v2.4.1.9
Business Combinations
 12 Months Ended
Dec. 31, 2014
Business Combinations [Abstract]  
Business Combinations
3. Business Combinations

Acquisition of a Controlling Interest in Prologis North American Industrial Fund

During 2014, we increased our ownership in Prologis North American Industrial Fund (“NAIF”) from 23.1% to 66.1% by acquiring the equity units from all but one partner for an aggregate of $679.0 million. This included the acquisition of $46.8 million on October 20, 2014 that resulted in our gaining control over NAIF, based on the rights of the limited partners, and therefore we began consolidating NAIF as of that date. When we acquire a controlling interest in an equity investment, we remeasure our equity investment to fair value, and as a result we may recognize a gain or loss. We recognized a gain of $201.3 million in Gains on Dispositions of Investments in Real Estate and Revaluation of Equity Investments upon Acquisition of a Controlling Interest, Net in the Consolidated Statements of Operations. The fair value was primarily based on external valuations.

The total purchase price was $1.1 billion, which included our investment in NAIF at the time of consolidation. The allocation of the purchase price required a significant amount of judgment and was based on our valuation, estimates and assumptions of the acquisition date fair value of the tangible and intangible assets and liabilities acquired, for which we used external valuations as appropriate. While the current allocation of the purchase price is substantially complete, the valuation of the real estate properties is still being finalized. We do not expect future revisions, if any, to have a significant impact on our financial position or results of operations. The allocation of the purchase price was as follows (in thousands):

 

 

Investments in real estate properties

    $ 2,770,191   

Cash, accounts receivable and other assets

      132,261   

Debt

      (1,195,213)   

Accounts payable, accrued expenses and other liabilities

      (70,226)   

Noncontrolling interests

      (554,493)   
  

 

 

  

Total purchase price

    $         1,082,520   

 

Our results of operations for 2014 include rental income and rental expenses of the properties acquired in the NAIF acquisition of $49.2 million and $13.3 million, respectively, offset by the impact of noncontrolling interests.

2013 Acquisitions of Controlling Interests in Unconsolidated Co-Investment Ventures

During 2013, we acquired real estate from three unconsolidated co-investment ventures through the conclusion of the venture or the acquisition of our partner’s interest. In connection with these transactions, we remeasured our equity investment to fair value and recognized gains of $34.8 million in Gains on Dispositions of Investments in Real Estate and Revaluation of Equity Investments upon Acquisition of a Controlling Interest, Net in the Consolidated Statements of Operations. The fair value was primarily based on external valuations.

 

  •  

On October 2, 2013, we acquired our partner’s 78.4% interest in the unconsolidated co-investment venture Prologis SGP Mexico and concluded the venture. The allocation of net assets acquired was $409.5 million in real estate properties and $4.0 million of net other assets and $158.4 million in debt. All properties acquired in this transaction were contributed in June 2014 to our new unconsolidated co-investment venture in Mexico, as discussed in Note 4.

 

  •  

On August 6, 2013, we concluded the unconsolidated co-investment venture Prologis North American Industrial Fund III. The venture sold 73 properties to a third party and we subsequently acquired the remaining properties through the purchase of our partner’s 80% ownership interest in the venture. The allocation of net assets acquired was $519.2 million in real estate properties and $22.0 million of net other assets. These properties were contributed in January 2014 to a consolidated venture in which we own 55% of the equity as discussed in Note 12.

 

  •  

In the second quarter of 2013, we concluded an unconsolidated co-investment venture in Japan.

The results of operations for these properties were not significant in 2013.

2012 Acquisitions of Controlling Interests in Unconsolidated Co-Investment Ventures

In 2012, we acquired all or a portion of the total properties in three of our unconsolidated co-investment ventures in the United States, collectively the “2012 Co-Investment Venture Acquisitions.” As a result of the 2012 Co-Investment Venture Acquisitions, we remeasured our equity investments in these co-investment ventures to fair value resulting in a gain of $286.3 million in Gains on Dispositions of Investments in Real Estate and Revaluation of Equity Investments upon Acquisition of a Controlling Interest, Net in the Consolidated Statements of Operations. The fair value was primarily based on external valuations. The allocation of net assets acquired for these acquisitions was approximately $2.3 billion in real estate properties, $50.3 million of net other assets and $1.0 billion in debt. Our results for 2012 include rental income and rental expenses of the properties acquired in the 2012 Co-Investment Venture Acquisitions of $170.6 million and $42.5 million, respectively.