The language of the business
There are a variety of terms used in the real estate industry that are unique to publicly-held companies, to the industrial property sector and to Prologis itself. The following glossary of terms used on this Website and in our financial documents (found in the Investor Relations section) should assist those doing research on our company and our industry.
ABR (Annualized Base Rent)
Calculated as the cash basis value of monthly base rent per the lease, multiplied by 12. If free rent is granted, the first full monthly base rent value is used in the calculation.
BTS (Build To Suit)
A custom development that is sourced, designed and constructed according to a specific customer's business needs.
The pooling of capital resources for the purpose of acquiring, developing and operating a property or portfolio of properties. Prologis contributes between 15% and 501% of its capital to each co-investment that it undertakes with private investors.
FFO (Funds From Operations)
A non-GAAP measure that is commonly used in the real estate industry. The most directly comparable GAAP measure to FFO is net earnings. Although the National Association of Real Estate Investment Trusts (NAREIT) has published a definition of FFO, modifications to the NAREIT calculation of FFO are common among REITs, as companies seek to provide financial measures that meaningfully reflect their business..
IBI (Industrial Business Indicator)
A proprietary model developed by Prologis Research, comprising the Federal Reserve Board's manufacturing output data and a customized set of algorithms, used to predict national net absorption trends in the United States. While our applications of the IBI toward projecting specific market absorption remains proprietary, our national forecasts are posted to this website each quarter.
The submarket areas where Prologis prefers to develop and acquire our industrial facilities. Owning buildings in infill locations provides our customers proximities to large consumer clusters and to the necessary municipal throughways in order to transport their goods quickly and easily. These locations also have geographic, political or regulatory limits on new supply.
Investment funds from governmental/corporate pension funds, foundations, endowments, trusts or single institutions. Prologis' Investment Management business raises investment funds from many private capital sources, which enables us to grow our business for our partners and investors without having to issue additional common stock (thereby diluting the "per share" value of our outstanding shares).
MO (Manufacturing Output)
A component of the Index of Industrial Production (IIP), which is published by the Federal Reserve Board. MO is calculated by subtracting the mining and utility industry components from the IIP, and is used by Prologis in our national Industrial Business Indicator.
Net absorption measures the total amount of square feet (or comparable measure) leased over a period of time, less the space that is vacated during the same period.
NAV (Net Asset Value)
The net "market value" of all company assets, including but not limited to its properties, after subtracting all its liabilities and obligations.
NOI (Net Operating Income)
Rental income less rental expenses.
NRA (Net Rentable Area)
The amount of space in a building or property that is usable (and therefore rentable) to tenants.
Any facility that is ground-leased from an airport (i.e., the airport retains ownership of the land underneath the facility). These properties are very close to the airfield but do not have ramp access or aircraft parking positions.
A secured facility located directly on the airfield. It has direct ramp access with aircraft parking and loading positions.
Real estate properties originally wholly owned by Prologis, then "sold" to a co-investment pool managed by Prologis Investment Management. By contributing pre-specified assets to our co-investment pools, we enable our private capital partners to quickly put their investment funds to work. Additionally, our partners know exactly what kind of investment they are making, rather than contributing their money to a blind pool.
REIT (Real Estate Investment Trust)
A private or public corporation or trust that is allowed special status under the U.S. tax code—enabling the entity to pay no corporate income tax as long as its activities meet statutory tests restricting its business to certain commercial real estate activities. By law, REITs must pay out 90% of their taxable income in the form of dividends to maintain their tax-exempt status.
All properties owned during both the current and prior-year reporting periods. This categorization excludes development properties prior to their stabilization, for both current and prior reporting periods. The same-store pool is adjusted annually.
Strategic Alliance Partners™
Global network of the top industrial real estate professionals that support Prologis’ success in both leasing and property acquisitions.
A required characteristic of any Prologis-targeted submarket. Supply-constrained submarkets possess natural or governmental obstacles to additional industrial development, and therefore generate higher levels of customer demand. Typical supply constraints include minimal land availability (such as the San Francisco Bay Area's peninsula or a major mountain range outside Mexico City) and zoning limits.
Un-stabilized properties that Prologis acquires as part of management’s current belief that the discount in pricing attributed to the operating challenges of the property could provide greater returns, once stabilized, than the returns of stabilized properties, which are not value-added acquisitions. Value-added acquisitions generally have one or more of the following characteristics:
The repurposing of industrial properties to a higher and better use, including office, residential, retail, research and development or manufacturing. Activities required to prepare the property for conversion to a higher and better use may include: