v2.4.1.9

Debt | 12 Months Ended
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Dec. 31, 2014
Debt Disclosure [Abstract] |
Debt |
9. | Debt
All debt is incurred directly or indirectly by the Operating Partnership. The Parent does not have any indebtedness, but guarantees the unsecured debt of the Operating Partnership. We generally do not guarantee the debt issued by non-wholly-owned subsidiaries. Our debt consisted of the following at December 31 (dollars in thousands):
|  | 2014 |  |  | 2013 |
|  | Weighted Average Interest Rate (1) |  |  | Amount Outstanding (2) |  |  | Weighted Average Interest Rate (1) |  |  | Amount Outstanding |
Credit facilities |  |  | - % |  |  | $ | - |  |  |  | 1.2% |  |  | $ | 725,483 |
Senior notes (3) |  |  | 3.6% |  |  |  | 6,076,920 |  |  |  | 4.5% |  |  |  | 5,357,933 |
Exchangeable senior notes |  |  | 3.3% |  |  |  | 456,766 |  |  |  | 3.3% |  |  |  | 438,481 |
Secured mortgage debt (4) |  |  | 6.1% |  |  |  | 1,050,591 |  |  |  | 5.6% |  |  |  | 1,696,597 |
Secured mortgage debt of consolidated entities (5) |  |  | 2.5% |  |  |  | 1,207,106 |  |  |  | 4.7% |  |  |  | 239,992 |
Term loans |  |  | 1.3% |  |  |  | 572,730 |  |  |  | 1.7% |  |  |  | 535,908 |
Other debt (6) |  |  | 6.2% |  |  |  | 16,086 |  |  |  | 6.2% |  |  |  | 16,822 |
Totals |  |  | 3.6% |  |  | $ | 9,380,199 |  |  |  | 4.2% |  |  | $ | 9,011,216 |
(1) | The interest rates presented represent the effective interest rates (including amortization of the non-cash premiums or discount).
(2) | Included in the outstanding balances are borrowings denominated in non-U.S. currency, principally: euro ($3.3 billion) and Japanese yen ($0.4 billion).
(3) | Notes are due July 2017 to June 2026 and effective interest rates range from 1.4% to 7.6% at December 31, 2014.
(4) | Debt is due July 2015 to April 2025 and effective interest rates range from 3.3% to 7.6% at December 31, 2014. The debt is secured by 196 real estate properties with an aggregate undepreciated cost of $2.6 billion at December 31, 2014.
(5) | Debt is due July 2015 to December 2027 and effective interest rates range from 1.9% to 6.9% at December 31, 2014. The debt is secured by 171 real estate properties with an aggregate undepreciated cost of $2.0 billion at December 31, 2014.
(6) | The balance at December 31, 2014, represents primarily assessment bonds with varying interest rates from 4.5% to 7.9% that are due December 2015 to September 2033. The assessment bonds are issued by municipalities and guaranteed by us as a means of financing infrastructure and secured by assessments (similar to property taxes) on various underlying real estate properties with an aggregate undepreciated cost of $784.2 million at December 31, 2014.
Credit Facilities We have a global senior credit facility (the “Global Facility”), under which we may draw in U.S. dollars, euro, Japanese yen, British pounds sterling and Canadian dollars on a revolving basis. In June 2014, the Global Facility was amended to increase the availability to $2.5 billion (subject to currency fluctuations, approximately $2.4 billion at December 31, 2014). The Global Facility is scheduled to mature on July 11, 2017; however, we may extend the maturity date twice, by six months each, subject to satisfaction of certain conditions and payment of extension fees. Pricing under the Global Facility, including the spread over LIBOR, facility fees and letter of credit fees, varies based upon the public debt ratings of the Operating Partnership. The Global Facility contains customary representations, covenants and defaults (including a cross-acceleration to other recourse indebtedness of more than $50 million). We also have a ¥45 billion ($376.2 million at December 31, 2014) Japanese yen revolver (the “Revolver”) with the ability to increase to ¥56.5 billion ($472.3 million at December 31, 2014) subject to obtaining additional lender commitments. Pricing under the Revolver was consistent with the Global Facility at December 31, 2014. The Revolver contains certain customary representations, covenants and defaults that are substantially the same as the corresponding provisions of the Global Facility. We refer to the Global Facility and the Revolver, collectively, as our “Credit Facilities.” In the first quarter of 2013, we entered into a $500 million bridge loan under which we could borrow in U.S. dollar, euro, or yen. We borrowed ¥20 billion ($215.7 million) under the bridge loan to make our initial investment in our co-investment venture in Japan. In connection with the contribution of properties to this venture, we paid the borrowings outstanding on this bridge loan and terminated the facility. Information about our Credit Facilities at December 31 was as follows (in millions):
|  | 2014 |  |  | 2013 |  |  | 2012 |
For the years ended December 31: |  |  |  |  |  |  |  |  |  |  |  |
Weighted average daily interest rate |  |  | 1.1 % |  |  |  | 1.7 % |  |  |  | 1.6 % |
Weighted average daily borrowings |  | $ | 182 |  |  | $ | 789 |  |  | $ | 815 |
Maximum borrowings outstanding at any month-end |  | $ | 742 |  |  | $ | 1,325 |  |  | $ | 1,634 |
At December 31: |  |  |  |  |  |  |  |  |  |  |  |
Aggregate lender - commitments |  | $ | 2,742 |  |  | $ | 2,451 |  |  | $ | 2,118 |
Less: |  |  |  |  |  |  |  |  |  |  |  |
Borrowings outstanding |  |  | - |  |  |  | 726 |  |  |  | 889 |
Outstanding letters of credit |  |  | 35 |  |  |  | 73 |  |  |  | 68 |
Current availability |  | $ | 2,707 |  |  | $ | 1,652 |  |  | $ | 1,161 |
Senior Notes The senior unsecured notes are issued by the Operating Partnership and guaranteed by the Parent. Our obligations under the senior notes are effectively subordinated in certain respects to any of our debt that is secured by a lien on real property, to the extent of the value of such real property. The senior notes require interest payments be made quarterly, semi-annually or annually. All of the senior notes are redeemable at any time at our option, subject to certain prepayment penalties. Such redemption and other terms are governed by the provisions of indenture agreements, various note purchase agreements and/or trust deeds. During the years ended December 31, we issued the following senior notes (dollars and euros in thousands):
2014 |  | Principal Amount |  |  | Interest Rate |  |  | Effective Interest Rate |  |  | Maturity Date |
February 2014 (1) |  | € | 700,000 |  |  | $ | 959,420 |  |  |  | 3.375% |  |  |  | 3.52% |  |  |  | February 2024 |
June 2014 (1) |  | € | 500,000 |  |  | $ | 680,550 |  |  |  | 3.000% |  |  |  | 3.10% |  |  |  | June 2026 |
October 2014 (1) |  | € | 600,000 |  |  | $ | 756,420 |  |  |  | 1.375% |  |  |  | 1.40% |  |  |  | October 2020 |
2013 |  | Principal Amount |  |  | Interest Rate |  |  | Effective Interest Rate |  |  | Maturity Date |
August 2013 |  |  |  |  |  | $ | 400,000 |  |  |  | 2.750% |  |  |  | 2.76% |  |  |  | February 2019 |
August 2013 |  |  |  |  |  | $ | 850,000 |  |  |  | 4.250% |  |  |  | 4.28% |  |  |  | August 2023 |
November 2013 |  |  |  |  |  | $ | 500,000 |  |  |  | 3.350% |  |  |  | 3.35% |  |  |  | February 2021 |
December 2013 (1) |  | € | 700,000 |  |  | $ | 950,500 |  |  |  | 3.000% |  |  |  | 3.08% |  |  |  | January 2022 |
(1) | This debt is denominated in euro and the exchange rate used to calculate into U.S. dollar was the effective rate at the date of the transaction.
Exchangeable Senior Notes At December 31, 2014, we had $460.0 million of 3.25% exchangeable senior notes that mature on March 15, 2015 (“Exchangeable Notes”). The Exchangeable Notes are exchangeable at any time by holders at an initial conversion rate of 25.8244 shares of our common stock per $1,000 principal amount of notes, equivalent to an initial conversion price of approximately $38.72 per share, subject to adjustment upon the occurrence of certain events. The holders of the notes have the right to require us to repurchase their notes for cash at any time on or prior to the maturity date upon a change in control or a termination of trading. Based on the conversion rate at December 31, 2014, 11.9 million shares would be required to settle the principal amount in stock for the Exchangeable Notes. The conversion of the Exchangeable Notes into stock, and the corresponding adjustment to interest expense, are included in our computation of diluted earnings per share/unit, unless the impact is anti-dilutive. For the years ended December 31, 2014, 2013 and 2012, the impact of these notes was anti-dilutive. We recognized unrealized losses on the derivative instrument (exchange feature) associated with exchangeable debt of $10.3 million, $1.2 million and $22.3 million for the years ended December 31, 2014, 2013 and 2012, respectively. The fair value of the derivative associated with the Exchangeable Notes was a liability of $51.3 million and $41.0 million at December 31, 2014 and 2013, respectively. Secured Mortgage Debt and Secured Mortgage Debt of Consolidated Entities TMK bonds are a financing vehicle in Japan for special purposes companies known as TMKs. In 2013, we issued ¥10.6 billion ($106.4 million) of new TMK bonds and paid off or transferred substantially all of our outstanding TMK bonds. At December 31, 2013, we had one TMK bond outstanding for ¥1.5 billion ($14.3 million). In 2014, we issued ¥7.2 billion ($70.7 million) of new TMK bonds and paid off or transferred all of our outstanding TMK bonds. In connection with the acquisitions of a controlling interest in certain of our co-investment ventures in 2014 and 2013, we assumed secured mortgage debt of $1.2 billion and $190.4 million, respectively. See Note 3 for more information on these transactions. Term Loans In June 2014, we terminated our existing senior term loan agreement and entered into a new agreement (the “Euro Term Loan”) under which loans can be obtained in U.S. dollars, euro, Japanese yen, and British pounds sterling in an aggregate amount not to exceed €500 million ($607.1 million at December 31, 2014). We may pay down and re-borrow under the Euro Term Loan and increase the borrowings up to €1.0 billion ($1.2 billion at December 31, 2014), subject to obtaining additional lender commitments. The interest rate on the Euro Term Loan is LIBOR plus 98 basis points and the loan is scheduled to mature in June 2017; however, we may extend the maturity date twice, by one year each, subject to the satisfaction of certain conditions and payment of an extension fee. The Euro Term Loan has borrowings of €190 million ($230.7 million) at December 31, 2014. In May 2014, we entered into a Japanese yen term loan (“Yen Term Loan”), under which we may obtain loans in an aggregate amount not to exceed ¥40.9 billion ($342.1 million at December 31, 2014). We may increase the borrowings to ¥51.1 billion ($427.2 million at December 31, 2014), subject to obtaining additional lender commitments. The Yen Term Loan is scheduled to mature in 2021, and the interest rate is yen LIBOR plus 120 basis points. The Yen Term Loan was fully drawn at December 31, 2014. Debt Covenants We have approximately $6.5 billion of senior notes outstanding at December 31, 2014 that were issued under three separate indentures, as supplemented, and are subject to certain financial covenants. We are also subject to financial covenants under our Credit Facilities and certain secured mortgage debt. At December 31, 2014, we were in compliance with all of our debt covenants. Long-Term Debt Maturities Principal payments due on our debt, for each year through the period ending December 31, 2024, and thereafter were as follows at December 31, 2014 (in millions):
|  | Prologis |  |  |  |  |  |  |
|  | Unsecured |  |  |  |  |  |  |  |  |  |  |  |  |
Maturity |  | Senior Notes |  |  | Exchangeable Notes |  |  | Credit Facilities |  |  | Term Loans and Other Debt |  |  | Secured Mortgage Debt |  |  | Total |  |  | Consolidated Entities’ Debt |  |  | Total Consolidated Debt |
2015(1) |  | $ | - |  |  | $ | 460 |  |  | $ | - |  |  | $ | 1 |  |  | $ | 24 |  |  | $ | 485 |  |  | $ | 114 |  |  | $ | 599 |
2016 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1 |  |  |  | 294 |  |  |  | 295 |  |  |  | 446 |  |  |  | 741 |
2017 |  |  | 377 |  |  |  | - |  |  |  | - |  |  |  | 232 |  |  |  | 156 |  |  |  | 765 |  |  |  | 206 |  |  |  | 971 |
2018 |  |  | 262 |  |  |  | - |  |  |  | - |  |  |  | 1 |  |  |  | 111 |  |  |  | 374 |  |  |  | 166 |  |  |  | 540 |
2019 |  |  | 693 |  |  |  | - |  |  |  | - |  |  |  | 1 |  |  |  | 285 |  |  |  | 979 |  |  |  | 1 |  |  |  | 980 |
2020 |  |  | 1,096 |  |  |  | - |  |  |  | - |  |  |  | 1 |  |  |  | 6 |  |  |  | 1,103 |  |  |  | 189 |  |  |  | 1,292 |
2021 |  |  | 500 |  |  |  | - |  |  |  | - |  |  |  | 342 |  |  |  | 11 |  |  |  | 853 |  |  |  | 1 |  |  |  | 854 |
2022 |  |  | 850 |  |  |  | - |  |  |  | - |  |  |  | 1 |  |  |  | 7 |  |  |  | 858 |  |  |  | 1 |  |  |  | 859 |
2023 |  |  | 850 |  |  |  | - |  |  |  | - |  |  |  | 1 |  |  |  | 7 |  |  |  | 858 |  |  |  | 1 |  |  |  | 859 |
2024 |  |  | 850 |  |  |  | - |  |  |  | - |  |  |  | 1 |  |  |  | 129 |  |  |  | 980 |  |  |  | 1 |  |  |  | 981 |
Thereafter |  |  | 607 |  |  |  | - |  |  |  | - |  |  |  | 7 |  |  |  | - |  |  |  | 614 |  |  |  | 3 |  |  |  | 617 |
Subtotal |  |  | 6,085 |  |  |  | 460 |  |  |  | - |  |  |  | 589 |  |  |  | 1,030 |  |  |  | 8,164 |  |  |  | 1,129 |  |  |  | 9,293 |
Unamortized (discounts) premiums, net |  |  | (8) |  |  |  | (3) |  |  |  | - |  |  |  | - |  |  |  | 20 |  |  |  | 9 |  |  |  | 78 |  |  |  | 87 |
Total |  | $ | 6,077 |  |  | $ | 457 |  |  | $ | - |  |  | $ | 589 |  |  | $ | 1,050 |  |  | $ | 8,173 |  |  | $ | 1,207 |  |  | $ | 9,380 |
(1) | The Exchangeable Notes are due on March 15, 2015. We will settle the exchanges in all cash, all stock or a combination of both pursuant to the applicable indenture.
Interest Expense Interest expense from continuing operations included the following components for the years ended December 31 (in thousands):
|  | 2014 |  |  | 2013 |  |  | 2012 |
Gross interest expense |  | $ | 377,666 |  |  | $ | 471,923 |  |  | $ | 578,518 |
Amortization of premium, net |  |  | (21,440) |  |  |  | (39,015) |  |  |  | (36,687) |
Amortization of deferred loan costs |  |  | 14,116 |  |  |  | 14,374 |  |  |  | 16,781 |
Interest expense before capitalization |  |  | 370,342 |  |  |  | 447,282 |  |  |  | 558,612 |
Capitalized amounts |  |  | (61,457) |  |  |  | (67,955) |  |  |  | (53,397) |
Net interest expense |  | $ | 308,885 |  |  | $ | 379,327 |  |  | $ | 505,215 |
Total cash paid for interest, net of amounts capitalized |  | $ | 258,441 |  |  | $ | 426,528 |  |  | $ | 546,627 |
Early Extinguishment of Debt In an effort to reduce our borrowing costs and extend our debt maturities, we repurchased certain debt, principally outstanding senior notes and secured mortgage debt, generally with proceeds from the issuance of senior notes outlined above and an equity offering in April 2013 (as described in Note 10). As a result, we may recognize a gain or loss represented by the difference between the recorded debt (net of premiums and discounts and including related debt costs) and the consideration we paid to retire the debt, including fees. A summary of the activity related to the repurchase of debt and net loss on early extinguishment of debt is as follows (in millions):
|  | 2014 |  |  | 2013 |
Repurchase of senior notes |  | $ | 1,290 |  |  | $ | 2,142 |
Repurchase of secured mortgage debt |  | $ | 528 |  |  | $ | 1,571 |
Loss on early extinguishment of debt |  | $ | 165 |  |  | $ | 277 |
The repurchase of debt activity was not considered significant during 2012.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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