| Noncontrolling Interests |
| 10. |
|
Noncontrolling Interests |
Operating Partnership
We report noncontrolling interest related to several entities we consolidate but do not own 100% of the common equity. These entities include three real
estate partnerships that have issued limited partnership units to third parties. Depending on the specific partnership agreements, these limited partnership units are exchangeable into shares of our common stock (or cash), generally at a rate of one
share of common stock to one unit. We evaluated the noncontrolling interests with redemption provisions that permit the issuer to settle in either cash or common stock at the option of the issuer to determine whether temporary or permanent equity
classification on the balance sheet is appropriate, including the requirement to settle in unregistered shares, and determined that these units meet the requirements to qualify for presentation as permanent equity.
We also consolidate several entities in which we do not own 100% but the units are not exchangeable into our common stock. If we contribute a property to
a consolidated co-investment venture, the property is still reflected in our Consolidated Financial Statements, but due to our ownership of less than 100%, there is an increase in noncontrolling interest related to the contributed properties, which
represents the cash we receive from our partners.
REIT
The noncontrolling interest of the REIT includes the noncontrolling interests presented in the Operating Partnership, as well as the common limited partnership units in the Operating Partnership that are
not owned by the REIT. As of June 30, 2012, the REIT owned approximately 99.59% of the common partnership units of the Operating Partnership.
The following is a summary of the noncontrolling interest and the consolidated entity’s total investment in real estate and debt at June 30, 2012 and December 31, 2011 (dollars in
thousands):
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Our Ownership
Percentage |
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Noncontrolling
Interests |
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Consolidated Entity
Total Investment
In
Real Estate |
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Consolidated Entity Debt |
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2012 |
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2011 |
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2012 |
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2011 |
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2012 |
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2011 |
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2012 |
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2011 |
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Partnerships with exchangeable units (1)
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various |
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various |
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$ |
43,301 |
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$ |
11,173 |
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$ |
831,795 |
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$ |
827,263 |
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$ |
26,417 |
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$ |
26,417 |
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Prologis Institutional Alliance Fund II (2)
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28.2 |
% |
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24.1 |
% |
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302,851 |
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324,721 |
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599,789 |
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624,318 |
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198,332 |
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220,625 |
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PEPR (3)
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99.5 |
% |
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93.7 |
% |
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9,968 |
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106,759 |
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3,621,172 |
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4,047,329 |
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1,390,917 |
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1,699,587 |
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Mexico Fondo Logistico (AFORES) (4)
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20.0 |
% |
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20.0 |
% |
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139,180 |
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118,580 |
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376,033 |
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312,914 |
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212,577 |
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177,000 |
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Prologis AMS (5)
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38.6 |
% |
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38.5 |
% |
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62,143 |
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83,897 |
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175,064 |
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211,627 |
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75,535 |
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77,041 |
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Other consolidated entities
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various |
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various |
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91,946 |
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90,092 |
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577,125 |
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620,052 |
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65,998 |
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70,140 |
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Operating Partnership noncontrolling interests
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649,389 |
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735,222 |
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6,180,978 |
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6,643,503 |
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1,969,776 |
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2,270,810 |
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Limited partners in the Operating Partnership (6)
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53,207 |
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58,613 |
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— |
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REIT noncontrolling interests
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$ |
702,596 |
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$ |
793,835 |
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$ |
6,180,978 |
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$ |
6,643,503 |
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$ |
1,969,776 |
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$ |
2,270,810 |
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| (1) |
At June 30, 2012 and December 31, 2011, there were 1,285,312 and 1,302,238 limited partnership units, respectively, that were exchangeable into an equal
number of shares of the REIT’s common stock. In the first quarter of 2012, 16,926 limited partnership units were exchanged for cash. The majority of the outstanding limited partnership units are entitled to quarterly cash distributions equal to
the quarterly dividends paid on our common stock. In 2012, we recorded an additional purchase accounting adjustment of $32.9 million associated with the Merger. |
| (2) |
In the second quarter of 2012, we purchased an additional interest in the fund from one of our partners for $14.1 million increasing our ownership to 28.2%.
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| (3) |
In the second quarter of 2012, we increased our ownership of PEPR up to 99.5%. In June 2012, the unitholders of PEPR passed a resolution to wind-up the entity in August
2012, pursuant to which we opted for in-kind distribution of assets and will assume responsibility for all liabilities of PEPR. In the first quarter of 2012, PEPR sold land under a ground lease and 18 properties aggregating 3,670 million square
feet for $342.3 million to third parties, and subsequently paid down $263.9 million of outstanding debt with proceeds from these dispositions. |
| (4) |
In the second quarter of 2012, we contributed four properties aggregating 0.8 million square feet to this entity for $40.6 million. As this entity is consolidated,
we did not record a gain on this transaction and the noncontrolling interests increased $15.7 million, which is primarily due to our partners’ investment in cash. |
| (5) |
In 2012, we recorded additional purchase accounting adjustments of $22.7 million associated with the Merger. |
| (6) |
At June 30, 2012 and December 31, 2011, 1,902,108 and 2,058,730 units were associated with the common limited partners in the Operating Partnership and
exchangeable into an equal number of shares of the REIT’s common stock. During the six months ended June 30, 2012, 156,622 units were exchanged for cash in the amount of $5.5 million. The majority of the outstanding limited partnership
units are entitled to quarterly cash distributions equal to the quarterly distributions paid on our common stock. |
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