UPDATE 2-ProLogis first-quarter FFO trails forecasts

* Q1 FFO share 1 ct vs. year-earlier 90 cts

* Drops low end of 2010 FFO forecast

* Shares fall 4.3 pct
(Recasts first sentence; adds details, CFO quote, stock price,
byline)

By Ilaina Jonas

NEW YORK, April 22 (BestGrowthStock) -ProLogis (PLD.N: ), owner of
warehouses and distribution facilities, on Thursday reported a
97 percent drop in first-quarter funds from operations on
Thursday, missing its own expectations and sending its shares
down more more than 4 percent.

ProLogis, whose business relies on global trade but trails
that activity, said its operating fundamentals continue to
bounce along the bottom. Occupancy was 89.2 percent at the end
of the quarter, flat with the prior period.

“Results for the first quarter were slightly below our
expectations, negatively impacted by roughly $0.01 per share
related to a stronger dollar and modestly lower occupancy,”
Chief Financial Officer William Sullivan said in a statement.

Denver-based ProLogis reported first-quarter FFO of $7.1
million, or 1 cent per share, down from $242.3 million, or 90
cents per share, a year earlier, when it booked a large gain
from the sale of its Japan property fund.

The latest results include $53.6 million in charges for the
buyback of convertible debt and the company’s share of
fund-related derivatives losses.

Excluding noncash charges, FFO was 5 cents a share, far
behind the 17 cents that analysts had forecast, according to
Thomson Reuters I/B/E/S. ProLogis, however, said the Wall
Street view compared with 13 cents per share, excluding
charges.

To account for the dilution from a senior notes offering in
the first quarter, the company cut the low end of its forecast
for full-year FFO per share to 70 cents from 74 cents, while
keeping the high end at 78 cents. The outlook includes sales of
new warehouse centers and land, but excludes noncash items.

During the quarter, the company leased 29.6 million square
feet of space, up from the 2009 quarterly average of 27
million.

But rents continued to decline. For properties the company
has owned for at least a year, new rents were 12.3 percent
lower, while net operating income — the cash the properties
generate less expenses — fell 3.1 percent.

ProLogis was among the real estate investment trusts hit
hardest by the credit crisis of 2008 as much of its debt is set
to mature in the next few years. It has been working to cut its
debt, especially its ballooning maturities in 2012 and 2013.

At the end of the first quarter, the company had reduced
its 2010 direct debt maturities to $1.3 billion from $2.3
billion at the end of 2009, while paring down its 2013
maturities to $1.1 billion from $1.5 billion. It did so chiefly
by issuing new debt with later maturities.

Shares of ProLogis were off 4.3 percent at $13.55 in morning
trading on the New York Stock Exchange.

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(Reporting by Ilaina Jonas, editing by Gerald E. McCormick and
Lisa Von Ahn)

UPDATE 2-ProLogis first-quarter FFO trails forecasts