SAN FRANCISCO, Jan. 26, 2016 /PRNewswire/ -- Prologis, Inc. (NYSE: PLD), the global leader in industrial real estate, today reported results for the fourth quarter and full year 2015.

HIGHLIGHTS


    --  Core funds from operations per diluted share was $2.23, up 19 percent
        year-over-year
    --  Prologis' share of GAAP same store NOI increased 5.6 percent for the
        full year
    --  Prologis' share of estimated value creation was $699 million, $533
        million from development stabilizations, reflecting a 32.5 percent
        margin and $166 from value-added conversions
    --  Short-term financing associated with the acquisition of the KTR real
        estate portfolio was reduced to $400 million, ahead of plan

"Financial and operating results in 2015 exceeded expectations and reflected outstanding execution by the team and favorable market conditions," said Hamid Moghadam, chairman and CEO, Prologis. "We enter 2016 with record occupancy levels, substantial requirements from our customers to further optimize their supply chains, and strong institutional interest in our co-investment ventures."

"In spite of macroeconomic uncertainty, vacancy rates are at all-time lows. Discussions with our global customers support our view that the power of domestic consumption and the growth of e-commerce will continue to drive demand for well-located distribution space, particularly in major gateway markets," Moghadam added. "Given our expectations that supply and demand will reach equilibrium by the end of 2016 in the U.S., we anticipate an extended period of low vacancy that will support favorable operating conditions."




    STRONG OPERATING PERFORMANCE CONTINUES


     Owned
     &
     Managed                                4Q15             4Q14                     Notes
     -------                                ----             ----                     -----

     Period                                                               Ended 2015 with record global
     End                                                                  occupancy
     Occupancy                                   96.9%            96.1%
    ----------                                    ----              ----   ------------------------------

     Leases                           40MSF            42MSF              More than 166MSF leased in
     Signed                                                               2015
    -------                                      -----            -----  ---------------------------

     Customer
     Retention                                   85.9%            85.5%
     ---------                                    ----              ----


     Prologis
     Share                                  4Q15             4Q14                     Notes
     --------                               ----             ----                     -----

     Rent
     Change
     (GAAP)                                      12.4%             8.4%        Led by the U.S. at 18.0%
     ------                                       ----               ---          -----------------------

     Rent
     Change
     (Cash)                                       2.9%             0.7%
     ------                                        ---               ---

     Same
     store
     NOI
     (GAAP)                                       6.6%             4.9%         Led by the U.S. at 8.7%
     ------                                        ---               ---           ----------------------

     Same
     store
     NOI
     (Cash)                                       4.5%             5.2%
     ------                                        ---               ---


    CAPITAL DEPLOYMENT PRICING AND MARGINS REMAIN STRONG


    Prologis Share
     (Millions of $)                            4Q15                2015                  Notes
    ----------------                            ----                ----                  -----

    Building
     Acquisitions                                       $554       $4,069
    -------------                                       ----       ------

          Weighted avg
           stabilized cap
           rate                                         5.2%        5.5%
          ---------------                                ---          ---

    Development
     Stabilizations                                     $290       $1,640
    ---------------                                     ----       ------

          Estimated
           weighted avg
           margin                                      25.5%       32.5%
          -------------                                 ----         ----

          Estimated value                                $74         $533     Estimated weighted average
           creation                                                         yield of 7.3% in 2015
          ---------------                                ---        ----   ---------------------------

    Value Creation
     from Value-
     Added
     Conversions                                          $0         $166
    --------------                                       ---         ----

    Development
     Starts                                             $569       $1,815
    -----------                                         ----       ------

         Estimated
          weighted avg
          margin                                       20.2%       20.9%
         -------------                                  ----         ----

          % Build-to-suit                              56.1%       43.6%    Projects include Amazon,
                                                                            Hitachi, Siemens and Subaru
          ---------------                               ----        ----   ----------------------------

    Total                                  Excludes the sale of the Morris
     Dispositions                                                           retail portfolio in December
     (Buildings and                                                         2015 to affiliates of
     Land) and                                                              Blackstone Real Estate
     Contributions                                      $819       $2,524     Advisors L.P.
    ---------------                                     ----       ------    -------------------------------

          Weighted avg                                                      Excludes land and other real
           stabilized cap                                                   estate
           rate                                         6.4%        5.3%
    ---------------------                                ---          ---       -----------------------------

"We completed more than 35 dispositions and contributions in the fourth quarter at strong pricing, demonstrating that buyer demand for high-quality industrial real estate remains strong and diverse," said Michael Curless, chief investment officer, Prologis. "We continue to deploy capital profitably to meet our customers' needs, and are very pleased with the $1.8 billion of developments that we stabilized this year at margins in excess of 30 percent."

FINANCING ACTIVITY STRENGTHENS BALANCE SHEET
During the fourth quarter, Prologis completed $1.8 billion of refinancings and reduced the short-term financing associated with the acquisition of the KTR real estate portfolio to $400 million.

"Our key credit metrics improved as our book leverage was reduced to 38.4 percent and our debt-to-EBITDA ratio declined to 6.9 times or 6.0 times, including realized development gains. We continue to maintain considerable liquidity with over $2.8 billion at year end and we have no bond maturities until 2018," said Thomas S. Olinger, chief financial officer, Prologis. "With the capital recycling activity currently underway, we are on track to pay down the remaining short-term financing during the first half of the year as well as fund our 2016 deployment needs."

GAAP NET EARNINGS
Net earnings per diluted share was $0.23 for the fourth quarter compared with $0.81 for the same period in 2014. For the full year 2015, net earnings per diluted share was $1.64 compared with $1.24 for the full year 2014.



    GUIDANCE ESTABLISHED FOR 2016 - CORE FFO EXPECTED TO
     GROW 14% YEAR-OVER-YEAR


    Per diluted share
    -----------------

    Core FFO                                    $2.50 to $2.60
    --------                                    --------------

    GAAP Net Earnings                           $0.28 to $0.36
    -----------------                           --------------


    Operations

    Year-end occupancy                          96.0% to 97.0%
    ------------------                           -------------

    GAAP Same store NOI - Prologis
     share                                        3.5% to 4.5%
    ------------------------------                 -----------


    Other Assumptions (in millions)

    Strategic capital revenue                     $180 to $190
    -------------------------                     ------------

    Net promote income                             $90 to $100
    ------------------                             -----------

    General & administrative expense              $235 to $245
    --------------------------------              ------------

    Realized development gains                    $150 to $200
    --------------------------                    ------------


    Annualized fourth quarter 2015
     dividend                                            $1.60
    ------------------------------                       -----


    Capital Deployment (in millions)

    Development stabilizations (80%
     Prologis share)                          $2,000 to $2,200
    -------------------------------           ----------------

    Development starts (80% Prologis
     share)                                   $1,800 to $2,300
    --------------------------------          ----------------

    Building acquisitions (40%
     Prologis share)                              $400 to $700
    --------------------------                    ------------

    Building and land dispositions
     (75% Prologis share)                     $1,700 to $2,200
    ------------------------------            ----------------

    Building contributions (75%
     Prologis share, net of retained
     ownership)                                 $900 to $1,200
    --------------------------------            --------------

The Core FFO and earnings guidance described above excludes any potential future gains (losses) recognized from real estate transactions. In reconciling from net earnings to Core FFO, Prologis makes certain adjustments, including but not limited to real estate depreciation and amortization expense, gains (losses) recognized from real estate transactions and early extinguishment of debt, acquisition costs, impairment charges, deferred taxes and unrealized gains or losses on foreign currency or derivative activity. The difference between the company's Core FFO and net earnings guidance for 2016 relates predominantly to these items.

WEBCAST & CONFERENCE CALL INFORMATION
Prologis will host a live webcast and conference call to discuss quarterly results, current market conditions and future outlook. Here are the event details:


    --  Tuesday, January 26, 2016 at 12 p.m. U.S. Eastern Time.
    --  Live webcast at http://ir.prologis.com by clicking Investors>Investor
        Events and Presentations
    --  Dial in: +1 877-256-7020 or +1 973-409-9692 and enter Passcode 19377453.

A telephonic replay will be available January 26-February 2 at +1 (855) 859-2056 (from the United States and Canada) or +1 (404) 537-3406 (from all other countries) using conference code 19377453. The webcast replay will be posted when available in the Investor Relations "Events & Presentations" section.

ABOUT PROLOGIS
Prologis, Inc. is the global leader in industrial real estate. As of December 31, 2015, Prologis owned or had investments in, on a wholly owned basis or through co-investment ventures, properties and development projects expected to total approximately 669 million square feet (62 million square meters) in 20 countries. The company leases modern distribution facilities to more than 5,200 customers, including third-party logistics providers, transportation companies, retailers and manufacturers.

FORWARD-LOOKING STATEMENTS
The statements in this document that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which Prologis operates, management's beliefs and assumptions made by management. Such statements involve uncertainties that could significantly impact Prologis' financial results. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements, which generally are not historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future -- including statements relating to rent and occupancy growth, development activity and changes in sales or contribution volume of properties, disposition activity, general conditions in the geographic areas where we operate, our debt and financial position, our ability to 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) national, international, regional and local economic climates, (ii) changes in financial markets, interest rates and foreign currency exchange rates, (iii) increased or unanticipated competition for our properties, (iv) risks associated with acquisitions, dispositions and development of properties, (v) maintenance of real estate investment trust ("REIT") status and tax structuring, (vi) availability of financing and capital, the levels of debt that we maintain and our credit ratings, (vii) risks related to our investments in our co-investment ventures and funds, including our ability to establish new co-investment ventures and funds, (viii) risks of doing business internationally, including currency risks, (ix) environmental uncertainties, including risks of natural disasters, and (x) those additional factors discussed in reports filed with the Securities and Exchange Commission by Prologis under the heading "Risk Factors." Prologis undertakes no duty to update any forward-looking statements appearing in this document.


                                                                                 Three Months ended                Twelve Months ended December
                                                                                       December 31,                                31,
                                                                                -------------------               ----------------------------

    (dollars in thousands, except per share
     data)                                                                                         2015                                     2014               2015               2014

                       Revenues                                        $643,201                            $450,865                                 $2,197,074         $1,760,787

                        Net earnings
                        attributable to
                        common
                        stockholders                                    118,363                             408,609                                    862,788            622,235

                       Core FFO                                         345,758                             246,421                                  1,181,290            953,147

                       AFFO                                             307,607                             234,954                                  1,287,869            903,253

                       Adjusted EBITDA                                  514,705                             414,311                                  1,936,351          1,629,614

                        Value creation from
                        development
                        stabilizations -
                        Prologis share                                   73,923                              46,138                                    533,213            235,784

                       Common stock
                        dividends and
                        common limited
                        partnership units
                        paid                                            219,170                             168,261                                    806,946            668,286


                        Per common share -
                        diluted:

                        Net earnings
                        attributable to
                        common
                        stockholders                                      $0.23                               $0.81                                      $1.64              $1.24

                       Core FFO                                            0.64                                0.48                                       2.23               1.88

                        Business line
                        reporting:

                                            Real estate operations                                    0.55                                     0.44               2.02               1.68

                                            Strategic capital                                         0.09                                     0.04               0.21               0.20
                                                                                                      ----                                     ----               ----               ----

                                            Core FFO                                                  0.64                                     0.48               2.23               1.88

                                            Realized development gains                                0.10                                     0.09               0.49               0.29

                        Dividends and
                        distributions per
                        common share/unit                                  0.40                                0.33                                       1.52               1.32


    (in thousands)                                                                                    December 31, 2015                 September 30, 2015                    December 31, 2014
    -------------                                                                                     -----------------                 ------------------                    -----------------

    Assets:

                             Investments in real
                             estate properties:

                            Operating properties                                                              $23,735,745                            $23,499,186                            $18,635,452

                             Development
                             portfolio                                                                          1,872,903                              1,575,389                              1,473,980

                            Land                                                                                1,359,794                              1,569,416                              1,577,786

                             Other real estate
                             investments                                                                          552,926                                625,367                                502,927
                                                                                                                  -------                                -------                                -------

                                                                                                                             27,521,368                             27,269,358                             22,190,145

                             Less accumulated
                             depreciation                                                                       3,274,284                              3,156,445                              2,790,781
                                                                                                                ---------                              ---------                              ---------

                                                                       Net investments in real estate
                                                                       properties                                            24,247,084                             24,112,913                             19,399,364

                             Investments in and
                             advances to
                             unconsolidated entities                                                            4,755,620                              4,841,225                              4,824,724

                            Assets held for sale                                                                  378,423                                369,382                                 43,934

                             Notes receivable backed
                             by real estate                                                                       235,050                                197,500                                      -


                                                                      Net investments in real estate                         29,616,177                             29,521,020                             24,268,022


                             Cash and cash
                             equivalents                                                                          264,080                                310,433                                350,692

                            Other assets                                                                        1,514,510                              1,544,579                              1,156,287

                                                                      Total assets                                          $31,394,767                            $31,376,032                            $25,775,001
                                                                                                                            ===========                            ===========                            ===========


    Liabilities and Equity:

                            Liabilities:

                            Debt                                                                              $11,626,831                            $11,891,033                             $9,336,977

                             Accounts payable,
                             accrued expenses
                             and other
                             liabilities                                                                        1,347,100                              1,300,028                              1,254,425

                                                                      Total liabilities                                      12,973,931                             13,191,061                             10,591,402
                                                                                                                             ----------                             ----------                             ----------


                            Equity:

                             Stockholders'
                             equity:

                                                   Preferred stock                                                   78,235                                 78,235                                 78,235

                                                   Common stock                                                       5,245                                  5,242                                  5,095

                                                    Additional paid-
                                                    in capital                                                   19,302,367                             19,150,336                             18,467,009

                                                    Accumulated other
                                                    comprehensive
                                                    loss                                                          (791,429)                             (776,570)                             (600,337)

                                                    Distributions in
                                                    excess of net
                                                    earnings                                                    (3,926,483)                           (3,825,673)                            (3,974,493)
                                                                                                                 ----------                             ----------                             ----------

                                                                      Total stockholders' equity                             14,667,935                             14,631,570                             13,975,509

                             Noncontrolling
                             interests                                                                          3,320,227                              3,371,425                              1,159,901

                             Noncontrolling
                             interests -limited
                             partnership
                             unitholders                                                                          432,674                                181,976                                 48,189
                                                                                                                  -------                                -------                                 ------

                                                                      Total equity                                           18,420,836                             18,184,971                             15,183,599
                                                                                                                             ----------                             ----------                             ----------

                                                                      Total liabilities and equity                          $31,394,767                            $31,376,032                            $25,775,001
                                                                                                                            ===========                            ===========                            ===========


                                             Three Months Ended               Twelve Months Ended

    (in thousands, except per share
     amounts)                                   December 31,                      December 31,
    -------------------------------             ------------                      ------------

                                                              2015         2014                                2015 2014

    Revenues:

                            Rental                        $560,186                           $402,014                     $1,973,187              $1,527,349

                             Strategic
                             capital                        77,115                             44,157                        210,362                 219,871

                             Development
                             management and
                             other                           5,900                              4,694                         13,525                  13,567

                             Total
                              revenues                     643,201                            450,865                      2,197,074               1,760,787
                                                           -------                            -------                      ---------               ---------


    Expenses:

                            Rental                         150,776                            108,370                        543,214                 430,787

                             Strategic
                             capital                        26,228                             22,054                         88,418                  96,496

                             General and
                             administrative                 65,509                             65,987                        238,199                 247,768

                             Depreciation
                             and
                             amortization                  272,906                            171,402                        880,373                 642,461

                            Other (A)                       22,231                              8,096                         66,698                  23,467

                             Total
                             expenses                      537,650                            375,909                      1,816,902               1,440,979
                                                           -------                            -------                      ---------               ---------


    Operating income                                                105,551                              74,956                         380,172                   319,808


    Other income (expense):

                             Earnings from
                             unconsolidated
                             entities, net                  52,879                             54,877                        159,262                 134,288

                             Interest
                             expense                      (82,665)                          (74,092)                     (301,363)              (308,885)

                            Gains on
                             dispositions
                             of development
                             properties and
                             land, net                      47,978                             46,171                        258,088                 172,492

                            Gains on
                             dispositions
                             of real
                             estate, net
                             (excluding
                             development
                             properties and
                             land)                          55,621                            341,924                        500,799                 553,298

                            Foreign
                             currency and
                             derivative
                             gains (losses)
                             and interest
                             and other
                             income
                             (expense), net                 19,191                           (14,527)                        37,950                   7,927

                             Losses on early
                             extinguishment
                             of debt, net                 (69,778)                           (1,939)                      (86,303)              (165,300)


                             Total other
                             income                         23,226                            352,414                        568,433                 393,820
                                                            ------                            -------                        -------                 -------


    Earnings before income taxes                                    128,777                             427,370                         948,605                   713,628

                             Current income
                             tax expense                   (5,319)                           (2,293)                      (28,147)               (61,585)

                             Deferred income
                             tax benefit                     3,299                              2,647                          5,057                  87,241


    Consolidated net earnings                                       126,757                             427,724                         925,515                   739,284

    Net earnings attributable to
     noncontrolling interests                                       (6,762)                           (17,437)                       (56,076)                (103,101)
                                                                     ------                             -------                         -------                  --------

    Net earnings attributable to
     controlling interests                                          119,995                             410,287                         869,439                   636,183

    Preferred stock dividends                                       (1,632)                            (1,678)                        (6,651)                  (7,431)

    Loss on preferred stock
     repurchase                                                           -                                  -                              -                  (6,517)

    Net earnings attributable to
     common stockholders                                           $118,363                            $408,609                        $862,788                  $622,235
                                                                   ========                            ========                        ========                  ========

    Weighted average common shares
     outstanding -Diluted                                           542,435                             507,896                         533,944                   506,391

    Net earnings per share
     attributable to common
     stockholders -Diluted                                            $0.23                               $0.81                           $1.64                     $1.24
    -----------------------                                           -----                               -----                           -----                     -----


                                               Three Months Ended               Twelve Months Ended

    (in thousands)                                December 31,                      December 31,
    -------------                                 ------------                      ------------

                                                                2015         2014                               2015 2014

    Reconciliation of net earnings
     to FFO


    Net earnings attributable to
     common stockholders                                             $118,363                           $408,609                       $862,788              $622,235

    Add (deduct) NAREIT defined
     adjustments:

                              Real estate
                               related
                               depreciation
                               and
                               amortization                  267,087                            164,107                      854,471                 617,814

                              Gains on
                               dispositions
                               of real
                               estate, net
                               (excluding
                               development
                               properties and
                               land)                        (55,621)                         (341,924)                   (500,799)               (553,298)

                              Reconciling
                               items related
                               to
                               noncontrolling
                               interests                    (44,733)                             (984)                    (78,106)                 47,939

                              Our share of
                               reconciling
                               items included
                               in earnings
                               from
                               unconsolidated
                               co-investment
                               ventures                       34,732                             30,719                      179,031                 179,302

                              Our share of
                               reconciling
                               items included
                               in earnings
                               from other
                               unconsolidated
                               ventures                        1,637                              2,702                        6,585                   7,238


    Subtotal-NAREIT defined FFO                                       321,465                            263,229                      1,323,970               921,230


    Add (deduct) our defined
     adjustments:

                              Unrealized
                               foreign
                               currency and
                               derivative
                               losses
                               (gains), net                  (7,830)                            19,887                        1,026                  18,984

                               Deferred income
                               tax benefit                   (3,299)                           (2,647)                     (5,057)               (87,241)

                              Current income
                               tax expense
                               related to
                               acquired tax
                               liabilities                         -                                 -                       3,497                  30,521

                              Reconciling
                               items related
                               to
                               noncontrolling
                               interests                       (163)                                 -                     (1,330)                      -

                              Our share of
                               reconciling
                               items included
                               in earnings
                               from
                               unconsolidated
                               co-investment
                               ventures                      (1,793)                             3,728                     (13,564)                  4,015


    FFO, as defined by Prologis                                       308,380                            284,197                      1,308,542               887,509


    Adjustments to arrive at Core
     FFO:

                              Net gain on
                               dispositions
                               of development
                               properties and
                               land, net of
                               taxes                        (53,108)                          (45,484)                   (258,288)               (156,992)

                               Acquisition
                               expenses                       17,485                              1,578                       47,034                   4,194

                              Losses on early
                               extinguishment
                               of debt and
                               repurchase of
                               preferred
                               stock, net                     69,778                              1,939                       86,303                 171,817

                              Reconciling
                               items related
                               to
                               noncontrolling
                               interests                       1,286                                  -                    (11,121)                      -

                              Our share of
                               reconciling
                               items related
                               to
                               unconsolidated
                               co-investment
                               ventures                        1,937                              4,191                        8,820                  46,619


    Core FFO                                                         $345,758                           $246,421                     $1,181,290              $953,147


    Adjustments to arrive at
     Adjusted FFO ("AFFO"),
     including our share of
     unconsolidated ventures less
     third party share of
     consolidated entities:

                              Net gains on
                               dispositions
                               of development
                               properties and
                               land, net of
                               taxes                          53,537                             44,969                      259,784                 149,778

                              Straight-lined
                               rents and
                               amortization
                               of lease
                               intangibles                  (22,451)                           (5,681)                    (63,581)               (26,278)

                               Property
                               improvements                 (36,066)                          (35,557)                    (91,541)               (96,729)

                               Tenant
                               improvements                 (27,055)                          (22,961)                    (92,015)               (86,490)

                               Leasing
                               commissions                  (21,463)                          (19,084)                    (73,787)               (62,604)

                               Amortization of
                               management
                               contracts                         920                              1,101                        4,303                   4,943

                               Amortization of
                               debt premiums
                               and financing
                               costs, net                    (5,758)                           (1,933)                    (18,417)                (3,102)

                               Cash received
                               on net
                               investment
                               hedges                          6,644                             13,243                      128,168                  13,110

                               Stock
                               compensation
                               expense                        13,541                             14,436                       53,665                  57,478

    AFFO                                                              $307,607                           $234,954                     $1,287,869              $903,253
                                                                      ========                           ========                     ==========              ========


    Common stock dividends and
     common limited partnership unit
     distributions                                                   $219,170                           $168,261                       $806,946              $668,286
    --------------------------------                                 --------                           --------                       --------              --------

Business Line Reporting. Core FFO and development gains are generated by our three lines of business: (i) real estate operations; (ii) strategic capital; and (iii) development. Real estate operations represents total Prologis Core FFO, less the amount allocated to the Strategic Capital line of business. The amount of Core FFO allocated to the Strategic Capital line of business represents the third party share of the asset management related fees we earn from our co-investment ventures (both consolidated and unconsolidated) less costs directly associated to our strategic capital group, plus development management income. Development gains include our share of gains on dispositions of development properties and land, net of taxes. To calculate the per share amount, the amount generated by each line of business is divided by the weighted average diluted common shares outstanding used in our Core FFO calculation of per share amounts. Management believes evaluating our results by line of business is a useful supplemental measure of our operating performance because it helps the investing public compare the operating performance of Prologis' respective businesses to other companies' comparable businesses. Prologis' computation of FFO by line of business may not be comparable to that reported by other real estate investment trusts as they may use different methodologies in computing such measures.

Calculation of Per Share Amounts is as follows (in thousands, except per share amounts):



                    Three Months Ended          Twelve Months Ended

                       December 31,                December 31,
                       ------------                ------------

                              2015         2014                           2015     2014

     Net
     earnings
     --------

     Net
     earnings             $118,363     $408,609                       $862,788 $622,235

     Noncontrolling
     interest
     attributable
     to
     exchangeable
     limited
     partnership
     units                   5,745        1,768                         13,120    3,636

     Gains,
     net
     of
     expenses,
     associated
     with
     exchangeable
     debt
     assumed
     exchanged                   -           -                       (1,614)       -
                               ---         ---                        ------      ---

     Adjusted
     net
     earnings
     -
     Diluted              $124,108     $410,377                       $874,294 $625,871
                          ========     ========                       ======== ========

     Weighted
     average
     common
     shares
     outstanding
     -
     Basic                 523,770      501,178                        521,241  499,583

     Incremental
     weighted
     average
     effect
     on
     exchange
     of
     limited
     partnership
     units                  16,393        3,457                          8,569    3,501

     Incremental
     weighted
     average
     effect
     of
     stock
     awards                  2,272        3,261                          1,961    3,307

     Incremental
     weighted
     average
     effect
     on
     exchangeable
     debt
     assumed
     exchanged
     (a)                         -           -                         2,173        -
                               ---         ---                         -----      ---

     Weighted
     average
     common
     shares
     outstanding
     -
     Diluted               542,435      507,896                        533,944  506,391
                           =======      =======                        =======  =======

     Net
     earnings
     per
     share
     -
     Basic                   $0.23        $0.82                          $1.66    $1.25
                             =====        =====                          =====    =====

     Net
     earnings
     per
     share
     -
     Diluted                 $0.23        $0.81                          $1.64    $1.24
                             =====        =====                          =====    =====

     Core
     FFO
     ----

     Core
     FFO                  $345,758     $246,421                     $1,181,290 $953,147

     Noncontrolling
     interest
     attributable
     to
     exchangeable
     limited
     partnership
     units                      53           60                            213      209

     Interest
     expense
     on
     exchangeable
     debt
     assumed
     exchanged                   -       4,246                          3,506   16,984
                               ---       -----                          -----   ------

     Core
     FFO
     -
     Diluted              $345,811     $250,727                     $1,185,009 $970,340
                          ========     ========                     ========== ========

     Weighted
     average
     common
     shares
     outstanding
     -
     Basic                 523,770      501,178                        521,241  499,583

     Incremental
     weighted
     average
     effect
     on
     exchange
     of
     limited
     partnership
     units                  14,897        1,964                          6,897    1,964

     Incremental
     weighted
     average
     effect
     of
     stock
     awards                  2,272        3,261                          1,961    3,307

     Incremental
     weighted
     average
     effect
     on
     exchangeable
     debt
     assumed
     exchanged
     (a)                         -      11,879                          2,173   11,879
                               ---      ------                          -----   ------

     Weighted
     average
     common
     shares
     outstanding
     -
     Diluted               540,939      518,282                        532,272  516,733
                           =======      =======                        =======  =======

     Core
     FFO
     per
     share
     -
     Diluted                 $0.64        $0.48                          $2.23    $1.88
     -------                 -----        -----                          -----    -----



    (a)               In March 2015, the exchangeable
                      debt was settled primarily through
                      the issuance of common stock. The
                      adjustment in 2015 assumes the
                      exchange occurred on January 1,
                      2015.

FFO, as defined by Prologis attributable to common stockholders/unitholders ("FFO, as defined by Prologis"); Core FFO attributable to common stockholders/unitholders ("Core FFO"); AFFO (collectively referred to as "FFO"). FFO is a financial measure that is not determined in accordance with GAAP, but is a measure that is commonly used in the real estate industry. The most directly comparable GAAP measure to FFO is net earnings. Although the National Association of Real Estate Investment Trusts ("NAREIT") has published a definition of FFO, modifications to the NAREIT calculation of FFO are common among REITs, as companies seek to provide financial measures that meaningfully reflect their business.

FFO is not meant to represent a comprehensive system of financial reporting and does not present, nor do we intend it to present, a complete picture of our financial condition and operating performance. We believe net earnings computed under GAAP remains the primary measure of performance and that FFO is only meaningful when it is used in conjunction with net earnings computed under GAAP. Further, we believe our consolidated financial statements, prepared in accordance with GAAP, provide the most meaningful picture of our financial condition and our operating performance.

NAREIT's FFO measure adjusts net earnings computed under GAAP to exclude historical cost depreciation and gains and losses from the sales, along with impairment charges, of previously depreciated properties. We agree that these NAREIT adjustments are useful to investors for the following reasons:



    (i)                historical cost accounting for real
                       estate assets in accordance with
                       GAAP assumes, through depreciation
                       charges, that the value of real
                       estate assets diminishes predictably
                       over time. NAREIT stated in its
                       White Paper on FFO "since real
                       estate asset values have
                       historically risen or fallen with
                       market conditions, many industry
                       investors have considered
                       presentations of operating results
                       for real estate companies that use
                       historical cost accounting to be
                       insufficient by themselves."
                       Consequently, NAREIT's definition of
                       FFO reflects the fact that real
                       estate, as an asset class, generally
                       appreciates over time and
                       depreciation charges required by
                       GAAP do not reflect the underlying
                       economic realities. We exclude
                       depreciation from our unconsolidated
                       entities and the third parties'
                       share of our consolidated ventures.

    (ii)               REITs were created in order to
                       encourage public ownership of real
                       estate as an asset class through
                       investment in firms that were in the
                       business of long-term ownership and
                       management of real estate. The
                       exclusion, in NAREIT's definition of
                       FFO, of gains and losses from the
                       sales, along with impairment
                       charges, of previously depreciated
                       operating real estate assets allows
                       investors and analysts to readily
                       identify the operating results of
                       the long-term assets that form the
                       core of a REIT's activity and
                       assists in comparing those operating
                       results between periods. We include
                       the gains and losses (including
                       impairment charges) from
                       dispositions of land and development
                       properties, as well as our
                       proportionate share of the gains and
                       losses (including impairment
                       charges) from dispositions of
                       development properties recognized by
                       our unconsolidated and consolidated
                       entities, in our definition of FFO.
                       We exclude the gain on revaluation
                       of equity investments upon
                       acquisition of a controlling
                       interest from our definition of FFO.

Our FFO Measures

At the same time that NAREIT created and defined its FFO measure for the REIT industry, it also recognized that "management of each of its member companies has the responsibility and authority to publish financial information that it regards as useful to the financial community." We believe stockholders, potential investors and financial analysts who review our operating results are best served by a defined FFO measure that includes other adjustments to net earnings computed under GAAP in addition to those included in the NAREIT defined measure of FFO. Our FFO measures are used by management in analyzing our business and the performance of our properties and we believe that it is important that stockholders, potential investors and financial analysts understand the measures management uses.

We calculate our FFO measures, as defined below, based on our proportionate ownership share of both our unconsolidated and consolidated ventures. We reflect our share of our FFO measures for unconsolidated ventures by applying our average ownership percentage for the period to the applicable reconciling 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 third party ownership share of the applicable reconciling items based on average ownership percentage for the applicable periods.

We use these FFO measures, including by segment and region, to: (i) evaluate our performance and the performance of our properties in comparison to expected results and results of previous periods, relative to resource allocation decisions; (ii) evaluate the performance of our management; (iii) budget and forecast future results to assist in the allocation of resources; (iv) assess our performance as compared to similar real estate companies and the industry in general; and (v) evaluate how a specific potential investment will impact our future results. Because we make decisions with regard to our performance with a long-term outlook, we believe it is appropriate to remove the effects of short-term items that we do not expect to affect the underlying long-term performance of the properties. The long-term performance of our properties is principally driven by rental income. While not infrequent or unusual, these additional items we exclude in calculating FFO, as defined by Prologis, defined below, are subject to significant fluctuations from period to period that cause 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 use our FFO measures as supplemental financial measures of operating performance. 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.

FFO, as defined by Prologis

To arrive at FFO, as defined by Prologis, we adjust the NAREIT defined FFO measure to exclude:



    (i)               deferred income tax benefits and
                      deferred income tax expenses
                      recognized by our subsidiaries;

    (ii)              current income tax expense related to
                      acquired tax liabilities that were
                      recorded as deferred tax liabilities
                      in an acquisition, to the extent the
                      expense is offset with a deferred
                      income tax benefit in GAAP earnings
                      that is excluded from our defined
                      FFO measure;

    (iii)             unhedged foreign currency exchange
                      gains and losses resulting from debt
                      transactions between us and our
                      foreign consolidated subsidiaries
                      and our foreign unconsolidated
                      entities;

    (iv)              foreign currency exchange gains and
                      losses from the remeasurement (based
                      on current foreign currency exchange
                      rates) of certain third party debt
                      of our foreign consolidated
                      subsidiaries and our foreign
                      unconsolidated entities; and

    (v)               mark-to-market adjustments
                      associated with derivative financial
                      instruments.

We believe investors are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in planning and executing our business strategy.

Core FFO

In addition to FFO, as defined by Prologis, we also use Core FFO. To arrive at Core FFO, we adjust FFO, as defined by Prologis, to exclude the following recurring and non-recurring items that we recognized directly in FFO, as defined by Prologis:



    (i)               gains or losses from contribution or
                      sale of land or development
                      properties;

    (ii)              income tax expense related to the
                      sale of investments in real estate
                      and third-party acquisition costs
                      related to the acquisition of real
                      estate;

    (iii)             impairment charges recognized
                      related to our investments in  real
                      estate generally as a result of our
                      change in intent to contribute or
                      sell these properties;

    (iv)              gains or losses from the early
                      extinguishment of debt and
                      redemption and repurchase of
                      preferred stock; and

    (v)               expenses related to natural
                      disasters.

We believe it is appropriate to further adjust our FFO, as defined by Prologis for certain recurring items as they were driven by transactional activity and factors relating to the financial and real estate markets, rather than factors specific to the on-going operating performance of our properties or investments. The impairment charges we have recognized were primarily based on valuations of real estate, which had declined due to market conditions, that we no longer expected to hold for long-term investment. Over the last few years, we made it a priority to strengthen our financial position by reducing our debt, our investment in certain low yielding assets and our exposure to foreign currency exchange fluctuations. As a result, we changed our intent to sell or contribute certain of our real estate properties and recorded impairment charges when we did not expect to recover the costs of our investment. Also, we purchased portions of our debt securities when we believed it was advantageous to do so, which was based on market conditions, and in an effort to lower our borrowing costs and extend our debt maturities. As a result, we have recognized net gains or losses on the early extinguishment of certain debt due to the financial market conditions at that time.

We analyze our operating performance primarily by the rental income of our real estate and the revenue driven by 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. Although these items discussed above have had 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.

We use Core FFO, including by segment and region, to: (i) evaluate our performance and the performance of our properties in comparison to expected results and results of previous periods, relative to resource allocation decisions; (ii) evaluate the performance of our management; (iii) budget and forecast future results to assist in the allocation of resources; (iv) provide guidance to the financial markets to understand our expected operating performance; (v) assess our operating performance as compared to similar real estate companies and the industry in general; and (vi) evaluate how a specific potential investment will impact our future results. Because we make decisions with regard to our performance with a long-term outlook, we believe it is appropriate to remove the effects of items that we do not expect to affect the underlying long-term performance of the properties we own. As noted above, we believe the long-term performance of our properties is principally driven by rental income. We believe investors are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in planning and executing our business strategy.

AFFO

To arrive at AFFO, we adjust Core FFO to include realized gains from the disposition of land and development properties and to exclude our share of the impact of; (i) straight-line rents; (ii) amortization of above- and below-market lease intangibles; (iii) recurring capital expenditures; (iv) amortization of management contracts; (v) amortization of debt premiums and discounts and financing costs, net of amounts capitalized, and; (vi) stock compensation expense.

We believe AFFO provides a meaningful indicator of our ability to fund cash needs, including cash distributions to our stockholders.

Limitations on Use of our FFO Measures

While we believe our defined 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 these limitations are:


    --  The current income tax expenses and acquisition costs that are excluded
        from our defined FFO measures represent the taxes and transaction costs
        that are payable.
    --  Depreciation and amortization of real estate assets are economic costs
        that are excluded from FFO. FFO is limited, as it does not reflect the
        cash requirements that may be necessary for future replacements of the
        real estate assets. Further, the amortization of capital expenditures
        and leasing costs necessary to maintain the operating performance of
        industrial properties are not reflected in FFO.
    --  Gains or losses from non-development property acquisitions and
        dispositions or impairment charges related to expected dispositions
        represent changes in value of the properties. By excluding these gains
        and losses, FFO does not capture realized changes in the value of
        acquired or disposed properties arising from changes in market
        conditions.
    --  The deferred income tax benefits and expenses that are excluded from our
        defined FFO measures result from the creation of a deferred income tax
        asset or liability that may have to be settled at some future point. Our
        defined FFO measures do not currently reflect any income or expense that
        may result from such settlement.
    --  The foreign currency exchange gains and losses that are excluded from
        our defined FFO measures are generally recognized based on movements in
        foreign currency exchange rates through a specific point in time. The
        ultimate settlement of our foreign currency-denominated net assets is
        indefinite as to timing and amount. Our FFO measures are limited in that
        they do not reflect the current period changes in these net assets that
        result from periodic foreign currency exchange rate movements.
    --  The gains and losses on extinguishment of debt that we exclude from our
        Core FFO, may provide a benefit or cost to us as we may be settling our
        debt at less or more than our future obligation.
    --  The natural disaster expenses that we exclude from Core FFO are costs
        that we have incurred.

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 defined FFO measures to our net earnings computed under GAAP.

Same Store. We evaluate the operating performance of the operating properties we own and manage using a "Same Store" analysis because the population of properties in this analysis is consistent from period to period, thereby eliminating the effects of changes in the composition of the portfolio on performance measures. We include the properties included in our owned and managed portfolio that were in operation (including development properties that have been completed and available for lease) at January 1, 2014 and throughout the full periods in both 2014 and 2015. We have removed all properties that were disposed of to a third party from the population for both periods. We believe the factors that impact rental income, rental expenses and NOI in the Same Store portfolio are generally the same as for the total operating portfolio. In order to derive an appropriate measure of period-to-period operating performance, we remove the effects of foreign currency exchange rate movements by using the current exchange rate to translate from local currency into U.S. dollars, for both periods.

Our same store measures are non-GAAP measures that are commonly used in the real estate industry and are calculated beginning with rental income and rental expenses from the financial statements prepared in accordance with GAAP. It is also common in the real estate industry and expected from the analyst and investor community that these numbers be further adjusted to remove certain non-cash items included in the financial statements prepared in accordance with GAAP to reflect a cash same store number. In order to clearly label these metrics, we call one Same Store NOI- GAAP and one Same Store NOI-Adjusted Cash. As these are non-GAAP measures they have certain limitations as an analytical tool and may vary among real estate companies. As a result, we provide a reconciliation from our financial statements prepared in accordance with GAAP to Same Store NOI-GAAP and then to Same Store NOI-Adjusted Cash with explanations of how these metrics are calculated and adjusted.

The following is a reconciliation of our consolidated rental income, rental expenses and NOI, as included in the Consolidated Statements of Operations, to the respective amounts in our Same Store portfolio analysis (dollars in thousands):



                         Three Months Ended

                            December 31,
                            ------------

                    2015                         2014  Change
                                                      (%)

    Rental
     Revenue:

    Per the
     Consolidated
     Statements
     of
     Operations                         $560,186              $402,014

    Properties
     not included
     and other
     adjustments
     (a)                               (178,482)             (53,884)

     Unconsolidated
     Co-
     Investment
     Ventures                            404,886               408,344
                                         -------               -------

    Same Store -
     Rental
     Income                             $786,590              $756,474 4.0%

    ---


    Rental
     Expense:

    Per the
     Consolidated
     Statements
     of
     Operations                         $150,776              $108,370

    Properties
     not included
     and other
     adjustments
     (b)                                (43,805)              (7,415)

     Unconsolidated
     Co-
     Investment
     Ventures                             92,416                93,807
                                          ------                ------

    Same Store -
     Rental
     Expense                            $199,387              $194,762 2.4%

    ---


    NOI-GAAP:

    Per the
     Consolidated
     Statements
     of
     Operations                         $409,410              $293,644

    Properties
     not included
     and other
     adjustments                       (134,677)             (46,469)

     Unconsolidated
     Co-
     Investment
     Ventures                            312,470               314,537
                                         -------               -------

    Same Store -
     NOI -GAAP                          $587,203              $561,712 4.5%


    Same Store -
     NOI -GAAP -
     Prologis
     Share (c)                          $351,450              $329,825 6.6%

    ---


    NOI-Adjusted
     Cash:

    Same store-
     NOI - GAAP                         $587,203              $561,712

    Adjustments
     (d)                                (13,089)              (6,913)
                                         -------                ------

    Same Store -
     NOI-
     Adjusted
     Cash                               $574,114              $554,799 3.5%


    Same Store -
     NOI-
     Adjusted
     Cash -
     Prologis
     Share (c)                          $342,518              $327,638 4.5%

    ---



    (a)               To calculate Same Store rental
                      income, we exclude the net
                      termination and renegotiation fees
                      to allow us to evaluate the growth
                      or decline in each property's rental
                      income without regard to items that
                      are not indicative of the property's
                      recurring operating performance.


    (b)               To calculate Same Store rental
                      expense, we include an allocation of
                      the property management expenses for
                      our consolidated properties based on
                      the property management fee that is
                      provided for in the individual
                      management agreements under which
                      our wholly owned management
                      companies provide property
                      management services (generally the
                      fee is based on a percentage of
                      revenue). On consolidation, the
                      management fee income and expenses
                      are eliminated and the actual cost
                      of providing property management
                      services is recognized.


    (c)               Prologis share of Same Store is
                      calculated using the underlying
                      building information from the Same
                      Store NOI GAAP and Adjusted Cash
                      calculations and applying our
                      ownership percentage as of September
                      30, 2015 to the NOI of each building
                      for both periods.


    (d)               In order to derive Same Store- NOI
                      - Adjusted Cash, we adjust Same
                      Store- NOI- GAAP to exclude non-
                      cash items included in our rental
                      income in our GAAP financial
                      statements, including straight line
                      rent adjustments and adjustments
                      related to purchase accounting to
                      reflect leases at fair value at the
                      time of acquisition.

Value Creation represents the value that we will create through our development and leasing activities. We calculate value creation by estimating the NOI that the property will generate at Stabilization and applying an estimated stabilized capitalization rate applicable to that property. The value creation is calculated as the amount by which the estimated value exceeds our total expected investment and does not include any fees or promotes we may earn. This can also include realized economic gains from value-added conversion properties.

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SOURCE Prologis, Inc.