021

 

 

Jun 30,

2022

 

 

Jun 30,

2021

 

 

Jun 30,

2022

 

 

Jun 30,

2021

 

 

Jun 30,

2022

 

 

Jun 30,

2021

 

 

Jun 30,

2022

 

 

Jun 30,

2021

 

For the three months ended:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues ($)

 

291

 

 

 

257

 

 

 

96

 

 

 

78

 

 

 

354

 

 

 

343

 

 

 

157

 

 

 

160

 

 

 

898

 

 

 

838

 

Net earnings ($)

 

68

 

 

 

54

 

 

 

31

 

 

 

28

 

 

 

127

 

 

 

82

 

 

 

32

 

 

 

36

 

 

 

258

 

 

 

200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Our earnings from unconsolidated

     co-investment ventures, net ($)

 

19

 

 

 

15

 

 

 

10

 

 

 

10

 

 

 

39

 

 

 

26

 

 

 

5

 

 

 

6

 

 

 

73

 

 

 

57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the six months ended:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues ($)

 

577

 

 

 

511

 

 

 

185

 

 

 

153

 

 

 

710

 

 

 

681

 

 

 

326

 

 

 

319

 

 

 

1,798

 

 

 

1,664

 

Net earnings ($)

 

140

 

 

 

103

 

 

 

64

 

 

 

58

 

 

 

231

 

 

 

169

 

 

 

66

 

 

 

71

 

 

 

501

 

 

 

401

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Our earnings from unconsolidated

     co-investment ventures, net ($)

 

38

 

 

 

28

 

 

 

22

 

 

 

22

 

 

 

70

 

 

 

54

 

 

 

11

 

 

 

12

 

 

 

141

 

 

 

116

 

 

(1)

Prologis Brazil Logistics Venture (“PBLV”) and our other Brazilian joint ventures are combined as one venture for the purpose of this table.

 

(2)

Prologis’ investment balance is presented at our adjusted basis. The difference between our ownership interest of a venture’s equity and our investment balance at June 30, 2022 and December 31, 2021, results principally from four types of transactions: (i) deferred gains from the contribution of property to a venture prior to January 1, 2018; (ii) recording additional costs associated with our investment in the venture; (iii) receivables, principally for fees and promotes ($193.2 million and $149.5 million, respectively); and (iv) customer security deposits retained subsequent to property contributions to Nippon Prologis REIT, Inc.

 

(3)

Represents our weighted average ownership interest in all unconsolidated co-investment ventures based on each entity’s contribution of total assets before depreciation, net of other liabilities.

 

14

 


Index

 

 

Equity Commitments Related to Certain Unconsolidated Co-Investment Ventures

 

At June 30, 2022, our outstanding equity commitments were $290.1 million, principally for Prologis China Logistics Venture. The equity commitments expire from 2023 to 2028 if they have not been previously called. Typically, equity commitments are used for future development and acquisitions in the unconsolidated co-investment ventures.

 

NOTE 4. ASSETS HELD FOR SALE OR CONTRIBUTION

 

We had investments in certain real estate properties that met the criteria to be classified as held for sale or contribution at June 30, 2022 and December 31, 2021. 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.

 

Assets held for sale or contribution consisted of the following (dollars and square feet in thousands):

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Number of operating properties

 

 

12

 

 

 

14

 

Square feet

 

 

2,208

 

 

 

5,486

 

Total assets held for sale or contribution

 

$

403,617

 

 

$

669,688

 

Total liabilities associated with assets held for sale or contribution – included in Other Liabilities

 

$

4,055

 

 

$

10,631

 

 

NOTE 5. DEBT

 

All debt is incurred by the OP or its consolidated subsidiaries. The following table summarizes our debt (dollars in thousands):

 

 

June 30, 2022

 

 

December 31, 2021

 

 

Weighted Average

 

 

Amount

 

 

Weighted Average

 

 

Amount

 

 

Interest Rate (1)

 

 

Term (2)

 

 

Outstanding (3)

 

 

Interest Rate (1)

 

 

Term (2)

 

 

Outstanding (3)

 

Credit facilities

1.2%

 

 

 

2.2

 

 

$

612,267

 

 

0.8%

 

 

 

1.6

 

 

$

491,393

 

Senior notes

1.6%

 

 

 

11.0

 

 

 

15,546,790

 

 

1.7%

 

 

 

11.6

 

 

 

14,981,690

 

Term loans and unsecured

    other

1.0%

 

 

 

5.6

 

 

 

1,362,293

 

 

0.5%

 

 

 

4.2

 

 

 

1,825,195

 

Secured mortgage

2.4%

 

 

 

3.6

 

 

 

519,482

 

 

5.1%

 

 

 

4.7

 

 

 

416,776

 

Total

1.6%

 

 

 

10.1

 

 

$

18,040,832

 

 

1.6%

 

 

 

10.4

 

 

$

17,715,054

 

 

(1)

The weighted average interest rates presented represent the effective interest rates (including amortization of debt issuance costs and noncash premiums or discounts) at the end of the period for the debt outstanding and include the impact of designated interest rate swaps, which effectively fix the interest rate on certain variable rate debt.

 

(2)

The weighted average term represents the remaining maturity in years on the debt outstanding at period end.

 

(3)

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, 2022

 

 

December 31, 2021

 

 

 

 

Weighted Average Interest Rate

 

 

Amount Outstanding

 

 

% of Total

 

 

Weighted Average Interest Rate

 

 

Amount Outstanding

 

 

% of Total

 

 

British pound sterling

 

 

2.1

%

 

$

1,248,276

 

 

 

6.9

%

 

 

2.1

%

 

$

1,376,807

 

 

 

7.8

%

 

Canadian dollar

 

 

3.0

%

 

 

513,615

 

 

 

2.8

%

 

 

2.7

%

 

 

283,773

 

 

 

1.6

%

 

Euro

 

 

1.1

%

 

 

8,069,667

 

 

 

44.7

%

 

 

1.0

%

 

 

7,408,407

 

 

 

41.8

%

 

Japanese yen

 

 

0.8

%

 

 

2,773,102

 

 

 

15.4

%

 

 

0.9

%

 

 

2,878,542

 

 

 

16.2

%

 

U.S. dollar

 

 

2.5

%

 

 

5,436,172

 

 

 

30.2

%

 

 

2.6

%

 

 

5,767,525

 

 

 

32.6

%

 

Total

 

 

1.6

%

 

$

18,040,832

 

 

 

100.0

%

 

 

1.6

%

 

$

17,715,054

 

 

 

100.0

%

 

15

 


Index

 

 

Credit Facilities

 

In June, we terminated our global senior credit facility (the “2019 Global Facility”) and entered into the 2022 Global Facility with a borrowing capacity of up to $3.0 billion (subject to currency fluctuation). We also upsized our second global senior credit facility (the “2021 Global Facility”), increasing its borrowing capacity up to $2.0 billion (subject to currency fluctuation). We may draw on both facilities in British pounds sterling, Canadian dollars, euro, Japanese yen, Mexican pesos and U.S. dollars on a revolving basis (subject to currency fluctuations). During the recast of both facilities, we modified the base rate of the aggregate lender commitments in U.S. dollars from U.S. dollar LIBOR to SOFR. The 2021 Global Facility is scheduled to initially mature in April 2024 and the 2022 Global Facility in June 2026; however, we can extend the maturity date for each facility by six months on two occasions, subject to the payment of extension fees. We have the ability to increase the 2021 Global Facility to $2.5 billion and the 2022 Global Facility to $4.0 billion, subject to currency fluctuations and obtaining additional lender commitments.

 

We also have a Japanese yen revolver (the “Yen Credit Facility”) with total commitments of ¥55.0 billion ($403.6 million at June 30, 2022). We have the ability to increase the borrowing capacity of the Yen Credit Facility to ¥75.0 billion ($550.4 million at June 30, 2022), subject to obtaining additional lender commitments. The Yen Credit Facility is initially scheduled to mature in July 2024; however, we may extend the maturity date for one year, subject to the payment of extension fees.

 

We refer to the 2021 Global Facility, the 2022 Global Facility and the Yen Credit Facility, collectively, as our “Credit Facilities.” Pricing for the Credit Facilities, including the spread over the applicable benchmark and the rates applicable to facility fees and letter of credit fees, varies based on the public debt ratings of the OP.

 

Liquidity

 

The following table summarizes information about our available liquidity at June 30, 2022 (in millions):

 

 

 

 

 

Aggregate lender commitments

 

 

 

 

Credit Facilities

 

$

5,380

 

Less:

 

 

 

 

Borrowings outstanding

 

 

612

 

Outstanding letters of credit

 

 

27

 

Current availability

 

$

4,741

 

Cash and cash equivalents

 

 

438

 

Total liquidity

 

$

5,179

 

 

Senior Notes

 

The following table summarizes the issuances of senior notes during the six months ended June 30, 2022 (principal in thousands):

 

 

 

Aggregate Principal

 

 

Issuance Date Weighted Average

 

 

 

Issuance Date

 

Borrowing Currency

 

 

USD (1)

 

 

Interest Rate (2)

 

 

Term (3)

 

 

Maturity Dates

January

 

£

60,000

 

 

$

80,932

 

 

2.1%

 

 

 

20.0

 

 

December 2041

February (4)

 

1,550,000

 

 

$

1,768,240

 

 

1.0%

 

 

 

8.5

 

 

February 2024 – 2034

Total

 

 

 

 

 

$

1,849,172

 

 

1.1%

 

 

 

9.0

 

 

 

 

(1)

The exchange rate used to calculate into U.S. dollars was the spot rate at the settlement date.

 

(2)

The weighted average interest rate represents the fixed or variable interest rates of the related debt at the issuance date.

 

(3)

The weighted average term represents the remaining maturity in years on the related debt at the issuance date.

 

(4)

Net proceeds from the issuance of these notes were used to finance green projects eligible under our green bond framework, repay or refinance indebtedness and for general corporate purposes.

 

16

 


Index

 

 

Long-Term Debt Maturities

 

Scheduled principal payments due on our debt for the remainder of 2022 and for each year through the period ended December 31, 2026, and thereafter were as follows at June 30, 2022 (in thousands):

 

 

 

 

 

 

 

Unsecured

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit

 

 

Senior

 

 

Term Loans

 

 

Secured

 

 

 

 

 

Maturity

 

Facilities

 

 

Notes

 

 

and Other

 

 

Mortgage

 

 

Total

 

2022 (1)

 

$

-

 

 

$

311,610

 

 

$

9,239

 

 

$

3,691

 

 

$

324,540

 

2023 (1)

 

 

-

 

 

 

-

 

 

 

131,921

 

 

 

186,875

 

 

 

318,796

 

2024 (2)

 

 

496,294

 

 

 

311,610

 

 

 

-

 

 

 

99,248

 

 

 

907,152

 

2025

 

 

-

 

 

 

36,693

 

 

 

-

 

 

 

142,415

 

 

 

179,108

 

2026 (3)

 

 

115,973

 

 

 

919,229

 

 

 

623,778

 

 

 

3,466

 

 

 

1,662,446

 

Thereafter

 

 

-

 

 

 

14,049,349

 

 

 

601,763

 

 

 

74,629

 

 

 

14,725,741

 

Subtotal

 

 

612,267

 

 

 

15,628,491

 

 

 

1,366,701

 

 

 

510,324

 

 

 

18,117,783

 

Unamortized premiums (discounts), net

 

 

-

 

 

 

(4,832

)

 

 

-

 

 

 

10,033

 

 

 

5,201

 

Unamortized debt issuance costs, net

 

 

-

 

 

 

(76,869

)

 

 

(4,408

)

 

 

(875

)

 

 

(82,152

)

Total

 

$

612,267

 

 

$

15,546,790

 

 

$

1,362,293

 

 

$

519,482

 

 

$

18,040,832

 

 

(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 2024 maturities is the 2021 Global Facility that can be extended until 2025.

 

(3)

Included in the 2026 maturities is the 2022 Global Facility that can be extended until 2027.

 

Financial Debt Covenants

 

Our senior notes, term loans and Credit Facilities outstanding at June 30, 2022 were subject to certain financial covenants under their related documents. At June 30, 2022, we were in compliance with all of our financial debt covenants.

 

Guarantee of Finance Subsidiary Debt

 

We have finance subsidiaries as part of our operations in Europe (Prologis Euro Finance LLC), Japan (Prologis Yen Finance LLC) and the U.K. (Prologis Sterling Finance LLC) in order to mitigate our foreign currency risk by borrowing in the currencies in which we invest. These entities are 100% indirectly owned by the OP and all unsecured debt issued or to be issued by each entity is or will be fully and unconditionally guaranteed by the OP. There are no restrictions or limits on the OP’s ability to obtain funds from its subsidiaries by dividend or loan. In reliance on Rule 13-01 of Regulation S-X, the separate financial statements of Prologis Euro Finance LLC, Prologis Yen Finance LLC and Prologis Sterling Finance LLC are not provided.

 

NOTE 6. 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, shares of the Parent’s common stock, generally at a rate of one share of common stock to one limited partnership unit. We also consolidate certain entities in which we do not own 100% of the equity but the equity of these entities is not exchangeable into our common stock.

 

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 outstanding limited partnership units receive quarterly cash distributions equal to the quarterly dividends paid on our common stock pursuant to the terms of the applicable partnership agreements.

 

17

 


Index

 

 

The following table summarizes these entities (dollars in thousands):

 

 

Our Ownership Percentage

 

 

Noncontrolling Interests

 

 

Total Assets

 

 

Total Liabilities

 

 

Jun 30,

2022

 

 

Dec 31,

2021

 

 

Jun 30,

2022

 

 

Dec 31,

2021

 

 

Jun 30,

2022

 

 

Dec 31,

2021

 

 

Jun 30,

2022

 

 

Dec 31,

2021

 

Prologis U.S. Logistics Venture

 

55.0

%

 

 

55.0

%

 

$

3,204,880

 

 

$

3,264,337

 

 

$

7,253,495

 

 

$

7,397,195

 

 

$

139,521

 

 

$

147,545

 

Other consolidated entities (1)

various

 

 

various

 

 

 

128,541

 

 

 

133,201

 

 

 

1,482,754

 

 

 

1,453,236

 

 

 

162,254

 

 

 

162,598

 

Prologis, L.P.

 

 

 

 

 

 

 

 

 

3,333,421

 

 

 

3,397,538

 

 

 

8,736,249

 

 

 

8,850,431

 

 

 

301,775

 

 

 

310,143

 

Limited partners in Prologis, L.P. (2)(3)

 

 

 

964,750

 

 

 

917,799

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Prologis, Inc.

 

 

 

 

 

 

 

 

$

4,298,171

 

 

$

4,315,337

 

 

$

8,736,249

 

 

$

8,850,431

 

 

$

301,775

 

 

$

310,143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes two partnerships that have issued limited partnership units to third parties, as discussed above, along with various other consolidated entities. The limited partnership units outstanding at June 30, 2022 and December 31, 2021 were exchangeable into cash or, at our option, 0.3 million shares of the Parent’s common stock.

 

(2)

We had 8.6 million Class A Units that were convertible into 8.0 million limited partnership units of the OP at June 30, 2022 and December 31, 2021.

 

(3)

There were limited partnership units in the OP, excluding the Class A Units, that were exchangeable into cash or, at our option, 8.3 million and 8.4 million shares of the Parent’s common stock, at June 30, 2022 and December 31, 2021, respectively. Also included are the vested OP Long-Term Incentive Plan Units (“LTIP Units”) associated with our long-term compensation plans of 4.4 million and 4.0 million shares of the Parent’s common stock at June 30, 2022 and December 31, 2021, respectively. See further discussion of LTIP Units in Note 7.

 

NOTE 7. LONG-TERM COMPENSATION

 

Equity-Based Compensation Plans and Programs

 

Prologis Outperformance Plan (“POP”)

 

We have allocated participation points or a percentage of the compensation pool 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 which the awards vest, which ranges from three to ten years. The performance hurdle (“Outperformance Hurdle”) at the end of the initial three-year performance period requires our three-year compound annualized total stockholder return (“TSR”) to exceed a threshold set at the three-year compound annualized TSR for the Morgan Stanley Capital International (“MSCI”) US REIT Index for the same period plus 100 basis points. If the Outperformance Hurdle is met, a compensation pool will be formed equal to 3% of the excess value created, subject to a maximum as defined by each performance period. POP awards cannot be paid at a time when we meet the outperformance hurdle yet our absolute TSR is negative. If after seven years our absolute TSR has not been positive, the awards will be forfeited.  

 

We granted participation points for the 2022 – 2024 performance period in January 2022, with a fair value of $30.4 million using a Monte Carlo valuation model that assumed a risk-free interest rate of 1.0% and an expected volatility of 31.0% for Prologis and 29.0% for the MSCI US REIT Index. The 2022 – 2024 performance period has an absolute maximum cap of $100 million. If an award is earned at the end of the initial three-year performance period, then 20% of the POP award is paid at the end of the initial performance period and the remaining 80% is subject to additional seven-year cliff vesting. The 20% that is paid at the end of the initial three-year performance period is subject to an additional three-year holding requirement. Awards are in the form of common stock, restricted stock units, POP LTIP Units and LTIP Units.     

 

The Outperformance Hurdle was met for the 2019 – 2021 performance period, which resulted in awards of $100.0 million being earned at December 31, 2021 and awarded in January 2022. Additionally, awards of $35.7 million were earned at December 31, 2021 and awarded in January 2022 for prior performance periods related to the compensation pool in excess of the initial award based on the terms of the POP awards granted prior to 2018. The tables below include POP awards that were earned but are unvested, while any vested awards are reflected within the Consolidated Statements of Equity and Capital. The initial grant date fair value derived using a Monte Carlo valuation model was used in determining the grant date fair value per unit in the tables below.

 

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.

18

 


Index

 

 

Summary of Award Activity

 

RSUs

 

The following table summarizes the activity for RSUs for the six months ended June 30, 2022 (units in thousands):

 

 

 

 

 

 

 

Weighted Average

 

 

 

Unvested RSUs

 

 

Grant Date Fair Value

 

Balance at January 1, 2022

 

 

1,237

 

 

$

87.87

 

Granted

 

 

522

 

 

 

121.63

 

Vested and distributed

 

 

(396

)

 

 

91.68

 

Forfeited

 

 

(22

)

 

 

113.23

 

Balance at June 30, 2022

 

 

1,341

 

 

$

99.47

 

 

 

 

 

 

 

 

 

 

LTIP Units

 

The following table summarizes the activity for LTIP Units for the six months ended June 30, 2022 (units in thousands):

 

 

 

Unvested

 

 

Weighted Average

 

 

 

LTIP Units

 

 

Grant Date Fair Value

 

Balance at January 1, 2022

 

 

3,317

 

 

$

61.65

 

Granted

 

 

988

 

 

 

95.90

 

Vested LTIP Units

 

 

(707

)

 

 

86.90

 

Balance at June 30, 2022

 

 

3,598

 

 

$

66.08

 

 

NOTE 8. 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):

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

Prologis, Inc.

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net earnings attributable to common stockholders – Basic

 

$

609,855

 

 

$

598,625

 

 

$

1,759,109

 

 

$

964,440

 

Net earnings attributable to exchangeable limited partnership units (1)

 

 

17,518

 

 

 

16,921

 

 

 

49,856

 

 

 

27,241

 

Adjusted net earnings attributable to common stockholders – Diluted

 

$

627,373

 

 

$

615,546

 

 

$

1,808,965

 

 

$

991,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding – Basic

 

 

740,637

 

 

 

739,190

 

 

 

740,506

 

 

 

739,105

 

Incremental weighted average effect on exchange of limited partnership units (1)

 

 

21,289

 

 

 

21,179

 

 

 

21,221

 

 

 

21,084

 

Incremental weighted average effect of equity awards

 

 

4,148

 

 

 

4,283

 

 

 

4,132

 

 

 

4,535

 

Weighted average common shares outstanding – Diluted (2)

 

 

766,074

 

 

 

764,652

 

 

 

765,859

 

 

 

764,724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.82

 

 

$

0.81

 

 

$

2.38

 

 

$

1.30

 

Diluted

 

$

0.82

 

 

$

0.81

 

 

$

2.36

 

 

$

1.30

 

 

19

 


Index

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

Prologis, L.P.

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net earnings attributable to common unitholders

 

$

627,286

 

 

$

615,478

 

 

$

1,808,811

 

 

$

991,561

 

Net earnings attributable to Class A Units

 

 

(6,608

)

 

 

(6,456

)

 

 

(19,023

)

 

 

(10,447

)

Net earnings attributable to common unitholders – Basic

 

 

620,678

 

 

 

609,022

 

 

 

1,789,788

 

 

 

981,114

 

Net earnings attributable to Class A Units

 

 

6,608

 

 

 

6,456

 

 

 

19,023

 

 

 

10,447

 

Net earnings attributable to exchangeable other limited partnership units

 

 

87

 

 

 

68

 

 

 

154

 

 

 

120

 

Adjusted net earnings attributable to common unitholders – Diluted

 

$

627,373

 

 

$

615,546

 

 

$

1,808,965

 

 

$

991,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common partnership units outstanding – Basic

 

 

753,610

 

 

 

752,065

 

 

 

753,420

 

 

 

751,883

 

Incremental weighted average effect on exchange of Class A Units

 

 

8,017

 

 

 

8,005

 

 

 

8,008

 

 

 

8,006

 

Incremental weighted average effect on exchange of other limited partnership units

 

 

299

 

 

 

299

 

 

 

299

 

 

 

299

 

Incremental weighted average effect of equity awards of Prologis, Inc.

 

 

4,148

 

 

 

4,283

 

 

 

4,132

 

 

 

4,536

 

Weighted average common units outstanding – Diluted (2)

 

 

766,074

 

 

 

764,652

 

 

 

765,859

 

 

 

764,724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per unit attributable to common unitholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.82

 

 

$

0.81

 

 

$

2.38

 

 

$

1.30

 

Diluted

 

$

0.82

 

 

$

0.81

 

 

$

2.36

 

 

$

1.30

 

 

(1)

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.

 

(2)

Our total weighted average potentially dilutive shares and units outstanding consisted of the following:  

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

 

June 30,

 

 

June 30,

 

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

Class A Units

 

 

8,017

 

 

 

8,005

 

 

 

8,008

 

 

 

8,006

 

 

Other limited partnership units

 

 

299

 

 

 

299

 

 

 

299

 

 

 

299

 

 

Equity awards

 

 

6,353

 

 

 

6,471

 

 

 

6,219

 

 

 

6,812

 

 

Prologis, L.P.

 

 

14,669

 

 

 

14,775

 

 

 

14,526

 

 

 

15,117

 

 

Common limited partnership units