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Real Estate | 12 Months Ended
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Dec. 31, 2011
Real Estate [Abstract] |
Real Estate |
5. | Real Estate
Investments in real estate properties are presented at cost, and consist of the following (in thousands):
|  | December 31, 2011 (1) |  |  | December 31, 2010 |
Industrial operating portfolio (2): |  |  |  |  |  |  |  |
Improved land |  | $ | 4,813,145 |  |  | $ | 2,527,972 |
Buildings and improvements |  |  | 16,739,403 |  |  |  | 8,186,827 |
Development portfolio, including cost of land (3) |  |  | 860,531 |  |  |  | 365,362 |
Land (4) |  |  | 1,984,233 |  |  |  | 1,533,611 |
Other real estate investments (5) |  |  | 390,225 |  |  |  | 265,869 |
Total investments in real estate properties |  |  | 24,787,537 |  |  |  | 12,879,641 |
Less accumulated depreciation |  |  | 2,157,907 |  |  |  | 1,595,678 |
Net investments in properties |  | $ | 22,629,630 |  |  | $ | 11,283,963 |
(1) | Included in the balances at December 31, 2011 are the real estate properties acquired in connection with the PEPR Acquisition and the Merger. See Note 3 for further details.
(2) | At December 31, 2011 and 2010, we had 1,797 and 985 industrial properties consisting of 291.1 million and 168.5 million square feet, respectively. Of the properties owned at December 31, 2011, 628 properties consisting of 76.1 million square feet were acquired in the Merger and 220 properties consisting of 50.2 million square feet were acquired in the PEPR Acquisition.
(3) | At December 31, 2011, the development portfolio consisted of 26 properties aggregating 7.2 million square feet under development and four properties aggregating 2.3 million square feet of pre-stabilized completed properties. Of these properties, 8 properties consisting of 2.5 million square feet were acquired in the Merger. At December 31, 2010, 14 properties aggregating 4.9 million square feet were under development. Our total expected investment upon completion of the development portfolio, including pre-stabilized properties, at December 31, 2011 was $1.2 billion, including land, development and leasing costs.
(4) | Land consisted of 10,723 acres at December 31, 2011, of which, 2,234 acres were acquired in the Merger and 8,990 acres at December 31, 2010.
(5) | Included in other investments are: (i) certain non-industrial real estate; (ii) our corporate office buildings; (iii) land subject to ground leases; (iv) certain infrastructure costs related to projects we are developing on behalf of others; (v) costs incurred related to future development projects, including purchase options on land; and (vi) earnest money deposits associated with potential acquisitions.
At December 31, 2011, excluding our assets held for sale, we owned real estate assets in the Americas (Canada, Mexico and the United States), Europe (Austria, Belgium, the Czech Republic, France, Germany, Hungary, Italy, the Netherlands, Poland, Romania, Slovakia, Spain, Sweden and the United Kingdom) and Asia (China, Japan, and Singapore). During the year ended December 31, 2011, we recognized Gains on Acquisitions and Dispositions of Investments in Real Estate, Net in continuing operations of $111.7 million. This includes a gain of $85.9 million recognized in the second quarter related to the acquisition of a controlling interest in PEPR (See Note 3), a $13.5 million gain from the acquisition of a controlling interest in a joint venture in Japan and the contribution of properties to unconsolidated co-investment ventures. The 2011 contribution activity resulted in cash proceeds of $590.8 million related to: (i) 40 properties aggregating 4.2 million square feet contributed to Prologis Targeted U.S Logistics Fund; (ii) four properties aggregating 0.6 million square feet to China Logistics Venture; (iii) nine properties aggregating 2.3 million square feet to Prologis European Properties Fund II; and (iv) four properties aggregating 0.7 million square feet to Europe Logistics Fund. During the year ended December 31, 2011, we recognized a $5.2 million charge for estimated repairs related primarily to one of our buildings in Japan that was damaged from the earthquake and related tsunami in March 2011. This charge was included in Interest and Other Income (Expense), Net on the Consolidated Statements of Operations. During 2011, in addition to the Merger and PEPR Acquisition we acquired 8 properties aggregating 1.5 million square feet with a combined purchase price of $86.5 million, which was allocated to real estate and other assets. During the years ended December 31, 2011, 2010 and 2009, we recorded impairment charges related to real estate properties of $23.9 million, $824.3 million and $331.6 million, respectively. See Note 16 for further discussion on the impairment charges. Lease Commitments We have entered into operating ground leases on certain land parcels, primarily on-tarmac facilities and office space with remaining lease terms of 1 to 79 years. Buildings and improvements subject to ground leases are depreciated ratably over the lesser of the term of the related leases or its useful life. Future minimum rental payments under non-cancelable operating leases in effect as of December 31, 2011 were as follows (in thousands):
2012 |  | $ | 24,236 |
2013 |  |  | 20,894 |
2014 |  |  | 19,454 |
2015 |  |  | 18,623 |
2016 |  |  | 10,726 |
Thereafter |  |  | 146,438 |
Total |  | $ | 240,371 |
Future Amortization of Leasing Assets and Liabilities The expected future amortization of leasing commissions of $220.6 million is summarized in the table below. We also expect our above and below market leases and rent leveling assets, which total $269.6 million at December 31, 2011, to be amortized into rental income as follows (in thousands):
|  | Amortization Expense |  |  | Net Charge (Increase) to Rental Income |
2012 |  | $ | 75,855 |  |  | $ | 32,040 |
2013 |  |  | 49,061 |  |  |  | 48,791 |
2014 |  |  | 36,408 |  |  |  | 56,047 |
2015 |  |  | 27,840 |  |  |  | 38,734 |
2016 |  |  | 14,932 |  |  |  | 25,092 |
Thereafter |  |  | 16,506 |  |  |  | 68,852 |
Totals |  | $ | 220,602 |  |  | $ | 269,556 |
Operating Lease Agreements We lease our operating properties and certain land parcels to customers under agreements that are generally classified as operating leases. Our largest customer and 25 largest customers accounted for 2.4% and 17.9%, respectively, of our annualized base rents at December 31, 2011. At December 31, 2011, minimum lease payments on leases with lease periods greater than one year for space in our operating properties and leases of land subject to ground leases, during each of the years in the five-year period ending December 31, 2016 and thereafter were as follows (in thousands):
2012 |  | $ | 1,050,141 |
2013 |  |  | 882,559 |
2014 |  |  | 710,916 |
2015 |  |  | 544,487 |
2016 |  |  | 389,951 |
Thereafter |  |  | 1,119,845 |
|  | $ | 4,697,899 |
These amounts do not reflect future rental revenues from the renewal or replacement of existing leases and exclude reimbursements of operating expenses. In addition to minimum rental payments, our customers pay reimbursements for their pro rata share of specified operating expenses, which amounted to $283.1 million, $161.0 million and $150.3 million for the years ended December 31, 2011, 2010 and 2009, respectively. These reimbursements are reflected as rental income and rental expenses in the accompanying Consolidated Statements of Operations.

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- Definition The entire disclosure for certain real estate investment financial statements, real estate investment trust operating support agreements, real estate owned, retail land sales, time share transactions, as well as other real estate related disclosures. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph c -Subparagraph Schedule III -Article 5 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 67 -Paragraph 4, 5, 6, 7 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 11 -Article 9 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 04-2 -Paragraph 41, 63, 64 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher OTS -Name Federal Regulation (FR) -Number Title 12 -Chapter V -Section 563c.102 -Paragraph 11 -Subsection I -LegacyDoc This is a non-GAAP reference that was included in the 2009 taxonomy. It will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 970 -SubTopic 360 -Section S99 -Paragraph 1 -Subparagraph (SX 210.12-28) -URI http://asc.fasb.org/extlink&oid=6590653&loc=d3e638233-123024 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 154 -Paragraph 22 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 43 -Chapter 3 -Section A -Paragraph 9 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 15 -Paragraph 28 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 28 -Article 12 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Interpretation (FIN) -Number 46R -Paragraph 23, 24 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 10 -Subparagraph 4 -Article 9 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Audit and Accounting Guide (AAG) -Number AAG-DEP -Chapter 11 -Paragraph 2, 6, 9-11, 18, 20 -IssueDate 2006-05-01 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 66 -Paragraph 4, 5, 37, 50, 59, 65, 95, 97 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 6 -Subparagraph a -Article 5 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 75-2 -Paragraph 47, 51, 52 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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