Unconsolidated Entities (Tables)

9 Months Ended

Sep. 30, 2012

Summary of Investments

Our investments in and advances to our unconsolidated entities are summarized below (in thousands):

	September 30,		December 31,
	2012		2011
Unconsolidated co-investment ventures	$	1,965,734	$	2,471,179
Other joint ventures		276,341		386,576
Totals	$	2,242,075	$	2,857,755

Earnings on Investments in Co-Investment Ventures

Summarized information regarding our investments in the co-investment ventures is as follows (in thousands):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2012			2011		2012			2011
Earnings (loss) from unconsolidated co-investment ventures:
Americas (1)	$	(3,912	)	$	18,931	$	(8,378	)	$	23,557
Europe		5,858			8,706		21,027			23,478
Asia		432			218		2,640			1,387
Total earnings from unconsolidated co-investment ventures, net	$	2,378		$	27,855	$	15,289		$	48,422
Private capital revenue and other income:
Americas	$	16,937		$	19,291	$	50,541		$	45,405
Europe		9,546			8,612		28,008			35,743
Asia		5,131			4,808		14,973			7,344
Total private capital revenue		31,614			32,711		93,522			88,492
Development management and other income		106			—		184			5,943
Total	$	31,720		$	32,711	$	93,706		$	94,435

(1) During the three and nine months ended September 30, 2012, we recorded losses of $1.3 million and $2.1 million representing our share of the disposal of the remaining properties in one of our ventures. Also included in the nine months ended September 30, 2012, is a $5.0 million loss representing our share of a loss from the early extinguishment of debt in Prologis North American Industrial Fund III (“Prologis NAIII”). During the three and nine months ended September 30, 2011, we recorded a gain of $13.9 million for our share of the gain on disposal of 13 properties in one of our ventures.

Investments in Co-Investment Ventures by Region

Information about our investments in the co-investment ventures is as follows (dollars in thousands):

	Weighted Average Ownership Percentage						Investment in and Advances to
	September 30,			December 31,			September 30,		December 31,
Unconsolidated co-investment ventures by region	2012			2011			2012		2011
Americas		23.9	%		28.2	%	$	1,119,855	$	1,596,295
Europe		30.0	%		29.9	%		648,397		662,010
Asia		19.3	%		19.4	%		197,482		212,874
Totals		25.5	%		27.9	%	$	1,965,734	$	2,471,179

Summarized Financial Information of Co-Investment Ventures

Summarized financial information of the co-investment ventures (for the entire entity, not our proportionate share) and our investment in such ventures is presented below (dollars in millions):

2012	Americas			Europe			Asia			Total
For the three months ended September 30, 2012 (1):
Revenues	$	184.8		$	115.5		$	36.0		$	336.3
Net earnings (loss)	$	(16.7	)	$	13.8		$	4.2		$	1.3
For the nine months ended September 30, 2012 (1):
Revenues	$	581.0		$	361.4		$	105.8		$	1,048.2
Net earnings (loss) (2)	$	(54.8	)	$	61.8		$	8.9		$	15.9
As of September 30, 2012:
Total assets	$	9,285.7		$	6,254.8		$	2,097.7		$	17,638.2
Amounts due to us (3)	$	23.4		$	4.5		$	8.0		$	35.9
Third party debt (4)	$	3,891.4		$	2,286.6		$	1,060.8		$	7,238.8
Total liabilities	$	4,212.6		$	2,815.2		$	1,161.7		$	8,189.5
Noncontrolling interest	$	1.6		$	6.8		$	—		$	8.4
Venture partners’ equity	$	5,071.5		$	3,432.8		$	936.0		$	9,440.3
Our weighted average ownership (5)		23.9	%		30.0	%		19.3	%		25.5	%
Our investment balance (6)	$	1,119.8		$	648.4		$	197.5		$	1,965.7
Deferred gains, net of amortization (7)	$	154.2		$	180.8		$	—		$	335.0
2011	Americas			Europe			Asia			Total
For the three months ended September 30, 2011 (1):
Revenues	$	256.5		$	123.2		$	38.2		$	417.9
Net earnings (loss) (8)	$	27.3		$	26.3		$	(3.5	)	$	50.1
For the nine months ended September 30, 2011 (1):
Revenues	$	624.9		$	482.9		$	56.3		$	1,164.1
Net earnings (loss) (8)	$	(2.6	)	$	64.1		$	1.1		$	62.6
As of December 31, 2011:
Total assets	$	12,236.0		$	6,211.8		$	2,245.1		$	20,692.9
Amounts due to us (3)	$	59.5		$	8.1		$	9.3		$	76.9
Third party debt (4)	$	5,952.8		$	2,275.8		$	1,061.4		$	9,290.0
Total liabilities	$	6,386.4		$	2,758.9		$	1,174.0		$	10,319.3
Noncontrolling interest	$	1.7		$	6.2		$	—		$	7.9
Venture partners’ equity	$	5,847.9		$	3,446.7		$	1,071.1		$	10,365.7
Our weighted average ownership (5)		28.2	%		29.9	%		19.4	%		27.9	%
Our investment balance (6)	$	1,596.3		$	662.0		$	212.9		$	2,471.2
Deferred gains, net of amortization (7)	$	227.6		$	191.0		$	0.1		$	418.7

(1) During the first quarter of 2012, we began consolidating two of our co-investment ventures in the Americas whose results are included through the transaction date. During the nine months ended September 30, 2011, amounts include approximately five months of activity, respectively, for PEPR while accounted for on the equity method and approximately four months of activity from the investments acquired through the Merger. See Note 2 for more details of these transactions.

(2) In 2012, one of our ventures in the Americas recorded a $10.7 million loss on the disposition of the remaining properties in this venture to third parties. During the second quarter of 2012, Prologis NAIII settled debt before maturity by transferring the secured properties to the lender in lieu of payment and triggered the write-off of the related derivative balance in other comprehensive income of $25.1 million (Prologis share was $5.0 million).

(3) At December 31, 2011, we had notes receivable aggregating $41.2 million from Prologis NAIII ($21.4 million) and Prologis SGP Mexico ($19.8 million). In February 2012, Prologis NAIII restructured the loan payable to us and our partner into equity according to our ownership percentages. As of September 30, 2012, we have one note receivable from Prologis SGP Mexico of $19.7 million. The remaining amounts represent current balances from services provided by us to the co-investment ventures.

(4) As discussed in Note 2, debt was reduced by $1.4 billion related to the consolidation of two unconsolidated co-investment ventures during the first quarter of 2012. As of September 30, 2012 and December 31, 2011, we guaranteed $28.4 million and $28.0 million, respectively, of the third party debt of certain unconsolidated ventures. As of December 31, 2011, we had pledged properties included in our Real Estate Operations segment with an undepreciated cost of approximately $277.0 million, to serve as additional collateral for the secured mortgage loan of NAIF II payable to an affiliate of our venture partner. In connection with the acquisition of our partner’s interest in February 2012, we repaid this loan, and these assets are no longer pledged.

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

(6) The difference between our ownership interest of the venture’s equity and our investment balance results principally from three types of transactions: (i) deferring a portion of the gains we recognize from a contribution of one of our properties to the venture (see next footnote); (ii) recording additional costs associated with our investment in the venture; and (iii) advances to the venture.

(7) This amount is recorded as a reduction to our investment and represents the gains that were deferred when we contributed a property to a venture due to our continuing ownership in the property.

(8) Included in 2011 is a gain of $33.6 million (Prologis share $13.9 million) from the disposition of 13 properties by one of our ventures in the Americas.

Summary of Remaining Equity Commitments

The following table is a summary of remaining equity commitments as of September 30, 2012 (in millions):

	Equity commitments		Expiration date for remaining commitments
Prologis Targeted U.S. Logistics Fund (1)
Prologis	$	—	Open-Ended (1)
Venture Partners	$	82.5
Prologis SGP Mexico (2)
Prologis	$	24.6	(2)
Venture Partner	$	98.1
Europe Logistics Venture 1 (3)
Prologis	$	72.5	February 2014
Venture Partner	$	410.7
Prologis China Logistics Venture 1
Prologis	$	71.0	March 2015
Venture Partner	$	402.1
Total
Prologis	$	168.1
Venture Partners	$	993.4

(1) We secured $265.5 million in commitments from third parties in 2012 in order to fund future acquisitions from us and third parties that meet the venture’s investment strategy, or to pay down existing debt. During the nine month ended September 30, 2012, the venture called capital of $183.0 million from these investors primarily to pay down existing debt.

(2) These equity commitments will be called only if needed to pay outstanding debt of the venture. The relevant debt was due in the third quarter of 2012, which was automatically extended until the third quarter of 2013. There is also an option to extend until the third quarter of 2014.

(3) Equity commitments are denominated in euro and reported above in U.S. dollar. During the third quarter of 2012, this venture called capital of €25.0 million ($32.2 million) of which €3.8 million ($4.8 million) represented our share, for the acquisition of one building from a third party. During the first quarter of 2012, this venture acquired two buildings from a third party with proceeds from commitments previously called and one building that was contributed by us with capital called during the quarter of €13.0 million ($17.2 million) of which €2.0 million ($2.6 million) represented our share.

Other Joint Ventures, Investment in and Advances to by Region

Our investments in and advances to these entities are as follows (in thousands):

	September 30, 2012		December 31, 2011
Americas (1)	$	194,014	$	305,352
Europe		52,013		50,474
Asia		30,314		30,750
Total investments in and advances to other joint ventures	$	276,341	$	386,576

(1) During the second quarter of 2012, we received $95.0 million, which represented a return of capital from one of our joint ventures that held a note receivable that was repaid in full during the quarter.