Business Segments

9 Months Ended

Sep. 30, 2011

Business Segments [Abstract]

Business Segments

15. Business Segments

Our business strategy currently includes two operating segments, as follows:

• Direct Owned — representing the direct long-term ownership of industrial operating properties. Each operating property is considered to be an individual operating segment having similar economic characteristics that are combined within the reportable segment based upon geographic location. Also included in this segment is the development of properties for continued direct ownership, including land held for development and properties currently under development and land we own and lease to customers under ground leases. We own real estate in the Americas (Canada, Mexico and the United States), Europe (Austria, Belgium, the Czech Republic, France, Germany, Hungary, Italy, the Netherlands, Poland, Romania, Slovakia, Spain, Sweden and the United Kingdom) and Asia (China, Japan and Singapore)

• Private Capital — representing the long-term management of property funds and industrial joint ventures and the properties they own. We recognize our proportionate share of the earnings or losses from our investments in unconsolidated property funds and certain joint ventures operating in the Americas, Europe and Asia that are accounted for under the equity method. In addition, we recognize fees and incentives earned for services performed on behalf of the unconsolidated investees and certain third parties.

We report the costs associated with our private capital segment for all periods presented in the line item Private Capital Expenses in our Consolidated Statements of Operations. These costs include the direct expenses associated with the asset management of the property funds provided by individuals who are assigned to our private capital segment. In addition, in order to achieve efficiencies and economies of scale, all of our property management functions are provided by a team of professionals who are assigned to our direct owned segment. These individuals perform the property-level management of the properties we own and the properties we manage that are owned by the unconsolidated investees. We allocate the costs of our property management function to the properties we consolidate (reported in Rental Expenses) and the properties owned by the unconsolidated investees (included in Private Capital Expenses), by using the square feet owned by the respective portfolios. We are further reimbursed by the property funds for certain expenses associated with managing these property funds.

Each investment in an unconsolidated property fund or joint venture is considered to be an individual operating segment having similar economic characteristics that are combined within the reportable segment based upon geographic location. Our operations in the private capital segment are in the Americas (Brazil, Canada, Mexico and the United States), Europe (Belgium, the Czech Republic, France, Germany, Hungary, Italy, the Netherlands, Poland, Slovakia, Spain, Sweden and the United Kingdom) and Asia (China and Japan).

We present the operations and net gains associated with properties sold to third parties or classified as held for sale as discontinued operations, which results in the restatement of prior year operating results to exclude the items presented as discontinued operations.

Reconciliations are presented below for: (i) each reportable business segment’s revenue from external customers to our Total Revenues; (ii) each reportable business segment’s net operating income from external customers to our Earnings (Loss) before Income Taxes; and (iii) each reportable business segment’s assets to our Total Assets. Our chief operating decision makers rely primarily on net operating income and similar measures to make decisions about allocating resources and assessing segment performance. The applicable components of our Revenues, Earnings (Loss) before Income Taxes and Total Assets are allocated to each reportable business segment’s revenues, net operating income and assets. Items that are not directly assignable to a segment, such as certain corporate income and expenses, are reflected as reconciling items. The following reconciliations are presented in thousands:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Revenues:
Direct owned (1):
Americas	$	285,680		$	152,150		$	641,457		$	453,099
Europe		130,407			21,893			221,751			61,286
Asia		50,318			22,023			107,292			60,189
Total direct owned segment		466,405			196,066			970,500			574,574
Private capital (2):
Americas		40,972			17,018			78,774			41,106
Europe		18,612			22,375			67,213			62,072
Asia		5,819			1,588			12,221			2,559
Total private capital segment		65,403			40,981			158,208			105,737
Total segment revenue		531,808			237,047			1,128,708			680,311
Reconciling item (3)		(30,415	)		(8,433	)		(53,025	)		(15,120	)
Total revenues	$	501,393		$	228,614		$	1,075,683		$	665,191
Net operating income:
Direct owned (4):
Americas	$	196,812		$	104,991		$	444,401		$	319,106
Europe		99,609			12,810			159,196			31,051
Asia		39,019			16,325			81,901			43,885
Total direct owned segment		335,440			134,126			685,498			394,042
Private capital (2)(5):
Americas		30,678			10,396			54,496			21,275
Europe		15,263			19,353			56,406			52,315
Asia		2,382			1,403			8,078			2,068
Total private capital segment		48,323			31,152			118,980			75,658
Total segment net operating income		383,763			165,278			804,478			469,700
Reconciling items:
General and administrative expenses		(53,341	)		(34,959	)		(144,364	)		(115,886	)
Merger, acquisition and other integration expenses		(12,683	)		—			(121,723	)		—
Depreciation and amortization expense		(196,558	)		(83,220	)		(403,027	)		(235,903	)
Earnings from other unconsolidated investees, net		560			792			2,990			5,382
Interest expense		(136,064	)		(120,233	)		(339,579	)		(349,132	)
Interest and other income (expense), net		4,643			7,375			7,341			5,833
Impairment of real estate properties and other assets (6)		—			(2,929	)		(103,823	)		(3,296	)
Gains on acquisitions and dispositions of investments in real estate, net		8,396			35,922			114,650			58,688
Foreign currency exchange and derivative gains (losses), net		52,525			6,144			43,643			2,626
Loss on early extinguishment of debt, net		(298	)		(1,791	)		(298	)		(48,449	)
Total reconciling items		(332,820	)		(192,899	)		(944,190	)		(680,137	)
Earnings (loss) before income taxes	$	50,943		$	(27,621	)	$	(139,712	)	$	(210,437	)

	September 30, 2011		December 31, 2010
Assets:
Direct owned:
Americas	$	13,839,379	$	7,336,197
Europe		7,430,336		2,619,455
Asia		3,411,401		1,889,879
Total direct owned segment		24,681,116		11,845,531
Private Capital:
Americas		1,996,113		1,035,548
Europe		792,382		1,038,061
Asia		285,919		84,000
Total private capital segment		3,074,414		2,157,609
Total segment assets		27,755,530		14,003,140
Reconciling items:
Investments in and advances to other unconsolidated investees		91,427		6,987
Notes receivable backed by real estate		243,970		189,550
Assets held for sale		89,519		574,791
Cash and cash equivalents		216,749		37,634
Other assets		189,109		90,565
Total reconciling items		830,774		899,527
Total assets	$	28,586,304	$	14,902,667

(1) Includes rental income from our industrial properties and land subject to ground leases, as well as development management and other income, other than development fees earned for services provided to our unconsolidated investees, which are included in the private capital segment.

(2) Includes management fees, development fees and our share of the earnings or losses recognized under the equity method from our investments in unconsolidated property funds and certain industrial joint ventures, along with dividends and interest earned on investments in preferred stock or debt securities of these unconsolidated investees. See Note 4 for more information on our unconsolidated investees.

(3) Amount represents the earnings or losses recognized under the equity method from unconsolidated investees, which we reflect in revenues of the private capital segment but are not presented as a component of Revenues in our Consolidated Statements of Operations.

(4) Includes rental income less rental expenses of our industrial properties and land subject to ground leases, as well as development management and other income less related expenses.

(5) Also includes the direct costs we incur to manage the unconsolidated investees and certain third parties and the properties they own that are presented as Private Capital Expenses in our Consolidated Statements of Operations.

(6) During the second quarter of 2011, we recognized impairment charges related to two of our investments in property funds in the Private Capital segment ($97.0 million in the Americas and $4.5 million in Asia). See Note 4 for more details.