v2.4.1.9

Unconsolidated Investments | 12 Months Ended
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Dec. 31, 2014
Equity Method Investments and Joint Ventures [Abstract] |
Unconsolidated Investments |
5. | Unconsolidated Investments
Summary of Investments We have investments in entities through a variety of ventures. We co-invest in entities that own multiple properties with partners and investors and provide asset and property management services to these entities, which we refer to as co-investment ventures. These entities may be consolidated or unconsolidated, depending on the structure, our partner’s participation and other rights and our level of control of the entity. This note primarily details our investments in unconsolidated co-investment ventures, which are accounted for using the equity method of accounting. See Note 12 for more detail regarding our consolidated investments. We also have other ventures, generally with one partner and that we do not manage, which we account for on the equity method. We refer to our investments in all entities accounted for under the equity method, both unconsolidated co-investment ventures and other ventures, collectively, as unconsolidated entities. Our investments in and advances to our unconsolidated entities at December 31 are summarized below (in thousands):
|  | 2014 |  |  | 2013 |
Unconsolidated co-investment ventures |  | $ | 4,665,918 |  |  | $ | 4,250,015 |
Other ventures |  |  | 158,806 |  |  |  | 180,224 |
Totals |  | $ | 4,824,724 |  |  | $ | 4,430,239 |
Unconsolidated Co-Investment Ventures The amounts recognized in Strategic Capital Income and Earnings from Unconsolidated Entities, Net in the Consolidated Statements of Operations depend on the size and operations of the co-investment ventures. Our ownership interest in these ventures also impacts the equity in earnings we recognize. The co-investment venture information represents the venture’s information (not our proportionate share) prepared on a GAAP basis. The following tables are summarized information of the unconsolidated co-investment ventures at December 31, and for the three years ended December 31.
(dollars and square feet in millions) |  | 2014 |  |  | 2013 |  |  | 2012 |
Americas: |  |  |  |  |  |  |  |  |  |  |  |
Number of ventures |  |  | 3 |  |  |  | 4 |  |  |  | 6 |
Number of properties owned |  |  | 590 |  |  |  | 709 |  |  |  | 801 |
Square feet |  |  | 87.1 |  |  |  | 108.5 |  |  |  | 127.5 |
Total assets |  | $ | 7,063 |  |  | $ | 8,014 |  |  | $ | 9,070 |
Third-party debt |  | $ | 2,280 |  |  | $ | 2,999 |  |  | $ | 3,836 |
Total liabilities |  | $ | 2,421 |  |  | $ | 3,177 |  |  | $ | 4,170 |
Our investment balance (1) |  | $ | 1,537 |  |  | $ | 1,194 |  |  | $ | 1,112 |
Our weighted average ownership (2) |  |  | 31.0% |  |  |  | 22.7% |  |  |  | 23.2% |
Europe: |  |  |  |  |  |  |  |  |  |  |  |
Number of ventures |  |  | 4 |  |  |  | 4 |  |  |  | 3 |
Number of properties owned |  |  | 636 |  |  |  | 571 |  |  |  | 312 |
Square feet |  |  | 147.4 |  |  |  | 132.9 |  |  |  | 70.3 |
Total assets |  | $ | 11,463 |  |  | $ | 11,819 |  |  | $ | 6,605 |
Third-party debt |  | $ | 2,644 |  |  | $ | 2,998 |  |  | $ | 2,384 |
Total liabilities |  | $ | 3,524 |  |  | $ | 4,114 |  |  | $ | 2,954 |
Our investment balance (1) |  | $ | 2,773 |  |  | $ | 2,703 |  |  | $ | 723 |
Our weighted average ownership (2) |  |  | 38.8% |  |  |  | 39.0% |  |  |  | 29.7% |
Asia: |  |  |  |  |  |  |  |  |  |  |  |
Number of ventures |  |  | 2 |  |  |  | 2 |  |  |  | 2 |
Number of properties owned |  |  | 52 |  |  |  | 43 |  |  |  | 44 |
Square feet |  |  | 26.2 |  |  |  | 22.9 |  |  |  | 11.0 |
Total assets |  | $ | 4,135 |  |  | $ | 4,032 |  |  | $ | 1,937 |
Third-party debt |  | $ | 1,652 |  |  | $ | 1,715 |  |  | $ | 973 |
Total liabilities |  | $ | 1,749 |  |  | $ | 1,899 |  |  | $ | 1,063 |
Our investment balance (1) |  | $ | 356 |  |  | $ | 353 |  |  | $ | 179 |
Our weighted average ownership (2) |  |  | 15.0% |  |  |  | 15.0% |  |  |  | 19.2% |
Total: |  |  |  |  |  |  |  |  |  |  |  |
Number of ventures |  |  | 9 |  |  |  | 10 |  |  |  | 11 |
Number of properties owned |  |  | 1,278 |  |  |  | 1,323 |  |  |  | 1,157 |
Square feet |  |  | 260.7 |  |  |  | 264.3 |  |  |  | 208.8 |
Total assets |  | $ | 22,661 |  |  | $ | 23,865 |  |  | $ | 17,612 |
Third-party debt |  | $ | 6,576 |  |  | $ | 7,712 |  |  | $ | 7,193 |
Total liabilities |  | $ | 7,694 |  |  | $ | 9,190 |  |  | $ | 8,187 |
Our investment balance (1) |  | $ | 4,666 |  |  | $ | 4,250 |  |  | $ | 2,014 |
Our weighted average ownership (2) |  |  | 32.0% |  |  |  | 29.2% |  |  |  | 25.1% |
(in millions) |  | 2014 (3) |  |  | 2013 (3) |  |  | 2012 |
Americas: |  |  |  |  |  |  |  |  |  |  |  |
Revenues |  | $ | 711 |  |  | $ | 702 |  |  | $ | 759 |
Net operating income |  | $ | 527 |  |  | $ | 513 |  |  | $ | 561 |
Net earnings (loss) |  | $ | 54 |  |  | $ | 58 |  |  | $ | (88) |
Europe: |  |  |  |  |  |  |  |  |  |  |  |
Revenues |  | $ | 1,001 |  |  | $ | 801 |  |  | $ | 490 |
Net operating income |  | $ | 787 |  |  | $ | 621 |  |  | $ | 380 |
Net earnings |  | $ | 268 |  |  | $ | 131 |  |  | $ | 86 |
Asia: |  |  |  |  |  |  |  |  |  |  |  |
Revenues |  | $ | 280 |  |  | $ | 224 |  |  | $ | 141 |
Net operating income |  | $ | 219 |  |  | $ | 175 |  |  | $ | 109 |
Net earnings |  | $ | 86 |  |  | $ | 48 |  |  | $ | 8 |
Total: |  |  |  |  |  |  |  |  |  |  |  |
Revenues |  | $ | 1,992 |  |  | $ | 1,727 |  |  | $ | 1,390 |
Net operating income |  | $ | 1,533 |  |  | $ | 1,309 |  |  | $ | 1,050 |
Net earnings |  | $ | 408 |  |  | $ | 237 |  |  | $ | 6 |
(1) | The difference between our ownership interest of the venture’s equity and our investment balance results principally from three types of transactions: (i) deferring a portion of the gains we recognize from a contribution of a property to the venture ($322.9 million, $139.6 million and $147.9 million at December 31, 2014, 2013 and 2012, respectively); (ii) recording additional costs associated with our investment in the venture; and (iii) advances to the venture.
(2) | Represents our weighted average ownership interest in all co-investment ventures based on each entity’s contribution to total assets, before depreciation, net of other liabilities.
(3) | We had significant activity with our unconsolidated co-investment ventures in 2014 and 2013. As described above, we formed and invested in FIBRA Prologis in June 2014. In connection with this transaction, we concluded our unconsolidated co-investment venture in Mexico. During 2013, we concluded three co-investment ventures and we started two new co-investment ventures.
Summarized information regarding the amounts we recognized in the Consolidated Statements of Operations as our share of the earnings from our investments in unconsolidated co-investment ventures for the years ended December 31 was as follows (in thousands):
|  | 2014 |  |  | 2013 |  |  | 2012 |
Earnings (loss) from unconsolidated co-investment ventures: |  |  |  |  |  |  |  |  |  |  |  |
Americas |  | $ | 8,596 |  |  | $ | 21,724 |  |  | $ | (7,843) |
Europe |  |  | 108,430 |  |  |  | 63,839 |  |  |  | 31,174 |
Asia |  |  | 14,022 |  |  |  | 9,091 |  |  |  | 2,372 |
Total earnings from unconsolidated co-investment ventures, net |  | $ | 131,048 |  |  | $ | 94,654 |  |  | $ | 25,703 |
Strategic capital and other income: |  |  |  |  |  |  |  |  |  |  |  |
Americas |  | $ | 94,354 |  |  | $ | 70,642 |  |  | $ | 68,142 |
Europe |  |  | 86,487 |  |  |  | 63,794 |  |  |  | 37,173 |
Asia |  |  | 37,509 |  |  |  | 42,749 |  |  |  | 19,870 |
Total strategic capital income |  |  | 218,350 |  |  |  | 177,185 |  |  |  | 125,185 |
Development management and other income |  |  | 5,424 |  |  |  | 4,007 |  |  |  | 535 |
Total strategic capital and other income |  | $ | 223,774 |  |  | $ | 181,192 |  |  | $ | 125,720 |
We may earn promotes based on the third-party investor returns over time. In June 2014, we earned a promote of $42.1 million from Prologis Targeted U.S. Logistics Fund, which was based on the venture’s cumulative returns to the investors over the last three years. In October 2013, we earned a promote of $7.9 million in connection with the conclusion of SGP Mexico, which was based on the venture’s cumulative returns to the investor over the life of the venture. We recognized the third-party investors’ portion of the promote of $31.3 million and $6.4 million in 2014 and 2013, respectively, which is reflected in Strategic Capital Income in the Consolidated Statements of Operations. We also recognized $4.2 million and $1.3 million of expense in 2014 and 2013, respectively that is reflected in Strategic Capital Expenses in the Consolidated Statements of Operations, and represents the associated cash bonus paid pursuant to the terms of the Prologis Promote Plan. See Note 13 for more information about this plan. Information about our investments in the individual co-investment ventures at December 31 was as follows (dollars in thousands):
|  | Ownership Percentage |  |  | Investment in and Advances to |
Co-Investment Venture |  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Prologis Targeted U.S. Logistics Fund, L.P. |  |  | 24.3% |  |  |  | 25.9% |  |  | $ | 712,044 |  |  | $ | 743,454 |
Prologis North American Industrial Fund, LP (NAIF) (1) |  |  | - |  |  |  | 23.1% |  |  |  | - |  |  |  | 201,482 |
FIBRA Prologis (2) (3) |  |  | 45.9% |  |  |  | - |  |  |  | 589,627 |  |  |  | - |
Prologis MX Fund LP (Prologis Mexico Industrial Fund) (2) |  |  | - |  |  |  | 20.0% |  |  |  | - |  |  |  | 49,684 |
Prologis Brazil Logistics Partners Fund I, L.P. (“Brazil Fund”) and related joint ventures (“Brazil Ventures”) (4) |  |  | 50.0% |  |  |  | 50.0% |  |  |  | 235,496 |  |  |  | 199,392 |
Prologis Targeted Europe Logistics Fund, FCP-FIS |  |  | 43.2% |  |  |  | 43.1% |  |  |  | 458,702 |  |  |  | 471,896 |
Prologis European Properties Fund II, FCP-FIS |  |  | 31.1% |  |  |  | 32.5% |  |  |  | 488,503 |  |  |  | 582,828 |
Europe Logistics Venture 1, FCP-FIS (5) |  |  | 15.0% |  |  |  | 15.0% |  |  |  | 56,127 |  |  |  | 62,654 |
Prologis European Logistics Partners Sàrl (PELP) (5) |  |  | 50.0% |  |  |  | 50.0% |  |  |  | 1,769,720 |  |  |  | 1,585,923 |
Nippon Prologis REIT (NPR) (6)(7) |  |  | 15.1% |  |  |  | 15.1% |  |  |  | 303,178 |  |  |  | 309,715 |
Prologis China Logistics Venture I, LP & II, LP (Prologis China Logistics Venture) (5) |  |  | 15.0% |  |  |  | 15.0% |  |  |  | 52,521 |  |  |  | 42,987 |
Totals |  |  |  |  |  |  |  |  |  | $ | 4,665,918 |  |  | $ | 4,250,015 |
(1) | As discussed in Note 3, we began consolidating NAIF in October 2014.
(2) | As discussed in Note 4, we completed the initial public offering of FIBRA Prologis in June 2014 and concluded the Prologis Mexico Industrial Fund. At December 31, 2014, we owned 291.1 million units of FIBRA Prologis, which had a closing price of Ps 27.29 ($1.86) per unit on the Mexican Stock Exchange.
(3) | We have granted FIBRA Prologis a right of first refusal with respect to stabilized properties that we plan to sell in Mexico.
(4) | We have a 50% ownership interest in and consolidate an entity that in turn owns 50% of several entities that we account for on the equity method. Also, we have additional investments in other unconsolidated entities in Brazil that we account for on the equity method with various ownership interests ranging from 5-50%. We refer to the Brazil Fund and the other unconsolidated entities collectively as the “Brazil Ventures.”
(5) | We have one partner in each of these co-investment ventures.
(6) | At December 31, 2014, we owned 261,310 units of NPR, which had a closing price of ¥260,600 ($2,179) per share on the Tokyo Stock Exchange. At December 31, 2014 and 2013, we had receivables from NPR of $85.9 million and $88.5 million, respectively, related to customer security deposits that originated through a leasing company owned by us that pertain to properties owned by NPR. We have a corresponding payable to NPR’s customers in Other Liabilities in the Consolidated Balance Sheets.
(7) | For any properties we develop and plan to sell in Japan, we are committed to offer those properties to NPR.
Equity Commitments Related to Certain Unconsolidated Co-Investment Ventures Certain co-investment ventures have equity commitments from us and our venture partners. Our venture partners fulfill their equity commitment with cash. We may fulfill our equity commitment through contributions of properties or cash. The venture may obtain financing for the properties and therefore the acquisition price of additional investments that the venture could make may be more than the equity commitment. Depending on market conditions, the investment objectives of the ventures, our liquidity needs and other factors, we may make additional contributions of properties and/or additional cash investments in these ventures through the remaining commitment period. The following table is a summary of remaining equity commitments at December 31, 2014 (in millions):
|  | Equity commitments |  |  | Expiration date for remaining commitments |
|  | Prologis |  |  | Venture Partners |  |  | Total |  |
Prologis Targeted U.S. Logistics Fund |  | $ | - |  |  | $ | 376 |  |  | $ | 376 |  |  |  | 2015-2017 |
Prologis Targeted Europe Logistics Fund (1) |  |  | 117 |  |  |  | 197 |  |  |  | 314 |  |  |  | June 2015 |
Prologis European Properties Fund II (1) |  |  | 46 |  |  |  | 106 |  |  |  | 152 |  |  |  | September 2015 |
Europe Logistics Venture 1 (1) |  |  | 4 |  |  |  | 21 |  |  |  | 25 |  |  |  | June 2015 |
Prologis European Logistics Partners Sàrl (2) |  |  | 104 |  |  |  | 104 |  |  |  | 208 |  |  |  | February 2016 |
Prologis China Logistics Venture (3) |  |  | 225 |  |  |  | 1,277 |  |  |  | 1,502 |  |  |  | 2015 and 2017 |
Total |  | $ | 496 |  |  | $ | 2,081 |  |  | $ | 2,577 |  |  |  |  |
(1) | Equity commitments are denominated in euro and reported above in U.S. dollars based on an exchange rate of 1.21 U.S. dollars to the euro.
(2) | The equity commitments for this venture are expected to fund the future repayment of debt that is denominated in British pounds sterling. The commitments will be called in euros and are reported above in U.S. dollars using an exchange rate of 1.56 U.S. dollars to the British pounds sterling.
(3) | In July 2014, we secured a $500 million increase in committed third-party equity for this venture.
Other Ventures We have several investments in other unconsolidated ventures that own real estate properties and/or perform development activity. We recognized our proportionate share of the earnings from our investments in these entities of $3.2 million, $2.6 million and $6.0 million for the years ended December 31, 2014, 2013 and 2012, respectively.

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=35687916&loc=d3e32787-111569 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=35687916&loc=d3e32847-111569 + Details
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