The company leased 36.3 million square feet in its combined operating and development portfolios in the second quarter. Prologis ended the quarter with 93.7% occupancy in its operating portfolio, consistent with the prior quarter.

Tenant retention in the second quarter was 84.6%. GAAP rental rates on leases signed in the quarter increased 4% from prior rents compared to a decrease of 3.8% in the same period in 2012. During the second quarter, same-store net operating income increased 0.7% and decreased 0.4% on an adjusted cash basis.

Capital Deployment

Invested capital during the second quarter totaled $922.2 million, of which $796.7 million was Prologis' share, including:

* Development starts of $385.3 million with a weighted average estimated yield of 7.1% and an estimated development margin of 13.9%. Prologis' share was $301.4 million and the company's estimated share of value creation upon stabilization is expected to be $42.7 million;

*Acquisitions of $127.2 million of buildings and land, of which $85.6 million was Prologis' share. The stabilized capitalization rate on building acquisitions was 7.2%; and

*$409.7 million of investments in our co-investment ventures, including Prologis Targeted Europe Logistics Fund, Prologis European Properties Fund II, and Prologis Institutional Alliance Fund II, with a stabilized capitalization rate of 6.4%.

Subsequent to quarter end, Prologis European Logistics Partners Sarl, the company's joint venture with Norges Bank Investment Management, acquired a portfolio in the United Kingdom for $380 million, of which $190 million was Prologis' share.

At quarter end, Prologis' global development pipeline comprised 26.6 million square feet, with a total expected investment of $2.3 billion, of which Prologis' share was $1.8 billion. The company's share of estimated value creation at stabilization is expected to be $363.9 million, with a weighted average estimated stabilized yield expected to be 7.7% and a margin of approximately 21.3%.

Dispositions and Contributions

Prologis completed $567.2 million in contributions and dispositions in the second quarter, of which $347.7 million was the company's share, with a stabilized capitalization rate of 5.6%, including:

* $282-million in contributions to Nippon Prologis REIT and Prologis Mexico Fondo Logistico, of which $237.3 million was the company's share; and

* $285.2 million of third-party building and land dispositions, of which $110.4 million was the company's share.

Investment Management

During the second quarter, the company further streamlined its co-investment ventures by rationalizing two funds, as GlobeSt.com reported:

* Prologis Japan Fund 1, the assets of which were acquired by Nippon Prologis REIT and Prologis; and

* Prologis Institutional Alliance Fund II, in which the company acquired its outside partners' interests and the assets are now wholly-owned by Prologis, as GlobeSt.com reported.

At quarter end, Prologis had $22.8 billion in combined assets under management in 15 funds.

Capital Markets

During the second quarter, Prologis completed approximately $4.3 billion in capital markets transactions, including:

*$1.5 billion from its follow-on equity offering, including the over-allotment;

* $2.3 billion in debt financings, re-financings, and pay-downs; and

* $482.5 million in preferred stock redemptions.

The company also established an at-the-market equity offering program to sell up to $750 million of its common stock.

Subsequent to quarter end, Prologis recast and upsized its global line of credit by $350 million to $2.0 billion, extended the initial term to 2017, and achieved a 40 basis point reduction in interest rate. “Our capital markets activity in the quarter provides us with enhanced financial flexibility,” explains Thomas S. Olinger, CFO of Prologis. "We have a strong balance sheet and the proven ability to access multiple sources of capital to fund our growth opportunities.”