Prologis Swings to Profit on Asset Dispositions

   By Everdeen Mason 
 

Prologis Inc. (PLD) swung to a fourth-quarter profit, as gains from asset dispositions offset a drop in revenue, while core funds from operations edged higher.

The warehouse real-estate investment trust completed $1.8 billion in contributions and dispositions of buildings and land in the fourth quarter, which the company said was the main reason for the rise in earnings.

For 2014, the company gave an adjusted per-share estimate for funds from operations--a key measure of performance for REITs--of $1.74 to $1.82. Analysts polled by Thomson Reuters recently expected per-share adjusted FFO of $1.76.

The current Prologis was formed in June 2011, when the nation's two biggest publicly traded warehouse owners--Prologis and AMB Property Corp.--merged in one of the largest real-estate deals since the recession.

The San Francisco-based real-estate investment trust has continued to benefit from a rental rebound that has raised occupancy rates and profits on its U.S. warehouses.

Prologis reported a profit of $61.2 million, compared with a year-earlier loss of $218.4 million. On a per-share basis, which reflects preferred-stock impacts, the profit was 12 cents, compared with a year-earlier loss of 50 cents.

The latest reporting period also included a net $112.9 million in early-debt extinguishment losses.

Revenue fell 14% to $436.8 million. Rental revenue dropped 19% to $379.2 million.

Core funds from operations, which excludes items such as gains and losses from property acquisitions or dispositions, ticked up to 43 cents a share from 42 cents.

Analysts polled by Thomson Reuters recently expected per-share FFO of 42 cents and rental revenue of $387.2 million.

As of the end of the quarter, the occupancy rate was 95.1%, up from 94% reported a year earlier. Tenant retention was 86.8% and rental rates on leases signed during the quarter were 5.9% higher than prior rents.

The company's shares closed Wednesday at $37.01 and were inactive in recent premarket trading Thursday. The stock is down 7.6% in the past 12 months.

Write to Everdeen Mason at [e-mail]

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