- First Half FFO Results Up from 2007 -
- Company Confirms Full-year 2008 Guidance -
TOKYO, July 24 /PRNewswire-FirstCall/ -- ProLogis (NYSE: PLD), the world's
largest owner, manager and developer of distribution facilities, today
reported funds from operations as defined by ProLogis (FFO) for the quarter
ended June 30, 2008, of $1.06 per diluted share, down from $1.16 in 2007.
Growth in income from the company's Investment Management business was offset
by lower CDFS gains, as well as a reduced level of property income due to
disposition activity in the second quarter of 2007. Net earnings per diluted
share for the quarter were $0.80, compared with $1.50 in 2007. Net earnings in
the second quarter of 2007 included approximately $0.56 of gains associated
with the disposition of non-CDFS properties, which are not included in FFO,
compared with $0.02 of similar gains during the same period in 2008.
For the six months ended June 30, 2008, FFO was $2.44 per diluted share,
up from $2.41 in the first six months of 2007. Net earnings per diluted share
for the six months ended June 30, 2008, were $1.53, compared with $2.39 in the
same period of 2007, primarily due to the non-CDFS gains noted above.
'Our solid results for the second quarter reflect the geographically
diversified nature of our global logistics infrastructure platform,' Jeffrey
H. Schwartz, ProLogis chairman and chief executive officer, said from Tokyo.
'Throughout Asia and Central Europe, growing domestic consumption, exports and
the lack of modern distribution space continue to support strong demand.
Operating property fundamentals held up well, despite a difficult financial
environment, and further signs of moderating demand for industrial space in
the United States and the United Kingdom.
'We continue to pursue our disciplined investment strategy, deploying
capital in the areas of the world where we see the greatest risk-adjusted
returns and the strongest logistics market opportunities. The breadth of our
platform allows us to take advantage of these opportunities.'
During the second quarter, the company recognized increases in FFO and
fees from its Investment Management business and achieved growth in leased
space, rents and net operating income in its same-store pool. 'Development
margins are moving toward more normalized levels, reflecting our sustainable
expectations for the business. New supply and the potential for overbuilding
have been significantly reduced by the return to historic margin levels and
continued capacity constraints in the debt markets. Ultimately, we believe
these factors will result in healthier market conditions, and those companies
with access to capital will be well positioned to capture opportunities,'
Schwartz added.
Company Confirms 2008 Guidance
The company confirms its guidance for 2008 FFO of $4.65 to $4.85 per share
and net earnings of $3.15 to $3.35 per share. In addition, the company stated
that it slightly exceeded its prior expectations for first half 2008
profitability primarily due to the recognition of certain CDFS gains, which
had originally been anticipated in the third quarter, as well as lower losses
related to the company's share of remeasurement and settlement losses on
interest rate derivative contracts entered into by ProLogis' unconsolidated
property funds. As a result, the company now anticipates that approximately 47
to 49 percent of full-year FFO per share will be recognized in the second half
of the year, with roughly two-thirds of that amount being recognized in the
fourth quarter, due to a larger expected volume of CDFS contributions. The
weighting of earnings per share is expected to be similar to the distribution
of FFO per share for the remaining quarters.
Continued Strength in International Demand
The company noted that global trade continues to be relatively strong,
particularly throughout Asia, driving demand for distribution space in key
global logistics markets. 'Our concentration of existing facilities and land
positions near major seaports, inland ports and rail-served locations allows
us to address this demand and drives our development business,' said Ted R.
Antenucci, ProLogis president and chief investment officer. 'While there is a
greater degree of market uncertainty in the United States and the United
Kingdom, over 87 percent of our development starts year to date are in markets
outside these countries.'
ProLogis began construction of $1.01 billion of new development during the
second quarter, including development within its retail and mixed-use and
industrial joint ventures, bringing the company's total CDFS asset pipeline to
$8.65 billion at June 30, 2008. Of this amount, total expected investment in
projects currently under construction is $4.47 billion, while the space
associated with the remaining $4.18 billion of completed developments and
repositioned properties was 55.1 percent leased at quarter end based on
expected investment, up from 53.7 percent at March 31, 2008.
During the quarter, the company signed approximately 34.3 million square
feet of leases worldwide, bringing the total for the first half of the year to
60.8 million square feet. Of that total, 14.6 million square feet were new
CDFS leases, including those second quarter transactions with repeat customers
such as: Amazon.com in Las Vegas, Nippon Express in Nagoya, Volkswagen in
Beijing and Schenker in Paris.
Overall US Markets Impacted by Economic Conditions
'Compared with previous US downturns, industrial supply and demand are
better balanced, reflecting a significant decrease in new speculative
development activity,' said Walter C. Rakowich, president and chief operating
officer. During the second quarter, the company reported that overall net
absorption in the top 30 North American logistics markets declined to roughly
10.8 million square feet, and vacancies in these 30 markets increased to 8.5
percent from 7.9 percent at March 31, 2008.
'Our stabilized North American portfolio remains well leased at 94.4
percent. During the second quarter, all of our US development starts were
preleased, while we started two inventory projects outside the United States
in Toronto and Mexico City -- both relatively healthy markets,' said Diane S.
Paddison, executive director of global operations.
Selected Financial and Operating Information
-- Increased same-store net operating income in the quarter by 1.6
percent, resulting from 1.3 percent growth in leased space and rent growth on
turnovers of 3.1 percent. For the first six months, same-store net operating
income increased 2.4 percent, resulting from a 1.6 percent increase in leased
space and rent growth on turnovers of 4.7 percent.
-- Maintained strong occupancy in the global stabilized portfolio of 94.2
percent, compared with 94.6 percent at March 31, 2008.
-- Recycled a total of $1.30 billion of capital through contributions and
dispositions during the quarter. Of the total, $1.28 billion was from CDFS
dispositions, with $79.8 million of that from acquired property portfolios.
The remaining $20.5 million was from non-CDFS dispositions. Year-to-date
total dispositions were $2.76 billion, with $2.70 billion from CDFS
dispositions.
-- Realized FFO from CDFS dispositions of $200.3 million for the quarter.
Pre-deferral, post-tax margins for developed and repositioned properties
during the second quarter averaged 24.5 percent, while post-tax, post-deferral
margins were 19.6 percent.
-- Increased total assets owned and under management to $40.4 billion, up
from $36.3 billion at December 31, 2007, a year-to-date increase of 11.3
percent.
-- Grew ProLogis' share of FFO from property funds to $41.1 million for
the quarter, compared with $33.2 million for the second quarter of 2007, an
increase of 23.8 percent.
-- Recognized fee income from property funds of $32.6 million, compared
with $23.9 million for the second quarter of 2007, an increase of 36.4
percent.
Copies of ProLogis' second quarter 2008 supplemental information will be
available from the company's website at http://ir.prologis.com. 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, July 24, 2008. A replay of the webcast will be
available on the company's website until September 30, 2008. 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 132 markets across North America,
Europe and Asia. The company has $40.4 billion of assets owned, managed and
under development, comprising 542.3 million square feet (50.4 million square
meters) in 2,884 properties as of June 30, 2008. 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 over 1,500 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.
