ProLogis Reports Growth In Third Quarter FFO and Earnings Per Share
- 78.5 Percent Increase in FFO per Share Driven by Investment Management Business Gains, Strong Operating Property Performance and Solid Development Profits -
- Company Sets Range of $4.65 to $4.85 for 2008 FFO per Share -
DENVER, Oct. 25 /PRNewswire-FirstCall/ -- ProLogis (NYSE: PLD), the world's largest owner, manager and developer of distribution facilities, today reported third quarter funds from operations as defined by ProLogis (FFO) of $1.41 per diluted share, up 78.5 percent from $0.79 in the same period in 2006. Net earnings per diluted share were $1.12 for the third quarter of 2007, compared with $0.65 for the same period in 2006.
For the nine months ended September 30, 2007, FFO was $3.81 per diluted share, up 47.1 percent from $2.59 in the first nine months of 2006. Net earnings per diluted share for the nine months ended September 30, 2007, were $3.51, compared with $2.04 in the comparable period of 2006.
"We're pleased to report another quarter of strong financial and operating performance," said Jeffrey H. Schwartz, ProLogis chairman and chief executive officer. "Our results reflect high occupancy levels with strong growth in rental rates, above-average development margins and the value we are creating through our Investment Management business."
Schwartz noted that global market supply and demand remain generally well balanced, while international trade continues to support customer requirements for modern distribution space in key logistics markets. "We have significant opportunities to further expand our global platform due to the ongoing reconfiguration of supply chains, functional obsolescence of a large portion of existing facilities throughout Europe and Asia and growing customer demand for more energy-efficient buildings.
"We believe these trends are secular, rather than cyclical, in nature and will support favorable industrial market fundamentals for the foreseeable future," Schwartz said. "Given the industry-leading scale and quality of our portfolio and the strength of our customer relationships, we are exceptionally well positioned to benefit from this long-term environment."
2007 Guidance Increased; Guidance Set for 2008 FFO per Share at $4.65 to $4.85
The company increased full-year guidance for FFO per share to $4.40 - $4.50. The increase is due to the third quarter recognition in FFO of $0.36 per share related to ProLogis' previously announced acquisition of the shares of Macquarie ProLogis Trust (MPR) and subsequent contribution to a new property fund. The transaction resulted in the recognition of deferred proceeds on prior property contributions to ProLogis North American Properties Fund V, the subsequent gain on contribution of the MPR assets into the newly formed ProLogis North American Industrial Fund II (NAIF II) and a gain related to the settlement of foreign currency forward contracts used to manage the fluctuation of the purchase price as denominated in Australian dollars. The company's previous guidance, which included an estimated $0.30 per share of income related to the MPR transaction, was $4.25 - $4.40 in FFO per share. The company's guidance related to earnings per share remains at its most recent estimate of $3.80 - $4.00 per share.
The company also set a range for 2008 FFO guidance of $4.65 to $4.85 per share and will provide business drivers to support that guidance in early 2008. "As a result of continued strong market fundamentals and customer demand driven by growth in global trade, we anticipate another year of solid growth in FFO per share," Schwartz said.
New Funds Expand Investment Management Platform and Support Growth in Fee Income
During the third quarter, the company announced four new property funds, in addition to NAIF II, with a combined capitalization of over $14 billion that will own distribution centers in Europe, the United States, Mexico and South Korea. Together with the capacity in ProLogis' existing funds, the company now has agreements in place to support $33 billion of assets in its Investment Management business, compared with $18.2 billion at September 30, 2007, and expects to recognize a corresponding increase in management fee income as these new funds are fully invested. At its October 10, 2007 Investor Day, the company outlined an objective to grow its Investment Management business to $37 to $40 billion by the end of 2010.
"Our new property funds were oversubscribed despite the recent credit crunch, which has begun to slow competitive development activity and caused investors to look towards more secure investments," Schwartz said. "Having committed equity capital in place to support our growing development business will prove to be a significant benefit to us as the environment for smaller, less well-capitalized developers becomes more challenging."
Solid Market Fundamentals Support Increased Expectations for New Development
"In North America, net absorption in the top 30 logistics markets remained healthy at over 32 million square feet during the third quarter," said Walter C. Rakowich, ProLogis president and chief operating officer. "While there are indications of a potential slowdown in the North American economy, our U.S. portfolio remains well occupied, and we are capturing a significant number of new build-to-suit opportunities.
"Our build-to-suit business also is accelerating in Europe. In Germany, for example, we signed agreements for roughly 1.8 million square feet of new development on a pre-committed basis. In Asia, where markets remain chronically undersupplied, net absorption remains healthy and leasing activity in the company's new inventory development is brisk," Rakowich said. "Additionally, with 79 percent of our year-to-date construction starts outside North America, we are well diversified and positioned to sustain growth."
During the third quarter, ProLogis began construction of $797.9 million of new industrial development, including development activity within its industrial joint ventures. The company's total CDFS pipeline stood at $6.2 billion at the end of the quarter, a 16.1 percent increase over December 31, 2006. Of this amount, total expected investment in projects currently under construction is $2.8 billion, while the remaining $3.4 billion of completed developments and repositioned properties was 65 percent leased at quarter end.
"We continue to achieve strong lease up in our pipeline of recently completed projects and properties under development," said Ted R. Antenucci, ProLogis chief investment officer. "As a result of strong customer demand and leasing, we have increased our guidance for expected 2007 development starts to between $3.8 and $4.0 billion, up from our guidance of $3.4 to $3.6 billion just last quarter."
During the quarter, the company signed roughly 10.2 million square feet of new CDFS leases, including those with repeat customers such as: Hitachi Transport in Fukuoka, Japan; DHL in Venlo, The Netherlands and GE Commercial in Monterrey, Mexico. "Existing customers continue to drive our new development, representing 73 percent of the new CDFS leases signed during the quarter," Antenucci said.
Selected Financial and Operating Information
-- Increased same-store net operating income in the quarter by 5.4 percent
(a 5.9 percent increase when straight-lined rents and lease
amortization are excluded), driven by 2.7 percent growth in average
same-store occupancies and same-store rent growth of 9.6 percent.
-- Maintained strong occupancy in the stabilized portfolio of 95.5
percent, compared with 95.2 percent at June 30, 2007.
-- Recycled $3.2 billion of capital from CDFS contributions and
dispositions during the quarter. Including non-CDFS disposition
activity, total dispositions and contributions were $3.3 billion for
the quarter.
-- Realized FFO from CDFS transactions of $230.1 million for the quarter,
up from $92.8 million in the third quarter of 2006. For the third
quarter, post-deferral, post-tax margins for all CDFS dispositions
averaged 7.7%, with Developed and Repositioned Properties averaging
27.3 percent and Acquired Property Portfolios (including the MPR
transaction noted above) averaging 2.9 percent. Year-to-date, post-
deferral, post-tax margins for all CDFS dispositions averaged 16.8
percent, with Developed and Repositioned Properties averaging 36.4%.
-- Started new developments with a total expected investment of $2.1
billion in the first nine months, including joint venture developments.
-- Grew ProLogis' share of FFO from property funds to $39.9 million for
the quarter, compared with $19.4 million in the same quarter of 2006,
an increase of 105.7 percent.
-- Recognized fee income from property funds for the quarter of $27.1
million, compared with $20.4 million in the same quarter of 2006, an
increase of 32.8 percent.
-- Increased total assets owned and under management to $34.4 billion, up
from $26.7 billion at December 31, 2006, a year-to-date increase of
28.8 percent.
Copies of ProLogis' third quarter 2007 supplemental information will be available from the company's website at http://ir.prologis.com or by request at 800-820-0181. The supplemental information also is available on the SEC's website at http://www.sec.gov. The related conference call will be available via a live webcast on the company's website at http://ir.prologis.com at 10:00 a.m. Eastern Time on Thursday, October 25, 2007. A replay of the webcast will be available on the company's website until November 8, 2007. Additionally, a podcast of the company's conference call will be available on the company's website as well as on the REITCafe website located at http://www.REITcafe.com.
About ProLogis
ProLogis is the world's largest owner, manager and developer of distribution facilities, with operations in 105 markets across North America, Europe and Asia. The company has $34.4 billion of assets owned, managed and under development, comprising 483.0 million square feet (44.9 million square meters) in 2,669 properties as of September 30, 2007. ProLogis' customers include manufacturers, retailers, transportation companies, third-party logistics providers and other enterprises with large-scale distribution needs. Headquartered in Denver, Colorado, ProLogis employs more than 1,300 people worldwide.
The statements above that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which ProLogis operates, management's beliefs and assumptions made by management, they involve uncertainties that could significantly impact ProLogis' financial results. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements, which generally are not historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future - including statements relating to rent and occupancy growth, development activity and changes in sales or contribution volume of developed properties, general conditions in the geographic areas where we operate and the availability of capital in existing or new property funds - are forward- looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although we believe the expectations reflected in any forward- looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained and therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some of the factors that may affect outcomes and results include, but are not limited to: (i) national, international, regional and local economic climates, (ii) changes in financial markets, interest rates and foreign currency exchange rates, (iii) increased or unanticipated competition for our properties, (iv) risks associated with acquisitions, (v) maintenance of real estate investment trust ("REIT") status, (vi) availability of financing and capital, (vii) changes in demand for developed properties, and (viii) those additional factors discussed under "Item 1A -Risk Factors" in ProLogis' Annual Report on Form 10-K for the year ended December 31, 2006.
ProLogis
Third Quarter 2007
Unaudited Financial Results
Selected Financial Information
(in thousands, except per share amounts and percentages)
Three Months Ended
September 30,
2007 2006 % Change
Net earnings attributable to
common shares:
Net earnings attributable to
common shares $299,445 $166,305 80.1%
Net earnings per diluted share
attributable to common shares $1.12 $0.65 72.3%
FFO and FFO, as adjusted see
definition of FFO
FFO attributable to common shares $376,155 $202,054 86.2%
Add back:
Merger integration and
relocation expenses (1) - -
FFO attributable to
common shares, as adjusted $376,155 $202,054 86.2%
FFO per diluted share
attributable to common
shares $1.41 $0.79 78.5%
Add back:
Merger integration and
relocation expenses(1) - -
FFO per diluted share attributable
to common shares, as adjusted $1.41 $0.79 78.5%
EBITDA:
EBITDA $556,029 $329,837 68.6%
Distributions:
Actual distributions
per common share (2) $0.46 $0.40 15.0%
Nine Months Ended
September 30,
2007 2006 %Change
Net earnings attributable to
common shares:
Net earnings attributable to
common shares $935,639 $517,861 80.7%
Net earnings per diluted share
attributable to common shares $3.51 $2.04 72.1%
FFO and FFO, as adjusted see
definition of FFO
FFO attributable to common shares
Add back: $1,015,773 $656,263 54.8%
Merger integration and
relocation expenses (1) - 2,723
FFO attributable to
common shares, as adjusted 1,015,773 $658,986 54.1%
FFO per diluted share
attributable to common
shares $3.81 $2.58 47.7%
Add back:
Merger integration and
relocation expenses(1) - 0.01
FFO per diluted share attributable
to common shares, as adjusted $3.81 $2.59 47.1%
EBITDA:
EBITDA $1,515,398 $1,036,369 46.2%
Distributions:
Actual distributions
per common share (2) $1.38 $1.20 15.0%
See our definition of FFO and our definition of EBITDA.
Footnotes follow Consolidated Balance Sheets.
ProLogis
Third Quarter 2007
Unaudited Financial Results
Consolidated Statements of Earnings
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Revenues:
Rental income (7)(8) $282,579 $232,495 $813,114 $673,040
CDFS disposition proceeds
(9)(10)(11):
Developed and repositioned
properties 735,428 311,840 2,092,081 1,050,704
Acquired property
portfolios 2,406,795 - 2,406,795 -
Property management and
other fees and
incentives (11) 27,095 20,421 72,679 79,318
Development management and
other income 10,321 11,099 23,936 26,525
Total revenues 3,462,218 575,855 5,408,605 1,829,587
Expenses:
Rental expenses (7) 73,473 58,547 212,664 170,723
Cost of CDFS dispositions (9):
Developed and repositioned
properties 572,668 234,216 1,488,343 821,054
Acquired property
portfolios 2,338,186 - 2,338,186 -
General and administrative
(1)(12) 52,326 37,787 152,971 113,085
Depreciation and
amortization 72,497 69,634 225,206 207,876
Other expenses (13) 3,550 2,977 21,484 8,924
Total expenses 3,112,700 403,161 4,438,854 1,321,662
Operating income 349,518 172,694 969,751 507,925
Other income (expense):
Earnings from unconsolidated
property funds (11) 46,688 11,215 81,456 78,629
Earnings from CDFS joint
ventures and other
unconsolidated investees (6) 4,679 9,590 6,996 47,011
Interest expense (14) (107,964) (77,417) (287,255) (216,933)
Interest income on notes
receivable 2,950 3,914 9,107 13,236
Interest and other income,
net 8,663 5,313 23,415 10,596
Total other income
(expense) (44,984) (47,385) (166,281) (67,461)
Earnings before minority
interest 304,534 125,309 803,470 440,464
Minority interest (1,855) (565) (2,751) (2,541)
Earnings before certain net
gains 302,679 124,744 800,719 437,923
Gains recognized on
dispositions of certain non-
CDFS business assets (15) 21,289 - 145,374 13,709
Foreign currency exchange
gains, net (16) 991 9,202 10,145 16,449
Earnings before income taxes 324,959 133,946 956,238 468,081
Income taxes (17):
Current income tax expense 14,204 34,824 58,949 75,913
Deferred income tax
(benefit) expense 11,892 (22,362) 5,710 (16,780)
Total income taxes 26,096 12,462 64,659 59,133
Earnings from continuing
operations 298,863 121,484 891,579 408,948
Discontinued operations (18):
Income attributable to
disposed properties and
assets held for sale 329 6,601 1,856 17,760
Gains recognized on
dispositions:
Non-CDFS business assets 6,607 29,386 38,732 80,037
CDFS business assets - 15,188 22,537 30,178
Total discontinued
operations 6,936 51,175 63,125 127,975
Net earnings 305,799 172,659 954,704 536,923
Less preferred share dividends 6,354 6,354 19,065 19,062
Net earnings attributable to
common shares $299,445 $166,305 $935,639 $517,861
Weighted average common shares
outstanding - Basic 257,435 245,460 256,270 244,918
Weighted average common shares
outstanding - Diluted 267,871 256,233 267,177 255,559
Net earnings per share attributable
to common shares - Basic:
Continuing operations $1.13 $0.47 $3.40 $1.59
Discontinued operations 0.03 0.21 0.25 0.52
Net earnings per share
attributable to common
shares - Basic $1.16 $0.68 $3.65 $2.11
Net earnings per share attributable
to common shares - Diluted:
Continuing operations $1.09 $0.45 $3.27 $1.54
Discontinued operations 0.03 0.20 0.24 0.50
Net earnings per share
attributable to common
shares - Diluted $1.12 $0.65 $3.51 $2.04
Footnotes follow Consolidated Balance Sheets.
Calculation of Net Earnings per Share Attributable to Common Shares -
Diluted
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Net earnings attributable to
common shares - Basic $299,445 $166,305 $935,639 $517,861
Minority interest (a) 947 565 3,409 2,541
Adjusted net earnings attributable
to common shares - Diluted $300,392 $166,870 $939,048 $520,402
Weighted average common shares
outstanding - Basic 257,435 245,460 256,270 244,918
Incremental weighted average
effect of conversion of limited
partnership units 5,011 5,142 5,086 5,218
Incremental weighted average
effect of potentially dilutive
instruments (b) 5,425 5,631 5,821 5,423
Weighted average common shares
outstanding - Diluted 267,871 256,233 267,177 255,559
Net earnings per share
attributable to common shares -
Diluted $1.12 $0.65 $3.51 $2.04
COMMENTS
(a) Includes only the minority interest related to the convertible limited
partnership units.
(b) Total weighted average potentially dilutive instruments outstanding
were 10,062 and 10,966 for the three months ended September 30, 2007
and 2006, respectively, and 10,393 and 10,987 for the nine months
ended September 30, 2007 and 2006 respectively. Subtantially all were
dilutive for both periods.
ProLogis
Third Quarter 2007
Unaudited Financial Results
Consolidated Statements of Funds From Operations (FFO)
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Revenues:
Rental income (7)(18) $283,127 $243,907 $820,179 $723,356
CDFS disposition proceeds
(9)(10)(11)(18):
Developed and repositioned
properties 735,428 429,002 2,265,379 1,273,783
Acquired property
portfolios 2,406,795 - 2,406,795 -
Property management and
other fees and incentives
(11) 27,095 20,421 72,679 79,318
Development management and
other income 10,321 11,099 23,936 26,525
Total revenues 3,462,766 704,429 5,588,968 2,102,982
Expenses:
Rental expenses (7)(18) 73,686 61,271 215,634 193,257
Cost of CDFS dispositions
(9)(18):
Developed and repositioned
properties 573,914 336,190 1,642,687 1,013,489
Acquired property
portfolios 2,338,186 - 2,338,186 -
General and administrative
(1)(12) 52,326 37,787 152,971 113,085
Depreciation of corporate
assets 2,706 2,201 7,997 7,016
Other expenses (13) 3,550 2,977 21,484 8,924
Total expenses 3,044,368 440,426 4,378,959 1,335,771
418,398 264,003 1,210,009 767,211
Other income (expense):
FFO from unconsolidated
property funds (11) 39,931 19,420 103,800 98,467
FFO from CDFS joint
ventures and other
unconsolidated investees(6) 6,628 10,937 12,684 51,551
Interest expense (18) (107,964) (77,417) (287,255) (217,807)
Interest income on notes
receivable 2,950 3,914 9,107 13,236
Interest and other income, net 8,663 5,313 23,415 10,596
Foreign currency exchange
gains (expenses and
losses), net (16) 29,962 (840) 21,740 7,334
Current income tax expense
(17) (14,204) (16,357) (55,911) (52,722)
Total other income
(expense) (34,034) (55,030) (172,420) (89,345)
FFO 384,364 208,973 1,037,589 677,866
Less preferred share
dividends 6,354 6,354 19,065 19,062
Less minority interest 1,855 565 2,751 2,541
FFO attributable to common
shares $376,155 $202,054 $1,015,773 $656,263
Weighted average common
shares outstanding - Basic 257,435 245,460 256,270 244,918
Weighted average common
shares outstanding -
Diluted 267,871 256,233 267,177 255,559
FFO per share attributable
to common shares:
Basic $1.46 $0.82 $3.96 $2.68
Diluted $1.41 $0.79 $3.81 $2.58
FFO attributable to common
shares - Basic $376,155 $202,054 $1,015,773 $656,263
Minority interest attributable
to convertible limited
partnership units 947 565 3,409 2,541
FFO attributable to common
shares - Diluted $377,102 $202,619 $1,019,182 $658,804
Merger integration and
relocation expenses (1) - - - 2,723
FFO attributable to common
shares, as adjusted - Diluted $377,102 $202,619 $1,019,182 $661,527
Weighted average common shares
outstanding - Basic 257,435 245,460 256,270 244,918
Incremental weighted average
effect of conversion of limited
partnership units 5,011 5,142 5,086 5,218
Incremental weighted average
effect of potentially dilutive
instruments 5,425 5,631 5,821 5,423
Weighted average common shares
outstanding - Diluted 267,871 256,233 267,177 255,559
FFO per share attributable to
common shares - Diluted $1.41 $0.79 $3.81 $2.58
FFO per share attributable to
common shares, as adjusted -
Diluted $1.41 $0.79 $3.81 $2.59
See Consolidated Statements of Earnings and the Reconciliations of Net
Earnings to FFO.
Footnotes follow Consolidated Balance Sheets.
Definition of FFO
FFO is a non-Generally Accepted Accounting Principles (GAAP) measure that is commonly used in the real estate industry. The most directly comparable GAAP measure to FFO is net earnings. Although the National Association of Real Estate Investment Trusts (NAREIT) has published a definition of FFO, modifications to the NAREIT calculation of FFO are common among REITs, as companies seek to provide financial measures that meaningfully reflect their business. FFO, as we define it, is presented as a supplemental financial measure. FFO is not used by us as, nor should it be considered to be, an alternative to net earnings computed under GAAP as an indicator of our operating performance or as an alternative to cash from operating activities computed under GAAP as an indicator of our ability to fund our cash needs.
FFO is not meant to represent a comprehensive system of financial reporting and does not present, nor do we intend it to present, a complete picture of our financial condition and operating performance. We believe that GAAP net earnings remains the primary measure of performance and that FFO is only meaningful when it is used in conjunction with GAAP net earnings. Further, we believe that our consolidated financial statements, prepared in accordance with GAAP, provide the most meaningful picture of our financial condition and our operating performance.
NAREIT's FFO measure adjusts GAAP net earnings to exclude historical cost depreciation and gains and losses from the sales of previously depreciated properties. We agree that these two NAREIT adjustments are useful to investors for the following reasons:
(a) historical cost accounting for real estate assets in accordance with
GAAP assumes, through depreciation charges, that the value of real
estate assets diminishes predictably over time. NAREIT stated in its
White Paper on FFO "since real estate asset values have historically
risen or fallen with market conditions, many industry investors have
considered presentations of operating results for real estate
companies that use historical cost accounting to be insufficient by
themselves." Consequently, NAREIT's definition of FFO reflects the
fact that real estate, as an asset class, generally appreciates over
time and depreciation charges required by GAAP do not reflect the
underlying economic realities.
(b) REITs were created as a legal form of organization in order to
encourage public ownership of real estate as an asset class through
investment in firms that were in the business of long-term ownership
and management of real estate. The exclusion, in NAREIT's definition
of FFO, of gains and losses from the sales of previously depreciated
operating real estate assets allows investors and analysts to readily
identify the operating results of the long-term assets that form the
core of a REIT's activities and assists in comparing those operating
results between periods. We include the gains and losses from
dispositions of properties acquired or developed in our CDFS business
segment and our proportionate share of the gains and losses from
dispositions recognized by the property funds in our definition of
FFO.
At the same time that NAREIT created and defined its FFO concept for the REIT industry, it also recognized that ''management of each of its member companies has the responsibility and authority to publish financial information that it regards as useful to the financial community.'' We believe that financial analysts, potential investors and shareholders who review our operating results are best served by a defined FFO measure that includes other adjustments to GAAP net earnings in addition to those included in the NAREIT defined measure of FFO.
Our defined FFO measure excludes the following items from GAAP net earnings that are not excluded in the NAREIT defined FFO measure:
(i) deferred income tax benefits and deferred income tax expenses
recognized by our subsidiaries;
(ii) current income tax expense related to acquired tax liabilities that
were recorded as deferred tax liabilities in an acquisition, to the
extent the expense is offset with a deferred income tax benefit in
GAAP earnings that is excluded from our defined FFO measure;
(iii) certain foreign currency exchange gains and losses resulting
from certain debt transactions between us and our foreign
consolidated subsidiaries and our foreign unconsolidated investees;
(iv) foreign currency exchange gains and losses from the remeasurement
(based on current foreign currency exchange rates) of certain third
party debt of our foreign consolidated subsidiaries and our foreign
unconsolidated investees; and
(v) mark-to-market adjustments associated with derivative financial
instruments utilized to manage our foreign currency risks.
FFO of our unconsolidated investees is calculated on the same basis.
The items that we exclude from GAAP net earnings, while not infrequent or unusual, are subject to significant fluctuations from period to period that cause both positive and negative effects on our results of operations, in inconsistent and unpredictable directions. Most importantly, the economics underlying the items that we exclude from GAAP net earnings are not the primary drivers in management's decision-making process and capital investment decisions. Period to period fluctuations in these items can be driven by accounting for short-term factors that are not relevant to long-term investment decisions, long-term capital structures or to long-term tax planning and tax structuring decisions. Accordingly, we believe that investors are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in planning and executing our business strategy.
Real estate is a capital-intensive business. Investors' analyses of the performance of real estate companies tend to be centered on understanding the asset value created by real estate investment decisions and understanding current operating returns that are being generated by those same investment decisions. The adjustments to GAAP net earnings that are included in arriving at our FFO measure are helpful to management in making real estate investment decisions and evaluating our current operating performance. We believe that these adjustments are also helpful to industry analysts, potential investors and shareholders in their understanding and evaluation of our performance on the key measures of net asset value and current operating returns generated on real estate investments.
While we believe that our defined FFO measure is an important supplemental measure, neither NAREIT's nor our measure of FFO should be used alone because they exclude significant economic components of GAAP net earnings and are, therefore, limited as an analytical tool. Some of the limitations are:
-- The current income tax expenses that are excluded from our defined FFO
measure represent taxes that are payable.
-- Depreciation and amortization of real estate assets are economic costs
that are excluded from FFO. FFO is limited as it does not reflect the
cash requirements that may be necessary for future replacements of the
real estate assets. Further, the amortization of capital expenditures
and leasing costs necessary to maintain the operating performance of
distribution properties are not reflected in FFO.
-- Gains or losses from property dispositions represent changes in the
value of the disposed properties. FFO, by excluding these gains and
losses, does not capture realized changes in the value of disposed
properties arising from changes in market conditions.
-- The deferred income tax benefits and expenses that are excluded from
our defined FFO measure result from the creation of a deferred income
tax asset or liability that may have to be settled at some future
point. Our defined FFO measure does not currently reflect any income or
expense that may result from such settlement.
-- The foreign currency exchange gains and losses that are excluded from
our defined FFO measure are generally recognized based on movements in
foreign currency exchange rates through a specific point in time. The
ultimate settlement of our foreign currency-denominated net assets is
indefinite as to timing and amount. Our defined FFO measure is limited
in that it does not reflect the current period changes in these net
assets that result from periodic foreign currency exchange rate
movements.
We compensate for these limitations by using our FFO measure only in conjunction with GAAP net earnings. To further compensate, we always reconcile our defined FFO measure to GAAP net earnings in our financial reports. Additionally, we provide investors with our complete financial statements prepared under GAAP, our definition of FFO, which includes a discussion of the limitations of using our non-GAAP measure, and a reconciliation of our GAAP measure (net earnings) to our non-GAAP measure (FFO, as we define it) so that investors can appropriately incorporate this measure and its limitations into their analyses.
ProLogis
Third Quarter 2007
Unaudited Financial Results
Reconciliations of Net Earnings to FFO
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Reconciliation of net earnings
to FFO:
Net earnings attributable to
common shares $299,445 $166,305 $935,639 $517,861
Add (deduct) NAREIT defined
adjustments:
Real estate related
depreciation and
amortization 69,791 67,433 217,209 200,860
Adjustments to CDFS
dispositions for
depreciation (1,246) - (3,583) 466
Gains recognized on
dispositions of certain
non-CDFS business assets
(15) (21,289) - (145,374) (13,709)
Reconciling items
attributable to discontinued
operations (18):
Gains recognized on
dispositions of non-CDFS
business assets (6,607) (29,386) (38,732) (80,037)
Real estate related
depreciation and
amortization 7 2,087 2,240 9,148
Totals discontinued
operations (6,600) (27,299) (36,492) (70,889)
Our share of reconciling
items from unconsolidated
investees (19):
Real estate related
depreciation and
amortization 24,460 18,010 63,669 47,834
Gains on dispositions of
non-CDFS business assets (32,603) (6,642) (34,491) (6,753)
Other amortization items
(20) (2,427) (2,067) (6,376) (14,199)
Totals unconsolidated
investees (10,570) 9,301 22,802 26,882
Totals NAREIT defined
adjustments 30,086 49,435 54,562 143,610
Subtotals-NAREIT
defined FFO 329,531 215,740 990,201 661,471
Add (deduct) our defined
adjustments:
Foreign currency exchange
losses (gains), net (16) 28,971 (10,042) 11,595 (9,115)
Current income tax expense
(17) - 18,467 3,038 23,191
Deferred income tax
expense (benefit) (17) 11,892 (22,362) 5,710 (16,780)
Our share of reconciling
items from unconsolidated
investees (19):
Foreign currency exchange
losses, net 6,001 1,143 5,828 130
Deferred income tax
benefit (240) (892) (599) (2,634)
Totals unconsolidated
investees 5,761 251 5,229 (2,504)
Totals our defined
adjustments 46,624 (13,686) 25,572 (5,208)
FFO attributable to common
shares $376,155 $202,054 $1,015,773 $656,263
ProLogis
Third Quarter 2007
Unaudited Financial Results
Reconciliations of Net Earnings to EBITDA
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Reconciliation of net earnings
to EBITDA:
Net earnings attributable to
common shares $299,445 $166,305 $935,639 $517,861
Add (deduct):
NAREIT defined adjustments
to compute FFO 30,086 49,435 54,562 143,610
Our defined adjustments to
compute FFO 46,624 (13,686) 25,572 (5,208)
Add:
Interest expense 107,964 77,417 287,255 216,933
Depreciation of corporate
assets 2,706 2,201 7,997 7,016
Current income tax expense
included in FFO (17) 14,204 16,357 55,911 52,722
Adjustments to CDFS gains
on dispositions for
interest capitalized 14,458 5,521 32,632 25,427
Preferred share dividends 6,354 6,354 19,065 19,062
Reconciling items
attributable to
discontinued operations - - - 874
Impairment charges (13) - 614 12,600 4,174
Share of reconciling items
from unconsolidated
investees (19) 34,188 19,319 84,165 53,898
EBITDA $556,029 $329,837 $1,515,398 $1,036,369
See Consolidated Statements of Earnings and the Reconciliations of Net
Earnings to FFO.
Footnotes follow Consolidated Balance Sheets.
Definition of EBITDA (Earnings before Interest, Taxes, Depreciation and
Amortization):
We believe that EBITDA is a useful supplemental measure, although it does
not represent net earnings or cash from operating activities that are
computed in accordance with GAAP and is not indicative of cash available
to fund cash needs, which we present in our Consolidated Statements of
Cash Flows and include in our Annual Reports on Form 10-K and Quarterly
Reports on Form 10-Q that are filed with the Securities and Exchange
Commission. Accordingly, the EBITDA measure presented should not be
considered as an alternative to net earnings as an indicator of our
operating performance, or as an alternative to cash flows from operating,
investing, or financing activities as a measure of liquidity. The EBITDA
measure presented may not be comparable to similarly titled measures of
other REITs.
EBITDA generally represents net earnings computed in accordance with GAAP
adjusted to exclude:
(i) interest expense;
(ii) income tax expenses and benefits; and
(iii) depreciation and amortization expenses.
In our computation of EBITDA the following items are also excluded:
(i) preferred dividends and charges related to the redemption of
preferred shares;
(ii) the foreign currency exchange gains and losses that are also
excluded in our definition of FFO;
(iii) impairment charges; and
(iv) gains from the dispositions of non-CDFS business assets.
In addition, we adjust the gains from the contributions and sales of
developed properties recognized as CDFS income to reflect these gains as
if no interest cost had been capitalized during the development of the
properties (i.e. the gains are larger since capitalized interest is not
included in the basis of the assets contributed and sold). EBITDA of our
unconsolidated investees is calculated on the same basis.
ProLogis
Third Quarter 2007
Unaudited Financial Results
Consolidated Balance Sheets
(in thousands, except per share data)
September 30, December 31,
2007 (3) 2006
Assets:
Investments in real estate assets:
Industrial operating properties $10,770,280 $10,423,249
Retail operating properties 327,220 305,188
Land subject to ground leases and other 466,800 472,412
Properties under development
(including cost of land) 1,242,359 964,842
Land held for development 2,241,569 1,397,081
Other investments 454,756 391,227
15,502,984 13,953,999
Less accumulated depreciation 1,340,046 1,280,206
Net investments in real
estate assets 14,162,938 12,673,793
Investments in and advances to
unconsolidated investees
Property funds (4)(5) 1,722,778 981,840
CDFS joint ventures and other
unconsolidated investees (6) 486,476 317,857
Total investments in and
advances to unconsolidated
investees 2,209,254 1,299,697
Cash and cash equivalents 550,272 475,791
Accounts and notes receivable 400,993 439,791
Other assets 1,309,096 957,295
Discontinued operations-assets held
for sale (18) 18,519 57,158
Total assets $18,651,072 $15,903,525
Liabilities and Shareholders' Equity:
Liabilities:
Lines of credit $2,533,087 $2,462,796
Senior notes and other unsecured debt 4,490,765 4,445,092
Convertible debt 1,230,356 -
Secured debt and assessment bonds 1,320,427 1,478,998
Accounts payable and accrued expenses 790,791 518,651
Other liabilities 774,314 546,129
Discontinued operations-assets
held for sale (18) 385 1,012
Total liabilities 11,140,125 9,452,678
Minority interest 69,102 52,268
Shareholders' equity:
Series C preferred shares at
stated liquidation preference
of $50.00 per share 100,000 100,000
Series F preferred shares at
stated liquidation preference
of $25.00 per share 125,000 125,000
Series G preferred shares at
stated liquidation preference
of $25.00 per share 125,000 125,000
Common shares at $.01 par value
per share 2,573 2,509
Additional paid-in capital 6,386,977 6,000,119
Accumulated other comprehensive income 301,054 216,922
Retained earnings/(distributions
in excess of net earnings) (21) 401,241 (170,971)
Total shareholders' equity 7,441,845 6,398,579
Total liabilities and
shareholders' equity $18,651,072 $15,903,525
ProLogis
Third Quarter 2007
Unaudited Financial Results
Notes to Consolidated Financial Statements
*** Certain 2006 amounts included in this Supplemental Information
package have been reclassified to conform to the 2007 presentation.
(1) In September 2005, we completed a merger with Catellus Development
Corporation and incurred certain costs including merger integration,
employee transition costs and severance costs for certain of our
employees whose responsibilities became redundant after the merger.
In February 2006, we moved our corporate headquarters, which is
located in Denver, to a recently constructed building. Relocation
costs included moving, temporary facility costs and accelerated
depreciation associated with non-real estate assets whose useful life
was shortened due to the relocation.
These amounts are included in general and administrative expenses in
our Consolidated Financial Statements.
(2) The annual distribution rate for 2007 is $1.84 per common share. The
distribution is declared quarterly and may be adjusted at the
discretion of the Board of Trustees.
(3) In February 2007, we purchased the industrial business and made an
investment in the retail business of Parkridge Holdings Limited
(''Parkridge''), a European developer. The total purchase price was
$1.3 billion, which was financed with $741.2 million in cash, the
issuance of 4.8 million shares of our common stock (valued for
accounting purposes at $71.01 per share for a total of $339.5
million) and the assumption of $194.9 million of debt and other
liabilities. The cash portion of the acquisition was funded with
borrowings under our Global Line and $600 million from a new senior
unsecured facility, which was partially repaid with proceeds from
contributions this quarter.
We allocated the purchase price based on estimated fair values and
recorded approximately $739.3 million of real estate assets, $156.3
million in investments in CDFS joint ventures and other
unconsolidated investees, $58.1 million of cash and other tangible
assets and $321.9 million of goodwill and other intangible assets
included in Other Assets in our Consolidated Balance Sheets. The
allocation of the purchase price was based upon preliminary estimates
and assumptions and, accordingly, these allocations are subject to
revision when final information is available. Revisions to the fair
value allocations, which may be significant, will be recorded as
adjustments to the purchase price allocations in subsequent periods
and should not have a significant impact on our overall financial
position or results of operations.
(4) During the third quarter of 2007, we formed five new unconsolidated
property funds in North America, Europe and Asia. We will serve as
external manager of the funds and receive property and asset
management fees and may also have the potential for incentive
performance fees. See note 5 below for further information on the new
property funds.
(5) On July 11, 2007, we completed the previously announced acquisition
of all of the units in Macquarie ProLogis Trust, an Australian listed
property trust ("MPR"). At the time of acquisition, MPR owned
approximately 89% of ProLogis North American Properties Fund V and
certain other assets. The total consideration was approximately $2.0
billion consisting of cash in the amount of $1.2 billion and assumed
liabilities of $0.8 billion. The cash portion of the transaction was
financed primarily with borrowings under a credit agreement (the
''Credit Agreement'') among certain subsidiaries of ProLogis and
certain lenders and an affiliate of Citigroup USA, Inc ("Citigroup").
The Credit Agreement provided for a $473.1 million term loan and a
$646.2 million convertible loan.
On August 27, 2007, Citigroup converted $546 million of the loan into
equity of a newly created property fund, ProLogis North American
Industrial Fund II, which resulted in Citigroup owning 63.1% and us
owning 36.9% of the equity of the property fund. We contributed the
real estate assets that we owned 100% after the acquisition of MPR,
and associated debt, to ProLogis North American Industrial Fund II.
These transactions resulted in a net gain on contribution of $52.0
million and the recognition of $16.6 million of previously deferred
proceeds from the initial contribution of the assets to ProLogis
North American Properties Fund V and are reflected in CDFS Acquired
Property Portfolios (see note 9) in our Statements of Earnings and
FFO. In addition, during the second quarter, we entered into foreign
currency forward contracts to manage the foreign currency
fluctuations of the purchase price of MPR and recognized gains of
$9.3 million included in earnings. These contracts settled in July
and resulted in gains of $17.3 million and $26.6 million for earnings
and FFO, respectively, and are reflected in Foreign Currency Exchange
Gains in our Consolidated Statements.
(6) We have varying ownership interests in unconsolidated investees. The
investees primarily engage in activities similar to our CDFS business
segment activities and own operating properties in China, Europe and
North America. We refer to the joint ventures engaged in industrial
property development and management as industrial CDFS joint
ventures. In addition, certain of the CDFS joint ventures engage in
land, retail and commercial development and management and we refer
to these joint ventures as non-industrial CDFS joint ventures. We
have ownership interests in all of the CDFS joint ventures ranging
from 15% to 50%. We also have varying ownership interests in other
unconsolidated investees that primarily own and operate industrial,
office and hotel properties.
(7) Represents rental income earned and rental expenses incurred while we
own a property directly. Under the terms of the respective lease
agreements, some or all of our rental expenses are recovered from our
customers. Amounts recovered are included as a component of rental
income. Rental expenses also include our direct expenses associated
with the management of the properties owned by the property funds.
For properties that have been contributed to property funds, we
recognize our share of the total operations of the property funds
under the equity method and present these amounts below operating
income in our Consolidated Statements of Earnings and FFO.
(8) In our Consolidated Statements of Earnings, rental income includes
the following (in thousands):
Three Months Nine Months
Ended Ended
September 30, September 30,
2007 2006 2007 2006
Rental income $213,839 $176,436 $615,877 $515,886
Rental expense recoveries 58,187 46,471 163,359 131,666
Straight-lined rents 10,553 9,588 33,878 25,488
$282,579 $232,495 $813,114 $673,040
(9) In our CDFS business segment, we develop real estate properties
primarily with the intent to contribute to a property fund in which
we have an ownership interest and act as manager, or to sell to third
parties. Additionally, we acquire properties with the intent to
rehabilitate and/or reposition the property in the CDFS business
segment prior to contributing to a property fund. This includes us
acquiring a portfolio of properties with the intent of contributing
the portfolio to an existing or future property fund. We include the
income generated in the CDFS business segment in our computation of
FFO and EBITDA.
During the third quarter of 2007, we made contributions to three of
the newly formed property funds; ProLogis North American Industrial
Fund II (see note 5), ProLogis Mexico Industrial Fund and ProLogis
European Properties Fund II. Each of these contributions included a
portfolio of assets that were acquired with the intention of
contributing to future property funds at or slightly above our
acquisition cost. We have segregated the proceeds and costs and
included them in Acquired Property Portfolios in our Statements of
Earnings and FFO.
(10) When we contribute a property to an entity in which we have an
ownership interest, we do not recognize a portion of the proceeds in
our computation of the gain resulting from the contribution. The
amount of the proceeds that we defer is based on our continuing
ownership interest in the contributed property that arises due to our
ownership interest in the entity acquiring the property. We defer
this portion of the proceeds by recognizing a reduction to our
investment in the applicable unconsolidated investee. We adjust our
proportionate share of the earnings or losses that we recognize under
the equity method in later periods to reflect the entity's
depreciation expense as if the depreciation expense was computed on
our lower basis in the contributed assets rather than on the entity's
basis in the contributed assets. If a loss results when a property is
contributed, the entire loss is recognized when it is known.
When a property that we originally contributed to an unconsolidated
investee is disposed of to a third party, we recognize a gain during
the period that the disposition occurs related to the proceeds we had
previously deferred, in addition to our proportionate share of the
gain or loss recognized by the entity. Further, during periods when
our ownership interest in an unconsolidated investee decreases, we
recognize gains to the extent that proceeds were previously deferred
to coincide with our new ownership interest in the unconsolidated
investee.
As of September 30, 2007, the cumulative gross proceeds that we have
not recognized in computing gains was $456.5 million on CDFS property
dispositions and $79.2 million on non-CDFS property dispositions.
(11) On January 4, 2006, we purchased the 80% ownership interests in each
of ProLogis North American Properties Funds II, III and IV
(collectively "Funds II-IV") from our fund partner. On March 1, 2006,
we contributed substantially all of the assets and associated
liabilities to the ProLogis North American Industrial Fund, which was
formed in February 2006. In connection with these transactions, we
recognized the following amounts in the respective financial
statement line items, during the first quarter of 2006 (in thousands)
after deferral of $17.9 million, due to our continuing ownership
interest in the ProLogis North American Industrial Fund:
Statements of Statements of
Earnings FFO
CDFS disposition proceeds - developed
and repositioned properties (a) $12,492 $12,958
Property management and other fees and
incentives (b) $21,958 $21,958
Earnings from unconsolidated property
funds (c) $37,113 $27,916
(a) Represents the recognition of the proceeds that we had previously
deferred as part of CDFS proceeds upon the initial contributions of
the properties to Funds II-IV.
(b) Represents an incentive return we earned due to certain return
levels achieved by our fund partner upon the termination of Funds
II-IV.
(c) Represents our proportionate share of the gain on termination
recognized by Funds II-IV on a depreciated basis (earnings) and on
an undepreciated basis (FFO).
(12) During the first quarter of 2007, we recorded $8.0 million of
employee departure costs, including $5.0 million related to the
departure of our Chief Financial Officer in March 2007 and $3.0
million related to employees whose responsibilities became redundant
after the acquisition of Parkridge (see note 3).
(13) During the second quarter of 2007, we recognized an impairment charge
of $12.6 million related to certain properties in our property
operations segment.
(14) The following table presents the components of interest expense (in
thousands). The increase in interest expense before capitalization is
primarily the result of increased debt levels due to the acquisitions
of Parkridge and MPR and property acquisitions, as well as our
increased development activities, which also accounts for the
increase in capitalized interest.
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Gross interest expense $137,262 $101,859 $370,138 $291,826
Net premium recognized (1,126) (3,471) (6,813) (10,574)
Amortization of deferred
loan costs 2,536 2,124 7,827 5,482
Interest expense before
capitalization 138,672 100,512 371,152 286,734
Less: capitalized amounts (30,708) (23,095) (83,897) (69,801)
Net interest expense 107,964 77,417 287,255 216,933
(15) In addition to contributions of CDFS properties, we occasionally
contribute properties from our property operations segment to
unconsolidated property funds in which we have continuing interests
through our equity ownership. During the third quarter of 2007, we
contributed 11 such properties to ProLogis Mexico Industrial Fund, as
well as recognized previously deferred proceeds related to properties
sold to a third party by a property fund. During the second quarter
of 2007, we contributed 66 properties to ProLogis North American
Industrial Fund. During the nine months ended September 30, 2006, we
contributed 12 properties to unconsolidated property funds. The gains
related to the dispositions of properties from our property
operations segment are included in earnings but are not included in
our calculation of FFO.
(16) Foreign currency exchange gains and losses that are recognized as a
component of net earnings generally result from: (i) remeasurement
and/or settlement of certain debt transactions between us and our
foreign consolidated subsidiaries and foreign unconsolidated
investees (depending on the type of loan, the currency in which the
loan is denominated and the form of our investment); (ii)
remeasurement and/or settlement of certain third party debt of our
foreign consolidated subsidiaries (depending on the currency in which
the loan is denominated); and (iii) mark-to-market adjustments
related to derivative financial instruments utilized to manage
foreign currency risks. We generally exclude these types of foreign
currency exchange gains and losses from our defined FFO measure and
also from our computation of EBITDA.
Foreign currency exchange gains and losses that result from
transactions (including certain intercompany debt and equity
investments) that are settled in a currency other than the reporting
entity's functional currency and from the settlement of derivative
financial instruments utilized to manage foreign currency risks are
included in our defined FFO measure and in our computation of EBITDA.
(17) Current income tax is generally a function of the level of income
recognized by our taxable subsidiaries operating primarily in the
CDFS business segment, state income taxes, taxes incurred in foreign
jurisdictions and interest associated with our income tax
liabilities. Deferred income tax is generally a function of the
period's temporary differences (items that are treated differently
for tax purposes than for financial reporting purposes), the
utilization of tax net operating losses generated in prior years that
had been previously recognized as deferred tax assets and deferred
tax liabilities related to indemnification agreements related to
contributions to certain property funds.
In connection with purchase accounting, we record all of the acquired
assets and liabilities at the estimated fair values at the date of
acquisition. For our taxable subsidiaries, we generally recognize the
deferred tax liabilities that represent the tax effect of the
difference between the tax basis carried over and the fair values of
these assets at the date of acquisition. As taxable income is
generated in these subsidiaries, we recognize a deferred tax benefit
in earnings as a result of the reversal of the deferred tax liability
previously recorded at the acquisition date and we record current
income tax expense representing the entire current income tax
liability. In our calculation of FFO, we only include the current
income tax expense to the extent the associated income is recognized
for financial reporting purposes.
(18) Properties disposed of to third parties are considered to be
discontinued operations unless such properties were developed under a
pre-sale agreement. During the nine months ended September 30, 2007,
we disposed of 71 such properties to third parties, four of which
were CDFS, as well as land subject to a ground lease.
The operations of the properties disposed of to third parties during
2007 and the aggregate gains recognized upon their dispositions are
presented as discontinued operations in our Consolidated Statements
of Earnings for all periods presented. In addition, the operations of
89 properties disposed of during 2006 (15 of which were CDFS business
assets) are presented as discontinued operations. As of September 30,
2007 and December 31, 2006, we had one property and eight properties,
respectively, that were classified as held for sale and accordingly,
the operations of these properties are included in discontinued
operations and the respective assets and liabilities are presented
separately in our Consolidated Balance Sheets. Interest expense
included in discontinued operations represents interest directly
attributable to these properties.
The components that are presented as discontinued operations
(excluding the gains recognized upon disposition) are as follows (in
thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Rental income $549 $11,412 $7,066 $50,316
Rental expenses (213) (2,724) (2,970) (22,534)
Depreciation and amortization (7) (2,087) (2,240) (9,148)
Interest expense - - - (874)
$329 $6,601 $1,856 $17,760
For purposes of our Consolidated Statements of FFO, we do not
segregate discontinued operations. In addition, in the calculation of
FFO we include the CDFS disposition proceeds and the cost of CDFS
dispositions for all CDFS properties disposed of during the period,
including those classified as discontinued operations.
(19) We report our investments in the property funds, CDFS joint ventures
and other unconsolidated investees under the equity method. For
purposes of calculating FFO and EBITDA, the net earnings of each of
our unconsolidated investees is adjusted to be consistent with our
calculation of these measures.
(20) Consists primarily of adjustments to the amounts we recognize under
the equity method that are necessary to recognize the amount of gains
not recognized at the contribution date due to the deferral of
certain proceeds based on our ownership interest in the
unconsolidated investee acquiring the property. See note 10. In
addition, this amount represents the adjustment to the amounts
we recognize under the equity method on dispositions made by the
unconsolidated investees to reflect the gain on sale on an
undepreciated basis for FFO.
(21) Effective January 1, 2007, we implemented Financial Accounting
Standards Board Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes -- an Interpretation of FASB Statement No. 109" ("FIN
48"), which resulted in an increase to our income tax liabilities and
a reduction to the January 1, 2007 balance of Retained Earnings of
$9.3 million.
SOURCE ProLogis
Released October 25, 2007