v3.8.0.1

Unconsolidated Entities | 9 Months Ended
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Sep. 30, 2017
Equity Method Investments And Joint Ventures [Abstract] |
Unconsolidated Entities | NOTE 3. UNCONSOLIDATED ENTITIES 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 details our investments in unconsolidated co-investment ventures, which are accounted for using the equity method of accounting. See Note 6 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 primarily using the equity method. We refer to our investments in all entities accounted for using the equity method, both unconsolidated co-investment ventures and other ventures, collectively, as unconsolidated entities. The following table summarizes our investments in and advances to our unconsolidated entities (in thousands):
|  | September 30, |  |  | December 31, |
|  | 2017 |  |  | 2016 |
Unconsolidated co-investment ventures |  | $ | 5,118,553 |  |  | $ | 4,057,524 |
Other ventures |  |  | 253,205 |  |  |  | 172,905 |
Totals |  | $ | 5,371,758 |  |  | $ | 4,230,429 |
Unconsolidated Co-Investment Ventures The amounts recognized in Strategic Capital Revenues and Earnings from Unconsolidated Entities, Net depend on the size and operations of the co-investment ventures, the timing of revenues earned through promotes during the life of a venture or upon liquidation, as well as fluctuations in foreign currency exchange rates. We recognized Strategic Capital Expenses for direct costs associated with the asset management of these ventures and allocated property-level management costs for the properties owned by the ventures. Our ownership interest in these ventures also impacts the earnings we recognize. The following table summarizes the amounts we recognized in the Consolidated Statements of Income related to the unconsolidated co-investment ventures (in thousands):
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Strategic capital revenues from unconsolidated co-investment ventures, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | 16,841 |  |  | $ | 9,565 |  |  | $ | 158,064 |  |  | $ | 27,739 |
Other Americas |  |  | 6,216 |  |  |  | 5,806 |  |  |  | 22,131 |  |  |  | 16,885 |
Europe |  |  | 26,323 |  |  |  | 113,489 |  |  |  | 78,450 |  |  |  | 161,257 |
Asia |  |  | 18,271 |  |  |  | 13,174 |  |  |  | 44,990 |  |  |  | 39,429 |
Total |  | $ | 67,651 |  |  | $ | 142,034 |  |  | $ | 303,635 |  |  | $ | 245,310 |
Earnings from unconsolidated co-investment ventures, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | 18,307 |  |  | $ | 1,763 |  |  | $ | 25,216 |  |  | $ | 9,140 |
Other Americas |  |  | 6,570 |  |  |  | 8,077 |  |  |  | 22,073 |  |  |  | 20,885 |
Europe |  |  | 23,848 |  |  |  | 29,802 |  |  |  | 89,622 |  |  |  | 90,395 |
Asia |  |  | 5,050 |  |  |  | 4,905 |  |  |  | 23,489 |  |  |  | 12,253 |
Total |  | $ | 53,775 |  |  | $ | 44,547 |  |  | $ | 160,400 |  |  | $ | 132,673 |
The following table summarizes the promotes earned and recognized in Strategic Capital Revenues (in thousands):
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Total promote (1) |  | $ | - |  |  | $ | 99,766 |  |  | $ | 150,898 |  |  | $ | 99,766 |
Less: Prologis' share |  |  | - |  |  |  | 11,222 |  |  |  | 23,806 |  |  |  | 11,222 |
Net promote recognized (third-party share) in strategic capital revenues |  | $ | - |  |  | $ | 88,544 |  |  | $ | 127,092 |  |  | $ | 88,544 |
(1) | We earned promotes from ELV, FIBRA Prologis and USLF in 2017 and Prologis European Properties Fund II and Prologis Targeted Europe Logistics Fund (“PTELF”) in 2016. Promotes are based on the venture’s cumulative returns to investors over a certain time-period, generally three years.
The following tables summarize the operating information and financial position of our unconsolidated co-investment ventures (not our proportionate share), as presented at our adjusted basis derived from the ventures’ U.S. GAAP information:
|  | September 30, |  |  | December 31, |  |  | September 30, |
(dollars and square feet in millions) |  | 2017 |  |  | 2016 |  |  | 2016 |
U.S. (1): |  |  |  |  |  |  |  |  |  |  |  |
Number of ventures |  |  | 1 |  |  |  | 1 |  |  |  | 1 |
Number of operating properties owned |  |  | 552 |  |  |  | 369 |  |  |  | 366 |
Square feet |  |  | 88 |  |  |  | 50 |  |  |  | 49 |
Total assets |  | $ | 7,311 |  |  | $ | 4,238 |  |  | $ | 4,167 |
Third-party debt |  | $ | 2,270 |  |  | $ | 1,414 |  |  | $ | 1,421 |
Total liabilities |  | $ | 2,473 |  |  | $ | 1,540 |  |  | $ | 1,509 |
Our investment balance (2) (3) |  | $ | 1,393 |  |  | $ | 435 |  |  | $ | 514 |
Our weighted average ownership (3) (4) |  |  | 27.1 | % |  |  | 14.9 | % |  |  | 17.8 | %
Other Americas (5): |  |  |  |  |  |  |  |  |  |  |  |
Number of ventures |  |  | 1 |  |  |  | 2 |  |  |  | 2 |
Number of operating properties owned |  |  | 203 |  |  |  | 213 |  |  |  | 209 |
Square feet |  |  | 37 |  |  |  | 42 |  |  |  | 41 |
Total assets |  | $ | 2,107 |  |  | $ | 2,793 |  |  | $ | 2,679 |
Third-party debt |  | $ | 727 |  |  | $ | 739 |  |  | $ | 671 |
Total liabilities |  | $ | 761 |  |  | $ | 814 |  |  | $ | 754 |
Our investment balance (2) |  | $ | 564 |  |  | $ | 845 |  |  | $ | 851 |
Our weighted average ownership (4) |  |  | 42.9 | % |  |  | 43.9 | % |  |  | 43.7 | %
Europe (6) (7): |  |  |  |  |  |  |  |  |  |  |  |
Number of ventures |  |  | 4 |  |  |  | 4 |  |  |  | 4 |
Number of operating properties owned |  |  | 709 |  |  |  | 700 |  |  |  | 694 |
Square feet |  |  | 167 |  |  |  | 163 |  |  |  | 160 |
Total assets |  | $ | 12,767 |  |  | $ | 10,853 |  |  | $ | 11,291 |
Third-party debt |  | $ | 2,742 |  |  | $ | 2,446 |  |  | $ | 2,628 |
Total liabilities |  | $ | 3,748 |  |  | $ | 3,283 |  |  | $ | 3,620 |
Our investment balance (2) (3) |  | $ | 2,649 |  |  | $ | 2,327 |  |  | $ | 2,565 |
Our weighted average ownership (3) (4) |  |  | 33.2 | % |  |  | 35.1 | % |  |  | 36.3 | %
Asia: |  |  |  |  |  |  |  |  |  |  |  |
Number of ventures |  |  | 2 |  |  |  | 2 |  |  |  | 2 |
Number of operating properties owned |  |  | 93 |  |  |  | 85 |  |  |  | 79 |
Square feet |  |  | 40 |  |  |  | 36 |  |  |  | 34 |
Total assets |  | $ | 5,907 |  |  | $ | 5,173 |  |  | $ | 5,439 |
Third-party debt |  | $ | 2,186 |  |  | $ | 1,947 |  |  | $ | 2,004 |
Total liabilities |  | $ | 2,504 |  |  | $ | 2,239 |  |  | $ | 2,313 |
Our investment balance (2) |  | $ | 513 |  |  | $ | 451 |  |  | $ | 493 |
Our weighted average ownership (4) |  |  | 15.1 | % |  |  | 15.1 | % |  |  | 15.0 | %
Total: |  |  |  |  |  |  |  |  |  |  |  |
Number of ventures |  |  | 8 |  |  |  | 9 |  |  |  | 9 |
Number of operating properties owned |  |  | 1,557 |  |  |  | 1,367 |  |  |  | 1,348 |
Square feet |  |  | 332 |  |  |  | 291 |  |  |  | 284 |
Total assets |  | $ | 28,092 |  |  | $ | 23,057 |  |  | $ | 23,576 |
Third-party debt |  | $ | 7,925 |  |  | $ | 6,546 |  |  | $ | 6,724 |
Total liabilities |  | $ | 9,486 |  |  | $ | 7,876 |  |  | $ | 8,196 |
Our investment balance (2) |  | $ | 5,119 |  |  | $ | 4,058 |  |  | $ | 4,423 |
Our weighted average ownership (4) |  |  | 28.7 | % |  |  | 27.9 | % |  |  | 28.9 | %
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
(in millions) |  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | 160 |  |  | $ | 100 |  |  | $ | 369 |  |  | $ | 296 |
Other Americas |  |  | 60 |  |  |  | 63 |  |  |  | 190 |  |  |  | 179 |
Europe |  |  | 266 |  |  |  | 232 |  |  |  | 758 |  |  |  | 724 |
Asia |  |  | 95 |  |  |  | 91 |  |  |  | 272 |  |  |  | 253 |
Total revenues |  | $ | 581 |  |  | $ | 486 |  |  | $ | 1,589 |  |  | $ | 1,452 |
Net earnings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | 64 |  |  | $ | 11 |  |  | $ | 115 |  |  | $ | 47 |
Other Americas |  |  | 19 |  |  |  | 20 |  |  |  | 58 |  |  |  | 53 |
Europe |  |  | 63 |  |  |  | 77 |  |  |  | 229 |  |  |  | 218 |
Asia |  |  | 30 |  |  |  | 30 |  |  |  | 147 |  |  |  | 74 |
Total net earnings |  | $ | 176 |  |  | $ | 138 |  |  | $ | 549 |  |  | $ | 392 |
(1) | In July 2017, we contributed operating properties to USLF. We received cash proceeds and additional units, which increased our ownership interest in USLF to 27.1%. See Note 2 for more information on this transaction.
(2) | The difference between our ownership interest of a venture’s equity and our investment balance at September 30, 2017, and December 31, 2016, results principally from three types of transactions: (i) deferring a portion of the gains we recognize from a contribution of a real estate property to a venture ($667.7 million and $469.9 million, respectively); (ii) recording additional costs associated with our investment in a venture ($106.3 million and $124.1 million, respectively); and (iii) advances to a venture ($195.2 million and $166.1 million, respectively).
(3) | In April 2016, we redeemed a portion of our investment in PTELF and USLF for €185.0 million ($210.6 million) and $200.0 million, respectively. The amounts received for the redemptions were included in Return of Investment from Unconsolidated Entities in the Consolidated Financial Statements of Cash Flows.
(4) | Represents our weighted average ownership interest in all co-investment ventures based on each entity’s contribution of total assets, before depreciation, net of other liabilities.
(5) | In August 2017, we acquired our partner’s interest in certain joint ventures in Brazil. See Note 2 for more information on this acquisition. Included in the Other Americas’ balances are nine properties aggregating 2.8 million square feet associated with the remaining Brazil joint ventures.
(6) | In January 2017, we sold our investment in ELV to our fund partner for $84.3 million and ELV contributed its properties to PTELF in exchange for equity interests.
(7) | In February 2017, we formed the Prologis UK Logistics Venture (“UKLV”), an unconsolidated co-investment venture in which we have a 15.0% ownership interest. UKLV will acquire land, develop buildings and operate and hold logistics real estate assets in the United Kingdom. Upon formation, we, along with our venture partner, committed £380.0 million ($508.9 million at September 30, 2017), of which our share is £57.0 million ($76.0 million at September 30, 2017). During the nine months ended September 30, 2017, we contributed 1.4 million square feet of stabilized properties, 0.6 million square feet of properties under development and 144.8 acres of land for an aggregate price of £269.5 million ($336.4 million). We expect to continue to contribute properties and land into UKLV.
Equity Commitments Related to Certain Unconsolidated Co-Investment Ventures The following table summarizes the remaining equity commitments at September 30, 2017 (in millions):
|  | Equity Commitments |  |  | Expiration Date for Remaining Commitments
|  | Prologis |  |  | Venture Partners |  |  | Total |  |  |
Prologis Targeted U.S. Logistics Fund |  | $ | - |  |  | $ | 195 |  |  | $ | 195 |  |  | 2019
Prologis Targeted Europe Logistics Fund (1) |  |  | - |  |  |  | 623 |  |  |  | 623 |  |  | 2018 – 2019
Prologis United Kingdom Logistics Venture (2) |  |  | 37 |  |  |  | 207 |  |  |  | 244 |  |  | 2021
Prologis China Logistics Venture |  |  | 294 |  |  |  | 1,665 |  |  |  | 1,959 |  |  | 2020 – 2024
Totals |  | $ | 331 |  |  | $ | 2,690 |  |  | $ | 3,021 |  |  |
(1) | Equity commitments are denominated in euro and reported in U.S. dollars based on an exchange rate of $1.18 U.S. dollars to the euro.
(2) | Equity commitments are denominated in British pounds sterling and reported in U.S. dollars based on an exchange rate of $1.34 U.S. dollars to the British pound sterling.

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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 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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