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Debt

9 Months Ended

Sep. 30, 2020

NOTE 6. DEBT

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

	September 30, 2020					December 31, 2019
	Weighted Average Interest Rate ⁽¹⁾			Amount Outstanding ⁽²⁾		Weighted Average Interest Rate⁽¹⁾			Amount Outstanding ⁽²⁾
Credit facilities		0.4	%	$	39,733		0.4	%	$	184,255
Senior notes ⁽³⁾		2.1	%		14,108,021		2.4	%		9,660,570
Term loans and unsecured other ⁽³⁾		0.8	%		1,723,473		0.9	%		1,441,882
Secured mortgage⁽³⁾⁽⁴⁾		3.6	%		646,899		3.4	%		619,170
Total		2.0	%	$	16,518,126		2.2	%	$	11,905,877

(1)

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

(2)	We borrow in the functional currencies of the countries where we invest. Included in the outstanding balances were borrowings denominated in the following currencies:

	September 30, 2020					December 31, 2019
	Amount Outstanding		% of Total			Amount Outstanding		% of Total
British pound sterling	$	1,126,684		6.8	%	$	656,549		5.5	%
Canadian dollar		271,752		1.6	%		279,730		2.3	%
Euro		6,297,942		38.2	%		6,128,986		51.5	%
Japanese yen		2,695,105		16.3	%		2,329,381		19.6	%
U.S. dollar		6,126,643		37.1	%		2,511,231		21.1	%
Total	$	16,518,126				$	11,905,877

(3)

Through the Liberty Transaction, we assumed $2.5 billion of senior notes, $246.9 million of secured mortgage debt and a $100.1 million term loan with a weighted average stated interest rate of 3.8%. We subsequently paid down $1.8 billion of the assumed debt with senior notes we issued at lower rates in February 2020. See below for additional activity on debt assumed in the Liberty Transaction and the extinguishment of a significant portion of the debt subsequent to acquisition.

(4)	Through the IPT Transaction, USLV assumed $341.8 million of secured mortgage debt, all of which was paid down at closing. See below for the early extinguishment of debt in the IPT Transaction.

Credit Facilities

We have a global senior credit facility (the “Global Facility”) under which we may draw in British pounds sterling, Canadian dollars, euro, Japanese yen, Mexican pesos and U.S. dollars on a revolving basis up to $3.5 billion (subject to currency fluctuations). Pricing under the Global Facility, including the spread over LIBOR, facility fees and letter of credit fees, varies based on the public debt ratings of the OP. The Global Facility is scheduled to mature in January 2023; however, we may extend the maturity date for six months on two occasions, subject to the satisfaction of certain conditions and payment of extension fees. We have the ability to increase the Global Facility to $4.5 billion, subject to currency fluctuations and obtaining additional lender commitments.

We also have a Japanese yen revolver (the “Revolver”) that we upsized in July 2020 with total commitments of ¥55.0 billion ($520.3 million at September 30, 2020). We have the ability to increase the borrowing capacity of the Revolver to ¥75.0 billion ($709.5 million at September 30, 2020), subject to obtaining additional lender commitments. Pricing under the Revolver, including the spread over Yen LIBOR, facility fees and letter of credit fees, varies based on the public debt ratings of the OP. At September 30, 2020, the Revolver was scheduled to mature in July 2024; however, we may extend the maturity date for one year, subject to the satisfaction of certain conditions and payment of extension fees.

We refer to the Global Facility and the Revolver, collectively, as our “Credit Facilities.”

Senior Notes

The following table summarizes the issuances and redemptions of senior notes during the nine months ended September 30, 2020 (principal in thousands):

	Aggregate Principal
Initial Borrowing Date	Borrowing Currency		USD ⁽¹⁾		Weighted Average Stated Interest Rate at the Issuance Date	Maturity Dates
February ⁽²⁾⁽³⁾	€	1,350,000	$	1,485,405	0.6%	February 2022 – 2035
February ⁽²⁾	$	2,200,000	$	2,200,000	2.4%	April 2027 – 2050
February	£	250,000	$	322,490	1.9%	February 2035
June⁽³⁾⁽⁴⁾	¥	41,200,000	$	386,314	1.0%	June 2027 – 2050
August ⁽³⁾⁽⁵⁾	$	1,250,000	$	1,250,000	1.6%	October 2030 – 2050
September	¥	19,700,000	$	186,835	1.0%	September 2032 – 2040

	Aggregate Principal
Redemption Date	Borrowing Currency		USD ⁽¹⁾		Stated Interest Rate at the Redemption Date	Maturity Dates
January	€	400,000	$	445,880	0.0%	January 2020
March ⁽²⁾	€	700,000	$	783,090	1.4%	May 2021
June ⁽⁴⁾	€	212,598	$	238,067	3.0%	January 2022
June ⁽⁴⁾	€	100,486	$	112,524	3.4%	February 2024
September ⁽⁵⁾	$	850,000	$	850,000	4.3%	August 2023

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

(2)

We utilized the proceeds from these issuances to redeem $1.8 billion of debt assumed in the Liberty Transaction, primarily senior notes as discussed above, and our €700.0 million ($783.1 million) senior notes due in May 2021. The remainder of the proceeds were used for the repayment of other debt and general corporate purposes.

(3)	Approximately $1.5 billion of the proceeds from the issuance of these notes are to fund sustainable and environmentally beneficial projects and buildings in accordance with our green bond framework.

(4)	We utilized the proceeds from the issuance of the Japanese yen senior notes to redeem €212.6 million ($238.1 million) and €100.5 million ($112.5 million) of the euro senior notes due in January 2022 and February 2024, respectively, through a tender offer.

(5)	We utilized the proceeds from this issuance to redeem $850.0 million of senior notes due in August 2023.

In February 2020, we completed an exchange offer for two series of Liberty’s senior notes for an aggregate amount of $750.0 million, with $689.8 million, or 92.0%, of the aggregate principal amount being validly tendered for exchange. These senior notes are in the aggregate principal amounts of $400.0 million due in October 2026 with an interest rate of 3.3% and $350.0 million due in February 2029 with an interest rate of 4.4%. The senior notes were exchanged for notes issued by a wholly owned subsidiary and guaranteed by the OP. As a result of the exchange offer, we have no separate remaining financial reporting obligations or financial covenants associated with the senior notes assumed in the Liberty Transaction. All other terms of the exchanged Liberty senior notes remained substantially the same.

Term Loans

During the nine months ended September 30, 2020, we extended the maturity of the multi-currency term loan (“2017 Term Loan”) by one year until May 2021. We may extend the maturity for one additional year, subject to the satisfaction of certain conditions and the payment of an extension fee. During the nine months ended September 30, 2020 and 2019, we borrowed a net $250.0 million and paid down a net $496.5 million on the 2017 Term Loan, respectively.

Liquidity

The following table summarizes information about our available liquidity at September 30, 2020 (in millions):


Aggregate lender commitments
Credit Facilities	$	4,052
Available term loans		250
Less:
Borrowings outstanding		40
Outstanding letters of credit		29
Current availability		4,233
Cash and cash equivalents		940
Total liquidity	$	5,173

Long-Term Debt Maturities

Scheduled principal payments due on our debt for the remainder of 2020 and for each year through the period ended December 31, 2024, and thereafter were as follows at September 30, 2020 (in thousands):

	Unsecured
	Credit		Senior			Term Loans			Secured
Maturity	Facilities		Notes			and Other			Mortgage			Total
2020 ⁽¹⁾	$	-	$	-		$	-		$	2,115		$	2,115
2021 ⁽¹⁾⁽²⁾		-		-			260,467			28,531			288,998
2022		-		743,535			-			11,919			755,454
2023		-		-			127,347			33,894			161,241
2024 ⁽³⁾		39,733		701,911			-			265,753			1,007,397
Thereafter		-		12,721,675			1,343,354			304,100			14,369,129
Subtotal		39,733		14,167,121			1,731,168			646,312			16,584,334
Unamortized net premiums		-		11,935			-			2,645			14,580
Unamortized debt issuance costs		-		(71,035	)		(7,695	)		(2,058	)		(80,788	)
Total	$	39,733	$	14,108,021		$	1,723,473		$	646,899		$	16,518,126

(1)	We expect to repay the amounts maturing in the next twelve months with cash generated from operations, proceeds from dispositions of real estate properties, or as necessary, with borrowings on our Credit Facilities.

(2)	Included in the 2021 maturities is the 2017 Term Loan that can be extended until 2022.

(3)	Included in the 2024 maturities is the Revolver that can be extended until 2025.

Early Extinguishment of Debt

During the nine months ended September 30, 2020, we recognized $164.6 million of losses upon the redemption of higher interest rate euro and U.S. dollar senior notes prior to maturity as described above, and the extinguishment of debt assumed in the Liberty Transaction and the IPT Transaction, which represented the excess of the prepayment penalties over the premium recorded upon assumption of the debt. During the nine months ended September 30, 2019, we recognized $16.1 million in losses on early extinguishment of debt, primarily from the redemption of euro senior notes.

Financial Debt Covenants

We have $14.1 billion of senior notes and $1.7 billion of term loans outstanding at September 30, 2020 that were subject to certain financial covenants under their related indentures. We are also subject to financial covenants under our Credit Facilities and certain secured mortgage debt. At September 30, 2020, we were in compliance with all of our financial debt covenants.

Guarantee of Finance Subsidiary Debt

We have finance subsidiaries as part of our operations in Europe (Prologis Euro Finance LLC), Japan (Prologis Yen Finance LLC) and the U.K. (Prologis Sterling Finance LLC) in order to mitigate our foreign currency risk by borrowing in the currencies in which we invest. These entities are 100% indirectly owned by the OP and all unsecured debt issued or to be issued by each entity is or will be fully and unconditionally guaranteed by the OP. There are no restrictions or limits on the OP’s ability to obtain funds from its subsidiaries by dividend or loan. In reliance on Rule 3-10 of Regulation S-X, the separate financial statements of Prologis Euro Finance LLC, Prologis Yen Finance LLC and Prologis Sterling Finance LLC are not provided.