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, (v) maintenance of real estate investment trust ('REIT') status,
(vi) availability of financing and capital, (vii) changes in demand for
developed properties, and (viii) those additional factors discussed under
'Item 1A -Risk Factors' in ProLogis' Annual Report on Form 10-K for the year
ended
December 31, 2007.
ProLogis
Second Quarter 2008
Unaudited Financial Results
Selected Financial Information
(in thousands, except per share amounts and percentages)
Three Months Ended Six Months Ended
SUMMARY OF RESULTS June 30, June 30,
2008 2007 2008 2007
Net earnings attributable
to common shares:
Net earnings attributable
to common shares $217,392 $400,104 $411,397 $636,195
Net earnings per share
attributable to common
shares - diluted $0.80 $1.50 $1.53 $2.39
FFO:
FFO attributable to
common shares $288,365 $309,905 $657,486 $639,618
FFO per share
attributable to common
shares - diluted $1.06 $1.16 $2.44 $2.41
Distributions declared
per common share (1) $0.5175 $0.46 $1.035 $0.92
OPERATING METRICS Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Same Store:
NOI + 1.62% + 6.16% + 2.43% + 5.89%
Rental Rates + 3.06% + 8.26% + 4.65% + 7.80%
Average Leasing + 1.29% + 2.66% + 1.58% + 2.92%
Total Expected Investment
of Development Starts $1,013,127 $687,811 $1,942,731 $1,303,411
See our definition of FFO and our definition of EBITDA.
Footnotes follow Consolidated Balance Sheets.
ProLogis
Second Quarter 2008
Unaudited Financial Results
Consolidated Statements of Earnings
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenues:
Rental income (2) $262,380 $270,840 $531,090 $527,386
CDFS disposition proceeds:
Developed and repositioned
properties 1,136,655 686,715 2,400,068 1,356,653
Acquired property
portfolios 79,843 - 163,175 -
Property management and
other fees and incentives 32,580 23,937 62,070 45,584
Development management and
other income 3,374 6,176 10,531 13,615
Total revenues 1,514,832 987,668 3,166,934 1,943,238
Expenses:
Rental expenses 86,186 75,052 177,159 142,180
Cost of CDFS dispositions:
Developed and repositioned
properties 936,610 476,684 1,921,917 915,675
Acquired property
portfolios 79,843 - 163,175 -
General and administrative(3) 59,215 48,423 115,687 96,765
Depreciation and amortization 84,866 74,004 162,238 151,973
Other expenses 5,633 15,068 8,103 17,934
Total expenses 1,252,353 689,231 2,548,279 1,324,527
Operating income 262,479 298,437 618,655 618,711
Other income (expense):
Earnings from unconsolidated
property funds (4) 36,553 15,804 17,986 34,768
(Losses) earnings from CDFS
joint ventures and other
unconsolidated investees (6,878) 1,773 (3,606) 2,317
Interest expense (5) (84,136) (90,640) (169,260) (179,291)
Interest and other income, net 9,644 9,735 15,260 20,909
Total other income(expense) (44,817) (63,328) (139,620) (121,297)
Earnings before minority
interest 217,662 235,109 479,035 497,414
Minority interest share in
loss (income) 4,585 (723) 3,479 (896)
Earnings before certain net
gains 222,247 234,386 482,514 496,518
Gains recognized on
dispositions of certain non-
CDFS business assets (6) 4,662 124,085 4,662 124,085
Foreign currency exchange
gains (losses), net 12,095 22,706 (24,606) 9,154
Earnings before income taxes 239,004 381,177 462,570 629,757
Income taxes:
Current income tax expense 12,692 26,645 37,524 44,745
Deferred income tax expense
(benefit) 6,236 (9,503) 8,736 (6,182)
Total income taxes 18,928 17,142 46,260 38,563
Earnings from continuing
operations 220,076 364,035 416,310 591,194
Discontinued operations (7):
(Loss) income attributable
to disposed properties and
assets held for sale (150) 1,069 32 3,050
Gains recognized on
dispositions:
Non-CDFS business assets 1,856 27,161 5,669 32,125
CDFS business assets 1,994 14,196 2,124 22,537
Total discontinued
operations 3,700 42,426 7,825 57,712
Net earnings 223,776 406,461 424,135 648,906
Less preferred share dividends 6,384 6,357 12,738 12,711
Net earnings attributable to
common shares $217,392 $400,104 $411,397 $636,195
Weighted average common shares
outstanding - Basic 262,715 257,086 260,827 255,677
Weighted average common shares
outstanding - Diluted 272,317 267,880 270,370 266,723
Net earnings per share
attributable to common shares
- Basic:
Continuing operations $0.82 $1.39 $1.55 $2.26
Discontinued operations 0.01 0.17 0.03 0.23
Net earnings per share
attributable to common shares -
Basic $0.83 $1.56 $1.58 $2.49
Net earnings per share
attributable to common shares
- Diluted:
Continuing operations $0.79 $1.34 $1.50 $2.17
Discontinued operations 0.01 0.16 0.03 0.22
Net earnings per share
attributable to common shares
- Diluted $0.80 $1.50 $1.53 $2.39
Calculation of Net Earnings per Share Attributable to Common
Shares - Diluted
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Net earnings attributable to
common shares - Basic $217,392 $400,104 $411,397 $636,195
Minority interest (a) 1,087 1,474 2,238 2,462
Adjusted net earnings attributable
to common shares - Diluted $218,479 $401,578 $413,635 $638,657
Weighted average common shares
outstanding - Basic 262,715 257,086 260,827 255,677
Incremental weighted average
effect of conversion of limited
partnership units 5,053 5,108 5,053 5,124
Incremental weighted average
effect of potentially dilutive
instruments (b) 4,549 5,686 4,490 5,922
Weighted average common shares
outstanding - Diluted 272,317 267,880 270,370 266,723
Net earnings per share
attributable to common shares -
Diluted $0.80 $1.50 $1.53 $2.39
COMMENTS
(a) Includes only the minority interest related to the convertible limited
partnership units.
(b) Total weighted average potentially dilutive instruments outstanding
were 10,276 and 10,283 for the three months ended June 30, 2008 and
2007, respectively, and 10,453 and 10,557 for the six months ended
June 30, 2008 and 2007, respectively. Substantially all were dilutive
for all periods.
Footnotes follow Consolidated Balance Sheets.
ProLogis
Second Quarter 2008
Unaudited Financial Results
Consolidated Statements of Funds From Operations (FFO)
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenues:
Rental income $262,501 $274,751 $531,977 $537,052
CDFS disposition proceeds:
Developed and
repositioned properties 1,151,862 792,524 2,415,275 1,529,951
Acquired property
portfolios 79,843 - 163,175 -
Property management and
other fees and incentives 32,580 23,937 62,070 45,584
Development management and
other income 3,374 6,176 10,531 13,615
Total revenues 1,530,160 1,097,388 3,183,028 2,126,202
Expenses:
Rental expenses 86,302 76,653 177,653 145,828
Cost of CDFS dispositions:
Developed and
repositioned properties 951,533 568,297 1,936,710 1,068,773
Acquired property
portfolios 79,843 - 163,175 -
General and administrative(3) 59,215 48,423 115,687 96,765
Depreciation of corporate
assets 4,731 2,585 8,151 5,291
Other expenses 5,633 15,068 8,103 17,934
Total expenses 1,187,257 711,026 2,409,479 1,334,591
342,903 386,362 773,549 791,611
Other income (expense):
FFO from unconsolidated
property funds (4) 41,075 33,249 78,387 63,869
FFO from CDFS joint
ventures and other
unconsolidated investees (4,685) 3,920 480 6,056
Interest expense (5) (84,136) (90,640) (169,260) (179,291)
Interest and other income, net 9,644 9,735 15,260 20,909
Foreign currency exchange
losses, net (1,945) (2,034) (3,805) (8,222)
Current income tax expense (12,692) (23,607) (27,866) (41,707)
Total other income
(expense) (52,739) (69,377) (106,804) (138,386)
FFO 290,164 316,985 666,745 653,225
Less preferred share
dividends 6,384 6,357 12,738 12,711
Less minority interest share
in (loss) income (4,585) 723 (3,479) 896
FFO attributable to common
shares $288,365 $309,905 $657,486 $639,618
Weighted average common
shares outstanding - Basic 262,715 257,086 260,827 255,677
Weighted average common
shares outstanding - Diluted 272,317 267,880 270,370 266,723
FFO per share attributable to
common shares:
Basic $1.10 $1.21 $2.52 $2.50
Diluted $1.06 $1.16 $2.44 $2.41
Calculation of FFO per Share Attributable to Common Shares - Diluted
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
FFO attributable to common shares
- Basic $288,365 $309,905 $657,486 $639,618
Minority interest attributable to
convertible limited partnership
units 1,087 1,474 2,238 2,462
FFO attributable to common shares
- Diluted $289,452 $311,379 659,724 642,080
Weighted average common shares
outstanding - Diluted 272,317 267,880 270,370 266,723
FFO per share attributable to
common shares - Diluted $1.06 $1.16 $2.44 $2.41
See Consolidated Statements of Earnings and the Reconciliations of Net
Earnings to FFO.
See our definition of FFO and our definition of EBITDA.
Footnotes follow Consolidated Balance Sheets.
Definition of FFO
FFO is a non-Generally Accepted Accounting Principles (GAAP) measure that
is commonly used in the real estate industry. The most directly comparable
GAAP measure to FFO is net earnings. Although the National Association of
Real Estate Investment Trusts (NAREIT) has published a definition of FFO,
modifications to the NAREIT calculation of FFO are common among REITs, as
companies seek to provide financial measures that meaningfully reflect
their business. FFO, as we define it, is presented as a supplemental
financial measure. FFO is not used by us as, nor should it be considered
to be, an alternative to net earnings computed under GAAP as an indicator
of our operating performance or as an alternative to cash from operating
activities computed under GAAP as an indicator of our ability to fund our
cash needs.
FFO is not meant to represent a comprehensive system of financial
reporting and does not present, nor do we intend it to present, a complete
picture of our financial condition and operating performance. We believe
that GAAP net earnings remains the primary measure of performance and that
FFO is only meaningful when it is used in conjunction with GAAP net
earnings. Further, we believe that our consolidated financial statements,
prepared in accordance with GAAP, provide the most meaningful picture of
our financial condition and our operating performance.
NAREIT's FFO measure adjusts GAAP net earnings to exclude historical cost
depreciation and gains from the sale of previously depreciated properties.
In addition to the NAREIT adjustments, we exclude additional items from
GAAP net earnings, although not infrequent or unusual, that are subject to
significant fluctuations from period to period that cause both positive
and negative effects on our results of operations, in inconsistent and
unpredictable directions, such as deferred income tax, current income tax
related to the reversal of any acquired tax liabilities in an acquisition,
foreign currency exchange gains/losses related to certain debt
transactions and gains/losses from remeasurement of certain derivative
instruments. We include gains from dispositions of properties acquired or
developed in our CDFS business segment in our definition of FFO. We
calculate FFO from our unconsolidated investees on the same basis.
We believe our adjustments to GAAP net earnings that are included in
arriving at our FFO measure are helpful to management in making real
estate investment decisions and evaluating our current operating
performance. We believe these adjustments are also helpful to industry
analysts, potential investors and shareholders in their understanding and
evaluation of our performance on the key measures of net asset value and
current operating returns generated on real estate investments.