美國
證券交易委員會
華盛頓特區20549
表格
截至季度結束的日期為
從______________至過渡期 ______________
佣金文件號碼：
（依憑章程所載的完整登記名稱）
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(依據所在地或其他管轄區) 的註冊地或組織地點) |
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(國稅局雇主識別號碼) 識別號碼) |
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（地址或首要執行辦公室） |
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（郵政編碼） |
(
（登記人電話號碼，包括區號）
(如與上次報告不同，列明前名稱、前地址及前財政年度)
根據法案第12(b)條規定註冊的證券：
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每個班級的標題 |
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交易符號 |
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註冊的每個交易所的名稱 |
普羅吉斯股份有限公司 |
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洛吉斯 (L.P.P.) |
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洛吉斯 (L.P.P.) |
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洛吉斯 (L.P.P.) |
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請勾選表示：（1）申報人在過去12個月內（或申報人在此期間需要提交此類報告的較短時間內，已提交了證券交易所法案第13條或第15(d)條規定的所有報告；並 （2）該申報人在過去90天內一直受到申報要求的約束。
Prologis, Inc. |
☒ |
沒有 |
☐ |
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Prologis, L.P. |
☒ |
沒有 |
☐ |
請勾選表示：在過去12個月內（或者在要求提交此類文件的較短期間內，公司提交了根據S-t法規第405條（本章節第232.405條）需要提交的每個互動數據文件。
Prologis, Inc. |
☒ |
沒有 |
☐ |
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Prologis, L.P. |
☒ |
沒有 |
☐ |
請勾選是否申報人為大型迅速檔案提交者、迅速檔案提交者、非迅速檔案提交者、較小的報告公司或新興成長公司。參見《交易所法》第120億2條中對「大型迅速檔案提交者」、「迅速檔案提交者」、「較小的報告公司」和「新興成長公司」的定義。
Prologis, Inc.： |
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加速歸檔者 ☐ |
非加速彙繳申報者 ☐ |
較小的報告主體 |
新興增長型企業 |
Prologis, L.P.： |
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大型加速彙報公司 ☐ |
加速歸檔者 ☐ |
較小的申報公司 |
新興增長型企業 |
如屬新興成長型企業，請勾選表示公司未選擇使用根據《交易所法》第13(a)條提供的任何新的或修訂的財務會計標準進行遵從的延長過渡期。 ☐
請以選取框表示，申報人是否屬於《證券交易法》1934年第120億2條規定的空殼公司。
Prologis, Inc. |
是 |
☐ |
沒有 |
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Prologis, L.P. |
是 |
☐ |
沒有 |
2024年10月23日，Prologis, Inc.的普通股股份大約為
解說說明
本報告合併了截至2024年9月30日的Prologis, Inc.和Prologis, L.P.表格10-Q季度報告。除非另有說明或情況另有要求，“Prologis, Inc.”或“母公司”是指Prologis, Inc.及其合併子公司；而“Prologis, L.P.”、“運營夥伴關系”或“OP”是指Prologis, L.P.及其合併子公司。 “本公司”，“Prologis”，“我們”，“我們的”或“我們”一詞指的是母公司和OP的合集。
該母公司是一家股權房地產投資信托（REIT），也是有限合夥人OP的普通合夥企業合夥人。截至2024年9月30日，該母公司持有OP 97.59％的普通合夥利益，幾乎所有OP的優先單位。餘下的2.41％普通有限合夥利益擁有者是非相關投資者，以及某些現任和前任母公司的董事和高級管理人員。
我們將母公司和OP視為一個企業運作。母公司的管理人員與OP的管理人員相同。這些成員是母公司的高級主管，也是OP或其子公司的員工。作為唯一的普通合夥人，母公司通過在日常管理中擁有完全的責任和裁量權來控制OP，因此，在財務報告目的上將OP整合起來。由於母公司唯一的重要資產是其對OP的投資，母公司和OP在各自的基本報表上的資產和負債是相同的。
我們相信將母公司和OP的季度報告10-Q合併成這份單一報告將帶來以下好處：
在我們經營公司的情況下，了解母公司和OP之間的幾個差異很重要。母公司本身不進行業務，除了偶爾作為OP的唯一普通合夥人，不時發行公開股本。OP直接或間接持有業務的幾乎所有資產。OP進行業務運作，並以合夥形式組織，沒有公開交易的股份。除了母公司透過股本發行所籌集的淨收益外，這些收益轉投資為合夥份額交換給OP，OP透過業務的營運、承擔債務以及向第三方發行合夥份額來產生業務所需的資本。
非控制權益、普通股股東權益和合夥人資本的呈現是母公司和OP合併基本報表之間的主要差異領域。母公司和OP之間股東權益和合夥人資本呈現上的差異源自母公司和OP在股本發行上的差異。
在母公司合併基本報表中，除了首要股、普通股、額外股本、累積其他 comprehensive income (損失) 和超過母公司淨收益的分派外，母公司將呈現為股東權益。這些項目代表母公司在 OP 擁有的普通和首要的一般合夥利益，並呈現為 OP 合併基本報表中合夥人權益中的普通合夥夥伴資本。OP 中普通有限合夥夥伴擁有的有限合夥權益在母公司合併基本報表中以權益中的非控制權益呈現，在 OP 合併基本報表中以合夥人權益中的有限合夥夥伴資本呈現。
為了突顯母公司與OP之間的差異，在本報告中，將各自討論母公司和OP，包括分開的基本報表以及分開的附錄31和32的認證。在結合母公司和OP披露的部分，本報告將行動或持有稱為Prologis的行動或持有。
PROLOGIS
工業前
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頁面 數字 |
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第一部分。 |
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项目1。 |
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Prologis, Inc.： |
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Prologis, L.P.： |
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Prologis, Inc.和Prologis, L.P.： |
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项目2。 |
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项目3。 |
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项目4。 |
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第二部分。 |
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项目1。 |
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项目1A。 |
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项目2。 |
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项目3。 |
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项目4。 |
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项目5。 |
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第6項。 |
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第一部分芬蘭社會資訊
項目一。菲娜社會聲明
普洛派斯公司。
BA合併蘭斯·謝茲
(未經查核)
(以千為單位，除每股數據外)
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2024年9月30日 |
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2023年12月31日 |
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資產 |
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投資於房地產業 |
$ |
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$ |
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減少已提折舊 |
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房地產業淨投資 |
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投資及債款給未合併實體 |
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持有供出售或供捐贈之資產 |
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房地產業的淨投資 |
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現金及現金等價物 |
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其他資產 |
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資產總額 |
$ |
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$ |
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負債和權益 |
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負債： |
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債務 |
$ |
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$ |
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應付帳款和應計費用 |
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其他負債 |
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總負債 |
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股權： |
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Prologis, Inc. 股東權益： |
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已發行股份，每股註明的清償優先權為 $ |
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普通股; $ |
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資本公積額額外增資 |
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累積其他全面損失 |
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超過淨收益的分配 |
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Prologis, Inc.股東權益總額 |
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非控制權益 |
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總股本 |
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負債加股東權益總額 |
$ |
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隨附附注乃這些合併財務報表的重要組成部分。
1
普洛派斯公司。
合併 S塔特收入結果
(未經查核)
(以千為單位，每股金額除外)
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結束於三個月的期間 |
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九個月結束了 |
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九月三十日， |
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九月三十日， |
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2024 |
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2023 |
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2024 |
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2023 |
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收入： |
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租賃 |
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$ |
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$ |
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戰略資本 |
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發展管理及其他 |
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總收益 |
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費用： |
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租賃 |
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戰略資本 |
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總務與行政 |
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折舊與攤提 |
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其他 |
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總支出 |
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不計房地產業務交易增值前的營業收入，淨額 |
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開發物業及土地處分之收益，淨額 |
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其他房地產投資處分收益，淨額 |
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營收 |
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其他收入（費用）： |
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未包括在合併財務報表內實體之收益，淨額 |
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利息費用 |
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外幣、衍生工具及其他收益（損失），及其他 |
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提前還清債務的盈利 |
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其他總費用 |
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稅前收益 |
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所得稅支出 |
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合併淨收益 |
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扣除歸屬於非控制股權的淨收益 |
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歸屬於控制股權的淨收益 |
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較不理想的送轉 |
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歸屬於普通股東的淨收益 |
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$ |
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$ |
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$ |
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基本加權平均每股普通股 |
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稀釋加權平均每股普通股 |
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歸屬於普通股股東的每股基本盈利 |
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$ |
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$ |
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$ |
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歸屬於普通股股東的每股稀釋盈利 |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these Consolidated Financial Statements.
2
PROLOGIS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Consolidated net earnings |
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$ |
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$ |
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$ |
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Other comprehensive income: |
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Foreign currency translation gains (losses), net |
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Unrealized gains (losses) on derivative contracts, net |
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Comprehensive income |
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Net earnings attributable to noncontrolling interests |
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Other comprehensive loss (income) attributable to noncontrolling interests |
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Comprehensive income attributable to common stockholders |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these Consolidated Financial Statements.
3
PROLOGIS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands)
Three Months Ended September 30, 2024 and 2023
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Common Stock |
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Accumulated |
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Distributions |
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Number |
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Additional |
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Other |
|
|
in Excess of |
|
|
Non- |
|
|
|
|
||||||||
|
Preferred |
|
|
of |
|
|
Par |
|
|
Paid-in |
|
|
Comprehensive |
|
|
Net |
|
|
controlling |
|
|
Total |
|
||||||||
|
Stock |
|
|
Shares |
|
|
Value |
|
|
Capital |
|
|
Loss |
|
|
Earnings |
|
|
Interests |
|
|
Equity |
|
||||||||
Balance at July 1, 2024 |
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||
Consolidated net earnings |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|||
Effect of equity compensation plans |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|||||
Capital contributions |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Redemption of noncontrolling interests |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
|
||||
Foreign currency translation losses, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Unrealized losses on |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Reallocation of equity |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
Dividends ($ |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2024 |
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||
|
|
|
|
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 July 1, 2023 |
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||
Consolidated net earnings |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|||
Effect of equity compensation plans |
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||||
Capital contributions |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Redemption of noncontrolling interests |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|||
Foreign currency translation gains, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|||
Unrealized gains on derivative |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|||
Reallocation of equity |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
Dividends ($ |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2023 |
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||
Nine Months Ended September 30, 2024 and 2023
|
|
|
|
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, 2024 |
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||
Consolidated net earnings |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|||
Effect of equity compensation plans |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|||||
Capital contributions |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Redemption of noncontrolling interests |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|||
Foreign currency translation losses, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Unrealized gains on derivative |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|||
Reallocation of equity |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
Dividends ($ |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2024 |
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||
|
|
|
|
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, 2023 |
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||
Consolidated net earnings |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|||
Effect of equity compensation plans |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|||||
Capital contributions |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Redemption of noncontrolling interests |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|||
Foreign currency translation gains, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|||
Unrealized losses on derivative |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Reallocation of equity |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
Dividends ($ |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2023 |
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
4
PROLOGIS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
|
Nine Months Ended |
|
|||||
|
|
September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Operating activities: |
|
|
|
|
|
|
||
Consolidated net earnings |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
||
Straight-lined rents and amortization of above and below market leases |
|
|
( |
) |
|
|
( |
) |
Equity-based compensation awards |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Earnings from unconsolidated entities, net |
|
|
( |
) |
|
|
( |
) |
Operating distributions from unconsolidated entities |
|
|
|
|
|
|
||
Decrease (increase) in operating receivables from unconsolidated entities |
|
|
|
|
|
( |
) |
|
Amortization of debt discounts and debt issuance costs, net |
|
|
|
|
|
|
||
Gains on dispositions of development properties and land, net |
|
|
( |
) |
|
|
( |
) |
Gains on other dispositions of investments in real estate, net |
|
|
( |
) |
|
|
( |
) |
Unrealized foreign currency and derivative losses (gains), net |
|
|
|
|
|
( |
) |
|
Gains on early extinguishment of debt, net |
|
|
( |
) |
|
|
( |
) |
Deferred income tax expense |
|
|
|
|
|
|
||
Decrease (increase) in other assets |
|
|
( |
) |
|
|
|
|
Increase in accounts payable and accrued expenses and other liabilities |
|
|
|
|
|
|
||
Net cash provided by operating activities |
|
|
|
|
|
|
||
Investing activities: |
|
|
|
|
|
|
||
Real estate development |
|
|
( |
) |
|
|
( |
) |
Real estate acquisitions |
|
|
( |
) |
|
|
( |
) |
Duke Transaction, net of cash acquired |
|
|
|
|
|
( |
) |
|
Tenant improvements and lease commissions on previously leased space |
|
|
( |
) |
|
|
( |
) |
Property improvements |
|
|
( |
) |
|
|
( |
) |
Proceeds from dispositions and contributions of real estate |
|
|
|
|
|
|
||
Investments in and advances to unconsolidated entities |
|
|
( |
) |
|
|
( |
) |
Return of investment from unconsolidated entities |
|
|
|
|
|
|
||
Proceeds from the settlement of net investment hedges |
|
|
|
|
|
|
||
Payments on the settlement of net investment hedges |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Financing activities: |
|
|
|
|
|
|
||
Dividends paid on common and preferred stock |
|
|
( |
) |
|
|
( |
) |
Noncontrolling interests contributions |
|
|
|
|
|
|
||
Noncontrolling interests distributions |
|
|
( |
) |
|
|
( |
) |
Settlement of noncontrolling interests |
|
|
( |
) |
|
|
( |
) |
Tax paid with shares withheld |
|
|
( |
) |
|
|
( |
) |
Debt and equity issuance costs paid |
|
|
( |
) |
|
|
( |
) |
Net payments on credit facilities and commercial paper |
|
|
( |
) |
|
|
( |
) |
Repurchase of and payments on debt |
|
|
( |
) |
|
|
( |
) |
Proceeds from the issuance of debt |
|
|
|
|
|
|
||
Net cash provided by financing activities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Effect of foreign currency exchange rate changes on cash |
|
|
|
|
|
( |
) |
|
Net increase in cash and cash equivalents |
|
|
|
|
|
|
||
Cash and cash equivalents, beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents, end of period |
|
$ |
|
|
$ |
|
||
See Note 11 for information on noncash investing and financing activities and other information.
The accompanying notes are an integral part of these Consolidated Financial Statements.
5
PROLOGIS, L.P.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
|
|
|
|
|
|
||
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
ASSETS |
|
|
|
|
|
||
Investments in real estate properties |
$ |
|
|
$ |
|
||
Less accumulated depreciation |
|
|
|
|
|
||
Net investments in real estate properties |
|
|
|
|
|
||
Investments in and advances to unconsolidated entities |
|
|
|
|
|
||
Assets held for sale or contribution |
|
|
|
|
|
||
Net investments in real estate |
|
|
|
|
|
||
|
|
|
|
|
|
||
Cash and cash equivalents |
|
|
|
|
|
||
Other assets |
|
|
|
|
|
||
Total assets |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
LIABILITIES AND CAPITAL |
|
|
|
|
|
||
Liabilities: |
|
|
|
|
|
||
Debt |
$ |
|
|
$ |
|
||
Accounts payable and accrued expenses |
|
|
|
|
|
||
Other liabilities |
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
||
|
|
|
|
|
|
||
Capital: |
|
|
|
|
|
||
Partners’ capital: |
|
|
|
|
|
||
General partner – preferred |
|
|
|
|
|
||
General partner – common |
|
|
|
|
|
||
Limited partners – common |
|
|
|
|
|
||
Limited partners – Class A common |
|
|
|
|
|
||
Total partners’ capital |
|
|
|
|
|
||
Noncontrolling interests |
|
|
|
|
|
||
Total capital |
|
|
|
|
|
||
Total liabilities and capital |
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these Consolidated Financial Statements.
6
PROLOGIS, L.P.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per unit amounts)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Rental |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Strategic capital |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Development management and other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Rental |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Strategic capital |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income before gains on real estate transactions, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gains on dispositions of development properties and land, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gains on other dispositions of investments in real estate, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings from unconsolidated entities, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Foreign currency, derivative and other gains (losses) and other |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Gains on early extinguishment of debt, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total other expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Earnings before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Consolidated net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less net earnings attributable to noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net earnings attributable to controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less preferred unit distributions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net earnings attributable to common unitholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common units outstanding – Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common units outstanding – Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net earnings per unit attributable to common unitholders – Basic |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net earnings per unit attributable to common unitholders – Diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
7
PROLOGIS, L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Consolidated net earnings |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation gains (losses), net |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Unrealized gains (losses) on derivative contracts, net |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net earnings attributable to noncontrolling interests |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other comprehensive loss (income) attributable to noncontrolling interests |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Comprehensive income attributable to common unitholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
8
PROLOGIS, L.P.
CONSOLIDATED STATEMENTS OF CAPITAL
(Unaudited)
(In thousands)
Three Months Ended September 30, 2024 and 2023
|
General Partner |
|
|
Limited Partners |
|
|
Non- |
|
|
|
|
||||||||||||||||||||||||||||
|
Preferred |
|
|
Common |
|
|
Common |
|
|
Class A Common |
|
|
controlling |
|
|
Total |
|
||||||||||||||||||||||
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Interests |
|
|
Capital |
|
||||||||||
Balance at July 1, 2024 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||
Consolidated net earnings |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|||||
Effect of equity compensation plans |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||||||
Capital contributions |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Redemption of limited partners units |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Foreign currency translation gains |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Unrealized losses on derivative |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Reallocation of capital |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
Distributions ($ |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2024 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||
|
General Partner |
|
|
Limited Partners |
|
|
Non- |
|
|
|
|
||||||||||||||||||||||||||||
|
Preferred |
|
|
Common |
|
|
Common |
|
|
Class A Common |
|
|
controlling |
|
|
Total |
|
||||||||||||||||||||||
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Interests |
|
|
Capital |
|
||||||||||
Balance at July 1, 2023 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||
Consolidated net earnings |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|||||
Effect of equity compensation plans |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|||||
Capital contributions |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Redemption of limited partners units |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
||
Foreign currency translation |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
( |
) |
|
|
|
||||
Unrealized gains on derivative |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||||
Reallocation of capital |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
||
Distributions ($ |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2023 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||
Nine Months Ended September 30, 2024 and 2023
|
General Partner |
|
|
Limited Partners |
|
|
Non- |
|
|
|
|
||||||||||||||||||||||||||||
|
Preferred |
|
|
Common |
|
|
Common |
|
|
Class A Common |
|
|
controlling |
|
|
Total |
|
||||||||||||||||||||||
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Interests |
|
|
Capital |
|
||||||||||
Balance at January 1, 2024 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||
Consolidated net earnings |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|||||
Effect of equity compensation plans |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|||||
Capital contributions |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Redemption of limited partners units |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
||
Foreign currency translation losses, net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Unrealized gains on |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||||
Reallocation of capital |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
Distributions ($ |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2024 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||
|
General Partner |
|
|
Limited Partners |
|
|
Non- |
|
|
|
|
||||||||||||||||||||||||||||
|
Preferred |
|
|
Common |
|
|
Common |
|
|
Class A Common |
|
|
controlling |
|
|
Total |
|
||||||||||||||||||||||
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Units |
|
|
Amount |
|
|
Interests |
|
|
Capital |
|
||||||||||
Balance at January 1, 2023 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||
Consolidated net earnings |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|||||
Effect of equity compensation plans |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|||||
Capital contributions |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Redemption of limited partners units |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
||
Foreign currency translation |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|||||
Unrealized losses on derivative |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Reallocation of capital |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
||
Distributions ($ |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2023 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
9
PROLOGIS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
|
Nine Months Ended |
|
|||||
|
|
September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Operating activities: |
|
|
|
|
|
|
||
Consolidated net earnings |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
||
Straight-lined rents and amortization of above and below market leases |
|
|
( |
) |
|
|
( |
) |
Equity-based compensation awards |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Earnings from unconsolidated entities, net |
|
|
( |
) |
|
|
( |
) |
Operating distributions from unconsolidated entities |
|
|
|
|
|
|
||
Decrease (increase) in operating receivables from unconsolidated entities |
|
|
|
|
|
( |
) |
|
Amortization of debt discounts and debt issuance costs, net |
|
|
|
|
|
|
||
Gains on dispositions of development properties and land, net |
|
|
( |
) |
|
|
( |
) |
Gains on other dispositions of investments in real estate, net |
|
|
( |
) |
|
|
( |
) |
Unrealized foreign currency and derivative losses (gains), net |
|
|
|
|
|
( |
) |
|
Gains on early extinguishment of debt, net |
|
|
( |
) |
|
|
( |
) |
Deferred income tax expense |
|
|
|
|
|
|
||
Decrease (increase) in other assets |
|
|
( |
) |
|
|
|
|
Increase in accounts payable and accrued expenses and other liabilities |
|
|
|
|
|
|
||
Net cash provided by operating activities |
|
|
|
|
|
|
||
Investing activities: |
|
|
|
|
|
|
||
Real estate development |
|
|
( |
) |
|
|
( |
) |
Real estate acquisitions |
|
|
( |
) |
|
|
( |
) |
Duke Transaction, net of cash acquired |
|
|
|
|
|
( |
) |
|
Tenant improvements and lease commissions on previously leased space |
|
|
( |
) |
|
|
( |
) |
Property improvements |
|
|
( |
) |
|
|
( |
) |
Proceeds from dispositions and contributions of real estate |
|
|
|
|
|
|
||
Investments in and advances to unconsolidated entities |
|
|
( |
) |
|
|
( |
) |
Return of investment from unconsolidated entities |
|
|
|
|
|
|
||
Proceeds from the settlement of net investment hedges |
|
|
|
|
|
|
||
Payments on the settlement of net investment hedges |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Financing activities: |
|
|
|
|
|
|
||
Distributions paid on common and preferred units |
|
|
( |
) |
|
|
( |
) |
Noncontrolling interests contributions |
|
|
|
|
|
|
||
Noncontrolling interests distributions |
|
|
( |
) |
|
|
( |
) |
Redemption of common limited partnership units |
|
|
( |
) |
|
|
( |
) |
Tax paid with shares of the Parent withheld |
|
|
( |
) |
|
|
( |
) |
Debt and equity issuance costs paid |
|
|
( |
) |
|
|
( |
) |
Net payments on credit facilities and commercial paper |
|
|
( |
) |
|
|
( |
) |
Repurchase of and payments on debt |
|
|
( |
) |
|
|
( |
) |
Proceeds from the issuance of debt |
|
|
|
|
|
|
||
Net cash provided by financing activities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Effect of foreign currency exchange rate changes on cash |
|
|
|
|
|
( |
) |
|
Net increase in cash and cash equivalents |
|
|
|
|
|
|
||
Cash and cash equivalents, beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents, end of period |
|
$ |
|
|
$ |
|
||
See Note 11 for information on noncash investing and financing activities and other information.
The accompanying notes are an integral part of these Consolidated Financial Statements.
10
PROLOGIS, INC. AND PROLOGIS, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. GENERAL
Business. Prologis, Inc. (or the “Parent”) commenced operations as a fully integrated real estate company in 1997, elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code” or “IRC”), and believes the current organization and method of operation will enable it to maintain its status as a REIT. The Parent is the general partner of Prologis, L.P. (or the “Operating Partnership” or “OP”). Through the OP, we are engaged in the ownership, acquisition, development and management of logistics facilities with a focus on key markets in
For each share of preferred or common stock the Parent issues, the OP issues a corresponding preferred or common partnership unit, as applicable, to the Parent in exchange for the contribution of the proceeds from the stock issuance. At September 30, 2024, the Parent owned a
As the sole general partner of the OP, the Parent has complete responsibility and discretion in the day-to-day management and control of the OP, and 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 general partner with control of the OP, the Parent is the primary beneficiary and therefore consolidates the OP. Because the Parent’s only significant asset is its investment in the OP, the assets and liabilities of the Parent and the OP are the same on their respective financial statements.
Basis of Presentation. The accompanying Consolidated Financial Statements are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and are presented in our reporting currency, the U.S. dollar. Intercompany transactions with consolidated entities have been eliminated.
The accompanying unaudited interim financial information has been prepared according to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in our annual financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations. Our management believes that the disclosures presented in these financial statements are adequate to make the information presented not misleading. In our opinion, all adjustments and eliminations, consisting only of normal recurring adjustments, necessary to present fairly the financial position and results of operations for both the Parent and the OP for the reported periods have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. The accompanying unaudited interim financial information should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC, and other public information.
Accounting Pronouncements.
New Accounting Standards Issued but not yet Adopted
Segment Reporting. In November 2023, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update (“ASU”) to improve reportable segments disclosure requirements. The ASU requires existing annual segment disclosures to also be disclosed on an interim basis, and also requires additional disclosures around significant segment expenses and disclosures to identify the title and position of the chief operating decision maker ("CODM"). The standard is effective for the fiscal year ended December 31, 2024 and interim periods thereafter. We do not expect the standard to have a material impact on our Consolidated Financial Statements as we anticipate the primary change will be additional disclosures in Note 10.
11
NOTE 2. REAL ESTATE
Investments in real estate properties consisted of the following (dollars and square feet in thousands):
|
Square Feet |
|
Number of Buildings |
|
|
|
||||||||||||
|
Sep 30, |
|
Dec 31, |
|
Sep 30, |
|
Dec 31, |
|
Sep 30, |
|
Dec 31, |
|
||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
||||||
Operating properties: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Buildings and improvements |
|
|
|
|
|
|
|
|
$ |
|
$ |
|
||||||
Improved land |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Development portfolio, including |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Prestabilized |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Properties under development |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Land (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other real estate investments (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total investments in real estate |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Less accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net investments in real estate |
|
|
|
|
|
|
|
|
$ |
|
$ |
|
||||||
Acquisitions
The following table summarizes our real estate acquisition activity, including energy assets (dollars and square feet in thousands):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2024 (1) |
|
|
2023 |
|
|
2024 (1) |
|
|
2023 (2) |
|
||||
Number of operating properties |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Square feet |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Acres of land |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Acquisition cost of net investments in real estate, excluding other real |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Acquisition cost of other real estate investments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
12
Dispositions
The following table summarizes our dispositions of net investments in real estate which include contributions to unconsolidated co-investment ventures and dispositions to third parties (dollars and square feet in thousands):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Dispositions of development properties and land, net (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Number of properties |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Square feet |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net proceeds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Gains on dispositions of development properties and land, net |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other dispositions of investments in real estate, net (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Number of properties |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Square feet |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net proceeds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Gains on other dispositions of investments in real estate, net |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Leases
We recognized lease right-of-use assets of $
Off-Balance Sheet Liabilities
We have entered into agreements, principally performance and surety bonds and standby letters of credit in connection with certain development and energy projects. At September 30, 2024 and December 31, 2023, we had $
NOTE 3. UNCONSOLIDATED ENTITIES
Summary of Investments
We have investments in entities through a variety of ventures. We co-invest in entities that own multiple properties with partners and investors and we provide asset management and property management services to these entities, which we refer to as co-investment ventures. These entities may be consolidated or unconsolidated depending on the structure, our partner’s participation and other rights and our level of control of the entity. This note details our investments in unconsolidated co-investment ventures, which are related parties and accounted for using the equity method of accounting. See Note 6 for more detail regarding our consolidated investments that are not wholly owned.
We also have investments in other ventures, generally with one partner, which we generally account for using the equity method. We refer to our investments in both unconsolidated co-investment ventures and other ventures, collectively, as unconsolidated entities.
13
The following table summarizes our investments in and advances to unconsolidated entities (in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
Unconsolidated co-investment ventures |
|
$ |
|
|
$ |
|
||
Other ventures (1) |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Unconsolidated Co-Investment Ventures
The following table summarizes the Strategic Capital Revenues we recognized in the Consolidated Statements of Income related to our unconsolidated co-investment ventures (in thousands):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Recurring fees |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Transactional fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Promote revenue (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total strategic capital revenues from unconsolidated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following table summarizes the key property information, financial position and operating information of our unconsolidated co-investment ventures on a U.S. GAAP basis (not our proportionate share) and the amounts we recognized in the Consolidated Financial Statements related to these ventures (dollars and square feet in millions):
|
U.S. |
|
|
Other Americas (1) |
|
|
Europe |
|
|
Asia |
|
|
Total |
|
|||||||||||||||||||||||||
At: |
Sep 30, |
|
|
Dec 31, |
|
|
Sep 30, |
|
|
Dec 31, |
|
|
Sep 30, |
|
|
Dec 31, |
|
|
Sep 30, |
|
|
Dec 31, |
|
|
Sep 30, |
|
|
Dec 31, |
|
||||||||||
Key property information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Square feet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial position: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Third-party debt ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total liabilities ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Our investment balance ($) (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Our weighted average ownership (4) |
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
U.S. |
|
|
Other Americas (1) |
|
|
Europe |
|
|
Asia |
|
|
Total |
|
|||||||||||||||||||||||||
Operating Information: |
Sep 30, |
|
|
Sep 30, |
|
|
Sep 30, |
|
|
Sep 30, |
|
|
Sep 30, |
|
|
Sep 30, |
|
|
Sep 30, |
|
|
Sep 30, |
|
|
Sep 30, |
|
|
Sep 30, |
|
||||||||||
For the three months ended: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net earnings ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Our earnings from unconsolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
For the nine months ended: |
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total revenues ($) |
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Net earnings ($) |
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||||||||||
Our earnings from unconsolidated |
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||||||||||
14
Equity Commitments Related to Certain Unconsolidated Co-Investment Ventures
At September 30, 2024, our outstanding equity commitments were $
NOTE 4. ASSETS HELD FOR SALE OR CONTRIBUTION
We had investments in certain real estate properties that met the criteria to be classified as held for sale or contribution at September 30, 2024 and December 31, 2023. At the time of classification, these properties were expected to be sold to third parties or were recently stabilized and expected to be contributed to unconsolidated co-investment ventures within twelve months. The amounts included in Assets Held for Sale or Contribution in the Consolidated Balance Sheets represented real estate investment balances and the related assets and liabilities.
Assets held for sale or contribution consisted of the following (dollars and square feet in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
Number of operating properties |
|
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|
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|
||
Square feet |
|
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||
Total assets held for sale or contribution |
|
$ |
|
|
$ |
|
||
Total liabilities associated with assets held for sale or contribution – included in Other Liabilities |
|
$ |
|
|
$ |
|
||
NOTE 5. DEBT
All debt is incurred by the OP or its consolidated subsidiaries. The following table summarizes our debt (dollars in thousands):
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||||||||||||
|
|
Weighted Average |
|
Amount |
|
|
Weighted Average |
|
Amount |
|
||||||||
|
|
Interest Rate (1) |
|
Years (2) |
|
Outstanding (3) |
|
|
Interest Rate (1) |
|
Years (2) |
|
Outstanding (3) |
|
||||
Credit facilities and |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
Senior notes |
|
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|
|
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|
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|
||||||
Term loans and |
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|
||||||
Secured mortgage |
|
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|
|
||||||
Total |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
15
|
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||||||||||||||
|
|
|
Weighted Average Interest Rate |
|
Amount Outstanding |
|
|
% of Total |
|
|
Weighted Average Interest Rate |
|
Amount Outstanding |
|
|
% of Total |
|
||||
|
British pound sterling |
|
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$ |
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% |
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$ |
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% |
||||||
|
Canadian dollar |
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% |
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% |
||||||
|
Chinese renminbi |
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% |
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% |
||||||
|
Euro |
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% |
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% |
||||||
|
Japanese yen |
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% |
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|
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% |
||||||
|
U.S. dollar |
|
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|
|
|
|
% |
|
|
|
|
|
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% |
||||||
|
Total |
|
|
$ |
|
|
|
% |
|
|
$ |
|
|
|
% |
||||||
In May 2022, Refinitive Benchmark Services (UK) Ltd. ("RBSL"), the administrator of the Canadian Dollar Offered Rate ("CDOR") formally announced that it would cease the calculation and publication of all tenors of CDOR effective June 28, 2024. In June 2024, we modified the interest rates on our Canadian term loan from 2022 ("2022 Canadian Term Loan") and our credit facility agreements that bore interest at CDOR plus a spread over the applicable benchmark to the Canadian Overnight Repo Rate Average ("CORRA"). The modification did not have a material impact on our Consolidated Financial Statements.
Credit Facilities and Commercial Paper
The following table summarizes information about our available liquidity at September 30, 2024 (in millions):
Aggregate lender commitments |
|
|
|
|
Credit facilities |
|
$ |
|
|
Less: |
|
|
|
|
Credit facility borrowings outstanding |
|
|
|
|
Commercial paper borrowings outstanding (1) |
|
|
|
|
Outstanding letters of credit |
|
|
|
|
Current availability |
|
|
|
|
Cash and cash equivalents |
|
|
|
|
Total liquidity |
|
$ |
|
|
Credit Facilities
We have two global senior credit facilities (the “2022 Global Facility” and "2023 Global Facility"), each with a borrowing capacity of $
We also have a Japanese yen revolver (the "Yen Credit Facility") with a borrowing capacity of ¥
We refer to the 2022 Global Facility, the 2023 Global Facility and the Yen Credit Facility, collectively, as our “Credit Facilities.” Pricing for the Credit Facilities, including the spread over the applicable benchmark and the rates applicable to facility fees and letter of credit fees, varies based on the public debt ratings of the OP.
Our Credit Facilities are utilized to support our cash needs for development and acquisition activities on a short-term basis. The maturities of the borrowings under the Credit Facilities generally range from overnight to three months.
Commercial Paper
In March 2024, we established a program under which we may issue, repay and re-issue short-term unsecured commercial paper notes denominated in U.S. dollars. The aggregate principal amount of notes outstanding under the CPP at any time cannot exceed $
16
range from overnight to three months. The notes are issued under customary terms in the commercial paper market and are issued at a discount from par or, alternatively, can be issued at par and bear varying interest rates on a fixed or floating basis. At any point in time, we are required to maintain available commitments under our Credit Facilities in an amount at least equal to the amount of the notes outstanding.
Senior Notes
The following table summarizes the issuances of senior notes during the nine months ended September 30, 2024 (principal in thousands):
|
|
Aggregate Principal |
|
|
Issuance Date Weighted Average |
|
|
|||||||||
Issuance Date |
|
Borrowing Currency |
|
|
USD (1) |
|
|
Interest Rate |
|
Years |
|
Maturity Dates |
||||
January |
|
$ |
|
|
|
$ |
|
|
|
|
|
|||||
February |
|
CN¥ |
|
|
|
$ |
|
|
|
|
|
|||||
March |
|
C$ |
|
|
|
$ |
|
|
|
|
|
|||||
May |
|
€ |
|
|
|
$ |
|
|
|
|
|
|||||
May |
|
£ |
|
|
|
$ |
|
|
|
|
|
|||||
July |
|
$ |
|
|
|
$ |
|
|
|
|
|
|||||
September |
|
CN¥ |
|
|
|
$ |
|
|
|
|
|
|||||
Total |
|
|
|
|
|
$ |
|
|
|
|
|
|
||||
Term Loans
In February 2024, we extinguished a $
In April 2024, we entered into a Japanese term loan totaling ¥
Long-Term Debt Maturities
Scheduled principal payments due on our debt for the remainder of 2024 and for each year through the period ended December 31, 2028, and thereafter were as follows at September 30, 2024 (in thousands):
|
|
Unsecured |
|
|
|
|
|
|
||||||||||||
|
|
Credit Facilities |
|
|
Senior |
|
|
Term Loans |
|
|
Secured |
|
|
|
|
|||||
Maturity |
|
Commercial Paper |
|
|
Notes |
|
|
and Other |
|
|
Mortgage |
|
|
Total |
|
|||||
2024 (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
2025 (1)(2) |
|
|
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|
|
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|
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|
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|
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|
|||||
2026 |
|
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|
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|
|
|
|
|
|||||
2027 (3) |
|
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|
|
|
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|
|||||
2028 |
|
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|
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|
|
|
|
|
|||||
Thereafter |
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|||||
Subtotal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Unamortized premiums (discounts), net |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Unamortized debt issuance costs, net |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
17
Financial Debt Covenants
Our Credit Facilities, senior notes and term loans outstanding at September 30, 2024 were subject to certain financial covenants under their related documents. At September 30, 2024, 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
NOTE 6. NONCONTROLLING INTERESTS
Prologis, L.P.
We report noncontrolling interests related to several entities we consolidate but of which we do not own 100% of the equity. These entities include two real estate partnerships that have issued limited partnership units to third parties. Depending on the specific partnership agreements, these limited partnership units are redeemable for cash or, at our option, shares of the Parent’s common stock, generally at a rate of
Prologis, Inc.
The noncontrolling interests of the Parent include the noncontrolling interests described above for the OP, as well as the limited partnership units in the OP that are not owned by the Parent. The outstanding limited partnership units receive quarterly cash distributions equal to the quarterly dividends paid on our common stock pursuant to the terms of the applicable partnership agreements.
The following table summarizes these entities (dollars in thousands):
|
Our Ownership Percentage |
|
|
Noncontrolling Interests |
|
|
Total Assets |
|
|
Total Liabilities |
|
||||||||||||||||||||
|
Sep 30, |
|
|
Dec 31, |
|
|
Sep 30, |
|
|
Dec 31, |
|
|
Sep 30, |
|
|
Dec 31, |
|
|
Sep 30, |
|
|
Dec 31, |
|
||||||||
Prologis U.S. Logistics Venture |
|
% |
|
|
% |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Other consolidated entities (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Prologis, L.P. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Limited partners in Prologis, L.P. (2)(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Prologis, Inc. |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
NOTE 7. LONG-TERM COMPENSATION
Equity-Based Compensation Plans and Programs
Prologis Outperformance Plan (“POP”)
We have allocated participation points or a percentage of the compensation pool to participants under our POP corresponding to
18
the period from the grant date to the date at which the awards vest, which ranges from to
The Outperformance Hurdle was met for the 2021 – 2023 performance period and the absolute maximum cap was earned and awarded in January 2024. The tables below include POP awards that were earned but are unvested, while any vested awards are reflected within the Consolidated Statements of Equity and Capital. The initial grant date fair value derived using a Monte Carlo valuation model was used in determining the grant date fair value per unit in the tables below.
Commencing in 2024, the named executive officers ("NEOs") and certain select employees will receive performance stock units ("PSUs"), discussed below, and no new awards will be made to these individuals under the POP. We granted participation points for the 2024 – 2026 performance period in January 2024, with a fair value of $
Performance Stock Unit Plan ("PSU Plan")
On January 16, 2024, PSUs were granted under the Company's 2020 Long-Term Incentive Plan and will be settled in equity at the end of a
We granted PSUs for the 2024 – 2026 performance period in January 2024, with a fair value of $
Other Equity-Based Compensation Plans and Programs
Our other equity-based compensation plans and programs include (i) the Prologis Promote Plan (“PPP”); (ii) the annual long-term incentive (“LTI”) equity award program (“Annual LTI Award”); and (iii) the annual bonus exchange program. Awards under these plans and programs may be issued in the form of RSUs or LTIP Units at the participant’s election. RSUs and LTIP Units are valued based on the market price of the Parent’s common stock on the date the award is granted and the grant date value is charged to compensation expense over the service period.
Summary of Award Activity
RSUs
The following table summarizes the activity for RSUs for the nine months ended September 30, 2024 (units in thousands):
|
|
|
|
|
Weighted Average |
|
||
|
|
Unvested RSUs |
|
|
Grant Date Fair Value |
|
||
Balance at January 1, 2024 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested and distributed |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Balance at September 30, 2024 |
|
|
|
|
$ |
|
||
19
LTIP Units
The following table summarizes the activity for LTIP Units for the nine months ended September 30, 2024 (units in thousands):
|
|
Unvested |
|
|
Weighted Average |
|
||
|
|
LTIP Units |
|
|
Grant Date Fair Value |
|
||
Balance at January 1, 2024 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested LTIP Units |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Balance at September 30, 2024 |
|
|
|
|
$ |
|
||
NOTE 8. EARNINGS PER COMMON SHARE OR UNIT
We determine basic earnings per share or unit based on the weighted average number of shares of common stock or units outstanding during the period. We compute diluted earnings per share or unit based on the weighted average number of shares or units outstanding combined with the incremental weighted average effect from all outstanding potentially dilutive instruments.
The computation of our basic and diluted earnings per share and unit was as follows (in thousands, except per share and unit amounts):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
Prologis, Inc. |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net earnings attributable to common stockholders – Basic |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Net earnings attributable to exchangeable limited partnership units (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted net earnings attributable to common stockholders – Diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding – Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Incremental weighted average effect on exchange of limited |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Incremental weighted average effect of equity awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding – Diluted (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net earnings per share attributable to common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
20
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
Prologis, L.P. |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net earnings attributable to common unitholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Net earnings attributable to Class A Units |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net earnings attributable to common unitholders – Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net earnings attributable to Class A Units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net earnings attributable to exchangeable other limited |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted net earnings attributable to common unitholders – Diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common partnership units outstanding – Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Incremental weighted average effect on exchange of Class A Units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Incremental weighted average effect on exchange of other limited |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Incremental weighted average effect of equity awards of Prologis, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common units outstanding – Diluted (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net earnings per unit attributable to common unitholders: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
Class A Units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Other limited partnership units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Equity awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Prologis, L.P. |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Common limited partnership units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Prologis, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
||||
NOTE 9. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Derivative Financial Instruments
In the normal course of business, our operations are exposed to market risks, including the effect of changes in foreign currency exchange rates and interest rates. We may enter into derivative financial instruments to offset these underlying market risks. There have been no significant changes in our policy and strategy from what was disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.
21
The following table presents the fair value of our derivative financial instruments recognized within Other Assets and Other Liabilities in the Consolidated Balance Sheets (in thousands):
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||||||||||
|
|
Asset |
|
|
Liability |
|
|
Asset |
|
|
Liability |
|
||||
Undesignated derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency contracts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forwards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Brazilian real |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
British pound sterling |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canadian dollar |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Chinese renminbi |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Euro |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Japanese yen |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Swedish krona |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mexican peso |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Designated derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency contracts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net investment hedges |
|
|
|
|
|
|
|
|
|
|
|
|
||||
British pound sterling |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canadian dollar |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate contracts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash flow hedges |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Euro |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. dollar |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total fair value of derivatives |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Undesignated Derivative Financial Instruments
Foreign Currency Contracts
The following table summarizes the activity of our undesignated foreign currency contracts for the nine months ended September 30 (in millions, except for weighted average forward rates and number of active contracts):
|
2024 |
|
|
2023 |
|
|||||||||||||||||||||||||||||||||||||||||
|
CAD |
|
|
EUR |
|
|
GBP |
|
|
JPY |
|
|
Other |
|
|
Total |
|
|
CAD |
|
|
EUR |
|
|
GBP |
|
|
JPY |
|
Other |
|
|
Total |
|
||||||||||||
Notional amounts at January 1 ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
New contracts ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Matured, expired or settled contracts ($) |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
( |
) |
|
Notional amounts at September 30 ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted average forward rate at September 30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Active contracts at September 30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
The following table summarizes the undesignated derivative financial instruments exercised and associated realized and unrealized gains (losses), respectively, in Foreign Currency, Derivative and Other Gains (Losses) and Other Income (Expense), Net in the Consolidated Statements of Income (in millions, except for number of exercised contracts):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Exercised contracts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized gains on the matured, expired or settled contracts |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Unrealized gains (losses) on the change in fair value of outstanding contracts |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Designated Derivative Financial Instruments
Changes in the fair value of derivatives that are designated as net investment hedges ("NIHs") of our foreign operations and cash flow hedges ("CFHs") are recorded in Accumulated Other Comprehensive Income (Loss) (“AOCI/L”) in the Consolidated Balance Sheets and reflected within the AOCI/L table below.
22
Foreign Currency Contracts
The following table summarizes the activity of our foreign currency contracts designated as NIHs for the nine months ended September 30 (in millions, except for weighted average forward rates and number of active contracts):
|
|
2024 |
|
|
2023 |
|
||||||||||||||||||||||
|
|
CAD |
|
|
GBP |
|
|
Total |
|
|
CAD |
|
|
CNH |
|
|
GBP |
|
|
Total |
|
|||||||
Notional amounts at January 1 ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
New contracts ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Matured, expired or settled contracts ($) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Notional amounts at September 30 ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Weighted average forward rate at |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Active contracts at September 30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Interest Rate Contracts
The following table summarizes the activity of our interest rate contracts designated as CFHs for the nine months ended September 30 (in millions):
|
|
2024 |
|
|
2023 |
|
||||||||||||||||||||||
|
|
EUR |
|
|
USD |
|
|
GBP |
|
|
Total |
|
|
EUR |
|
|
USD |
|
|
Total |
|
|||||||
Notional amounts at January 1 ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
New contracts ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Matured, expired or settled contracts ($) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Notional amounts at September 30 ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Designated Nonderivative Financial Instruments
The following table summarizes our debt and accrued interest, designated as a hedge of our net investment in international subsidiaries at the quarter ended (in millions):
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
British pound sterling |
|
$ |
|
|
$ |
|
||
Canadian dollar |
|
$ |
|
|
$ |
|
||
The following table summarizes the unrealized gains (losses) in Foreign Currency, Derivative and Other Gains (Losses) and Other Income (Expense), Net in the Consolidated Statements of Income on the remeasurement of the unhedged portion of our euro-denominated and Chinese renminbi-denominated debt and accrued interest (in millions):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Unrealized gains (losses) on the unhedged portion |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Accumulated Other Comprehensive Income (Loss) ("AOCI/L")
The change in AOCI/L in the Consolidated Statements of Equity during the periods presented was due to the following: i) the currency translation adjustments ("CTA") that we recognize due to the translation of the financial statements of our consolidated subsidiaries, whose functional currency is not the U.S. dollar, into U.S. dollars; and ii) the change in the fair value of the effective portion of our derivative financial instruments that have been designated as NIHs and CFHs and the translation of the hedged portion of our debt.
23
The following tables present these changes in AOCI/L (in thousands):
Three Months Ended September 30, 2024 and 2023
|
|
Unrealized losses |
|
|
Our share of derivatives from unconsolidated entities |
|
|
Derivative NIHs |
|
|
Debt designated as nonderivative NIHs (2) |
|
|
CTA |
|
|
Total AOCI/L |
|
||||||
Balance at |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|||
Other comprehensive |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|||
|
|
Unrealized gains on CFHs |
|
|
Our share of derivatives from unconsolidated entities |
|
|
Derivative NIHs |
|
|
Debt designated as nonderivative NIHs (2) |
|
|
CTA |
|
|
Total AOCI/L |
|
||||||
Balance at |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||||
Other comprehensive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance at |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||||
Nine Months Ended September 30, 2024 and 2023
|
|
Unrealized gains (losses) on CFHs (1) |
|
|
Our share of derivatives from unconsolidated entities |
|
|
Derivative NIHs |
|
|
Debt designated as nonderivative NIHs (2) |
|
|
CTA |
|
|
Total AOCI/L |
|
||||||
Balance at |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|||
Other comprehensive |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Balance at |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|||
|
|
Unrealized gains (losses) on CFHs |
|
|
Our share of derivatives from unconsolidated entities |
|
|
Derivative NIHs |
|
|
Debt designated as nonderivative NIHs (2) |
|
|
CTA |
|
|
Total AOCI/L |
|
||||||
Balance at |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||||
Other comprehensive |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Balance at |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||||
Fair Value Measurements
There have been no significant changes in our policy from what was disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.
Fair Value Measurements on a Recurring Basis
At September 30, 2024 and December 31, 2023, other than the derivatives discussed previously, we had no significant financial assets or financial liabilities that were measured at fair value on a recurring basis in the Consolidated Financial Statements. All of our derivatives held at September 30, 2024 and December 31, 2023, were classified as Level 2 of the fair value hierarchy.
24
Fair Value Measurements on Nonrecurring Basis
Acquired properties and assets we expect to sell or contribute are significant nonfinancial assets that met the criteria to be measured at fair value on a nonrecurring basis. At September 30, 2024 and December 31, 2023, we estimated the fair value of our properties using Level 2 or Level 3 inputs from the fair value hierarchy. See more information on our acquired properties in Note 2 and assets held for sale or contribution in Note 4.
Fair Value of Financial Instruments
At September 30, 2024 and December 31, 2023, the carrying amounts of certain financial instruments, including cash and cash equivalents, accounts and notes receivable, accounts payable and accrued expenses were representative of their fair values.
The differences in the fair value of our debt from the carrying value in the table below were the result of differences in interest rates or borrowing spreads that were available to us at September 30, 2024 and December 31, 2023, as compared with those in effect when the debt was issued or assumed, including lower borrowing spreads due to our credit ratings. See Note 5 for more information on our debt activity.
The following table reflects the carrying amounts and estimated fair values of our debt (in thousands):
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||||||||||
|
|
Carrying Value |
|
|
Fair Value |
|
|
Carrying Value |
|
|
Fair Value |
|
||||
Credit facilities and commercial paper |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Senior notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Term loans and unsecured other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Secured mortgage |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
NOTE 10. BUSINESS SEGMENTS
Our current business strategy includes
Below we present: (i) each reportable business segment’s revenues from external customers to Total Revenues; (ii) each reportable business segment’s net operating income from external customers to Operating Income and Earnings Before Income Taxes; and (iii) each reportable business segment’s assets to Total Assets. Our CODMs rely principally on net operating income and similar measures to make decisions about allocating resources and assessing segment performance. The applicable components of Total Revenues, Operating Income, Earnings Before Income Taxes and Total Assets in the Consolidated Financial Statements are allocated to each reportable business segment’s revenues, net operating income and assets. Items that are not directly assignable to a segment are not allocated but reflected as non-segment items (G&A expenses and real estate adjustments for depreciation and gains and losses on contributions and sales) due to how our CODMs utilize segment information for planning and execution of our business strategy.
25
The following reportable business segment revenues, net operating income and assets are presented in thousands:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Real estate segment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other Americas |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total real estate segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Strategic capital segment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other Americas |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total strategic capital segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment net operating income: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Real estate segment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other Americas |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total real estate segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Strategic capital segment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other Americas |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total strategic capital segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total segment net operating income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-segment items: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative expenses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Depreciation and amortization expenses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Gains on dispositions of development properties and land, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gains on other dispositions of investments in real estate, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings from unconsolidated entities, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Foreign currency, derivative and other gains (losses) and |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Gains on early extinguishment of debt, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings before income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
26
|
|
September 30, |
|
|
December 31, |
|
||
Segment assets: |
|
|
|
|
|
|
||
Real estate segment: |
|
|
|
|
|
|
||
U.S. |
|
$ |
|
|
$ |
|
||
Other Americas |
|
|
|
|
|
|
||
Europe |
|
|
|
|
|
|
||
Asia |
|
|
|
|
|
|
||
Total real estate segment |
|
|
|
|
|
|
||
Strategic capital segment: (3) |
|
|
|
|
|
|
||
U.S. |
|
|
|
|
|
|
||
Europe |
|
|
|
|
|
|
||
Asia |
|
|
|
|
|
|
||
Total strategic capital segment |
|
|
|
|
|
|
||
Total segment assets |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Non-segment items: |
|
|
|
|
|
|
||
Investments in and advances to unconsolidated entities |
|
|
|
|
|
|
||
Assets held for sale or contribution |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
|
|
|
|
|
||
Other assets |
|
|
|
|
|
|
||
Total non-segment items |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
NOTE 11. SUPPLEMENTAL CASH FLOW INFORMATION
Our significant noncash investing and financing activities for the nine months ended September 30, 2024 and 2023 included the following:
We paid $
We paid $
27
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Prologis, Inc.:
Results of Review of Interim Financial Information
We have reviewed the consolidated balance sheet of Prologis, Inc. and subsidiaries (the Company) as of September 30, 2024, the related consolidated statements of income, comprehensive income, and equity for the three-month and nine-month periods ended September 30, 2024 and 2023, the related consolidated statements of cash flows for the nine-month periods ended September 30, 2024 and 2023, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2023, and the related consolidated statements of income, comprehensive income, equity, and cash flows for the year then ended (not presented herein); and in our report dated February 13, 2024, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2023 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ KPMG LLP
Denver, Colorado
October 25, 2024
28
Report of Independent Registered Public Accounting Firm
To the Partners of Prologis, L.P. and the Board of Directors of Prologis, Inc.:
Results of Review of Interim Financial Information
We have reviewed the consolidated balance sheet of Prologis, L.P. and subsidiaries (the Operating Partnership) as of September 30, 2024, the related consolidated statements of income, comprehensive income, and capital for the three-month and nine-month periods ended September 30, 2024 and 2023, the related consolidated statements of cash flows for the nine-month periods ended September 30, 2024 and 2023, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Operating Partnership as of December 31, 2023, and the related consolidated statements of income, comprehensive income, capital, and cash flows for the year then ended (not presented herein); and in our report dated February 13, 2024, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2023 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
This consolidated interim financial information is the responsibility of the Operating Partnership’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ KPMG LLP
Denver, Colorado
October 25, 2024
29
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following should be read in conjunction with the Consolidated Financial Statements and related Notes included in Item 1 of this report and our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”).
The statements in this report 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 we operate as well as management’s beliefs and assumptions. Such statements involve uncertainties that could significantly impact our financial results. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “aims,” and “estimates” including 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, acquisition and development activity, contribution and disposition activity, general conditions in the geographic areas where we operate, expectations regarding new lines of business, our debt, capital structure and financial position, our ability to earn revenues from co-investment ventures or form new co-investment ventures and the availability of capital in existing or new co-investment ventures — 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. Some of the factors that may affect outcomes and results include, but are not limited to: (i) international, national, regional and local economic and political climates and conditions; (ii) changes in global financial markets, interest rates and foreign currency exchange rates; (iii) increased or unanticipated competition for our properties; (iv) risks associated with acquisitions, dispositions and development of properties, including the integration of the operations of significant real estate portfolios; (v) maintenance of Real Estate Investment Trust (“REIT”) status, tax structuring and changes in income tax laws and rates; (vi) availability of financing and capital, the levels of debt that we maintain and our credit ratings; (vii) risks related to our investments in and management of our co-investment ventures, including our ability to establish new co-investment ventures; (viii) risks of doing business internationally, including currency risks; (ix) environmental uncertainties, including risks of natural disasters; (x) risks related to global pandemics; and (xi) those additional factors discussed under Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023. We undertake no duty to update any forward-looking statements appearing in this report except as may be required by law.
Prologis, Inc. is a self-administered and self-managed REIT and is the sole general partner of Prologis, L.P. through which it holds substantially all of its assets. We operate Prologis, Inc. and Prologis, L.P. as one enterprise and, therefore, our discussion and analysis refers to Prologis, Inc. and its consolidated subsidiaries, including Prologis, L.P. We invest in real estate through wholly owned subsidiaries and other entities through which we co-invest with partners and investors ("co-investment ventures"). We have a significant ownership interest in the co-investment ventures, which are either consolidated or unconsolidated based on our level of control of the entity.
We operate, manage and measure the operating performance of our properties on an owned and managed (“O&M”) basis. Our O&M portfolio includes our consolidated properties as well as properties owned by our unconsolidated co-investment ventures, which we manage. We make operating decisions based on our total O&M portfolio as we manage the properties without regard to their ownership. We also evaluate our results based on our proportionate economic ownership of each property included in the O&M portfolio (“our share”).
Included in our discussion below are references to funds from operations (“FFO”) and net operating income (“NOI”), neither of which are United States ("U.S.") generally accepted accounting principles (“GAAP”). See below for a reconciliation of Net Earnings Attributable to Common Stockholders/Unitholders in the Consolidated Statements of Income to our FFO measures and a reconciliation of NOI to Operating Income in the Consolidated Statements of Income, the most directly comparable GAAP measures.
MANAGEMENT'S OVERVIEW
Prologis is the global leader in logistics real estate with a focus on high-barrier, high growth markets. We own, manage and develop well-located, high-quality logistics facilities in 20 countries across four continents. Our portfolio focuses on the world’s most vibrant centers of commerce and our scale across these locations allows us to better serve our customers’ diverse logistics requirements.
The importance of logistics supply chains has increased dramatically to our customers and the global economy. The long-term trends of e-commerce adoption and supply chain resiliency continue to drive the need for increased warehouse space to store and distribute goods. This demand has translated into meaningful increases in rents and low vacancy over the last several years. We believe this demand is driven by three primary factors: (i) customer supply chains re-positioning to address the significant shift to e-commerce and heightened service expectations; (ii) overall consumption and household growth; and (iii) our customers’ desire for more supply chain resiliency. We believe these forces will keep demand strong over the long term. In the short term, we expect some delay in our customers' leasing decisions over the next several quarters due to uncertainty in the economic and geopolitical environment.
30
Our teams actively manage our portfolio by providing comprehensive real estate services, including leasing, property management, development, acquisitions and dispositions. We also invest significant capital into new logistics properties through our development activity and third-party acquisitions. Proceeds from the disposition of properties, generally through the contribution of newly developed properties to our co-investment ventures and the sales of non-strategic properties to third parties, allow us to recycle capital back into our investment activities.
While the majority of our properties in the U.S. are wholly owned, we hold a significant ownership interest in properties both in the U.S. and internationally through our investment in the co-investment ventures. Partnering with the world’s largest institutional investors through co-investment ventures allows us to expand our investment capacity, enhance and diversify our real estate returns and mitigate our exposure to foreign currency movements.
Our scale and customer-focused strategy have compelled us to expand the services we provide. Our 1.2 billion square foot portfolio has provided the foundation upon which we have built a platform of solutions to address challenges that our customers face in global fulfillment today. Through Prologis Essentials, we focus on innovative ways to meet our customers’ operations and energy and sustainability needs. Our customer experience teams, proprietary technology and strategic partnerships are foundational to all aspects of our Prologis Essentials offerings. These resources allow us to provide our customers with unique and actionable insights and tools to help them make progress on sustainability goals and drive greater efficiency in their operations.
Finally, we believe our long-standing dedication to Environmental, Social and Governance (“ESG”) practices creates value for our customers, investors, employees and the communities in which we do business. The principles of ESG have been an important aspect of our business strategy that we believe delivers a strategic business advantage.
Our Global Presence
At September 30, 2024, we owned or had investments in, on a wholly-owned basis or through co-investment ventures, properties and development projects expected to total approximately 1.2 billion square feet across the following geographies:
Throughout this discussion, we reflect amounts in the U.S. dollar, our reporting currency. Included in these amounts are consolidated and unconsolidated investments denominated in foreign currencies, principally the British pound sterling, Canadian dollar, euro and Japanese yen that are impacted by fluctuations in exchange rates when translated to U.S. dollars. We mitigate our exposure to foreign currency fluctuations by investing outside the U.S. through co-investment ventures, borrowing in the functional currency of our subsidiaries and utilizing derivative financial instruments.
31
Our business comprises two operating segments: Real Estate (Rental Operations and Development) and Strategic Capital.
Below is information summarizing consolidated activity within our segments (in millions):
Real Estate Segment
Rental Operations. Rental operations comprise the largest component of our operating segments and generally contributes 90% to 95% of our consolidated revenues, earnings and FFO. We collect rent from our customers through operating leases, including reimbursements for the majority of our property operating costs. For leases that commenced during the nine months ended September 30, 2024, within the consolidated operating portfolio, the weighted average lease term was 63 months. We expect to generate earnings growth by increasing rents, maintaining high occupancy rates and controlling expenses. The primary driver of our revenue growth will be the rolling of in-place leases to current market rents when leases expire, as discussed further below. We believe our active portfolio management, combined with the skills of our property, leasing, maintenance, energy, sustainability and risk management teams allow us to maximize NOI across our portfolio. Substantially all of our consolidated rental revenue, NOI and cash flows from rental operations are generated in the U.S.
Development. Given the scarcity of modern logistics facilities in our target markets, our development business provides the opportunity to build to the evolving requirements of our customers while deepening our market presence. We believe we have a competitive advantage due to (i) the strategic locations of our global land bank and redevelopment sites; (ii) the development expertise of our local teams; (iii) the depth of our customer relationships; (iv) our ability to integrate sustainable design features that provide operational efficiencies for our customers; and (v) our procurement capabilities that allow us to secure high-demand construction materials at a lower cost. Successful development and redevelopment efforts provide significant earnings growth as projects are leased, generate income and increase the value of our Real Estate Segment. Generally, we develop properties in the U.S. to hold for the long-term and outside the U.S. for contribution to our unconsolidated co-investment ventures.
Strategic Capital Segment
Through the Strategic Capital Segment, we partner with many of the world’s largest institutional investors through unconsolidated co-investment ventures. The business is capitalized through private and public equity, of which 94% is in open ended ventures, long-term ventures or two publicly traded vehicles (Nippon Prologis REIT, Inc. in Japan and FIBRA Prologis in Mexico). We align our interests with our partners by holding significant ownership interests in our nine unconsolidated co-investment ventures (ranging from 15% to 50%). This structure allows us to reduce our exposure to foreign currency movements for investments outside the U.S.
This segment produces durable, long-term cash flows and generally contributes 5% to 10% of our consolidated revenues, earnings and FFO, excluding promotes. We generate strategic capital revenue from our unconsolidated co-investment ventures, principally through asset management and property management services. Revenue earned from asset management fees is primarily driven by the quarterly valuation of the real estate properties owned by the respective ventures. We earn additional revenues by providing leasing, acquisition, construction management, development and disposition services. In certain ventures, we also have the ability to earn revenues through incentive fees (“promotes” or “promote revenues”) periodically during the life of a venture, upon liquidation of a venture or upon stabilization of individual venture assets based primarily on the total return of the investments over certain financial hurdles. Promote revenues are recognized when earned at the end of the promote period for the specific co-investment ventures. We plan to grow this business and increase revenues by increasing our assets under management in existing or new ventures. The majority of the strategic capital revenues are generated outside the U.S.
32
FUTURE GROWTH
We believe that the quality and scale of our portfolio, our ability to build out our land bank and redevelopment sites, our strategic capital business, the depth of our customer relationships and the strength of our balance sheet are differentiators that allow us to drive growth in revenues, NOI, earnings, FFO and cash flows.
Rent change represents the percentage change in net effective rental rates (average rate over the lease term), on new and renewed leases, commenced during the period compared with previous net effective rental rates in that same space.
Based on our current estimates, our consolidated land and other real estate investments, including options and CLPs, have the potential to support the development of $36.0 billion ($40.7 billion on an O&M basis) of TEI of newly developed buildings. We measure the estimated value creation of a development project as the stabilized value above our TEI. As properties are completed and leased, we expect to realize the value creation principally through gains realized through contributions of these properties to unconsolidated co-investment ventures and increases in the NOI of the consolidated portfolio.
33
SUMMARY OF THE NINE MONTHS ENDED SEPTEMBER 30, 2024
Our operating results were strong during the nine months ended September 30, 2024 despite the softening of rents and occupancy in the market. Due to increases in market rents over the last several years, our existing lease mark-to-market drove rent change on rollover and same-store growth in our O&M portfolio. Our operating portfolio occupancy was 96.2% at September 30, 2024 and rent change on leases that commenced during the nine months ended September 30, 2024 was 69.5% on a net effective basis, both metrics based on our ownership share.
While our proprietary metrics around lease proposals are positive, we expect our customers to exercise caution in their leasing decisions through the remainder of 2024 due to uncertainty in the economic and geopolitical environment. Additionally, we are experiencing slower decision-making with build-to-suits and, as a result, expect limited speculative development in the short term. Despite the current environment, we believe we are well positioned to organically grow revenues over the long-term given the cumulative growth in market rents over the last several years and our existing high lease mark-to-market.
We completed the following significant activities in 2024, as described in the Notes to the Consolidated Financial Statements:
|
|
|
Aggregate Principal |
|
|
Issuance Date Weighted Average |
|
|
|||||||||
|
Issuance Date |
|
Borrowing Currency |
|
|
USD (1) |
|
|
Interest Rate |
|
Years |
|
Maturity Dates |
||||
|
January |
|
$ |
|
1,250 |
|
|
$ |
1,250 |
|
|
5.1% |
|
17.3 |
|
|
March 2034 – 2054 |
|
February |
|
CN¥ |
|
1,500 |
|
|
$ |
211 |
|
|
3.5% |
|
3.0 |
|
|
February 2027 |
|
March |
|
C$ |
|
550 |
|
|
$ |
405 |
|
|
4.7% |
|
5.0 |
|
|
March 2029 |
|
May |
|
€ |
|
550 |
|
|
$ |
592 |
|
|
4.0% |
|
10.0 |
|
|
May 2034 |
|
May |
|
£ |
|
350 |
|
|
$ |
439 |
|
|
5.6% |
|
16.0 |
|
|
May 2040 |
|
July |
|
$ |
|
1,100 |
|
|
$ |
1,100 |
|
|
5.1% |
|
17.5 |
|
|
January 2035 – March 2054 |
|
September |
|
CN¥ |
|
1,350 |
|
|
$ |
190 |
|
|
3.3% |
|
5.0 |
|
|
September 2029 |
|
Total |
|
|
|
|
|
$ |
4,187 |
|
|
4.8% |
|
13.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
(1) The exchange rate used to calculate into U.S. dollars was the spot rate at the settlement date of each issuance. |
||||||||||||||||
RESULTS OF OPERATIONS – NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
We evaluate our business operations based on the NOI of our two operating segments: Real Estate (Rental Operations and Development) and Strategic Capital. NOI by segment is a non-GAAP performance measure that is calculated using revenues and expenses directly from our financial statements. We consider NOI by segment to be an appropriate supplemental measure of our performance because it helps management and investors understand our operating results.
34
Below is our NOI by segment per the Consolidated Financial Statements and a reconciliation of NOI by segment to Operating Income per the Consolidated Financial Statements for the nine months ended September 30 (in millions):
|
|
2024 |
|
|
2023 |
|
||
Real estate segment: |
|
|
|
|
|
|
||
Rental revenues |
|
$ |
5,577 |
|
|
$ |
5,063 |
|
Development management and other revenues |
|
|
5 |
|
|
|
1 |
|
Rental expenses |
|
|
(1,327 |
) |
|
|
(1,217 |
) |
Other expenses |
|
|
(39 |
) |
|
|
(32 |
) |
Real Estate Segment – NOI |
|
|
4,216 |
|
|
|
3,815 |
|
|
|
|
|
|
|
|
||
Strategic capital segment: |
|
|
|
|
|
|
||
Strategic capital revenues |
|
|
419 |
|
|
|
1,071 |
|
Strategic capital expenses |
|
|
(211 |
) |
|
|
(307 |
) |
Strategic Capital Segment – NOI |
|
|
208 |
|
|
|
764 |
|
|
|
|
|
|
|
|
||
General and administrative expenses |
|
|
(316 |
) |
|
|
(292 |
) |
Depreciation and amortization expenses |
|
|
(1,924 |
) |
|
|
(1,846 |
) |
Operating income before gains on real estate transactions, net |
|
|
2,184 |
|
|
|
2,441 |
|
Gains on dispositions of development properties and land, net |
|
|
160 |
|
|
|
274 |
|
Gains on other dispositions of investments in real estate, net |
|
|
651 |
|
|
|
158 |
|
Operating income |
|
$ |
2,995 |
|
|
$ |
2,873 |
|
See Note 10 to the Consolidated Financial Statements for more information on our segments and a reconciliation of each business segment’s NOI to Operating Income and Earnings Before Income Taxes.
Real Estate Segment
This operating segment principally includes rental revenue and rental expenses recognized from our consolidated properties. This segment also includes the operating results of our energy assets. We allocate the costs of our property management and leasing functions to the Real Estate Segment through Rental Expenses and the Strategic Capital Segment through Strategic Capital Expenses, both in the Consolidated Financial Statements, based on the square footage of the relative portfolios. In addition, this segment is impacted by our development, acquisition and disposition activities.
Below are the components of Real Estate Segment NOI for the nine months ended September 30, derived directly from line items in the Consolidated Financial Statements (in millions):
|
|
2024 |
|
|
2023 |
|
||
Rental revenues |
|
$ |
5,577 |
|
|
$ |
5,063 |
|
Development management and other revenues |
|
|
5 |
|
|
|
1 |
|
Rental expenses |
|
|
(1,327 |
) |
|
|
(1,217 |
) |
Other expenses |
|
|
(39 |
) |
|
|
(32 |
) |
Real Estate Segment – NOI |
|
$ |
4,216 |
|
|
$ |
3,815 |
|
35
The $401 million change in Real Estate Segment (“RES”) NOI for the nine months ended September 30 compared to the same period in 2023, was impacted by the following activities (in millions):
Below are key operating metrics of our consolidated operating portfolio.
36
Development Activity
The following table summarizes consolidated development activity for the nine months ended September 30 (dollars and square feet in millions):
|
|
2024 |
|
|
2023 |
|
||
Starts: |
|
|
|
|
|
|
||
Number of new development buildings started during the period |
|
|
21 |
|
|
|
17 |
|
Square feet |
|
|
6 |
|
|
|
4 |
|
TEI |
|
$ |
885 |
|
|
$ |
1,335 |
|
Percentage of build-to-suits based on TEI |
|
|
27.7 |
% |
|
|
60.9 |
% |
|
|
|
|
|
|
|
||
Stabilizations: |
|
|
|
|
|
|
||
Number of development buildings stabilized during the period |
|
|
55 |
|
|
|
43 |
|
Square feet |
|
|
19 |
|
|
|
15 |
|
TEI |
|
$ |
3,317 |
|
|
$ |
1,863 |
|
Percentage of build-to-suits based on TEI |
|
|
27.4 |
% |
|
|
36.3 |
% |
Weighted average stabilized yield (1) |
|
|
6.0 |
% |
|
|
6.4 |
% |
Estimated value at completion |
|
$ |
3,812 |
|
|
$ |
2,505 |
|
Estimated weighted average margin (2) |
|
|
14.9 |
% |
|
|
34.5 |
% |
Estimated value creation |
|
$ |
495 |
|
|
$ |
642 |
|
At September 30, 2024, the consolidated development portfolio, including properties under development and pre-stabilized properties, was expected to be completed before August 2026 with a TEI of $5.4 billion and was 32.8% leased. This includes the development of data centers with an aggregate TEI of $1.1 billion, on a consolidated basis. Our investment in the development portfolio was $3.1 billion at September 30, 2024.
Capital Expenditures
We capitalize costs incurred in improving and leasing our operating properties as part of the investment basis or within Other Assets in the Consolidated Balance Sheets. The following graph summarizes recurring capitalized expenditures and leasing costs of our consolidated operating properties during each quarter and excludes development costs and spend subsequent to stabilization that is structural in nature and non-recurring:
Strategic Capital Segment
This operating segment includes revenues from asset management and property management services, transactional services for acquisition, disposition and leasing activity and promote revenue earned from the unconsolidated co-investment ventures. Revenues associated with the Strategic Capital Segment fluctuate because of changes in the size of the portfolios through acquisitions and dispositions, the fair value of the properties, timing of promotes, foreign currency exchange rates and other transactional activity. These revenues are reduced by the direct costs associated with the asset and property-level management expenses for the properties owned by these ventures. We allocate the costs of our property management and leasing functions to the Strategic Capital Segment through Strategic Capital Expenses and to the Real Estate Segment through Rental Expenses, both in the Consolidated Financial Statements,
37
based on the square footage of the relative portfolios. For further details regarding the key property information and summarized financial condition and operating results of our unconsolidated co-investment ventures, refer to Note 3 to the Consolidated Financial Statements.
Below are the components of Strategic Capital Segment NOI for the nine months ended September 30, derived directly from the line items in the Consolidated Financial Statements (in millions):
|
|
2024 |
|
|
2023 |
|
||
Strategic capital revenues |
|
$ |
419 |
|
|
$ |
1,071 |
|
Strategic capital expenses |
|
|
(211 |
) |
|
|
(307 |
) |
Strategic Capital Segment – NOI |
|
$ |
208 |
|
|
$ |
764 |
|
Below is additional detail of our Strategic Capital Segment revenues, expenses and NOI for the nine months ended September 30 (in millions):
|
|
U.S. (1) |
|
|
Other Americas |
|
|
Europe |
|
|
Asia |
|
|
Total |
|
|||||||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||||||
Strategic capital revenues ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Recurring fees (2) |
|
|
125 |
|
|
|
130 |
|
|
|
45 |
|
|
|
36 |
|
|
|
126 |
|
|
|
122 |
|
|
|
56 |
|
|
|
60 |
|
|
|
352 |
|
|
|
348 |
|
Transactional fees (3) |
|
|
13 |
|
|
|
16 |
|
|
|
5 |
|
|
|
5 |
|
|
|
16 |
|
|
|
13 |
|
|
|
8 |
|
|
|
15 |
|
|
|
42 |
|
|
|
49 |
|
Promote revenue (4) |
|
|
- |
|
|
|
641 |
|
|
|
24 |
|
|
|
33 |
|
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
25 |
|
|
|
674 |
|
Total strategic capital revenues ($) |
|
|
138 |
|
|
|
787 |
|
|
|
74 |
|
|
|
74 |
|
|
|
142 |
|
|
|
135 |
|
|
|
65 |
|
|
|
75 |
|
|
|
419 |
|
|
|
1,071 |
|
Strategic capital expenses ($) (4) |
|
|
(107 |
) |
|
|
(164 |
) |
|
|
(17 |
) |
|
|
(20 |
) |
|
|
(60 |
) |
|
|
(82 |
) |
|
|
(27 |
) |
|
|
(41 |
) |
|
|
(211 |
) |
|
|
(307 |
) |
Strategic Capital Segment– NOI ($) |
|
|
31 |
|
|
|
623 |
|
|
|
57 |
|
|
|
54 |
|
|
|
82 |
|
|
|
53 |
|
|
|
38 |
|
|
|
34 |
|
|
|
208 |
|
|
|
764 |
|
For promotes earned after January 2024, we amended the Prologis Promote Plan ("PPP") to award up to 25% of the third-party portion of the promotes earned by us from the co-investment ventures to our employees. This award is issued as a combination of cash and equity-based awards, pursuant to the terms of the PPP and expensed through Strategic Capital Expenses in the Consolidated Statements of Income, as vested. For promotes earned prior to January 2024, up to 40% of the third-party portion of promotes earned was awarded to certain employees.
G&A Expenses
G&A expenses were $316 million and $292 million for the nine months ended September 30, 2024 and 2023, respectively. G&A expenses increased in 2024 as compared to 2023, principally due to inflationary increases and higher compensation expenses. We capitalize certain internal costs that are incremental and directly related to our development and building improvement activities.
The following table summarizes capitalized G&A for the nine months ended September 30 (dollars in millions):
|
|
2024 |
|
|
2023 |
|
||
Building and land development activities |
|
$ |
103 |
|
|
$ |
96 |
|
Operating building improvements and other |
|
|
42 |
|
|
|
39 |
|
Total capitalized G&A expenses |
|
$ |
145 |
|
|
$ |
135 |
|
Capitalized compensation and related costs as a percent of total |
|
|
24.8 |
% |
|
|
23.6 |
% |
38
Depreciation and Amortization Expenses
Depreciation and amortization expenses were $1.9 billion and $1.8 billion for the nine months ended September 30, 2024 and 2023, respectively.
The $78 million change in depreciation and amortization expenses for the nine months ended September 30, 2024 compared to the same period in 2023, was impacted by the following items (in millions):
Gains on Real Estate Transactions, Net
Gains on the disposition of development properties and land were $160 million and $274 million for the nine months ended September 30, 2024 and 2023, respectively, primarily from the contribution of properties we developed to unconsolidated co-investment ventures in the U.S. and Europe in 2024 and in Japan in 2023. Gains on other dispositions of investments in real estate were $651 million and $158 million for the nine months ended September 30, 2024 and 2023, respectively. The gains recognized in 2024 are primarily from the contribution of operating properties to our U.S. unconsolidated co-investment venture, and both 2024 and 2023 include the sale of non-strategic properties in the U.S.
Historically, we have utilized the proceeds from these transactions primarily to fund our acquisition and development activities. See Note 2 to the Consolidated Financial Statements for further information on these transactions.
Our Owned and Managed (“O&M”) Operating Portfolio
We manage our business and review our operating fundamentals on an O&M basis, which includes our consolidated properties and properties owned by our unconsolidated co-investment ventures. We believe reviewing the results in this way allows management to understand performance more broadly as we manage the properties without regard to their ownership. We do not control the unconsolidated co-investment ventures for purposes of GAAP and the presentation of the ventures’ operating information does not represent a legal claim.
Our O&M operating portfolio does not include our development portfolio, value-added properties, non-industrial properties or properties that we consider non-strategic and do not have the intent to hold long term that are classified as either held for sale or within other real estate investments. Value-added properties are properties we have either acquired at a discount and believe we could provide greater returns post-stabilization or properties we expect to repurpose to a higher and better use. See below for information on our O&M operating portfolio (square feet in millions):
|
September 30, 2024 |
|
December 31, 2023 |
||||||||||||||||
|
Number of Properties |
|
|
Square |
|
|
Percentage Occupied |
|
Number of Properties |
|
|
Square |
|
|
Percentage Occupied |
||||
Consolidated |
|
3,007 |
|
|
|
649 |
|
|
96.1% |
|
|
2,957 |
|
|
|
631 |
|
|
97.6% |
Unconsolidated |
|
2,278 |
|
|
|
519 |
|
|
95.8% |
|
|
2,242 |
|
|
|
507 |
|
|
97.5% |
Total |
|
5,285 |
|
|
|
1,168 |
|
|
95.9% |
|
|
5,199 |
|
|
|
1,138 |
|
|
97.6% |
39
Below are the key leasing metrics of our O&M operating portfolio.
Same Store Analysis
Our same store metrics are non-GAAP financial measures, which are commonly used in the real estate industry and expected from the financial community, presented on both a net effective and cash basis. We evaluate the performance of the operating properties we own and manage using a “same store” analysis to ensure that the population of properties in this analysis is consistent from period to period, allowing us and investors to analyze our ongoing business operations. We determine our same store metrics on property NOI, which is calculated as rental revenue less rental expense for the applicable properties in the same store population for both consolidated and unconsolidated properties based on our ownership interest, as further defined below.
We define our same store population for the three months ended September 30, 2024 as the properties in our O&M operating portfolio, including the property NOI for both consolidated properties and properties owned by the unconsolidated co-investment ventures, at January 1, 2023 and owned throughout the same three-month period in both 2023 and 2024. We believe the drivers of property NOI for the consolidated portfolio are generally the same for the properties owned by the ventures in which we invest and therefore we evaluate the same store metrics of the O&M portfolio based on Prologis’ ownership in the properties (“Prologis Share”). The same store population excludes properties held for sale to third parties, along with development properties that were not stabilized at the beginning of the period (January 1, 2023) and properties acquired or disposed of to third parties during the period. To derive an appropriate measure of period-to-period operating performance, we remove the effects of foreign currency exchange rate movements by using the reported period-end exchange rate to translate from local currency into the U.S. dollar, for both periods.
40
As non-GAAP financial measures, the same store metrics have certain limitations as analytical tools and may vary among real estate companies. As a result, we provide a reconciliation of Rental Revenues less Rental Expenses (“Property NOI”) (from our Consolidated Financial Statements prepared in accordance with U.S. GAAP) to our Same Store Property NOI measures, as follows for the three months ended September 30 (dollars in millions):
|
|
|
|
|
|
|
Percentage |
|
|||
|
2024 |
|
|
2023 |
|
|
Change |
|
|||
Reconciliation of Consolidated Property NOI to Same Store Property NOI measures: |
|
||||||||||
|
|
|
|
|
|
|
|
|
|||
Rental revenues |
$ |
1,897 |
|
|
$ |
1,777 |
|
|
|
|
|
Rental expenses |
|
(427 |
) |
|
|
(416 |
) |
|
|
|
|
Consolidated Property NOI |
|
1,470 |
|
|
|
1,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Adjustments to derive same store results: |
|
|
|
|
|
|
|
|
|||
Property NOI from consolidated properties not included in same store portfolio and |
|
(238 |
) |
|
|
(189 |
) |
|
|
|
|
Property NOI from unconsolidated co-investment ventures included in same store portfolio (1)(2) |
|
809 |
|
|
|
749 |
|
|
|
|
|
Third parties' share of Property NOI from properties included in same store portfolio (1)(2) |
|
(641 |
) |
|
|
(603 |
) |
|
|
|
|
Prologis Share of Same Store Property NOI – Net Effective (2) |
$ |
1,400 |
|
|
$ |
1,318 |
|
|
|
6.2 |
% |
Consolidated properties straight-line rent and fair value lease amortization |
|
(120 |
) |
|
|
(124 |
) |
|
|
|
|
Unconsolidated co-investment ventures straight-line rent and fair value lease |
|
(16 |
) |
|
|
(15 |
) |
|
|
|
|
Third parties' share of straight-line rent and fair value lease amortization included |
|
13 |
|
|
|
12 |
|
|
|
|
|
Prologis Share of Same Store Property NOI – Cash (2)(3) |
$ |
1,277 |
|
|
$ |
1,191 |
|
|
|
7.2 |
% |
During the periods presented, certain wholly owned properties were contributed to a co-investment venture and are included in the same store portfolio. Neither our consolidated results nor those of the co-investment ventures, when viewed individually, would be comparable on a same store basis because of the changes in composition of the respective portfolios from period to period (e.g. the results of a contributed property are included in our consolidated results through the contribution date and in the results of the venture subsequent to the contribution date based on our ownership interest at the end of the period). As a result, only line items labeled “Prologis Share of Same Store Property NOI” are comparable period over period.
We manage our business and compensate our executives based on the same store results of our O&M portfolio at 100% as we manage our portfolio on an ownership blind basis. We calculate those results by including 100% of the properties included in our same store portfolio.
41
Other Components of Income (Expense)
Earnings from Unconsolidated Entities, Net
We recognized net earnings from unconsolidated entities, which are generally accounted for using the equity method, of $260 million and $218 million for the nine months ended September 30, 2024 and 2023, respectively.
The earnings we recognize can be impacted by: (i) the size, rental rates and occupancy of the portfolio of properties owned by each venture; (ii) interest expense based on the size of the debt portfolio; (iii) gains or losses from the dispositions of properties and extinguishment of debt; (iv) our ownership interest in each venture; (v) other variances in revenues and expenses of each venture; and (vi) fluctuations in foreign currency exchange rates used to translate our share of net earnings to U.S. dollars.
See the discussion of our unconsolidated entities above in the Strategic Capital Segment discussion and in Note 3 to the Consolidated Financial Statements for a further breakdown of our share of net earnings recognized.
Interest Expense
The following table details our net interest expense for the nine months ended September 30 (dollars in millions):
|
|
2024 |
|
|
2023 |
|
||
Gross interest expense |
|
$ |
656 |
|
|
$ |
490 |
|
Amortization of debt discount and debt issuance costs, net |
|
|
59 |
|
|
|
56 |
|
Capitalized amounts |
|
|
(83 |
) |
|
|
(79 |
) |
Net interest expense |
|
$ |
632 |
|
|
$ |
467 |
|
Weighted average effective interest rate during the period |
|
|
3.1 |
% |
|
|
2.7 |
% |
Interest expense increased during the nine months ended September 30, 2024, as compared to the same period in 2023, principally due to the issuance of senior notes to finance our acquisition and development activities and higher interest rates on new issuances. We issued $4.2 billion of senior notes during the nine months ended September 30, 2024 and $5.4 billion during the year ended December 31, 2023, with a weighted average interest rate of 4.8% and 4.7%, respectively, at the issuance date.
See Note 5 to the Consolidated Financial Statements and the Liquidity and Capital Resources section below, for further discussion of our debt and borrowing costs.
Foreign Currency, Derivative and Other Gains (Losses) and Other Income (Expense), Net
We recognized foreign currency, derivative and other gains (losses) and other income (expense), net, of $63 million and $103 million for the nine months ended September 30, 2024 and 2023, respectively. Included in these amounts was interest income earned on short-term investments.
We are exposed to foreign currency exchange risk related to investments in and earnings from our foreign investments. We primarily hedge our foreign currency risk related to our investments by borrowing in the currencies in which we invest thereby providing a natural hedge. We have issued debt in a currency that is not the same functional currency of the borrowing entity and have designated a portion of the debt as a nonderivative net investment hedge. We recognize the remeasurement and settlement of the translation adjustment on the unhedged portion of the debt and accrued interest in unrealized gains or losses. We may use derivative financial instruments to manage foreign currency exchange rate risk related to our earnings. We recognize the change in fair value of the undesignated derivative contracts in unrealized gains and losses. Upon settlement of these transactions, we recognize realized gains or losses.
The following table details our foreign currency and derivative gains (losses), net for the nine months ended September 30 included in earnings (in millions):
|
|
2024 |
|
|
2023 |
|
||
Realized foreign currency and derivative gains, net: |
|
|
|
|
|
|
||
Gains on the settlement of undesignated derivatives |
|
$ |
50 |
|
|
$ |
42 |
|
Gains (losses) on the settlement of transactions with third parties |
|
|
(1 |
) |
|
|
2 |
|
Total realized foreign currency and derivative gains, net |
|
|
49 |
|
|
|
44 |
|
|
|
|
|
|
|
|
||
Unrealized foreign currency and derivative gains (losses), net: |
|
|
|
|
|
|
||
Gains (losses) on the change in fair value of undesignated derivatives and unhedged debt |
|
|
(44 |
) |
|
|
16 |
|
Gains (losses) on remeasurement of certain assets and liabilities |
|
|
(17 |
) |
|
|
6 |
|
Total unrealized foreign currency and derivative gains (losses), net |
|
|
(61 |
) |
|
|
22 |
|
Total foreign currency and derivative gains (losses), net |
|
$ |
(12 |
) |
|
$ |
66 |
|
42
See Note 9 to the Consolidated Financial Statements for more information about our derivative and nonderivative transactions.
Income Tax Expense
We recognize income tax expense related to our taxable REIT subsidiaries and in the local, state and foreign jurisdictions in which we operate. Our current income tax expense (benefit) fluctuates from period to period based primarily on the timing of our taxable income, including gains on the disposition of properties, fees earned from the co-investment ventures and taxable earnings from unconsolidated co-investment ventures. Deferred income tax expense (benefit) is generally a function of the period’s temporary differences and the utilization of net operating losses generated in prior years that had been previously recognized as deferred income tax assets in taxable subsidiaries.
The following table summarizes our income tax expense for the nine months ended September 30 (in millions):
|
|
2024 |
|
|
2023 |
|
||
Current income tax expense: |
|
|
|
|
|
|
||
Income tax expense |
|
$ |
71 |
|
|
$ |
117 |
|
Income tax expense on dispositions |
|
|
7 |
|
|
|
26 |
|
Total current income tax expense |
|
|
78 |
|
|
|
143 |
|
|
|
|
|
|
|
|
||
Deferred income tax expense: |
|
|
|
|
|
|
||
Income tax expense |
|
|
2 |
|
|
|
10 |
|
Total deferred income tax expense |
|
|
2 |
|
|
|
10 |
|
Total income tax expense |
|
$ |
80 |
|
|
$ |
153 |
|
Net Earnings Attributable to Noncontrolling Interests
Net earnings attributable to noncontrolling interests represents the third-party investors’ share of the earnings generated in consolidated entities in which we do not own 100% of the equity, reduced by the third-party share of fees or promotes payable to us and earned during the period. We had net earnings attributable to noncontrolling interests of $153 million and $149 million for the nine months ended September 30, 2024 and 2023, respectively. Included in these amounts were $61 million for both the nine months ended September 30, 2024 and 2023, of net earnings attributable to the common limited partnership unitholders of Prologis, L.P.
See Note 6 to the Consolidated Financial Statements for further information on our noncontrolling interests.
Other Comprehensive Income (Loss)
The key driver of changes in Accumulated Other Comprehensive Income (Loss) (“AOCI/L”) in the Consolidated Financial Statements during the nine months ended September 30, 2024 and 2023, was the currency translation adjustment derived from changes in exchange rates during both periods principally on our net investments in real estate outside the U.S. and the borrowings we issue in the functional currencies of the countries where we invest. These borrowings serve as a natural hedge of our foreign investments. In addition, we use derivative financial instruments, such as foreign currency contracts to manage foreign currency exchange rate risk related to our foreign investments and interest rate contracts to manage interest rate risk, that when designated the change in fair value is included in AOCI/L.
See Note 9 to the Consolidated Financial Statements for more information on changes in other comprehensive income and about our derivative and nonderivative transactions.
RESULTS OF OPERATIONS – THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
Except as separately discussed above, the changes in comprehensive income attributable to common stockholders and unitholders and its components for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, are similar to the changes for the nine-month periods ended on the same dates.
LIQUIDITY AND CAPITAL RESOURCES
Overview
We consider our ability to generate cash from operating activities, distributions from our co-investment ventures, contributions and dispositions of properties and available financing sources to be adequate to meet our anticipated future development, acquisition, operating, debt service, dividend and distribution requirements.
43
Near-Term Principal Cash Sources and Uses
In addition to dividends and distributions, we expect our primary cash needs will consist of the following:
We expect to fund our cash needs principally from the following sources (subject to market conditions):
In the long term, we may also voluntarily repurchase our outstanding debt or equity securities (depending on prevailing market conditions, our liquidity, contractual restrictions and other factors) through cash purchases, open-market purchases, privately negotiated transactions, tender offers or otherwise. We may also fund our cash needs from the issuance of equity securities, subject to market conditions, and through the sale of a portion of our investments in co-investment ventures.
44
Debt
The following table summarizes information about our consolidated debt by currency (dollars in millions):
|
|
September 30, 2024 |
|
|
|
|
|
December 31, 2023 |
|
|
|
|
||||||||
|
|
Weighted Average |
|
Amount |
|
|
% of Total |
|
|
Weighted Average |
|
Amount |
|
|
% of Total |
|
||||
British pound sterling |
|
3.0% |
|
$ |
1,834 |
|
|
|
5.7 |
% |
|
2.1% |
|
$ |
1,300 |
|
|
|
4.5 |
% |
Canadian dollar |
|
5.0% |
|
|
1,127 |
|
|
|
3.5 |
% |
|
5.0% |
|
|
830 |
|
|
|
2.9 |
% |
Chinese renminbi |
|
3.6% |
|
|
651 |
|
|
|
2.0 |
% |
|
3.7% |
|
|
242 |
|
|
|
0.8 |
% |
Euro |
|
2.2% |
|
|
10,880 |
|
|
|
33.7 |
% |
|
2.0% |
|
|
10,084 |
|
|
|
34.8 |
% |
Japanese yen |
|
1.1% |
|
|
3,354 |
|
|
|
10.4 |
% |
|
1.0% |
|
|
3,086 |
|
|
|
10.6 |
% |
U.S. dollar |
|
4.1% |
|
|
14,444 |
|
|
|
44.7 |
% |
|
4.1% |
|
|
13,459 |
|
|
|
46.4 |
% |
Total debt (1) |
|
3.1% |
|
$ |
32,290 |
|
|
|
100.0 |
% |
|
3.0% |
|
$ |
29,001 |
|
|
|
100.0 |
% |
Our credit ratings at September 30, 2024, were A from Standard & Poor's with a stable outlook and A3 from Moody’s with a positive outlook. These ratings allow us to borrow at an advantageous interest rate. Adverse changes in our credit ratings could negatively impact our business and, in particular, our refinancing and other capital market activities, our ability to manage debt maturities, our future growth and our development and acquisition activity. A securities rating is not a recommendation to buy, sell or hold securities and is subject to revision or withdrawal at any time by the rating organization.
At September 30, 2024, we were in compliance with all of our financial debt covenants. These covenants include a number of customary financial covenants, such as maintaining debt service coverage ratios, leverage ratios and fixed charge coverage ratios.
See Note 5 to the Consolidated Financial Statements for further discussion on our debt.
Equity Commitments Related to Certain Co-Investment Ventures
Certain co-investment ventures have equity commitments from us and our venture partners. Our venture partners fulfill their equity commitment with cash. We may fulfill our equity commitment through contributions of properties or cash.
The following table summarizes the remaining equity commitments at September 30, 2024 (dollars in millions):
|
Equity Commitments (1) |
|
|
|
|||||||||
|
Prologis |
|
|
Venture |
|
|
Total |
|
|
Expiration Date |
|||
Prologis Targeted U.S. Logistics Fund |
$ |
- |
|
|
$ |
200 |
|
|
$ |
200 |
|
|
2026 – 2027 (2) |
Prologis Brazil Logistics Venture |
|
32 |
|
|
|
127 |
|
|
|
159 |
|
|
2026 |
Prologis European Logistics Fund |
|
- |
|
|
|
160 |
|
|
|
160 |
|
|
2027 (2) |
Prologis Japan Core Logistics Fund |
|
99 |
|
|
|
510 |
|
|
|
609 |
|
|
2033 |
Prologis China Logistics Venture |
|
186 |
|
|
|
1,057 |
|
|
|
1,243 |
|
|
2024 – 2028 |
Total |
$ |
317 |
|
|
$ |
2,054 |
|
|
$ |
2,371 |
|
|
|
See the Cash Flow Summary below for more information about our investment activity in our co-investment ventures.
Cash Flow Summary
The following table summarizes our cash flow activity for the nine months ended September 30 (in millions):
|
2024 |
|
|
2023 |
|
||
Net cash provided by operating activities |
$ |
3,577 |
|
|
$ |
4,299 |
|
Net cash used in investing activities |
$ |
(3,419 |
) |
|
$ |
(5,212 |
) |
Net cash provided by financing activities |
$ |
92 |
|
|
$ |
1,404 |
|
Net increase in cash and cash equivalents, including the effect of foreign currency exchange |
$ |
250 |
|
|
$ |
462 |
|
45
Operating Activities
Cash provided by and used in operating activities, exclusive of changes in receivables and payables, was impacted by the following significant activities during the nine months ended September 30, 2024 and 2023:
Investing Activities
Cash provided by investing activities is driven by proceeds from the sale of real estate assets that include the contribution of properties we developed to our unconsolidated co-investment ventures as well as the sale of non-strategic operating properties. Cash used in investing activities is principally driven by our capital deployment activities of investing in real estate development, acquisitions and capital expenditures as discussed above. This activity includes land for future development, operating properties, other real estate assets and real estate portfolios, such as the $3.1 billion portfolio acquired in the second quarter of 2023. See Note 2 to the Consolidated Financial Statements for further information on these activities. In addition, the following significant transactions also impacted our cash used in and provided by investing activities during the nine months ended September 30, 2024 and 2023:
Financing Activities
Cash provided by and used in financing activities is principally driven by proceeds from and payments on credit facilities, commercial paper and other debt, along with dividends paid on common and preferred stock and noncontrolling interest contributions and distributions. Our credit facilities and our commercial paper support our cash needs for development and acquisition activities on a
46
short-term basis. The maturities of the borrowings under the credit facilities and the notes under the commercial paper program generally range from overnight to three months.
Our repurchase of and payments on debt and proceeds from the issuance of debt consisted of the following activity for the nine months ended September 30 (in millions):
|
|
2024 |
|
|
2023 |
|
||
Repurchase of and payments on debt (including extinguishment costs) |
|
|
|
|
|
|
||
Regularly scheduled debt principal payments and payments at maturity |
|
$ |
329 |
|
|
$ |
28 |
|
Secured mortgage debt |
|
|
89 |
|
|
|
153 |
|
Senior notes |
|
|
- |
|
|
|
89 |
|
Term loans |
|
|
500 |
|
|
|
- |
|
Total |
|
$ |
918 |
|
|
$ |
270 |
|
|
|
|
|
|
|
|
||
Proceeds from the issuance of debt |
|
|
|
|
|
|
||
Secured mortgage debt |
|
$ |
6 |
|
|
$ |
112 |
|
Senior notes |
|
|
4,149 |
|
|
|
5,323 |
|
Term loans |
|
|
129 |
|
|
|
312 |
|
Total |
|
$ |
4,284 |
|
|
$ |
5,747 |
|
Unconsolidated Co-Investment Venture Debt
We had investments in and advances to our unconsolidated co-investment ventures of $9.3 billion at September 30, 2024. These ventures had total third-party debt of $16.6 billion at September 30, 2024 with a weighted average remaining maturity of 6 years and weighted average interest rate of 3.3%. The weighted average loan-to-value ratio for all unconsolidated co-investment ventures was 29.1% at September 30, 2024 based on gross book value. Loan-to-value, a non-GAAP measure, was calculated as the percentage of total third-party debt to the gross book value of real estate for each venture and weighted based on the cumulative gross book value of all unconsolidated co-investment ventures.
At September 30, 2024, we did not guarantee any third-party debt of the unconsolidated co-investment ventures.
Dividend and Distribution Requirements
Our dividend policy on our common stock is to distribute a percentage of our cash flow to ensure that we will meet the dividend requirements of the Internal Revenue Code ("IRC"), relative to maintaining our REIT status, while still allowing us to retain cash to fund our capital deployment and other investment activities.
Under the IRC, REITs may be subject to certain federal income and excise taxes on undistributed taxable income.
We paid quarterly cash dividends of $0.96 and $0.87 per common share in each of the first three quarters of 2024 and 2023, respectively. Our future common stock dividends, if and as declared, may vary and will be determined by the Board based upon the circumstances prevailing at the time, including our financial condition, operating results and REIT distribution requirements, and may be adjusted at the discretion of the Board during the year.
We make distributions on the common limited partnership units outstanding at the same per unit amount as our common stock dividend. The Class A common limited partnerships units ("Class A Units") in the OP are entitled to a quarterly distribution equal to $0.64665 per unit so long as the common units receive a quarterly distribution of at least $0.40 per unit. We paid a quarterly cash distribution of $0.64665 per Class A Unit in the first three quarters of 2024 and 2023.
At September 30, 2024, our Series Q preferred stock had an annual dividend rate of 8.54% per share and the dividends are payable quarterly in arrears.
Pursuant to the terms of our preferred stock, we are restricted from declaring or paying any dividend with respect to our common stock unless and until all cumulative dividends with respect to the preferred stock have been paid and sufficient funds have been set aside for dividends that have been declared for the relevant dividend period with respect to the preferred stock.
Other Commitments
On an ongoing basis, we are engaged in various stages of negotiations for the acquisition or disposition of individual properties or portfolios of properties.
47
FUNDS FROM OPERATIONS ATTRIBUTABLE TO COMMON STOCKHOLDERS/UNITHOLDERS (“FFO”)
FFO is a non-GAAP financial measure that is commonly used in the real estate industry. The most directly comparable GAAP measure to FFO is net earnings.
The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as earnings computed under GAAP to exclude historical cost depreciation and gains and losses from the sales net of any related tax, along with impairment charges, of previously depreciated properties. We also exclude the gains on revaluation of equity investments upon acquisition of a controlling interest and the gain recognized from a partial sale of our investment, as these are similar to gains from the sales of previously depreciated properties. We exclude similar adjustments from our unconsolidated entities and the third parties’ share of our consolidated ventures.
Our FFO Measures
Our FFO measures begin with NAREIT’s definition and we make certain adjustments to reflect our business and the way that management plans and executes our business strategy. While not infrequent or unusual, the additional items we adjust for in calculating FFO, as modified by Prologis and Core FFO, both as defined below, are subject to significant fluctuations from period to period. Although these items may have a material impact on our operations and are reflected in our financial statements, the removal of the effects of these items allows us to better understand the core operating performance of our properties over the long term. These items have both positive and negative short-term effects on our results of operations in inconsistent and unpredictable directions that are not relevant to our long-term outlook.
We calculate our FFO measures, as defined below, based on our proportionate ownership share of both our unconsolidated entities and consolidated ventures. We reflect our share of our FFO measures for unconsolidated entities by applying our average ownership percentage for the period to the applicable adjusting items on an entity-by-entity basis. We reflect our share for consolidated ventures in which we do not own 100% of the equity by adjusting our FFO measures to remove the noncontrolling interests share of the applicable adjusting items based on our average ownership percentage for the applicable periods.
These FFO measures are used by management as supplemental financial measures of operating performance and we believe that it is important that stockholders, potential investors and financial analysts understand the measures management uses. We do not use our FFO measures as, nor should they be considered to be, alternatives to net earnings computed under GAAP, as indicators of our operating performance, as alternatives to cash from operating activities computed under GAAP or as indicators of our ability to fund our cash needs.
We analyze our operating performance principally by the rental revenue of our real estate and the revenues from our strategic capital business, net of operating, administrative and financing expenses. This income stream is not directly impacted by fluctuations in the market value of our investments in real estate or debt securities.
FFO, as modified by Prologis attributable to common stockholders/unitholders (“FFO, as modified by Prologis”)
To arrive at FFO, as modified by Prologis, we adjust the NAREIT defined FFO measure to exclude the impact of foreign currency related items and deferred tax, specifically:
We use FFO, as modified by Prologis, so that management, analysts and investors are able to evaluate our performance against other REITs that do not have similar operations or operations in jurisdictions outside the U.S.
Core FFO attributable to common stockholders/unitholders (“Core FFO”)
In addition to FFO, as modified by Prologis, we also use Core FFO. To arrive at Core FFO, we adjust FFO, as modified by Prologis, to exclude the following recurring and nonrecurring items that we recognize directly in FFO, as modified by Prologis:
48
We use Core FFO, including by segment and region, to: (i) assess our operating performance as compared to other real estate companies; (ii) evaluate our performance and the performance of our properties in comparison with expected results and results of previous periods; (iii) evaluate the performance of our management; (iv) budget and forecast future results to assist in the allocation of resources; (v) provide guidance to the financial markets to understand our expected operating performance; and (vi) evaluate how a specific potential investment will impact our future results.
Limitations on the use of our FFO measures
While we believe our modified FFO measures are important supplemental measures, neither NAREIT’s nor our measures of FFO should be used alone because they exclude significant economic components of net earnings computed under GAAP and are, therefore, limited as an analytical tool. Accordingly, these are only a few of the many measures we use when analyzing our business. Some of the limitations are:
49
We compensate for these limitations by using our FFO measures only in conjunction with net earnings computed under GAAP when making our decisions. This information should be read with our complete Consolidated Financial Statements prepared under GAAP. To assist investors in compensating for these limitations, we reconcile our modified FFO measures to our net earnings computed under GAAP for the nine months ended September 30 as follows (in millions):
|
|
2024 |
|
|
2023 |
|
||
Reconciliation of net earnings attributable to common stockholders to FFO measures: |
|
|
|
|
|
|
||
Net earnings attributable to common stockholders |
|
$ |
2,448 |
|
|
$ |
2,424 |
|
|
|
|
|
|
|
|
||
Add (deduct) NAREIT defined adjustments: |
|
|
|
|
|
|
||
Real estate related depreciation and amortization |
|
|
1,870 |
|
|
|
1,811 |
|
Gains on other dispositions of investments in real estate, net of taxes (excluding development |
|
|
(651 |
) |
|
|
(156 |
) |
Adjustments related to noncontrolling interests |
|
|
(31 |
) |
|
|
(24 |
) |
Our proportionate share of adjustments related to unconsolidated entities |
|
|
333 |
|
|
|
342 |
|
NAREIT defined FFO attributable to common stockholders/unitholders |
|
|
3,969 |
|
|
|
4,397 |
|
|
|
|
|
|
|
|
||
Add (deduct) our modified adjustments: |
|
|
|
|
|
|
||
Unrealized foreign currency, derivative and other losses (gains), net |
|
|
61 |
|
|
|
(26 |
) |
Deferred income tax expense |
|
|
2 |
|
|
|
10 |
|
Our proportionate share of adjustments related to unconsolidated entities |
|
|
(3 |
) |
|
|
(6 |
) |
FFO, as modified by Prologis attributable to common stockholders/unitholders |
|
|
4,029 |
|
|
|
4,375 |
|
|
|
|
|
|
|
|
||
Adjustments to arrive at Core FFO: |
|
|
|
|
|
|
||
Gains on dispositions of development properties and land, net |
|
|
(160 |
) |
|
|
(274 |
) |
Current income tax expense on dispositions |
|
|
7 |
|
|
|
24 |
|
Gains on early extinguishment of debt, net |
|
|
(1 |
) |
|
|
(3 |
) |
Adjustments related to noncontrolling interests |
|
|
- |
|
|
|
9 |
|
Our proportionate share of adjustments related to unconsolidated entities |
|
|
(5 |
) |
|
|
1 |
|
Core FFO attributable to common stockholders/unitholders |
|
$ |
3,870 |
|
|
$ |
4,132 |
|
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to the impact of foreign exchange-related variability and earnings volatility on our foreign investments and interest rate changes. See our risk factors in Part 1, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023. See also Note 9 in the Consolidated Financial Statements in Item 1 for more information about our foreign operations and derivative financial instruments.
We monitor our market risk exposures using a sensitivity analysis. Our sensitivity analysis estimates the exposure to market risk sensitive instruments assuming a hypothetical 10% adverse change in foreign currency exchange rates or interest rates at September 30, 2024. The results of the sensitivity analysis are summarized in the following sections. The sensitivity analysis is of limited predictive value. As a result, revenues and expenses, as well as our ultimate realized gains or losses with respect to foreign currency exchange rate and interest rate fluctuations will depend on the exposures that arise during a future period, hedging strategies at the time and the prevailing foreign currency exchange rates and interest rates.
Foreign Currency Risk
We are exposed to foreign currency exchange variability related to investments in and earnings from our foreign investments. Foreign currency market risk is the possibility that our results of operations or financial position could be better or worse than planned because of changes in foreign currency exchange rates. We primarily hedge our foreign currency risk by borrowing in the currencies in which we invest thereby providing a natural hedge. Additionally, we hedge our foreign currency risk by entering into derivative financial instruments, such as foreign currency contracts, that we designate as net investment hedges, as these amounts offset the translation adjustments on the underlying net assets of our foreign investments. At September 30, 2024, after consideration of our ability to borrow in the foreign currencies in which we invest and also derivative and nonderivative financial instruments as discussed in Note 9 to the Consolidated Financial Statements, we had minimal net equity denominated in a currency other than the U.S. dollar.
50
For the nine months ended September 30, 2024, $434 million or 7.2% of our total consolidated revenue was denominated in foreign currencies. We enter into foreign currency contracts that we do not designate, such as forwards, to reduce the impact from fluctuations in foreign currency associated with the translation of the future earnings of our international subsidiaries. At September 30, 2024, we had foreign currency contracts denominated principally in British pound sterling, Canadian dollar, euro and Japanese yen, with an aggregate notional amount of $1.6 billion. As we do not designate these foreign currency contracts as hedges, the gain or loss on settlement is included in our earnings and offsets the lower or higher translation of earnings from our investments denominated in currencies other than the U.S. dollar. Although the impact to net earnings is mitigated through higher translated U.S. dollar earnings from these currencies, a weakening of the U.S. dollar against these currencies by 10% could result in a $163 million cash payment on settlement of these contracts.
Interest Rate Risk
We are also exposed to the impact of interest rate changes on future earnings and cash flows. To mitigate that risk, we generally borrow with fixed rate debt and we may use derivative instruments to fix the interest rate on our variable rate debt. At September 30, 2024, $31.2 billion of our debt bore interest at fixed rates and therefore the fair value of these instruments was affected by changes in market interest rates. At September 30, 2024, $1.7 billion of our debt bore interest at variable rates. The following table summarizes the future repayment of debt and scheduled principal payments at September 30, 2024 (dollars in millions):
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|
2027 |
|
|
Thereafter |
|
|
Total |
|
|
Fair Value |
|
|||||||
Fixed rate debt |
|
$ |
2 |
|
|
$ |
275 |
|
|
$ |
1,472 |
|
|
$ |
2,017 |
|
|
$ |
27,422 |
|
|
$ |
31,188 |
|
|
$ |
28,801 |
|
Weighted average interest rate (1) |
|
|
4.0 |
% |
|
|
3.4 |
% |
|
|
3.3 |
% |
|
|
2.2 |
% |
|
|
3.2 |
% |
|
|
3.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Variable rate debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Credit facilities |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
661 |
|
|
$ |
- |
|
|
$ |
661 |
|
|
$ |
661 |
|
Secured mortgage debt |
|
|
- |
|
|
|
43 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
43 |
|
|
|
43 |
|
Term loans |
|
|
- |
|
|
|
222 |
|
|
|
595 |
|
|
|
- |
|
|
|
175 |
|
|
|
992 |
|
|
|
991 |
|
Total variable rate debt |
|
$ |
- |
|
|
$ |
265 |
|
|
$ |
595 |
|
|
$ |
661 |
|
|
$ |
175 |
|
|
$ |
1,696 |
|
|
$ |
1,695 |
|
At September 30, 2024, the weighted average effective interest rate on our variable rate debt was 2.7% which was calculated using an average balance on our credit facilities throughout the year and our other variable rate debt balances at September 30, 2024. Changes in interest rates can cause interest expense to fluctuate on our variable rate debt. On the basis of our sensitivity analysis, a 10% increase in interest rates on our average outstanding variable rate debt balances would result in additional annual interest expense of $4 million for the quarter ended September 30, 2024, which equates to a change in interest rates of 27 basis points on our average outstanding variable rate debt balances and one basis point on our average total debt portfolio balances.
ITEM 4. Controls and Procedures
Controls and Procedures (Prologis, Inc.)
Prologis, Inc. carried out an evaluation under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the disclosure controls and procedures (as defined in Rule 13a-14(c)) under the Securities and Exchange Act of 1934 (the “Exchange Act”) at September 30, 2024. Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms.
Changes in Internal Control over Financial Reporting
There have not been any changes in Prologis, Inc.’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, Prologis, Inc.’s internal control over financial reporting.
51
Controls and Procedures (Prologis, L.P.)
Prologis, L.P. carried out an evaluation under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the disclosure controls and procedures (as defined in Rule 13a-14(c)) under the Exchange Act at September 30, 2024. Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms.
Changes in Internal Control over Financial Reporting
There have not been any changes in Prologis, L.P.’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, Prologis, L.P.’s internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
Prologis and our unconsolidated entities are party to a variety of legal proceedings arising in the ordinary course of business. With respect to any such matters to which we are currently a party, the ultimate disposition of any such matters will not result in a material adverse effect on our business, financial position or results of operations.
ITEM 1A. Risk Factors
At September 30, 2024, no material changes had occurred in our risk factors as discussed in Item 1A. in our Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the quarterly period ended September 30, 2024, we issued 0.2 million shares of common stock of Prologis, Inc. in connection with the redemption of common units of Prologis, L.P. in reliance on the exemption from registration requirements of the Securities Act of 1933, as amended (the "Act"), afforded by Section 4(a)(2) thereof.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Mine Safety Disclosures
Not Applicable.
ITEM 5. Other Information
During the quarterly period ended September 30, 2024, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act)
ITEM 6. Exhibits
The exhibits required by this item are set forth on the Exhibit Index attached hereto.
52
INDEX TO EXHIBITS
Certain of the following documents are filed herewith. Certain other of the following documents that have been previously filed with the Securities and Exchange Commission (“SEC”) and, pursuant to Rule 12b-32, are incorporated herein by reference.
4.1 |
|
|
|
4.2 |
|
|
|
4.3 |
|
|
|
4.4 |
|
|
|
15.1† |
|
|
|
15.2† |
|
|
|
22.1† |
|
|
|
31.1† |
|
|
|
31.2† |
|
|
|
31.3† |
|
|
|
31.4† |
|
|
|
32.1† |
|
|
|
32.2† |
|
|
|
101.INS† |
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document. |
|
|
101.SCH† |
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
|
|
104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
|
|
† |
Filed herewith |
53
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.
|
PROLOGIS, INC. |
|
|
|
|
|
By: |
/s/ Timothy D. Arndt |
|
|
Timothy D. Arndt |
|
|
Chief Financial Officer |
|
|
|
|
By: |
/s/ Lori A. Palazzolo |
|
|
Lori A. Palazzolo |
|
|
Managing Director and Chief Accounting Officer |
|
|
|
|
PROLOGIS, L.P. |
|
|
|
|
|
By: |
Prologis, Inc., its general partner |
|
|
|
|
By: |
/s/ Timothy D. Arndt |
|
|
Timothy D. Arndt |
|
|
Chief Financial Officer |
|
|
|
|
By: |
/s/ Lori A. Palazzolo |
|
|
Lori A. Palazzolo |
|
|
Managing Director and Chief Accounting Officer |
|
|
|
Date: October 25, 2024
54