* Fourth-quarter FFO/shr 42 cents vs Wall St 41 cents
* Expects 2013 FFO/shr $1.60-$1.70 vs Wall St $1.73
* CEO says 14 cents outlook difference for early sale, tax
* Shares down 1.6 pct
NEW YORK, Feb 6 Prologis Inc, one of the
world's largest owners of warehouse and distribution centers,
reported core funds from operations, a measure of earnings, that
surpassed Wall Street's forecast, but was down from last year
due in part to lower rental rates.
The company on Wednesday also issued a forecast for 2013
that was below Wall Street's forecasts, contributing to shares
falling 1.6 percent. Shares were down 65 cents at $39.63 on the
New York Stock Exchange.
Prologis reported diluted core funds from operations of
$199.3 million, or 42 cents per share in the fourth quarter,
compared with 208.2 million or 44 cents per share in the same
period a year ago.
Analysts on average had expected the San Francisco-based
company to report FFO of 41 cents per share, according to
Thomson Reuters I/B/E/S.
Funds from operations, or FFO, is a real estate investment
trust performance measure that mitigates the earnings-reducing
effect of depreciation, a non-cash charge.
Prologis' Core FFO excludes certain items, such as losses or
gains on foreign currency or derivative activity, merger-related
costs and impairments.
For property the company has owned at least a year, rental
rates on signed leases were 2.4 percent lower than those they
replaced. While the industry is recovering, rental rates remain
lower than before the downturn.
Prologis Chairman and Chief Executive Officer Hamid Moghadam
said he expects the rental rate difference to turn positive this
One reason will be the resurgence of demand from the housing
market, whose need to store and ship such things as carpet and
appliances has been weak, Moghadam said.
"The industrial business is finally having its day in the
sun," Moghadam said.
During the quarter, Prologis leased a record 40.5 million
square feet of which about 11.6 million were under new leases,
and 3.8 million were leases for new development. The remaining
square feet were under lease renewals.
Prologis is working on a plan to reduce its debt load to 30
percent of its asset value. The company recently spun out part
of its assets in Japan into a Japanese real estate investment
trust. It also sold a 50 percent stake in a portfolio of
European warehouses to Norway's sovereign wealth fund.
When that transaction closes, the debt to value will be
reduced to 37 percent, Moghadam said. That would be down from 50
percent at the time company merged with AMB Property Corp in
For 2013, Prologis sees core FFO in the range of $1.60 to
$1.70 per share, while analysts have forecast $1.73 per share,
according to Thomson Reuters I/B/E/S.
Moghadam attributed the difference to the
sooner-than-expected sale of the European portfolio, which will
pare 8 cents off FFO, and 6 cents-a-share for a 2012 tax rebate,
which will not re-occur this year.