UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 20, 2016

PROLOGIS, INC.
PROLOGIS, L.P.
(Exact name of registrant as specified in charter)

 

 

Registrants’ Telephone Number, including Area Code: (415) 394-9000

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

 

 

 

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On October 20, 2016, Prologis, Inc., the general partner of Prologis, L.P., issued a press release announcing third quarter 2016 financial results. A copy of the supplemental information as well as the press release is furnished with this report as Exhibit 99.1 and Exhibit 99.2, respectively, and is incorporated herein by reference.

The information in this report and the exhibits attached hereto is being furnished, not filed, for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and pursuant to Items 2.02 and 7.01 of Form 8-K will not be incorporated by reference into any filing under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit Index

 

 

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Prologis Supplemental Information Unaudited Third Quarter 2016

Table of Contents Highlights 1Company Profile 3Company Performance 5Guidance Financial Information 6Consolidated Balance Sheets 7Consolidated Statements of Income 8Reconciliations of Net Earnings to FFO 9Reconciliations of Net Earnings to EBITDA Strategic Capital 10 Summary and Financial Highlights Operating and Balance Sheet Information of the Unconsolidated Co-Investment Ventures Non-GAAP Pro-rata Financial Information Operations 13Overview 14Operating Metrics 16Operating Portfolio 19Customer Information Capital Deployment 20Overview 21Development Stabilizations 22Development Starts 23Development Portfolio 24Third Party Building Acquisitions 25Dispositions and Contributions 26Land Portfolio Capitalization 28Overview 29Debt Components - Consolidated 30Debt Components - Unconsolidated and Noncontrolling Interests Net Asset Value 31Components Notes and Definitions 33Notes and Definitions (A) Cover: Prologis Park Pineham, Northampton, UK (A) Terms used throughout document are defined in the Notes and Definitions

* This is a non-GAAP financial measure, please see our Notes and Definitions for further explanation. (A) NOI calculation based on Prologis share of the Operating Portfolio. Company Profile Highlights Prologis, Inc., is the global leader in logistics real estate with a focus on high-barrier, high-growth markets. As of September 30, 2016, the company owned or had investments in, on a wholly owned basis or through co-investment ventures, properties and development projects expected to total approximately 665 million square feet (62 million square meters) in 20 countries. Prologis leases modern distribution facilities to a diverse base of approximately 5,200 customers across two major categories: business-to-business and retail/online fulfillment. Asia 56 MSF 4% of NOI*(A) U.S. 376 MSF 71% of NOI*(A) Other Americas 55 MSF 7% of NOI*(A) Europe 178 MSF 18% of NOI*(A) 5,200 Customers 665M Square Feet 3,300 Buildings 1

* This is a non-GAAP financial measure, please see our Notes and Definitions for further explanation. 3Q 2016 Prologis share of NOI of the operating portfolio annualized. 3Q 2016 third-party share of asset management fees annualized plus trailing twelve month third-party share of transaction fees and net promotes. Prologis share of trailing twelve month estimated value creation from development starts. Mexico is included in the U.S. as it is U.S. dollar functional. Highlights $1.8B in annual NOI*(A) Operations $235M of fees and promotes(B) Strategic Capital Prologis Share AUM $41B(D) Net Equity $29B(D) Gross AUM $68B(D) 2 $312M in value from starts annually(C) Development Company Profile

* This is a non-GAAP financial measure, please see our Notes and Definitions for further explanation. (A) Includes value creation from value added conversions, which was $29 million in Q3 2015. Company Performance Highlights 3

* This is a non-GAAP financial measure, please see our Notes and Definitions for further explanation. Company Performance Highlights 4 (in millions)

* This is a non-GAAP financial measure, please see our Notes and Definitions for further explanation. The difference between Core FFO and Net Earnings predominately relates to real estate depreciation, gains or losses on real estate transactions, acquisition expenses and early extinguishment of debt. See the Notes and Definitions for more information. Net promote guidance is $0.15 per share. Earnings guidance includes potential future gains (losses) recognized from real estate transactions, but exclude future foreign currency or derivative gains or losses as these items are difficult to predict. Guidance Highlights 5

Consolidated Balance Sheets Financial Information 6

Consolidated Statements of Income Financial Information 7

* This is a non-GAAP financial measure, please see our Notes and Definitions for further explanation. Reconciliations of Net Earnings to FFO Financial Information 8

* This is a non-GAAP financial measure, please see our Notes and Definitions for further explanation. Reconciliations of Net Earnings to EBITDA Financial Information 9

Values represent the entire venture at 100%, not Prologis proportionate share. Values are presented at Prologis’ adjusted basis derived from the ventures’ U.S. GAAP information and may not be comparable to values reflected in the ventures’ stand alone financial statements calculated on a different basis. Throughout this document we use the most recent public information for these co-investment ventures. Summary and Financial Highlights Strategic Capital 10

Operating and Balance Sheet Information of the Unconsolidated Co-Investment Ventures (at 100%) (A) Strategic Capital 11 * This is a non-GAAP financial measure, please see our Notes and Definitions for further explanation. Values represent the entire venture at 100%, not Prologis proportionate share. Values are presented at Prologis’ adjusted basis derived from the ventures’ U.S. GAAP information and may not be comparable to values reflected in the ventures’ stand alone financial statements calculated on a different basis.

This is a non-GAAP financial measure, please see our Notes and Definitions for further explanation. See our Notes and Definitions for further explanation of how these amounts are calculated. Represents noncontrolling interests share of Prologis’ Consolidated Financial Statements. Represents Prologis’ share of unconsolidated co-investment ventures. This balance includes the deferred portion of gains on the contribution of our properties to the ventures, net of any additional costs included in our investment in the venture. Non-GAAP Pro-rata Financial Information (A) Strategic Capital 12

* This is a non-GAAP financial measure, please see our Notes and Definitions for further explanation Overview – Owned and Managed Operations 13

Operating Metrics – Owned and Managed Operations 14

* This is a non-GAAP financial measure, please see our Notes and Definitions for further explanation. Operating Metrics – Owned and Managed Operations 15 98% Occupancy

Operating Portfolio – Square Feet, Occupied and Leased Operations 16

* This is a non-GAAP financial measure, please see our Notes and Definitions for further explanation. Operating Portfolio – NOI and Gross Book Value Operations 17

* This is a non-GAAP financial measure, please see our Notes and Definitions for further explanation. Operating Portfolio – Summary by Division Operations 18

Customer Information – Owned and Managed Operations 19

Overview – Prologis Share Capital Deployment Est Value Creation $ 224 $ 277 $ 347 $ 380 $198 Outside the U.S. U.S. 20 (in millions) Wtd avg est stabilized yield 7.8% 7.8% 7.5% 7.3% 6.9% Est Value Creation $148 $372 $236 $533 $410

Development Stabilizations Capital Deployment 21

Development Starts Capital Deployment 22

Development Portfolio Capital Deployment 23

Third Party Building Acquisitions Capital Deployment 24

Dispositions and Contributions Capital Deployment 25

Land Portfolio – Owned and Managed Capital Deployment 26

Land Portfolio – Summary and Roll Forward Capital Deployment 27 (A) Amounts include approximately 1,500 acres that we currently control through options, ground leases, unconsolidated joint ventures and other contractual arrangements.

* This is a non-GAAP financial measure, please see our Notes and Definitions for further explanation. Mexico is included in the U.S. as it is U.S. dollar functional. This includes the currencies in Europe in which we operate, predominately Euro and GBP. These calculations are included in the Notes and Definitions section, and are not calculated in accordance with the applicable SEC rules. A securities rating is not a recommendation to buy, sell or hold securities and is subject to revision or withdrawal at any time by the rating organization. Overview Capitalization Assets Under Management (dollars in millions) Total Enterprise Value Assets Under Management Total AUM by Division Market Equity 28 Yen 20%

The maturity of our credit facilities and certain term loan debt ($421.9 million) is reflected at the extended maturity date as the extension is at our option. We hedge the net assets of certain international subsidiaries using foreign currency forward contracts, including those that are accounted for as net investment hedges, to economically reduce our exposure to fluctuations in foreign currency rates. The effect is to essentially exchange U.S. dollar denominated debt as reflected in the table under Investment Hedges. See also page 28 for our net equity exposure by currency. Debt Components- Consolidated Capitalization 29

Refer to Notes and Definitions under Non-GAAP Pro-Rata Financial Information for further explanation on how these amounts are calculated. The maturity of certain unsecured debt (Prologis share $261.8 million) is reflected at the extended maturity date as the extension is at the entity’s option. We hedge the net assets of certain international ventures using foreign currency forward contracts, including those that are accounted for as net investment hedges, to economically reduce our exposure to fluctuations in foreign currency rates. The effect is to essentially exchange U.S. dollar denominated debt as reflected in the table under Investment Hedges. See also page 28 for our net equity exposure by currency. Debt Components- Unconsolidated and Noncontrolling Interests (A) Capitalization 30

* This is a non-GAAP financial measure, please see our Notes and Definitions for further explanation. Components – Prologis Share Net Asset Value 31

Components - Continued Net Asset Value 32

Notes and Definitions Section 1

Notes and Definitions 34

(continued) Notes and Definitions 35

(continued) Notes and Definitions 36

(continued) Notes and Definitions 37

(continued) Notes and Definitions 38

(continued) Notes and Definitions 39

(continued) Notes and Definitions 40

(continued) Notes and Definitions 41

 

 

For Immediate Release

 

 

Prologis Reports Third Quarter 2016 Earnings Results

 

SAN FRANCISCO (October 20, 2016) – Prologis, Inc. (NYSE: PLD), the global leader in logistics real estate, today reported results for the third quarter of 2016.

Net earnings per share was $0.52 compared with $0.49 for the same period in 2015. The year-over-year increase is due primarily to improved operating performance and higher net promote income offset by lower gains from the disposition of real estate. Core funds from operations per diluted share* was $0.73 compared with $0.58 for the same period in 2015. The 26% year-over-year increase reflects improved operating performance and higher net promote income.

“This was another excellent quarter for Prologis, resulting from our well-located portfolio, favorable secular trends and the laser focus of the team,” said Hamid R. Moghadam, chairman and CEO, Prologis. “Our portfolio and financial position have never been stronger and we are very confident in our prospects for earnings growth going forward.”

Moghadam added: “Customers continue to invest in their supply chains to improve efficiencies. Their requirements for logistics facilities are matching up very well with our properties’ locations and functional characteristics. In the third quarter, we saw broad-based demand across customer segments, led by e-commerce, automotive, consumer products and construction supplies.”

OPERATING RESULTS STRONG ACROSS THE BOARD

 

 

*This is a non-GAAP financial measure. See the Notes and Definitions in our supplemental information for further explanation and a reconciliation to the most directly comparable GAAP measure.

 

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DEVELOPMENT STABILIZATION AND CAPITAL RECYCLING ACTIVITY ON TRACK FOR RECORD PERFORMANCE

 

 

CAPITAL MARKETS ACTIVITY BENEFITS FROM ACCESS TO GLOBAL CAPITAL

Prologis ended the quarter with liquidity of $3.8 billion. During the third quarter, the company and its co-investment ventures completed $1.3 billion of financings, including a ¥120 billion loan.  

“The $1.2 billion yen transaction we completed in the quarter to refinance three older loans is a great example of our ability to source capital globally at attractive rates,” said Thomas S. Olinger, chief financial officer, Prologis. “This new facility has a current interest rate of 65 basis points and a term of approximately seven years.”

GUIDANCE INCREASED FOR 2016

Net earnings guidance increased $0.13 at the midpoint, primarily a result of improved operations and higher gains from the disposition of real estate.

“Market fundamentals continued to exceed our expectations in the third quarter,” Olinger said. “As a result of outperformance from operations we are increasing the midpoint of our full-year guidance ranges for earnings and net effective same store NOI*. The earnings increase reflects net earnings growth of 17 percent and Core FFO* growth of 15 percent including promotes and 11 percent excluding promotes. During this same period, we have further strengthened our balance sheet and increased liquidity.”

 

Earnings (per diluted share)PreviousRevised

 

OperationsPreviousRevised

 

*This is a non-GAAP financial measure. See the Notes and Definitions in our supplemental information for further explanation and a reconciliation to the most directly comparable GAAP measure.

 

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Other Assumptions (in millions)PreviousRevised

 

 

Capital Deployment (in millions)PreviousRevised

The earnings guidance described above includes potential future gains (losses) recognized from real estate transactions but excludes any future foreign currency or derivative gains or losses as these items are difficult to predict. In reconciling from net earnings to Core FFO*, Prologis makes certain adjustments, including but not limited to real estate depreciation and amortization expense, gains (losses) recognized from real estate transactions and early extinguishment of debt, acquisition costs, impairment charges, deferred taxes and unrealized gains or losses on foreign currency or derivative activity. The difference between the company's Core FFO* and net earnings guidance for 2016 relates predominantly to these items. Please refer to our third quarter Supplemental Information, which is available on our Investor Relations website at www.ir.prologis.com and on the SEC’s website at www.sec.gov for a definition of Core FFO* and other non-GAAP measures used by Prologis, along with reconciliations of these items to the closest GAAP measure for our results and guidance.

WEBCAST & CONFERENCE CALL INFORMATION
Prologis will host a live webcast and conference call to discuss quarterly results, current market conditions and future outlook. Here are the event details:

A telephonic replay will be available October 20-27 at +1 (855) 859-2056 (from the United States and Canada) or +1 (404) 537-3406 (from all other countries) using conference code 81585906. The webcast replay will be posted when available in the Investor Relations “Events & Presentations” section.

*This is a non-GAAP financial measure. See the Notes and Definitions in our supplemental information for further explanation and a reconciliation to the most directly comparable GAAP measure.

 

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ABOUT PROLOGIS
Prologis, Inc. is the global leader in logistics real estate with a focus on high-barrier, high-growth markets. As of September 30, 2016, the company owned or had investments in, on a wholly owned basis or through co-investment ventures, properties and development projects expected to total approximately 665 million square feet (62 million square meters) in 20 countries. Prologis leases modern distribution facilities to a diverse base of approximately 5,200 customers across two major categories: business-to-business and retail/online fulfillment.

FORWARD-LOOKING STATEMENTS
The statements in this document 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 we operate as well as management’s beliefs and assumptions. Such statements involve uncertainties that could significantly impact our financial results. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and 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 properties, disposition activity, general conditions in the geographic areas where we operate, our debt, capital structure and financial position, our ability to form new co-investment ventures and the availability of capital in existing or new co-investment ventures — 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, dispositions and development of properties, (v) maintenance of real estate investment trust status, tax structuring and income tax rates (vi) availability of financing and capital, the levels of debt that we maintain and our credit ratings, (vii) risks related to our investments in our co-investment ventures, including our ability to establish new co-investment ventures and funds, (viii) risks of doing business internationally, including currency risks, (ix) environmental uncertainties, including risks of natural disasters, and (x) those additional factors discussed in reports filed with the Securities and Exchange Commission by us under the heading “Risk Factors.” We undertake no duty to update any forward-looking statements appearing in this document.

CONTACTS

Investors: Tracy Ward, Tel: +1 415 733 9565, [email protected], San Francisco

Media: Jason Golz, Tel: +1 415 733 9439, [email protected], San Francisco

 

 

*This is a non-GAAP financial measure. See the Notes and Definitions in our supplemental information for further explanation and a reconciliation to the most directly comparable GAAP measure.

 

SEC Filings

BTIG Positive on Prologis (PLD) Following 'Beat-and-Raise' QuarterOctober 20, 2016 11:36 AM