0001564590-18-024639.txt : 20181022 0001564590-18-024639.hdr.sgml : 20181022 20181022170635 ACCESSION NUMBER: 0001564590-18-024639 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 106 CONFORMED PERIOD OF REPORT: 20180930 FILED AS OF DATE: 20181022 DATE AS OF CHANGE: 20181022 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Prologis, Inc. CENTRAL INDEX KEY: 0001045609 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 943281941 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13545 FILM NUMBER: 181132767 BUSINESS ADDRESS: STREET 1: PIER 1 BAY 1 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4153949000 MAIL ADDRESS: STREET 1: PIER 1 BAY 1 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 FORMER COMPANY: FORMER CONFORMED NAME: AMB PROPERTY CORP DATE OF NAME CHANGE: 19970916 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Prologis, L.P. CENTRAL INDEX KEY: 0001045610 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 943285362 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-14245 FILM NUMBER: 181132766 BUSINESS ADDRESS: STREET 1: PIER 1 BAY 1 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4153949000 MAIL ADDRESS: STREET 1: PIER 1 BAY 1 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 FORMER COMPANY: FORMER CONFORMED NAME: AMB PROPERTY LP DATE OF NAME CHANGE: 19980421 10-Q 1 pld-10q_20180930.htm 10-Q pld-10q_20180930.htm

 

 

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 September 30, 2018

 

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)

 

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 (check one):

 

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 October 18, 2018, was approximately 629,530,000.

 

 

 

 


 

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended September 30, 2018, 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 September 30, 2018, the Parent owned 97.07% common general partnership interest in the OP and 100% of the preferred units in the OP. The remaining 2.93% 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 Parent itself does not incur any indebtedness, but it guarantees the unsecured debt of the OP. 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 – September 30, 2018 and December 31, 2017

 

1

 

 

 

 

Consolidated Statements of Income – Three and Nine Months Ended September 30, 2018 and 2017

 

2

 

 

 

 

Consolidated Statements of Comprehensive Income – Three and Nine Months Ended September 30, 2018 and 2017

 

3

 

 

 

 

Consolidated Statement of Equity – Nine Months Ended September 30, 2018

 

3

 

 

 

 

Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2018 and 2017

 

4

 

 

 

            Prologis, L.P.:

 

 

 

 

 

 

Consolidated Balance Sheets – September 30, 2018 and December 31, 2017

 

5

 

 

 

 

Consolidated Statements of Income – Three and Nine Months Ended September 30, 2018 and 2017

 

6

 

 

 

 

Consolidated Statements of Comprehensive Income – Three and Nine Months Ended September 30, 2018 and 2017

 

7

 

 

 

 

Consolidated Statement of Capital – Nine Months Ended September 30, 2018

 

7

 

 

 

 

Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2018 and 2017

 

8

 

 

 

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

 

 

 

 

 

 

Notes to the Consolidated Financial Statements

 

9

 

 

 

 

Note 1. General

 

9

 

 

 

 

Note 2. DCT Transaction

 

11

 

 

 

 

Note 3. Real Estate

 

11

 

 

 

 

Note 4. Unconsolidated Entities

 

13

 

 

 

 

Note 5. Assets Held for Sale or Contribution

 

15

 

 

 

 

Note 6. Debt

 

15

 

 

 

 

Note 7. Noncontrolling Interests

 

17

 

 

 

 

Note 8. Long-Term Compensation

 

18

 

 

 

 

Note 9. Earnings Per Common Share or Unit

 

19

 

 

 

 

Note 10. Financial Instruments and Fair Value Measurements

 

20

 

 

 

 

Note 11. Business Segments

 

24

 

 

 

 

Note 12. 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

 

47

 

 

 

Item 4.

Controls and Procedures

 

48

 

PART II.

 

Other Information

 

 

 

 

 

Item 1.

Legal Proceedings

 

48

 

 

 

Item 1A.

Risk Factors

 

48

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

48

 

 

 

Item 3.

Defaults Upon Senior Securities

 

49

 

 

 

Item 4.

Mine Safety Disclosures

 

49

 

 

 

Item 5.

Other Information

 

49

 

 

 

Item 6.

Exhibits

 

49

 

 

 

 

 

 


 

PART I. FINANCIAL INFORMATION

 

ITEM 1. Financial Statements

 

PROLOGIS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

September 30, 2018

 

 

December 31,

 

 

(Unaudited)

 

 

2017

 

ASSETS

 

 

 

 

 

 

 

Investments in real estate properties

$

34,285,783

 

 

$

25,838,644

 

Less accumulated depreciation

 

4,451,434

 

 

 

4,059,348

 

Net investments in real estate properties

 

29,834,349

 

 

 

21,779,296

 

Investments in and advances to unconsolidated entities

 

5,618,178

 

 

 

5,496,450

 

Assets held for sale or contribution

 

761,575

 

 

 

342,060

 

Notes receivable backed by real estate

 

-

 

 

 

34,260

 

Net investments in real estate

 

36,214,102

 

 

 

27,652,066

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

275,562

 

 

 

447,046

 

Other assets

 

1,778,498

 

 

 

1,381,963

 

Total assets

$

38,268,162

 

 

$

29,481,075

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

Debt

$

11,232,129

 

 

$

9,412,631

 

Accounts payable and accrued expenses

 

873,412

 

 

 

702,804

 

Other liabilities

 

724,966

 

 

 

659,899

 

Total liabilities

 

12,830,507

 

 

 

10,775,334

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

Prologis, Inc. stockholders’ equity:

 

 

 

 

 

 

 

Series Q preferred stock at stated liquidation preference of $50 per share; $0.01 par value; 1,379

     shares issued and outstanding and 100,000 preferred shares authorized at September 30, 2018 and

          December 31, 2017, respectively

 

68,948

 

 

 

68,948

 

Common stock; $0.01 par value; 629,522 shares and 532,186 shares issued and outstanding at

     September 30, 2018 and December 31, 2017, respectively

 

6,295

 

 

 

5,322

 

Additional paid-in capital

 

25,674,657

 

 

 

19,363,007

 

Accumulated other comprehensive loss

 

(1,046,565

)

 

 

(901,658

)

Distributions in excess of net earnings

 

(2,672,736

)

 

 

(2,904,461

)

Total Prologis, Inc. stockholders’ equity

 

22,030,599

 

 

 

15,631,158

 

Noncontrolling interests

 

3,407,056

 

 

 

3,074,583

 

Total equity

 

25,437,655

 

 

 

18,705,741

 

Total liabilities and equity

$

38,268,162

 

 

$

29,481,075

 

 

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

 

 

 

1

 


 

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

$

476,865

 

 

$

416,427

 

 

$

1,331,315

 

 

$

1,304,271

 

Rental recoveries

 

 

132,109

 

 

 

114,755

 

 

 

378,281

 

 

 

370,221

 

Strategic capital

 

 

71,142

 

 

 

68,042

 

 

 

279,800

 

 

 

305,741

 

Development management and other

 

 

2,316

 

 

 

3,650

 

 

 

7,968

 

 

 

17,979

 

Total revenues

 

 

682,432

 

 

 

602,874

 

 

 

1,997,364

 

 

 

1,998,212

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

 

147,184

 

 

 

128,735

 

 

 

423,454

 

 

 

429,185

 

Strategic capital

 

 

35,390

 

 

 

35,996

 

 

 

114,100

 

 

 

119,781

 

General and administrative

 

 

62,244

 

 

 

57,656

 

 

 

182,287

 

 

 

171,350

 

Depreciation and amortization

 

 

252,702

 

 

 

201,903

 

 

 

660,456

 

 

 

656,639

 

Other

 

 

3,391

 

 

 

3,093

 

 

 

11,145

 

 

 

8,608

 

Total expenses

 

 

500,911

 

 

 

427,383

 

 

 

1,391,442

 

 

 

1,385,563

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

181,521

 

 

 

175,491

 

 

 

605,922

 

 

 

612,649

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from unconsolidated entities, net

 

 

56,634

 

 

 

55,066

 

 

 

181,839

 

 

 

172,267

 

Interest expense

 

 

(64,186

)

 

 

(64,190

)

 

 

(166,761

)

 

 

(212,456

)

Interest and other income, net

 

 

1,891

 

 

 

4,816

 

 

 

9,508

 

 

 

9,493

 

Gains on dispositions of investments in real estate and revaluation of equity

     investments upon acquisition of a controlling interest, net

 

 

194,058

 

 

 

779,053

 

 

 

483,430

 

 

 

959,384

 

Foreign currency and derivative gains (losses), net

 

 

21,513

 

 

 

(18,872

)

 

 

65,801

 

 

 

(46,327

)

Losses on early extinguishment of debt, net

 

 

(1,955

)

 

 

-

 

 

 

(2,657

)

 

 

(30,596

)

Total other income

 

 

207,955

 

 

 

755,873

 

 

 

571,160

 

 

 

851,765

 

Earnings before income taxes

 

 

389,476

 

 

 

931,364

 

 

 

1,177,082

 

 

 

1,464,414

 

Total income tax expense

 

 

13,956

 

 

 

17,947

 

 

 

44,612

 

 

 

42,328

 

Consolidated net earnings

 

 

375,520

 

 

 

913,417

 

 

 

1,132,470

 

 

 

1,422,086

 

Less net earnings attributable to noncontrolling interests

 

 

27,684

 

 

 

35,524

 

 

 

81,169

 

 

 

70,647

 

Net earnings attributable to controlling interests

 

 

347,836

 

 

 

877,893

 

 

 

1,051,301

 

 

 

1,351,439

 

Less preferred stock dividends

 

 

1,491

 

 

 

1,675

 

 

 

4,443

 

 

 

5,023

 

Net earnings attributable to common stockholders

 

$

346,345

 

 

$

876,218

 

 

$

1,046,858

 

 

$

1,346,416

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding – Basic

 

 

574,520

 

 

 

531,288

 

 

 

546,612

 

 

 

530,036

 

Weighted average common shares outstanding – Diluted

 

 

597,647

 

 

 

554,163

 

 

 

568,599

 

 

 

551,618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share attributable to common stockholders – Basic

 

$

0.60

 

 

$

1.65

 

 

$

1.92

 

 

$

2.54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share attributable to common stockholders – Diluted

 

$

0.60

 

 

$

1.63

 

 

$

1.90

 

 

$

2.51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends per common share

 

$

0.48

 

 

$

0.44

 

 

$

1.44

 

 

$

1.32

 

 

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

 

 

 

2

 


 

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Consolidated net earnings

 

$

375,520

 

 

$

913,417

 

 

$

1,132,470

 

 

$

1,422,086

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gains (losses), net

 

 

(10,316

)

 

 

4,061

 

 

 

(153,359

)

 

 

46,890

 

Unrealized gains on derivative contracts, net

 

 

4,454

 

 

 

6,091

 

 

 

298

 

 

 

15,457

 

Comprehensive income

 

 

369,658

 

 

 

923,569

 

 

 

979,409

 

 

 

1,484,433

 

Net earnings attributable to noncontrolling interests

 

 

(27,684

)

 

 

(35,524

)

 

 

(81,169

)

 

 

(70,647

)

Other comprehensive loss (income) attributable to noncontrolling interests

 

 

783

 

 

 

(576

)

 

 

8,154

 

 

 

(49,494

)

Comprehensive income attributable to common stockholders

 

$

342,757

 

 

$

887,469

 

 

$

906,394

 

 

$

1,364,292

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

PROLOGIS, INC.

CONSOLIDATED STATEMENT OF EQUITY

Nine Months Ended September 30, 2018

(Unaudited)

(In thousands)

 

 

 

 

 

 

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, 2018

$

68,948

 

 

 

532,186

 

 

$

5,322

 

 

$

19,363,007

 

 

$

(901,658

)

 

$

(2,904,461

)

 

$

3,074,583

 

 

$

18,705,741

 

Consolidated net earnings

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,051,301

 

 

 

81,169

 

 

 

1,132,470

 

Effect of equity compensation

     plans

 

-

 

 

 

1,157

 

 

 

11

 

 

 

21,625

 

 

 

-

 

 

 

-

 

 

 

38,149

 

 

 

59,785

 

DCT Transaction, net of

     issuance costs

 

-

 

 

 

96,179

 

 

 

962

 

 

 

6,321,667

 

 

 

-

 

 

 

-

 

 

 

293,286

 

 

 

6,615,915

 

Capital contributions

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

117,095

 

 

 

117,095

 

Redemption of noncontrolling

     interests

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,530

)

 

 

-

 

 

 

-

 

 

 

(47,884

)

 

 

(52,414

)

Foreign currency translation

     losses, net

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(145,196

)

 

 

-

 

 

 

(8,163

)

 

 

(153,359

)

Unrealized gains on derivative

     contracts, net

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

289

 

 

 

-

 

 

 

9

 

 

 

298

 

Reallocation of equity

 

-

 

 

 

-

 

 

 

-

 

 

 

(27,004

)

 

 

-

 

 

 

-

 

 

 

27,004

 

 

 

-

 

Distributions and other

 

-

 

 

 

-

 

 

 

-

 

 

 

(108

)

 

 

-

 

 

 

(819,576

)

 

 

(168,192

)

 

 

(987,876

)

Balance at September 30, 2018

$

68,948

 

 

 

629,522

 

 

$

6,295

 

 

$

25,674,657

 

 

$

(1,046,565

)

 

$

(2,672,736

)

 

$

3,407,056

 

 

$

25,437,655

 

 

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

 

 

 

3

 


 

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2018

 

 

2017

 

Operating activities:

 

 

 

 

 

 

 

 

Consolidated net earnings

 

$

1,132,470

 

 

$

1,422,086

 

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

 

 

 

 

 

 

 

 

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

 

 

(45,372

)

 

 

(66,234

)

Equity-based compensation awards

 

 

58,029

 

 

 

58,091

 

Depreciation and amortization

 

 

660,456

 

 

 

656,639

 

Earnings from unconsolidated entities, net

 

 

(181,839

)

 

 

(172,267

)

Operating distributions from unconsolidated entities

 

 

250,763

 

 

 

231,441

 

Decrease (increase) in operating receivables from unconsolidated entities

 

 

5,933

 

 

 

(19,530

)

Amortization of debt discounts (premiums), net and debt issuance costs

 

 

8,533

 

 

 

(1,585

)

Gains on dispositions of investments in real estate and revaluation of equity investments upon acquisition of a

    controlling interest, net

 

 

(483,430

)

 

 

(959,384

)

Unrealized foreign currency and derivative losses (gains), net

 

 

(73,120

)

 

 

55,646

 

Losses on early extinguishment of debt, net

 

 

2,657

 

 

 

30,596

 

Deferred income tax benefit

 

 

(1,079

)

 

 

(197

)

Decrease (increase) in accounts receivable and other assets

 

 

(77,275

)

 

 

76,170

 

Increase in accounts payable and accrued expenses and other liabilities

 

 

17,192

 

 

 

48,841

 

Net cash provided by operating activities

 

 

1,273,918

 

 

 

1,360,313

 

Investing activities:

 

 

 

 

 

 

 

 

Real estate development

 

 

(1,332,923

)

 

 

(1,095,623

)

DCT Transaction, net of cash acquired

 

 

(46,268

)

 

 

-

 

Real estate acquisitions

 

 

(508,655

)

 

 

(295,178

)

Tenant improvements and lease commissions on previously leased space

 

 

(91,194

)

 

 

(112,442

)

Property improvements

 

 

(62,473

)

 

 

(68,698

)

Proceeds from dispositions and contributions of real estate properties

 

 

1,307,534

 

 

 

2,354,547

 

Investments in and advances to unconsolidated entities

 

 

(117,005

)

 

 

(244,301

)

Acquisition of a controlling interest in an unconsolidated venture, net of cash received

 

 

-

 

 

 

(374,605

)

Return of investment from unconsolidated entities

 

 

175,600

 

 

 

143,604

 

Proceeds from repayment of notes receivable backed by real estate

 

 

34,260

 

 

 

32,100

 

Proceeds from the settlement of net investment hedges

 

 

3,370

 

 

 

7,541

 

Payments on the settlement of net investment hedges

 

 

(6,351

)

 

 

(5,058

)

Net cash provided by (used in) investing activities

 

 

(644,105

)

 

 

341,887

 

Financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

5,153

 

 

 

30,684

 

Dividends paid on common and preferred stock

 

 

(819,576

)

 

 

(707,260

)

Noncontrolling interests contributions

 

 

105,295

 

 

 

135,857

 

Noncontrolling interests distributions

 

 

(168,192

)

 

 

(132,004

)

Settlement of noncontrolling interests

 

 

(52,414

)

 

 

(790,016

)

Tax paid for shares withheld

 

 

(26,694

)

 

 

(19,626

)

Debt and equity issuance costs paid

 

 

(16,367

)

 

 

(7,020

)

Net payments on credit facilities

 

 

(490,307

)

 

 

(33,745

)

Repurchase of and payments on debt

 

 

(3,288,016

)

 

 

(2,728,198

)

Proceeds from issuance of debt

 

 

3,962,027

 

 

 

2,294,041

 

Net cash used in financing activities

 

 

(789,091

)

 

 

(1,957,287

)

 

 

 

 

 

 

 

 

 

Effect of foreign currency exchange rate changes on cash

 

 

(12,206

)

 

 

16,497

 

Net decrease in cash and cash equivalents

 

 

(171,484

)

 

 

(238,590

)

Cash and cash equivalents, beginning of period

 

 

447,046

 

 

 

807,316

 

Cash and cash equivalents, end of period

 

$

275,562

 

 

$

568,726

 

 

See Note 12 for information on noncash investing and financing activities and other information.

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

 

 

4

 


 

PROLOGIS, L.P.

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

 

 

 

 

 

 

 

September 30, 2018

 

 

December 31,

 

 

(Unaudited)

 

 

2017

 

ASSETS

 

 

 

 

 

 

 

Investments in real estate properties

$

34,285,783

 

 

$

25,838,644

 

Less accumulated depreciation

 

4,451,434

 

 

 

4,059,348

 

Net investments in real estate properties

 

29,834,349

 

 

 

21,779,296

 

Investments in and advances to unconsolidated entities

 

5,618,178

 

 

 

5,496,450

 

Assets held for sale or contribution

 

761,575

 

 

 

342,060

 

Notes receivable backed by real estate

 

-

 

 

 

34,260

 

Net investments in real estate

 

36,214,102

 

 

 

27,652,066

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

275,562

 

 

 

447,046

 

Other assets

 

1,778,498

 

 

 

1,381,963

 

Total assets

$

38,268,162

 

 

$

29,481,075

 

 

 

 

 

 

 

 

 

LIABILITIES AND CAPITAL

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

Debt

$

11,232,129

 

 

$

9,412,631

 

Accounts payable and accrued expenses

 

873,412

 

 

 

702,804

 

Other liabilities

 

724,966

 

 

 

659,899

 

Total liabilities

 

12,830,507

 

 

 

10,775,334

 

 

 

 

 

 

 

 

 

Capital:

 

 

 

 

 

 

 

Partners’ capital:

 

 

 

 

 

 

 

General partner – preferred

 

68,948

 

 

 

68,948

 

General partner – common

 

21,961,651

 

 

 

15,562,210

 

Limited partners – common