Tracy WardThank you, Melissa. Good morning, everyone. Welcome to our first quarter 2012 conference call. The supplemental document is available on our website at prologis.com under Investor Relations. This morning, we'll hear from Hamid Moghadam, co-CEO and Chairman, who will provide an update relative to the company's priorities and will share the company's view of the operating environment. He will then turn it over to Bill Sullivan, CFO, to cover results and guidance. Additionally, we are joined by members of our executive team, including Walt Rakowich, Gary Anderson, Mike Curless, Nancy Hemenway, Guy Jaquier, Ed Nekritz, Tom Olinger and Gene Reilly. Before we begin the prepared remarks, I'd like to quickly state that this conference call will contain forward-looking statements under Federal Securities laws. These statements are based on current expectations, estimates and projections about the market and the industry in which Prologis operates, as well as management's beliefs and assumptions. Forward-looking statements are not guarantees of performance, and actual operating results may be affected by a variety of factors. For a list of those factors, please refer to forward-looking statement notice in our 10-K or on SEC filings. I'd also like to state that the first quarter results press release and our supplemental do contain financial measures, such as FFO and EBITDA that are non-GAAP measures. And in accordance with Reg G, we've provided a reconciliation to those measures. [Operator Instructions] Hamid, will you please begin? Hamid R. Moghadam Thanks, Tracy, and good morning, everyone. Welcome to our first quarter 2012 earnings call. This morning, I'll provide an update on our key priorities and share our views of the operating environment. Our results exceeded our expectations. It's shaping up to be a very good year for us with strong momentum across all of our business lines and solid execution on our 4 key priorities. We've made excellent progress on strengthening our financial position as well as aligning our portfolio with our investment strategy. We are now 3 calendar quarters into our 10-quarter post-merger strategic plan, and we generated $1.4 billion from our net disposition contribution and deployment activities. This amount is about $650 million or 45% ahead of our 10-quarter plan to date. As a result of this realignment activity, we've been able to increase our share of assets in global markets from 79% to 84% and reduced our assets in other or exit markets from 8% to 6%. These trends will continue as we execute the balance of our 10-quarter plan.
We've been somewhat below plan in capital deployment, but we expect development volume to pick up in the coming quarters due to lack of supply of Class A facilities, which I'll address in a moment. Interestingly, we're once again seeing opportunities to utilize our platform for value-added conversions. During the quarter, we completed one such transaction in Silicon Valley, generating an economic gain of more than $23 million or 38% higher than the value of the property as an industrial asset.Turning to Private Capital, I'd like use this opportunity to give you an update on our Japan operations as well as our Private Capital initiatives there. I spent last week in Japan, and my time with the team further reinforced my assessment of the quality and scale of opportunities that we have before us in that market. We're having great success leasing our development projects in Japan, often prior to the completion of construction. You recently saw our press release on a million-square-foot development project in Tokyo that was fully leased before we broke ground. We expect to have more news of this nature to share with you in the coming weeks and months. At the same time, vacancies for modern [ph] logistic facilities in Tokyo and Osaka have fallen below 5% and rents are moving up. Our operating assets in Japan represent the highest quality product in the market and actually within our entire portfolio. With cash yields in the mid-5% range and long-term financing costs under 2%, Japan offers the highest cash spreads among all of our global markets, and local investors appear eager to allocate capital to real estate and this yield starved environment. We've seen strong Japanese fund flows into the U.S. REITs as well as J-REITs, the latter causing a narrowing of the gap between J-REIT share prices and their underlying NAVs. As a result, we are reassessing our fund-formation strategy for Japan. We're now upsizing our development fund to be formed later this year. We're receiving strong interest from our large global investors and are substantially oversubscribed in this fund. Read the rest of this transcript for free on seekingalpha.com