ProLogis posted a 23 percent jump in third-quarter 2005 gross revenues of $178.6 million, compared to the same period last year, as commercial property leasing, occupancy and rent rates cooled slightly from 2004 and early 2005 recovery levels.
ProLogis for the first time included income from its $5.4 billion acquisition of Catellus Development completed in September. Though the latest financials count only 15 days of income from Catellus, ProLogis said it believes the "merger will enhance the North American property portfolio in key markets, increase development property base and capabilities, reduce the overall property portfolio age and deepen its customers relationships."
ProLogis recorded similar gains in net revenue, up 20 percent, to $64.8 million, over $53.9 million for third-quarter 2004. The company expanded its property holdings to 2,218 facilities comprising almost 339.8 million square feet, from 1,919 facilities with 276 million square feet this time last year.
ProLogis said it expects improvements in general economic conditions - which drove increased leasing activity first in the North America and then in Europe starting in second quarter 2004 - would continue through the end of this year. Leasing demand in Japan and China has been strong throughout.
However, the company said it doesn't expect occupancies in North America and Europe to return to boom levels seen in 1999 through 2001, when vacancies dipped below 4 percent. Customers' imperative to reduce distribution costs, as well as shifting distribution patterns, will continue to be key drivers of leasing decisions, reducing demand for space.
Rental rates also declined, by 1.7 percent, for the first nine months of 2005, though less quickly than the 5.4 percent drop during the same period last year. ProLogis said rates will likely continue their decline, just not as rapidly, due to macroeconomic forces that depress demand.
Publicly-traded ProLogis had $844 million in calendar 2004 sales.