Over the last couple of months, the questions below were the most frequently asked by Prologis (NYSE:PLD) investors. Here, we give our answers. We hope you find this information helpful.
1) Can you walk us through your self-funding model?
We have the capacity to fund more than five years of capital deployment. At our current run rate, our total annual funding requirement is $600 million, which includes development spend net of contribution proceeds. We expect to fund this through the rebalancing of our co-investment ventures, by reducing our land bank and selling our remaining non-strategic assets. These one-time sources total more than $3.5 billion and give us the ability to fund more than five years of net deployment activity.
2) Help us understand Prologis' activity in Europe and Asia.
Let's start with where our revenue comes from. When collecting rent, 72 percent is in the U.S. and 28 percent comes from abroad. Roughly 90 percent of our net equity is in U.S. dollars. The reason we're a global REIT is because our customers are global, and so we've organized our business to capitalize on this unique aspect of our sector. About two-thirds of our development value creation, fees and promotes are generated outside the U.S. As an aside, these benefits actually cover more than 100 percent of our global overhead. We view Prologis as an owner-operator in the U.S. and a fund manager and developer in Europe and Asia. This means we have minimal exposure to emerging economies.
3) What makes you optimistic about the market for dispositions?
Most of buildings we are selling are in primary markets across the U.S., where buyer interest is the strongest. We are selling well-located, older product, generally in the $25 million range-a good price point for buyers. So, in addition to our usual buyer pool, these factors help attract local and regional investors, as well as potential owner-operators. This expanded buyer pool and the demand we've seen to date give us confidence in the market for dispositions.
We'll be providing more QA's next quarter. In the meantime, follow us on LinkedIn for daily company updates.
Additional disclosure: Tom Olinger is the CFO of Prologis.