10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number: 001-13545 (Prologis, Inc.) 001-14245 (Prologis, L.P.)

Prologis, Inc.

Prologis, L.P.

(Exact name of registrant as specified in its charter)


Maryland (Prologis, Inc.) Delaware (Prologis, L.P.)		94-3281941 (Prologis, Inc.) 94-3285362 (Prologis, L.P.)
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Pier 1, Bay 1, San Francisco, California		94111
(Address or principal executive offices)		(Zip Code)

(415) 394-9000

(Registrants’ telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


	Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Prologis, Inc.	Common Stock, $0.01 par value	PLD	New York Stock Exchange
Prologis, L.P.	3.000% Notes due 2026	PLD/26	New York Stock Exchange
Prologis, L.P.	2.250% Notes due 2029	PLD/29	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing for the past 90 days.


Prologis, Inc.	Yes	☒	No	☐
Prologis, L.P.	Yes	☒	No	☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter periods that the registrant was required to submit such files).


Prologis, Inc.	Yes		No	☐
Prologis, L.P.	Yes		No	☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Prologis, Inc.:
Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐	Emerging growth company ☐


Prologis, L.P.:
Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒	Smaller reporting company ☐	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).


Prologis, Inc.	Yes	☐	No	☒
Prologis, L.P.	Yes	☐	No	☒

The number of shares of Prologis, Inc.’s common stock outstanding at April 26, 2023, was approximately 923,466,000.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended March 31, 2023, of Prologis, Inc. and Prologis, L.P. Unless stated otherwise or the context otherwise requires, references to “Prologis, Inc.” or the “Parent” mean Prologis, Inc. and its consolidated subsidiaries; and references to “Prologis, L.P.” or the “Operating Partnership” or the “OP” mean Prologis, L.P., and its consolidated subsidiaries. The terms “the Company,” “Prologis,” “we,” “our” or “us” means the Parent and the OP collectively.

The Parent is a real estate investment trust (a “REIT”) and the general partner of the OP. At March 31, 2023, the Parent owned a 97.55% common general partnership interest in the OP and substantially all of the preferred units in the OP. The remaining 2.45% common limited partnership interests are owned by unaffiliated investors and certain current and former directors and officers of the Parent.

We operate the Parent and the OP as one enterprise. The management of the Parent consists of the same members as the management of the OP. These members are officers of the Parent and employees of the OP or one of its subsidiaries. As sole general partner, the Parent has control of the OP through complete responsibility and discretion in the day-to-day management and therefore, consolidates the OP for financial reporting purposes. Because the only significant asset of the Parent is its investment in the OP, the assets and liabilities of the Parent and the OP are the same on their respective financial statements.

We believe combining the quarterly reports on Form 10-Q of the Parent and the OP into this single report results in the following benefits:

•

enhances investors’ understanding of the Parent and the OP by enabling investors to view the business as a whole in the same manner as management views and operates the business;

•

eliminates duplicative disclosure and provides a more streamlined and readable presentation as a substantial portion of the Company’s disclosure applies to both the Parent and the OP; and

•

creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

It is important to understand the few differences between the Parent and the OP in the context of how we operate the Company. The Parent does not conduct business itself, other than acting as the sole general partner of the OP and issuing public equity from time to time. The OP holds substantially all the assets of the business, directly or indirectly. The OP conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for net proceeds from equity issuances by the Parent, which are contributed to the OP in exchange for partnership units, the OP generates capital required by the business through the OP’s operations, incurrence of indebtedness and issuance of partnership units to third parties.

The presentation of noncontrolling interests, stockholders’ equity and partners’ capital are the main areas of difference between the consolidated financial statements of the Parent and those of the OP. The differences in the presentations between stockholders’ equity and partners’ capital result from the differences in the equity and capital issuances in the Parent and in the OP.

The preferred stock, common stock, additional paid-in capital, accumulated other comprehensive income (loss) and distributions in excess of net earnings of the Parent are presented as stockholders’ equity in the Parent’s consolidated financial statements. These items represent the common and preferred general partnership interests held by the Parent in the OP and are presented as general partner’s capital within partners’ capital in the OP’s consolidated financial statements. The common limited partnership interests held by the limited partners in the OP are presented as noncontrolling interest within equity in the Parent’s consolidated financial statements and as limited partners’ capital within partners’ capital in the OP’s consolidated financial statements.

To highlight the differences between the Parent and the OP, separate sections in this report, as applicable, individually discuss the Parent and the OP, including separate financial statements and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure of the Parent and the OP, this report refers to actions or holdings as being actions or holdings of Prologis.

PROLOGIS

INDEX


			Page Number
PART I.	Financial Information
	Item 1.	Financial Statements		1
	Prologis, Inc.:
		Consolidated Balance Sheets – March 31, 2023 and December 31, 2022		1
		Consolidated Statements of Income – Three Months Ended March 31, 2023 and 2022		2
		Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2023 and 2022		3
		Consolidated Statements of Equity – Three Months Ended March 31, 2023 and 2022		4
		Consolidated Statements of Cash Flows – Three Months Ended March 31, 2023 and 2022		5
	Prologis, L.P.:
		Consolidated Balance Sheets – March 31, 2023 and December 31, 2022		6
		Consolidated Statements of Income – Three Months Ended March 31, 2023 and 2022		7
		Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2023 and 2022		8
		Consolidated Statements of Capital – Three Months Ended March 31, 2023 and 2022		9
		Consolidated Statements of Cash Flows – Three Months Ended March 31, 2023 and 2022		10
	Prologis, Inc. and Prologis, L.P.:
		Notes to the Consolidated Financial Statements		11
		Note 1. General		11
		Note 2. Duke Transaction		11
		Note 3. Real Estate		12
		Note 4. Unconsolidated Entities		13
		Note 5. Assets Held for Sale or Contribution		15
		Note 6. Debt		15
		Note 7. Noncontrolling Interests		17
		Note 8. Long-Term Compensation		18
		Note 9. Earnings Per Common Share or Unit		19
		Note 10. Financial Instruments and Fair Value Measurements		20
		Note 11. Business Segments		23
		Note 12. Supplemental Cash Flow Information		25
		Reports of Independent Registered Public Accounting Firm		26
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		28
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		48
	Item 4.	Controls and Procedures		49
PART II.	Other Information
	Item 1.	Legal Proceedings		49
	Item 1A.	Risk Factors		49
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		49
	Item 3.	Defaults Upon Senior Securities		49
	Item 4.	Mine Safety Disclosures		50
	Item 5.	Other Information		50
	Item 6.	Exhibits		50

Index

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

PROLOGIS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share data)



	March 31, 2023			December 31, 2022
ASSETS
Investments in real estate properties	$	82,385,546		$	81,623,396
Less accumulated depreciation		9,508,351			9,036,085
Net investments in real estate properties		72,877,195			72,587,311
Investments in and advances to unconsolidated entities		9,680,097			9,698,898
Assets held for sale or contribution		734,106			531,257
Net investments in real estate		83,291,398			82,817,466

Cash and cash equivalents		522,501			278,483
Other assets		4,706,985			4,801,499
Total assets	$	88,520,884		$	87,897,448

LIABILITIES AND EQUITY
Liabilities:
Debt	$	25,153,342		$	23,875,961
Accounts payable and accrued expenses		1,507,748			1,711,885
Other liabilities		4,394,565			4,446,509
Total liabilities		31,055,655			30,034,355

Equity:
Prologis, Inc. stockholders’ equity:
Series Q preferred stock at stated liquidation preference of $50 per share; $0.01 par value; 1,279 shares issued and outstanding and 100,000 preferred shares authorized at March 31, 2023 and December 31, 2022		63,948			63,948
Common stock; $0.01 par value; 923,453 shares and 923,142 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively		9,235			9,231
Additional paid-in capital		54,058,036			54,065,407
Accumulated other comprehensive loss		(496,424	)		(443,609	)
Distributions in excess of net earnings		(799,577	)		(457,695	)
Total Prologis, Inc. stockholders’ equity		52,835,218			53,237,282
Noncontrolling interests		4,630,011			4,625,811
Total equity		57,465,229			57,863,093
Total liabilities and equity	$	88,520,884		$	87,897,448

The accompanying notes are an integral part of these Consolidated Financial Statements.

Index

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended
	March 31,
	2023			2022
Revenues:
Rental	$	1,633,770		$	1,076,861
Strategic capital		134,701			133,925
Development management and other		116			8,342
Total revenues		1,768,587			1,219,128
Expenses:
Rental		412,554			275,674
Strategic capital		71,709			51,811
General and administrative		99,777			74,646
Depreciation and amortization		602,367			396,647
Other		7,184			9,589
Total expenses		1,193,591			808,367

Operating income before gains on real estate transactions, net		574,996			410,761
Gains on dispositions of development properties and land, net		-			210,206
Gains on other dispositions of investments in real estate, net		4,047			584,835
Operating income		579,043			1,205,802

Other income (expense):
Earnings from unconsolidated entities, net		75,779			76,962
Interest expense		(136,011	)		(64,064	)
Foreign currency and derivative gains and other income, net		8,614			48,409
Gains (losses) on early extinguishment of debt, net		3,275			(18,165	)
Total other income (expense)		(48,343	)		43,142
Earnings before income taxes		530,700			1,248,944
Income tax expense		(32,071	)		(29,222	)
Consolidated net earnings		498,629			1,219,722
Less net earnings attributable to noncontrolling interests		34,006			68,937
Net earnings attributable to controlling interests		464,623			1,150,785
Less preferred stock dividends		1,453			1,531
Net earnings attributable to common stockholders	$	463,170		$	1,149,254

Weighted average common shares outstanding – Basic		923,888			740,368
Weighted average common shares outstanding – Diluted		951,624			765,517

Net earnings per share attributable to common stockholders – Basic	$	0.50		$	1.55

Net earnings per share attributable to common stockholders – Diluted	$	0.50		$	1.54

The accompanying notes are an integral part of these Consolidated Financial Statements.

Index

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)


	Three Months Ended
	March 31,
	2023			2022
Consolidated net earnings	$	498,629		$	1,219,722
Other comprehensive income (loss):
Foreign currency translation gains (losses), net		(28,101	)		189,523
Unrealized gains (losses) on derivative contracts, net		(25,853	)		13,349
Comprehensive income		444,675			1,422,594
Net earnings attributable to noncontrolling interests		(34,006	)		(68,937	)
Other comprehensive loss (income) attributable to noncontrolling interests		1,139			(5,739	)
Comprehensive income attributable to common stockholders	$	411,808		$	1,347,918

The accompanying notes are an integral part of these Consolidated Financial Statements.

Index

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands)

Three Months Ended March 31, 2023 and 2022


			Common Stock							Accumulated			Distributions
			Number				Additional			Other			in Excess of			Non-
	Preferred		of		Par		Paid-in			Comprehensive			Net			controlling			Total
	Stock		Shares		Value		Capital			Loss			Earnings			Interests			Equity
Balance at January 1, 2023	$	63,948		923,142	$	9,231	$	54,065,407		$	(443,609	)	$	(457,695	)	$	4,625,811		$	57,863,093
Consolidated net earnings		-		-		-		-			-			464,623			34,006			498,629
Effect of equity compensation plans		-		288		4		13,468			-			-			51,416			64,888
Capital contributions		-		-		-		-			-			-			-			-
Redemption of noncontrolling interests		-		23		-		1,304			-			-			(43,573	)		(42,269	)
Foreign currency translation losses, net		-		-		-		-			(27,595	)		-			(506	)		(28,101	)
Unrealized losses on derivative contracts, net		-		-		-		-			(25,220	)		-			(633	)		(25,853	)
Reallocation of equity		-		-		-		(22,143	)		-			-			22,143			-
Dividends ($0.87 per common share) and other distributions		-		-		-		-			-			(806,505	)		(58,653	)		(865,158	)
Balance at March 31, 2023	$	63,948		923,453	$	9,235	$	54,058,036		$	(496,424	)	$	(799,577	)	$	4,630,011		$	57,465,229


			Common Stock							Accumulated			Distributions
			Number				Additional			Other			in Excess of			Non-
	Preferred		of		Par		Paid-in			Comprehensive			Net			controlling			Total
	Stock		Shares		Value		Capital			Income (Loss)			Earnings			Interests			Equity
Balance at January 1, 2022	$	63,948		739,827	$	7,398	$	35,561,608		$	(878,253	)	$	(1,327,828	)	$	4,315,337		$	37,742,210
Consolidated net earnings		-		-		-		-			-			1,150,785			68,937			1,219,722
Effect of equity compensation plans		-		290		3		4,217			-			-			35,947			40,167
Capital contributions		-		-		-		-			-			-			434			434
Redemption of noncontrolling interests		-		72		1		3,300			-			-			(29,570	)		(26,269	)
Foreign currency translation gains, net		-		-		-		-			184,152			-			5,371			189,523
Unrealized gains on derivative contracts, net		-		-		-		-			12,981			-			368			13,349
Reallocation of equity		-		-		-		(22,852	)		-			-			22,852			-
Dividends ($0.79 per common share) and other distributions		-		-		-		(10	)		-			(587,382	)		(129,542	)		(716,934	)
Balance at March 31, 2022	$	63,948		740,189	$	7,402	$	35,546,263		$	(681,120	)	$	(764,425	)	$	4,290,134		$	38,462,202

The accompanying notes are an integral part of these Consolidated Financial Statements.

Index

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Three Months Ended
	March 31,
	2023			2022
Operating activities:
Consolidated net earnings	$	498,629		$	1,219,722
Adjustments to reconcile net earnings to net cash provided by operating activities:
Straight-lined rents and amortization of above and below market leases		(143,686	)		(37,374	)
Equity-based compensation awards		62,906			41,429
Depreciation and amortization		602,367			396,647
Earnings from unconsolidated entities, net		(75,779	)		(76,962	)
Operating distributions from unconsolidated entities		135,081			95,665
Decrease (increase) in operating receivables from unconsolidated entities		51,164			(819	)
Amortization of debt discounts and debt issuance costs, net		17,623			1,980
Gains on dispositions of development properties and land, net		-			(210,206	)
Gains on other dispositions of investments in real estate, net		(4,047	)		(584,835	)
Unrealized foreign currency and derivative losses (gains), net		10,113			(33,273	)
Losses (gains) on early extinguishment of debt, net		(3,275	)		18,165
Deferred income tax expense		3,577			7,492
Decrease in other assets		21,742			107,702
Decrease in accounts payable and accrued expenses and other liabilities		(62,118	)		(103,806	)
Net cash provided by operating activities		1,114,297			841,527
Investing activities:
Real estate development		(936,921	)		(639,636	)
Real estate acquisitions		(51,866	)		(451,343	)
Duke Transaction, net of cash acquired		(3,828	)		-
Tenant improvements and lease commissions on previously leased space		(78,955	)		(85,024	)
Property improvements		(19,302	)		(18,280	)
Proceeds from dispositions and contributions of real estate		54,903			1,495,260
Investments in and advances to unconsolidated entities		(39,677	)		(34,811	)
Return of investment from unconsolidated entities		21,169			14,302
Proceeds from the settlement of net investment hedges		5,323			3,732
Payments on the settlement of net investment hedges		-			(771	)
Net cash provided by (used in) investing activities		(1,049,154	)		283,429
Financing activities:
Dividends paid on common and preferred stock		(806,505	)		(587,382	)
Noncontrolling interests contributions		-			434
Noncontrolling interests distributions		(58,653	)		(129,542	)
Settlement of noncontrolling interests		(42,269	)		(26,269	)
Tax paid with shares withheld		(18,690	)		(22,602	)
Debt and equity issuance costs paid		(17,868	)		(8,058	)
Net payments on credit facilities		(1,337,857	)		(492,552	)
Repurchase of and payments on debt		(90,793	)		(332,995	)
Proceeds from the issuance of debt		2,545,042			1,841,450
Net cash provided by financing activities		172,407			242,484

Effect of foreign currency exchange rate changes on cash		6,468			(10,807	)
Net increase in cash and cash equivalents		244,018			1,356,633
Cash and cash equivalents, beginning of period		278,483			556,117
Cash and cash equivalents, end of period	$	522,501		$	1,912,750

See Note 12 for information on noncash investing and financing activities and other information.

The accompanying notes are an integral part of these Consolidated Financial Statements.

Index

PROLOGIS, L.P.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)



	March 31, 2023		December 31, 2022
ASSETS
Investments in real estate properties	$	82,385,546	$	81,623,396
Less accumulated depreciation		9,508,351		9,036,085
Net investments in real estate properties		72,877,195		72,587,311
Investments in and advances to unconsolidated entities		9,680,097		9,698,898
Assets held for sale or contribution		734,106		531,257
Net investments in real estate		83,291,398		82,817,466

Cash and cash equivalents		522,501		278,483
Other assets		4,706,985		4,801,499
Total assets	$	88,520,884	$	87,897,448

LIABILITIES AND CAPITAL
Liabilities:
Debt	$	25,153,342	$	23,875,961
Accounts payable and accrued expenses		1,507,748		1,711,885
Other liabilities		4,394,565		4,446,509
Total liabilities		31,055,655		30,034,355

Capital:
Partners’ capital:
General partner – preferred		63,948		63,948
General partner – common		52,771,270		53,173,334
Limited partners – common		862,734		843,263
Limited partners – Class A common		462,634		464,781
Total partners’ capital		54,160,586		54,545,326
Noncontrolling interests		3,304,643		3,317,767
Total capital		57,465,229		57,863,093
Total liabilities and capital	$	88,520,884	$	87,897,448

The accompanying notes are an integral part of these Consolidated Financial Statements.

Index

PROLOGIS, L.P.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per unit amounts)


	Three Months Ended
	March 31,
	2023			2022
Revenues:
Rental	$	1,633,770		$	1,076,861
Strategic capital		134,701			133,925
Development management and other		116			8,342
Total revenues		1,768,587			1,219,128
Expenses:
Rental		412,554			275,674
Strategic capital		71,709			51,811
General and administrative		99,777			74,646
Depreciation and amortization		602,367			396,647
Other		7,184			9,589
Total expenses		1,193,591			808,367

Operating income before gains on real estate transactions, net		574,996			410,761
Gains on dispositions of development properties and land, net		-			210,206
Gains on other dispositions of investments in real estate, net		4,047			584,835
Operating income		579,043			1,205,802

Other income (expense):
Earnings from unconsolidated entities, net		75,779			76,962
Interest expense		(136,011	)		(64,064	)
Foreign currency and derivative gains and other income, net		8,614			48,409
Gains (losses) on early extinguishment of debt, net		3,275			(18,165	)
Total other income (expense)		(48,343	)		43,142
Earnings before income taxes		530,700			1,248,944
Income tax expense		(32,071	)		(29,222	)
Consolidated net earnings		498,629			1,219,722
Less net earnings attributable to noncontrolling interests		22,357			36,666
Net earnings attributable to controlling interests		476,272			1,183,056
Less preferred unit distributions		1,453			1,531
Net earnings attributable to common unitholders	$	474,819		$	1,181,525

Weighted average common units outstanding – Basic		939,054			753,159
Weighted average common units outstanding – Diluted		951,624			765,517

Net earnings per unit attributable to common unitholders – Basic	$	0.50		$	1.55

Net earnings per unit attributable to common unitholders – Diluted	$	0.50		$	1.54

The accompanying notes are an integral part of these Consolidated Financial Statements.

Index

PROLOGIS, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)


	Three Months Ended
	March 31,
	2023			2022
Consolidated net earnings	$	498,629		$	1,219,722
Other comprehensive income (loss):
Foreign currency translation gains (losses), net		(28,101	)		189,523
Unrealized gains (losses) on derivative contracts, net		(25,853	)		13,349
Comprehensive income		444,675			1,422,594
Net earnings attributable to noncontrolling interests		(22,357	)		(36,666	)
Other comprehensive income attributable to noncontrolling interests		(187	)		(155	)
Comprehensive income attributable to common unitholders	$	422,131		$	1,385,773

The accompanying notes are an integral part of these Consolidated Financial Statements.

Index

PROLOGIS, L.P.

CONSOLIDATED STATEMENTS OF CAPITAL

(Unaudited)

(In thousands)

Three Months Ended March 31, 2023 and 2022


	General Partner									Limited Partners											Non-
	Preferred				Common					Common						Class A Common					controlling			Total
	Units		Amount		Units		Amount			Units			Amount			Units		Amount			Interests			Capital
Balance at January 1, 2023		1,279	$	63,948		923,142	$	53,173,334			14,640		$	843,263			8,595	$	464,781		$	3,317,767		$	57,863,093
Consolidated net earnings		-		-		-		464,623			-			7,604			-		4,045			22,357			498,629
Effect of equity compensation plans		-		-		288		13,472			843			51,416			-		-			-			64,888
Capital contributions		-		-		-		-			-			-			-		-			-			-
Redemption of limited partners units		-		-		23		1,304			(386	)		(43,573	)		-		-			-			(42,269	)
Foreign currency translation gains (losses), net		-		-		-		(27,595	)		-			(451	)		-		(242	)		187			(28,101	)
Unrealized losses on derivative contracts, net		-		-		-		(25,220	)		-			(412	)		-		(221	)		-			(25,853	)
Reallocation of capital		-		-		-		(22,143	)		-			22,313			-		(170	)		-			-
Distributions ($0.87 per common unit) and other		-		-		-		(806,505	)		-			(17,426	)		-		(5,559	)		(35,668	)		(865,158	)
Balance at March 31, 2023		1,279	$	63,948		923,453	$	52,771,270			15,097		$	862,734			8,595	$	462,634		$	3,304,643		$	57,465,229


	General Partner									Limited Partners											Non-
	Preferred				Common					Common						Class A Common					controlling			Total
	Units		Amount		Units		Amount			Units			Amount			Units		Amount			Interests			Capital
Balance at January 1, 2022		1,279	$	63,948		739,827	$	33,362,925			12,354		$	557,097			8,595	$	360,702		$	3,397,538		$	37,742,210
Consolidated net earnings		-		-		-		1,150,785			-			19,856			-		12,415			36,666			1,219,722
Effect of equity compensation plans		-		-		290		4,220			837			35,947			-		-			-			40,167
Capital contributions		-		-		-		-			-			-			-		-			434			434
Redemption of limited partners units		-		-		72		3,301			(242	)		(29,570	)		-		-			-			(26,269	)
Foreign currency translation gains, net		-		-		-		184,152			-			3,222			-		1,994			155			189,523
Unrealized gains on derivative contracts, net		-		-		-		12,981			-			227			-		141			-			13,349
Reallocation of capital		-		-		-		(22,852	)		-			23,144			-		(292	)		-			-
Distributions ($0.79 per common unit) and other		-		-		-		(587,392	)		-			(13,241	)		-		(5,558	)		(110,743	)		(716,934	)
Balance at March 31, 2022		1,279	$	63,948		740,189	$	34,108,120			12,949		$	596,682			8,595	$	369,402		$	3,324,050		$	38,462,202

The accompanying notes are an integral part of these Consolidated Financial Statements.

Index

PROLOGIS, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Three Months Ended
	March 31,
	2023			2022
Operating activities:
Consolidated net earnings	$	498,629		$	1,219,722
Adjustments to reconcile net earnings to net cash provided by operating activities:
Straight-lined rents and amortization of above and below market leases		(143,686	)		(37,374	)
Equity-based compensation awards		62,906			41,429
Depreciation and amortization		602,367			396,647
Earnings from unconsolidated entities, net		(75,779	)		(76,962	)
Operating distributions from unconsolidated entities		135,081			95,665
Decrease (increase) in operating receivables from unconsolidated entities		51,164			(819	)
Amortization of debt discounts and debt issuance costs, net		17,623			1,980
Gains on dispositions of development properties and land, net		-			(210,206	)
Gains on other dispositions of investments in real estate, net		(4,047	)		(584,835	)
Unrealized foreign currency and derivative losses (gains), net		10,113			(33,273	)
Losses (gains) on early extinguishment of debt, net		(3,275	)		18,165
Deferred income tax expense		3,577			7,492
Decrease in other assets		21,742			107,702
Decrease in accounts payable and accrued expenses and other liabilities		(62,118	)		(103,806	)
Net cash provided by operating activities		1,114,297			841,527
Investing activities:
Real estate development		(936,921	)		(639,636	)
Real estate acquisitions		(51,866	)		(451,343	)
Duke Transaction, net of cash acquired		(3,828	)		-
Tenant improvements and lease commissions on previously leased space		(78,955	)		(85,024	)
Property improvements		(19,302	)		(18,280	)
Proceeds from dispositions and contributions of real estate		54,903			1,495,260
Investments in and advances to unconsolidated entities		(39,677	)		(34,811	)
Return of investment from unconsolidated entities		21,169			14,302
Proceeds from the settlement of net investment hedges		5,323			3,732
Payments on the settlement of net investment hedges		-			(771	)
Net cash provided by (used in) investing activities		(1,049,154	)		283,429
Financing activities:
Distributions paid on common and preferred units		(829,490	)		(606,181	)
Noncontrolling interests contributions		-			434
Noncontrolling interests distributions		(35,668	)		(110,743	)
Redemption of common limited partnership units		(42,269	)		(26,269	)
Tax paid with shares of the Parent withheld		(18,690	)		(22,602	)
Debt and equity issuance costs paid		(17,868	)		(8,058	)
Net payments on credit facilities		(1,337,857	)		(492,552	)
Repurchase of and payments on debt		(90,793	)		(332,995	)
Proceeds from the issuance of debt		2,545,042			1,841,450
Net cash provided by financing activities		172,407			242,484

Effect of foreign currency exchange rate changes on cash		6,468			(10,807	)
Net increase in cash and cash equivalents		244,018			1,356,633
Cash and cash equivalents, beginning of period		278,483			556,117
Cash and cash equivalents, end of period	$	522,501		$	1,912,750

See Note 12 for information on noncash investing and financing activities and other information.

The accompanying notes are an integral part of these Consolidated Financial Statements.

Index

PROLOGIS, INC. AND PROLOGIS, L.P.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. GENERAL

Business. Prologis, Inc. (or the “Parent”) commenced operations as a fully integrated real estate company in 1997, elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code” or “IRC”), and believes the current organization and method of operation will enable it to maintain its status as a REIT. The Parent is the general partner of Prologis, L.P. (or the “Operating Partnership” or “OP”). Through the OP, we are engaged in the ownership, acquisition, development and management of logistics facilities with a focus on key markets in 19 countries on four continents. We invest in real estate through wholly owned subsidiaries and other entities through which we co-invest with partners and investors. We maintain a significant level of ownership in these co-investment ventures, which may be consolidated or unconsolidated based on our level of control of the entity. Our current business strategy consists of two operating business segments: Real Estate (Rental Operations and Development) and Strategic Capital. Our Real Estate Segment represents the ownership, leasing and development of logistics properties. Our Strategic Capital Segment represents the management of properties owned by our unconsolidated co-investment ventures and other ventures. See Note 11 for further discussion of our business segments. Unless otherwise indicated, the Notes to the Consolidated Financial Statements apply to both the Parent and the OP. The terms “the Company,” “Prologis,” “we,” “our” or “us” means the Parent and OP collectively.

For each share of preferred or common stock the Parent issues, the OP issues a corresponding preferred or common partnership unit, as applicable, to the Parent in exchange for the contribution of the proceeds from the stock issuance. At March 31, 2023, the Parent owned a 97.55% common general partnership interest in the OP and substantially all of the preferred units in the OP. The remaining 2.45% common limited partnership interests, which include Class A common limited partnership units (“Class A Units”) in the OP, are owned by unaffiliated investors and certain current and former directors and officers of the Parent. Each partner’s percentage interest in the OP is determined based on the number of OP units held, including the number of OP units into which Class A Units are convertible, compared to total OP units outstanding at each period end and is used as the basis for the allocation of net income or loss to each partner. At the end of each reporting period, a capital adjustment is made in the OP to reflect the appropriate ownership interest for each of the common unitholders. These adjustments are reflected in the line items Reallocation of Equity in the Consolidated Statements of Equity of the Parent and Reallocation of Capital in the Consolidated Statements of Capital of the OP.

As the sole general partner of the OP, the Parent has complete responsibility and discretion in the day-to-day management and control of the OP and we operate the Parent and the OP as one enterprise. The management of the Parent consists of the same members as the management of the OP. These members are officers of the Parent and employees of the OP or one of its subsidiaries. As general partner with control of the OP, the Parent is the primary beneficiary and therefore consolidates the OP. Because the Parent’s only significant asset is its investment in the OP, the assets and liabilities of the Parent and the OP are the same on their respective financial statements.

Basis of Presentation. The accompanying Consolidated Financial Statements are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and are presented in our reporting currency, the U.S. dollar. Intercompany transactions with consolidated entities have been eliminated.

The accompanying unaudited interim financial information has been prepared according to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in our annual financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations. Our management believes that the disclosures presented in these financial statements are adequate to make the information presented not misleading. In our opinion, all adjustments and eliminations, consisting only of normal recurring adjustments, necessary to present fairly the financial position and results of operations for both the Parent and the OP for the reported periods have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. The accompanying unaudited interim financial information should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC, and other public information.

NOTE 2. DUKE TRANSACTION

On October 3, 2022, we acquired Duke Realty Corporation and Duke Realty Limited Partnership (collectively “Duke” or the “Duke Transaction”). Through the Duke Transaction, we acquired a portfolio primarily comprised of logistics real estate assets, including 494 industrial operating properties, aggregating 144.4 million square feet, which are highly complementary to our U.S. portfolio in terms of product quality, location and growth potential in our key markets. There was approximately 15 million square feet of non-strategic industrial operating properties acquired in the Duke Transaction for which our intent is not to operate these properties long term. These assets are classified as other real estate investments within Investments in Real Estate Properties in the Consolidated Balance Sheets. The portfolio also included properties under development, land for future development and investments in other ventures.

The Duke Transaction was completed for $23.2 billion through the issuance of equity based on the value of the Prologis common stock and units issued of $18.8 billion, the assumption of debt of $4.2 billion and transaction costs. In connection with the transaction, each

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issued and outstanding share or unit held by a Duke shareholder or unitholder was converted automatically into 0.475 shares of Prologis common stock or common units of Prologis, L.P., respectively, including shares and units under Duke’s equity incentive plan that became fully vested at closing.

The aggregate equity consideration is calculated below (in millions, except price per share):


Number of Prologis shares and units issued upon conversion of Duke's shares and units at October 3, 2022		184.80
Multiplied by price of Prologis' common stock on September 30, 2022	$	101.60
Fair value of Prologis shares and units issued	$	18,776

We accounted for the Duke Transaction as an asset acquisition and as a result, the transaction costs of $239.8 million were capitalized to the basis of the acquired properties. Transaction costs included the direct costs incurred to acquire the real estate assets.

Under acquisition accounting, the total cost or total consideration exchanged is allocated to the real estate properties and related lease intangibles on a relative fair value basis. As the fair value of the properties acquired exceeded the purchase price, we allocated the bargain consideration at a property-level based on the relative fair value of the property in comparison to the total portfolio. All other assets acquired and liabilities assumed, including debt, and real estate assets that we intend to sell in the next twelve months were recorded at fair value. The total purchase price, including transaction costs, was allocated as follows (in millions):


Net investments in real estate	$	24,915
Cash and other assets		441
Debt		(4,162	)
Intangible liabilities, net of intangible assets (1)		(1,457	)
Accounts payable, accrued expenses and other liabilities		(719	)
Noncontrolling interests		(2	)
Total purchase price, including transaction costs	$	19,016

(1)

Intangible assets of $836.6 million and intangible liabilities of $2.3 billion were included within Other Assets and Other Liabilities, respectively, on the Consolidated Balance Sheets. The acquired lease intangibles from the Duke Transaction will be amortized over the terms of the respective leases with a weighted average remaining lease term of 64 months at October 3, 2022.

NOTE 3. REAL ESTATE

Investments in real estate properties consisted of the following (dollars and square feet in thousands):


	Square Feet				Number of Buildings
	Mar 31,		Dec 31,		Mar 31,		Dec 31,		Mar 31,		Dec 31,
	2023		2022		2023		2022		2023		2022
Operating properties:
Buildings and improvements		600,985		597,362		2,836		2,825	$	49,020,423	$	48,650,334
Improved land										20,549,061		20,388,461
Development portfolio, including land costs:
Prestabilized		5,844		4,874		21		15		680,951		597,553
Properties under development		37,600		44,011		102		121		3,571,692		3,614,601
Land (1)										3,444,294		3,338,121
Other real estate investments (2)										5,119,125		5,034,326
Total investments in real estate properties										82,385,546		81,623,396
Less accumulated depreciation										9,508,351		9,036,085
Net investments in real estate properties									$	72,877,195	$	72,587,311

(1)

At March 31, 2023 and December 31, 2022, our land was comprised of 7,335 and 7,188 acres, respectively.

(2)

Included in other real estate investments were: (i) land parcels we own and lease to third parties; (ii) non-strategic real estate assets, primarily acquired from the Duke Transaction, that we do not intend to operate long term; (iii) non-industrial real estate assets that we intend to redevelop into industrial properties; and (iv) costs associated with potential acquisitions and future development projects, including purchase options on land.

Index

Acquisitions

The following table summarizes our real estate acquisition activity (dollars and square feet in thousands):


	Three Months Ended March 31,
	2023		2022
Number of operating properties		-		1
Square feet		-		303
Acres of land		120		578
Acquisition cost of net investments in real estate, excluding other real estate investments	$	40,474	$	264,485

Acquisition cost of other real estate investments	$	6,185	$	223,411

Dispositions

The following table summarizes our dispositions of net investments in real estate that include contributions to unconsolidated co-investment ventures and dispositions to third parties (dollars and square feet in thousands):


	Three Months Ended March 31,
	2023		2022
Dispositions of development properties and land, net (1)
Number of properties		-		7
Square feet		-		2,583
Net proceeds	$	-	$	442,555
Gains on dispositions of development properties and land, net	$	-	$	210,206

Other dispositions of investments in real estate, net
Number of properties		5		102
Square feet		360		8,676
Net proceeds	$	57,008	$	1,264,280
Gains on other dispositions of investments in real estate, net	$	4,047	$	584,835

(1)

The gains we recognize in Gains on Dispositions of Development Properties and Land, Net are principally driven by the contribution of newly developed properties to our unconsolidated co-investment ventures and occasionally sales to a third party.

Leases

We recognized lease right-of-use assets of $735.1 million and $735.4 million within Other Assets and lease liabilities of $642.4 million and $638.8 million within Other Liabilities, for land and office space leases in which we are the lessee, on the Consolidated Balance Sheets at March 31, 2023 and December 31, 2022, respectively.

NOTE 4. UNCONSOLIDATED ENTITIES

Summary of Investments

We have investments in entities through a variety of ventures. We co-invest in entities that own multiple properties with partners and investors and we provide asset management and property management services to these entities, which we refer to as co-investment ventures. These entities may be consolidated or unconsolidated depending on the structure, our partner’s participation and other rights and our level of control of the entity. This note details our investments in unconsolidated co-investment ventures, which are related parties and accounted for using the equity method of accounting. See Note 7 for more detail regarding our consolidated investments that are not wholly owned.

We also have investments in other ventures, generally with one partner, which we account for using the equity method. We refer to our investments in both unconsolidated co-investment ventures and other ventures, collectively, as unconsolidated entities.

Index

The following table summarizes our investments in and advances to unconsolidated entities (in thousands):


	March 31,		December 31,
	2023		2022
Unconsolidated co-investment ventures	$	8,055,322	$	8,073,927
Other ventures (1)		1,624,775		1,624,971
Total	$	9,680,097	$	9,698,898

(1)

Included in other ventures is our $174.9 million and $162.6 million investment in early and growth-stage companies that are focused on emerging technologies at March 31, 2023 and December 31, 2022, respectively.

Unconsolidated Co-Investment Ventures

The following table summarizes the Strategic Capital Revenues we recognized in the Consolidated Statements of Income related to our unconsolidated co-investment ventures (in thousands):


	Three Months Ended March 31,
	2023		2022
Recurring fees	$	113,557	$	113,237
Transactional fees		15,080		17,229
Promote revenue		320		-
Total strategic capital revenues from unconsolidated co-investment ventures (1)	$	128,957	$	130,466

(1)

These amounts exclude strategic capital revenues from other ventures.

The following table summarizes the key property information, financial position and operating information of our unconsolidated co-investment ventures on a U.S. GAAP basis (not our proportionate share) and the amounts we recognized in the Consolidated Financial Statements related to these ventures (dollars and square feet in millions):


	U.S.						Other Americas (1)						Europe						Asia						Total
At:	Mar 31, 2023			Dec 31, 2022			Mar 31, 2023			Dec 31, 2022			Mar 31, 2023			Dec 31, 2022			Mar 31, 2023			Dec 31, 2022			Mar 31, 2023			Dec 31, 2022
Key property information:
Ventures		1			1			2			2			2			2			3			3			8			8
Operating properties		740			739			260			260			992			989			220			217			2,212			2,205
Square feet		123			123			60			60			220			219			90			89			493			491

Financial position:
Total assets ($)		12,609			12,617			3,760			3,744			22,957			22,502			9,844			9,964			49,170			48,827
Third-party debt ($)		3,468			3,468			919			919			5,426			5,315			3,827			3,811			13,640			13,513
Total liabilities ($)		4,179			4,143			983			1,011			7,502			7,292			4,259			4,279			16,923			16,725

Our investment balance ($) (2)		2,371			2,398			1,041			1,070			3,850			3,786			793			820			8,055			8,074
Our weighted average ownership (3)		26.2	%		26.2	%		40.6	%		41.0	%		31.0	%		31.0	%		15.2	%		15.2	%		27.4	%		27.4	%

	U.S.						Other Americas (1)						Europe						Asia						Total
Operating Information:	Mar 31, 2023			Mar 31, 2022			Mar 31, 2023			Mar 31, 2022			Mar 31, 2023			Mar 31, 2022			Mar 31, 2023			Mar 31, 2022			Mar 31, 2023			Mar 31, 2022
For the three months ended:
Total revenues ($)		324			286			103			89			414			356			165			169			1,006			900
Net earnings ($)		101			72			43			33			69			104			27			34			240			243

Our earnings from unconsolidated co-investment ventures, net ($)		27			19			16			12			21			31			4			6			68			68

(1)

Prologis Brazil Logistics Venture (“PBLV”) and our other Brazilian joint ventures are combined as one venture for the purpose of this table.

(2)

Prologis’ investment balance is presented at our adjusted basis. The difference between our ownership interest of a venture’s equity and our investment balance at March 31, 2023 and December 31, 2022, results principally from four types of transactions: (i) deferred gains from the contribution of property to a venture prior to January 1, 2018; (ii) recording additional costs associated with our investment in the venture; (iii) receivables, principally for fees and promotes ($146.4 million and $193.7 million, respectively); and (iv) customer security deposits retained subsequent to property contributions to Nippon Prologis REIT, Inc.

(3)

Represents our weighted average ownership interest in all unconsolidated co-investment ventures based on each entity’s contribution of total assets before depreciation, net of other liabilities.

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Equity Commitments Related to Certain Unconsolidated Co-Investment Ventures

At March 31, 2023, our outstanding equity commitments were $285.8 million, primarily for Prologis China Logistics Venture. The equity commitments expire from 2023 to 2028 if they have not been previously called. Typically, equity commitments are used for future development and acquisitions in the unconsolidated co-investment ventures.

NOTE 5. ASSETS HELD FOR SALE OR CONTRIBUTION

We had investments in certain real estate properties that met the criteria to be classified as held for sale or contribution at March 31, 2023 and December 31, 2022. At the time of classification, these properties were expected to be sold to third parties or were recently stabilized and expected to be contributed to unconsolidated co-investment ventures within twelve months. The amounts included in Assets Held for Sale or Contribution represented real estate investment balances and the related assets and liabilities.

Assets held for sale or contribution consisted of the following (dollars and square feet in thousands):


	March 31,		December 31,
	2023		2022
Number of operating properties		23		21
Square feet		5,771		4,061
Total assets held for sale or contribution	$	734,106	$	531,257
Total liabilities associated with assets held for sale or contribution – included in Other Liabilities	$	10,533	$	4,536

NOTE 6. DEBT

All debt is incurred by the OP or its consolidated subsidiaries. The following table summarizes our debt (dollars in thousands):


	March 31, 2023					December 31, 2022
	Weighted Average			Amount		Weighted Average			Amount
	Interest Rate (1)	Years (2)		Outstanding (3)		Interest Rate (1)	Years (2)		Outstanding (3)
Credit facilities	2.0%		2.3	$	212,553	4.2%		2.8	$	1,538,461
Senior notes	2.6%		10.7		22,399,340	2.3%		10.3		19,786,253
Term loans and unsecured other	2.4%		4.6		2,093,006	2.3%		4.9		2,106,592
Secured mortgage	3.2%		4.0		448,443	3.0%		4.3		444,655
Total	2.6%		10.0	$	25,153,342	2.5%		9.2	$	23,875,961

(1)

The weighted average interest rates represent the effective interest rates (including amortization of debt issuance costs and noncash premiums or discounts) at the end of the period for the debt outstanding and include the impact of designated interest rate swaps, which effectively fix the interest rate on certain variable rate debt.

(2)

The weighted average years represents the remaining maturity in years on the debt outstanding at period end.

(3)

We borrow in the functional currencies of the countries where we invest. Included in the outstanding balances were borrowings denominated in the following currencies:


	March 31, 2023								December 31, 2022
	Weighted Average Interest Rate			Amount Outstanding		% of Total			Weighted Average Interest Rate			Amount Outstanding		% of Total
British pound sterling		2.1	%	$	1,263,807		5.0	%		2.1	%	$	1,228,483		5.1	%
Canadian dollar		4.9	%		813,415		3.2	%		4.5	%		814,491		3.4	%
Euro		1.7	%		9,100,801		36.2	%		1.3	%		7,991,301		33.5	%
Japanese yen		1.0	%		3,367,643		13.4	%		1.0	%		3,308,009		13.9	%
U.S. dollar		3.6	%		10,607,676		42.2	%		3.6	%		10,533,677		44.1	%
Total		2.6	%	$	25,153,342		100.0	%		2.5	%	$	23,875,961		100.0	%

Credit Facilities

At March 31, 2023, we had two global senior credit facilities: the 2021 Global Facility and the 2022 Global Facility. We may draw on both facilities in British pounds sterling, Canadian dollars, euro, Japanese yen, Mexican pesos and U.S. dollars on a revolving basis up to $2.0 billion and $3.0 billion (subject to currency fluctuations) on the 2021 and 2022 Global Facility, respectively. The 2021 Global Facility is scheduled to initially mature in April 2024 and the 2022 Global Facility in June 2026; however, we can extend the maturity date for each facility by six months on two occasions, subject to the payment of extension fees. We have the ability to increase the

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2021 Global Facility to $2.5 billion and the 2022 Global Facility to $4.0 billion, subject to currency fluctuations and obtaining additional lender commitments.

On April 5, 2023, we amended and restated the 2021 Global Facility as the 2023 Global Facility and upsized its borrowing capacity to $3.0 billion (subject to currency fluctuations). The 2023 Global Facility is scheduled to initially mature in June 2027; however, we can extend the maturity date for the facility by six months on two occasions, subject to the payment of extension fees. We have the ability to increase the 2023 Global Facility to $4.0 billion, subject to currency fluctuations and obtaining additional lender commitments.

We also have a Japanese yen revolver (the “Yen Credit Facility”) with total commitments of ¥55.0 billion ($413.0 million at March 31, 2023). We have the ability to increase the borrowing capacity of the Yen Credit Facility to ¥75.0 billion ($563.2 million at March 31, 2023), subject to obtaining additional lender commitments. The Yen Credit Facility is initially scheduled to mature in July 2024; however, we may extend the maturity date for one year, subject to the payment of extension fees.

We refer to the 2021 Global Facility, the 2022 Global Facility and the Yen Credit Facility, collectively, as our “Credit Facilities.” Pricing for the Credit Facilities, including the spread over the applicable benchmark and the rates applicable to facility fees and letter of credit fees, varies based on the public debt ratings of the OP.

The following table summarizes information about our available liquidity at March 31, 2023 (in millions):



Aggregate lender commitments
Credit Facilities	$	5,473
Less:
Borrowings outstanding		213
Outstanding letters of credit		39
Current availability		5,221
Cash and cash equivalents		523
Total liquidity	$	5,744

Senior Notes

The following table summarizes the issuances of senior notes during the three months ended March 31, 2023 (principal in thousands):


	Aggregate Principal				Issuance Date Weighted Average
Issuance Date	Borrowing Currency		USD (1)		Interest Rate	Years	Maturity Dates
January	€	1,250,000	$	1,354,125	4.1%	13.8	January 2030 – 2043
March	$	1,200,000	$	1,200,000	4.9%	17.7	June 2033 – 2053
Total			$	2,554,125	4.5%	15.6

(1)

The exchange rate used to calculate into U.S. dollars was the spot rate at the settlement date.

Long-Term Debt Maturities

Scheduled principal payments due on our debt for the remainder of 2023 and for each year through the period ended December 31, 2027, and thereafter were as follows at March 31, 2023 (in thousands):


	Unsecured
	Credit		Senior			Term Loans			Secured
Maturity	Facilities		Notes			and Other			Mortgage			Total
2023 (1)	$	-	$	-		$	-		$	31,619		$	31,619
2024 (1) (2)		98,365		326,250			-			95,292			519,907
2025 (3)		-		37,544			722,420			153,480			913,444
2026 (4)		114,188		1,308,918			638,310			67,805			2,129,221
2027		-		1,738,332			53,787			4,156			1,796,275
Thereafter		-		19,569,982			682,140			89,135			20,341,257
Subtotal		212,553		22,981,026			2,096,657			441,487			25,731,723
Unamortized premiums (discounts), net		-		(481,289	)		946			8,554			(471,789	)
Unamortized debt issuance costs, net		-		(100,397	)		(4,597	)		(1,598	)		(106,592	)
Total	$	212,553	$	22,399,340		$	2,093,006		$	448,443		$	25,153,342

Index

(1)

We expect to repay the amounts maturing in the next twelve months with cash generated from operations, proceeds from dispositions of real estate properties, or as necessary, with additional borrowings.

(2)

Included in the 2024 maturities is the Yen Credit Facility that can be extended until 2025.

(3)

Included in the 2025 maturities is a Canadian term loan that we entered into in 2022 that can be extended until 2027.

(4)

Included in the 2026 maturities is the 2022 Global Facility that can be extended until 2027.

Financial Debt Covenants

Our senior notes, term loans and Credit Facilities outstanding at March 31, 2023 were subject to certain financial covenants under their related documents. At March 31, 2023, we were in compliance with all of our financial debt covenants.

Guarantee of Finance Subsidiary Debt

We have finance subsidiaries as part of our operations in Europe (Prologis Euro Finance LLC), Japan (Prologis Yen Finance LLC) and the U.K. (Prologis Sterling Finance LLC) in order to mitigate our foreign currency risk by borrowing in the currencies in which we invest. These entities are 100% indirectly owned by the OP and all unsecured debt issued or to be issued by each entity is or will be fully and unconditionally guaranteed by the OP. There are no restrictions or limits on the OP’s ability to obtain funds from its subsidiaries by dividend or loan. In reliance on Rule 13-01 of Regulation S-X, the separate financial statements of Prologis Euro Finance LLC, Prologis Yen Finance LLC and Prologis Sterling Finance LLC are not provided.

NOTE 7. NONCONTROLLING INTERESTS

Prologis, L.P.

We report noncontrolling interests related to several entities we consolidate but of which we do not own 100% of the equity. These entities include two real estate partnerships that have issued limited partnership units to third parties. Depending on the specific partnership agreements, these limited partnership units are redeemable for cash or, at our option, shares of the Parent’s common stock, generally at a rate of one share of common stock to one limited partnership unit. We also consolidate certain entities in which we do not own 100% of the equity but the equity of these entities is not exchangeable into our common stock.

Prologis, Inc.

The noncontrolling interests of the Parent include the noncontrolling interests described above for the OP, as well as the limited partnership units in the OP that are not owned by the Parent. The outstanding limited partnership units receive quarterly cash distributions equal to the quarterly dividends paid on our common stock pursuant to the terms of the applicable partnership agreements.

The following table summarizes these entities (dollars in thousands):


	Our Ownership Percentage						Noncontrolling Interests				Total Assets				Total Liabilities
	Mar 31, 2023			Dec 31, 2022			Mar 31, 2023		Dec 31, 2022		Mar 31, 2023		Dec 31, 2022		Mar 31, 2023		Dec 31, 2022
Prologis U.S. Logistics Venture		55.0	%		55.0	%	$	3,170,301	$	3,182,858	$	7,200,384	$	7,225,438	$	150,401	$	158,453
Other consolidated entities (1)	various			various				134,342		134,909		1,679,510		1,737,311		253,241		259,524
Prologis, L.P.								3,304,643		3,317,767		8,879,894		8,962,749		403,642		417,977
Limited partners in Prologis, L.P. (2)(3)								1,325,368		1,308,044		-		-		-		-
Prologis, Inc.							$	4,630,011	$	4,625,811	$	8,879,894	$	8,962,749	$	403,642	$	417,977

(1)

Includes two partnerships that have issued limited partnership units to third parties, as discussed above, along with various other consolidated entities. The limited partnership units outstanding at March 31, 2023 and December 31, 2022 were exchangeable into cash or, at our option, 0.3 million shares of the Parent’s common stock.

(2)

We had 8.6 million Class A Units that were convertible into 8.1 million and 8.0 million limited partnership units of the OP at March 31, 2023 and December 31, 2022, respectively.

(3)

There were limited partnership units in the OP, excluding the Class A Units, that were exchangeable into cash or, at our option, 9.7 million and 10.0 million shares of the Parent’s common stock, at March 31, 2023 and December 31, 2022, respectively. Also included are the vested OP Long-Term Incentive Plan Units (“LTIP Units”) associated with our long-term compensation plans of 5.4 million and 4.6 million shares of the Parent’s common stock at March 31, 2023 and December 31, 2022, respectively. See further discussion of LTIP Units in Note 8.

Index

NOTE 8. LONG-TERM COMPENSATION

Equity-Based Compensation Plans and Programs

Prologis Outperformance Plan (“POP”)

We have allocated participation points or a percentage of the compensation pool to participants under our POP corresponding to three-year performance periods beginning every January 1. The fair value of the awards is measured at the grant date and amortized over the period from the grant date to the date at which the awards vest, which ranges from three to ten years. The performance hurdle (“Outperformance Hurdle”) at the end of the initial three-year performance period requires our three-year compound annualized total stockholder return (“TSR”) to exceed a threshold set at the three-year compound annualized TSR for the Morgan Stanley Capital International (“MSCI”) US REIT Index for the same period plus 100 basis points. If the Outperformance Hurdle is met, a compensation pool will be formed equal to 3% of the excess value created, subject to a maximum as defined by each performance period. POP awards cannot be paid at a time when we meet the outperformance hurdle yet our absolute TSR is negative. If after seven years our absolute TSR has not been positive, the awards will be forfeited.

We granted participation points for the 2023 – 2025 performance period in January 2023, with a fair value of $28.3 million using a Monte Carlo valuation model that assumed a risk-free interest rate of 4.2% and an expected volatility of 35.0% for Prologis and 31.0% for the MSCI US REIT Index. The 2023 – 2025 performance period has an absolute maximum cap of $100.0 million. If an award is earned at the end of the initial three-year performance period, then 20% of the POP award is paid at the end of the initial performance period and the remaining 80% is subject to additional seven-year cliff vesting. The 20% that is paid at the end of the initial three-year performance period is subject to an additional three-year holding requirement. Awards are in the form of common stock, restricted stock units, POP LTIP Units and LTIP Units.

The Outperformance Hurdle was met for the 2020 – 2022 performance period, which resulted in awards of $100.0 million being earned at December 31, 2022 and awarded in January 2023. Additionally, awards of $22.4 million were earned at December 31, 2022 and awarded in January 2023 for prior performance periods related to the compensation pool in excess of the initial award based on the terms of the POP awards granted prior to 2018. The tables below include POP awards that were earned but are unvested, while any vested awards are reflected within the Consolidated Statements of Equity and Capital. The initial grant date fair value derived using a Monte Carlo valuation model was used in determining the grant date fair value per unit in the tables below.

Other Equity-Based Compensation Plans and Programs

Our other equity-based compensation plans and programs include (i) the Prologis Promote Plan (“PPP”); (ii) the annual long-term incentive (“LTI”) equity award program (“Annual LTI Award”); and (iii) the annual bonus exchange program. Awards under these plans and programs may be issued in the form of restricted stock units (“RSUs”) or LTIP Units at the participant’s election. RSUs and LTIP Units are valued based on the market price of the Parent’s common stock on the date the award is granted and the grant date value is charged to compensation expense over the service period.

Summary of Award Activity

RSUs

The following table summarizes the activity for RSUs for the three months ended March 31, 2023 (units in thousands):


				Weighted Average
	Unvested RSUs			Grant Date Fair Value
Balance at January 1, 2023		1,533		$	100.59
Granted		764			96.37
Vested and distributed		(333	)		115.60
Forfeited		(11	)		129.01
Balance at March 31, 2023		1,953		$	96.22

LTIP Units

The following table summarizes the activity for LTIP Units for the three months ended March 31, 2023 (units in thousands):


	Unvested			Weighted Average
	LTIP Units			Grant Date Fair Value
Balance at January 1, 2023		4,214		$	73.31
Granted		1,292			78.94
Vested LTIP Units		(688	)		105.99
Balance at March 31, 2023		4,818		$	70.16

Index

NOTE 9. EARNINGS PER COMMON SHARE OR UNIT

We determine basic earnings per share or unit based on the weighted average number of shares of common stock or units outstanding during the period. We compute diluted earnings per share or unit based on the weighted average number of shares or units outstanding combined with the incremental weighted average effect from all outstanding potentially dilutive instruments.

The computation of our basic and diluted earnings per share and unit was as follows (in thousands, except per share and unit amounts):


	Three Months Ended
	March 31,
Prologis, Inc.	2023		2022
Net earnings attributable to common stockholders – Basic		463,170	$	1,149,254
Net earnings attributable to exchangeable limited partnership units (1)		11,743		32,338
Adjusted net earnings attributable to common stockholders – Diluted	$	474,913	$	1,181,592

Weighted average common shares outstanding – Basic		923,888		740,368
Incremental weighted average effect on exchange of limited partnership units (1)		23,535		21,089
Incremental weighted average effect of equity awards		4,201		4,060
Weighted average common shares outstanding – Diluted (2)		951,624		765,517

Net earnings per share attributable to common stockholders:
Basic	$	0.50	$	1.55
Diluted	$	0.50	$	1.54


	Three Months Ended
	March 31,
Prologis, L.P.	2023			2022
Net earnings attributable to common unitholders	$	474,819		$	1,181,525
Net earnings attributable to Class A Units		(4,045	)		(12,415	)
Net earnings attributable to common unitholders – Basic		470,774			1,169,110
Net earnings attributable to Class A Units		4,045			12,415
Net earnings attributable to exchangeable other limited partnership units		94			67
Adjusted net earnings attributable to common unitholders – Diluted	$	474,913		$	1,181,592

Weighted average common partnership units outstanding – Basic		939,054			753,159
Incremental weighted average effect on exchange of Class A Units		8,070			7,999
Incremental weighted average effect on exchange of other limited partnership units		299			299
Incremental weighted average effect of equity awards of Prologis, Inc.		4,201			4,060
Weighted average common units outstanding – Diluted (2)		951,624			765,517

Net earnings per unit attributable to common unitholders:
Basic	$	0.50		$	1.55
Diluted	$	0.50		$	1.54

(1)

Earnings allocated to the exchangeable OP units not held by the Parent have been included in the numerator and exchangeable common units have been included in the denominator for the purpose of computing diluted earnings per share for all periods as the per share and unit amount is the same.

(2)

Our total weighted average potentially dilutive shares and units outstanding consisted of the following:


	Three Months Ended
	March 31,
	2023		2022
Class A Units		8,070		7,999
Other limited partnership units		299		299
Equity awards		7,773		5,839
Prologis, L.P.		16,142		14,137
Common limited partnership units		15,166		12,791
Prologis, Inc.		31,308		26,928

Index

NOTE 10. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Derivative Financial Instruments

In the normal course of business, our operations are exposed to market risks, including the effect of changes in foreign currency exchange rates and interest rates. We may enter into derivative financial instruments to offset these underlying market risks. There have been no significant changes in our policy or strategy from what was disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

The following table presents the fair value of our derivative financial instruments recognized within Other Assets and Other Liabilities on the Consolidated Balance Sheets (in thousands):


	March 31, 2023				December 31, 2022
	Asset		Liability		Asset		Liability
Undesignated derivatives
Foreign currency contracts
Forwards
Brazilian real	$	-	$	741	$	35	$	494
British pound sterling		20,796		915		29,187		648
Canadian dollar		8,316		10		12,074		2
Chinese renminbi		443		434		657		364
Euro		41,794		3,051		51,317		2,801
Japanese yen		33,454		807		34,022		2,344
Swedish krona		5,568		26		6,292		-

Designated derivatives
Foreign currency contracts
Net investment hedges
British pound sterling		16,305		555		23,534		-
Canadian dollar		18,002		-		24,552		-
Chinese renminbi		-		34		-		-

Interest rate swaps
Cash flow hedges
Euro		2,842		-		44,982		-
U.S. dollar		-		-		584		29
Total fair value of derivatives	$	147,520	$	6,573	$	227,236	$	6,682

Undesignated Derivative Financial Instruments

Foreign Currency Contracts

The following table summarizes the activity of our undesignated foreign currency contracts for the three months ended March 31 (in millions, except for weighted average forward rates and number of active contracts):


	2023																		2022
	CAD			EUR			GBP			JPY			Other			Total			CAD			EUR			GBP			JPY			SEK			Other			Total
Notional amounts at January 1 ($)		283			601			349			331			81			1,645			175			749			383			250			85			20			1,662
New contracts ($)		6			9			49			27			41			132			45			350			(21	)		61			9			13			457
Matured, expired or settled contracts ($)		(54	)		(43	)		(22	)		(21	)		(7	)		(147	)		(16	)		(182	)		(19	)		(22	)		(4	)		(4	)		(247	)
Notional amounts at March 31 ($)		235			567			376			337			115			1,630			204			917			343			289			90			29			1,872

Weighted average forward rate at March 31		1.29			1.18			1.30			110.58									1.27			1.19			1.27			104.39			9.30
Active contracts at March 31		88			94			100			97									81			93			77			85			84

Index

The following table summarizes the undesignated derivative financial instruments exercised and outstanding recognized in realized and unrealized gains (losses), respectively, in Foreign Currency and Derivative Gains and Other Income, Net in the Consolidated Statements of Income (in millions, except for number of exercised contracts):


	Three Months Ended
	March 31,
	2023			2022
Exercised contracts		52			32
Realized gains on the matured, expired or settled contracts	$	14		$	15
Unrealized gains (losses) on the change in fair value of outstanding contracts	$	(14	)	$	15

Designated Derivative Financial Instruments

Changes in the fair value of derivatives that are designated as net investment hedges of our foreign operations and cash flow hedges are recorded in Accumulated Other Comprehensive Income (Loss) (“AOCI/L”) and reflected within the Other Comprehensive Income (Loss) table below.

Foreign Currency Contracts

The following table summarizes the activity of our foreign currency contracts designated as net investment hedges for the three months ended March 31 (in millions, except for weighted average forward rates and number of active contracts):


	2023										2022
	CAD			CNH		GBP		Total			BRL			CAD			GBP			Total
Notional amounts at January 1 ($)		534			-		440		974			-			535			432			967
New contracts ($)		119			100		-		219			44			204			229			477
Matured, expired or settled contracts ($)		(124	)		-		-		(124	)		(44	)		(125	)		(100	)		(269	)
Notional amounts at March 31 ($)		529			100		440		1,069			-			614			561			1,175

Weighted average forward rate at March 31		1.30			6.72		1.28					-			1.26			1.35
Active contracts at March 31		6			1		4					-			7			5

Interest Rate Swaps

The following table summarizes the activity of our interest rate swaps designated as cash flow hedges for the three months ended March 31 (in millions):


	2023									2022
	EUR			USD			Total			EUR			Total
Notional amounts at January 1 ($)		447			150			597			165			165
New contracts ($)		434			550			984			1,004			1,004
Matured, expired or settled contracts ($) (1)		(709	)		(700	)		(1,409	)		(722	)		(722	)
Notional amounts at March 31 ($)		172			-			172			447			447

(1)

Included in AOCI(L) are cash flow hedges of $268.6 million notional, that settled during the three months ended March 31, 2023, to hedge our exposure to the variability in future cash flows for forecasted debt transactions that have not occurred and will be hedged over 10 years.

Designated Nonderivative Financial Instruments

The following table summarizes our debt and accrued interest, designated as a hedge of our net investment in international subsidiaries at the quarter ended (in millions):


	March 31, 2023		December 31, 2022
British pound sterling	$	1,252	$	1,237
Canadian dollar	$	373	$	370

Index

The following table summarizes the unrealized gains (losses) in Foreign Currency and Derivative Gains and Other Income, Net on the remeasurement of the unhedged portion of our euro denominated debt and accrued interest (in millions):


	Three Months Ended
	March 31,
	2023			2022
Unrealized gains (losses) on the unhedged portion	$	(4	)	$	15

Other Comprehensive Income (Loss)

The change in Other Comprehensive Income (Loss) in the Consolidated Statements of Comprehensive Income during the periods presented was due to the translation into U.S. dollars from the consolidation of the financial statements of our consolidated subsidiaries whose functional currency is not the U.S. dollar. The change in fair value of the effective portion of our derivative financial instruments that have been designated as net investment hedges and cash flow hedges and the translation of the hedged portion of our debt, as discussed above, are also included in Other Comprehensive Income (Loss).

The following table presents these changes in Other Comprehensive Income (Loss) (in thousands):


	Three Months Ended March 31,
	2023			2022
Derivative net investment hedges (1)	$	(8,163	)	$	4,093
Debt designated as nonderivative net investment hedges		(41,499	)		33,597
Cumulative translation adjustment		21,561			151,833
Total foreign currency translation gains (losses), net	$	(28,101	)	$	189,523

Cash flow hedges (1) (2)	$	(19,327	)	$	4,422
Our share of derivatives from unconsolidated co-investment ventures		(6,526	)		8,927
Total unrealized gains (losses) on derivative contracts, net	$	(25,853	)	$	13,349
Total change in other comprehensive income (losses)	$	(53,954	)	$	202,872

(1)

The ending balance in AOCI/L for accumulated derivative gains on net investment hedges was $324.8 million and $333.0 million at March 31, 2023 and December 31, 2022, respectively. Additionally, the ending balance in AOCI/L for accumulated derivative gains on cash flow hedges was $13.4 million and $32.7 million at March 31, 2023 and December 31, 2022, respectively.

(2)

We estimate an additional expense of $1.0 million will be reclassified to Interest Expense over the next 12 months from March 31, 2023, due to the amortization of previously settled derivatives designated as cash flow hedges.

Fair Value Measurements

There have been no significant changes in our policy from what was disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Fair Value Measurements on a Recurring Basis

At March 31, 2023 and December 31, 2022, other than the derivatives discussed previously, we had no significant financial assets or financial liabilities that were measured at fair value on a recurring basis in the Consolidated Financial Statements. All of our derivatives held at March 31, 2023 and December 31, 2022, were classified as Level 2 of the fair value hierarchy.

Fair Value Measurements on Nonrecurring Basis

Acquired properties and assets we expect to sell or contribute are significant nonfinancial assets that met the criteria to be measured at fair value on a nonrecurring basis. At March 31, 2023 and December 31, 2022, we estimated the fair value of our properties using Level 2 or Level 3 inputs from the fair value hierarchy. See more information on our acquired properties in Note 3 and assets held for sale or contribution in Note 5.

Fair Value of Financial Instruments

At March 31, 2023 and December 31, 2022, the carrying amounts of certain financial instruments, including cash and cash equivalents, accounts and notes receivable, accounts payable and accrued expenses were representative of their fair values.

The differences in the fair value of our debt from the carrying value in the table below were the result of differences in interest rates or borrowing spreads that were available to us at March 31, 2023 and December 31, 2022, as compared with those in effect when the

Index

debt was issued or assumed, including reduced borrowing spreads due to our improved credit ratings. The senior notes and many of the issuances of secured mortgage debt contain prepayment penalties or yield maintenance provisions that could make the cost of refinancing the debt at lower rates exceed the benefit that would be derived from doing so. We evaluate this on an on-going basis and take the opportunity to refinance our debt at lower rates and longer maturities based on market conditions and other factors. See Note 6 for more information on our debt activity.

The following table reflects the carrying amounts and estimated fair values of our debt (in thousands):


	March 31, 2023				December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value
Credit facilities	$	212,553	$	212,553	$	1,538,461	$	1,538,461
Senior notes		22,399,340		19,275,513		19,786,253		16,604,241
Term loans and unsecured other		2,093,006		2,079,813		2,106,592		2,092,264
Secured mortgage		448,443		428,330		444,655		420,964
Total	$	25,153,342	$	21,996,209	$	23,875,961	$	20,655,930

NOTE 11. BUSINESS SEGMENTS

Our current business strategy includes two operating segments: Real Estate (Rental Operations and Development) and Strategic Capital. We generate revenues, earnings, net operating income and cash flows through our segments, as follows:

•

Real Estate Segment. This operating segment represents the ownership and development of operating properties and is the largest component of our revenue and earnings. We collect rent from our customers through operating leases, including reimbursements for the majority of our property operating costs. Each operating property is considered to be an individual operating segment with similar economic characteristics; these properties are combined within the reportable business segment based on geographic location. The Real Estate Segment also includes development activities that lead to rental operations, including land held for development and properties currently under development, and other real estate investments. Within this line of business, we utilize the following: (i) our land bank; (ii) the development and leasing expertise of our local teams; and (iii) our customer relationships.

•

Strategic Capital Segment. This operating segment represents the management of unconsolidated co-investment ventures. We generate strategic capital revenues primarily from our unconsolidated co-investment ventures through asset management and property management services and we earn additional revenues by providing leasing, acquisition, construction, development, financing and disposition services. Depending on the structure of the venture and the returns provided to our partners, we also earn revenues through promotes periodically during the life of a venture or upon liquidation. Each unconsolidated co-investment venture we manage is considered to be an individual operating segment with similar economic characteristics; these ventures are combined within the reportable business segment based on geographic location.

Reconciliations are presented below for: (i) each reportable business segment’s revenues from external customers to Total Revenues; (ii) each reportable business segment’s net operating income from external customers to Operating Income and Earnings Before Income Taxes; and (iii) each reportable business segment’s assets to 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 Total Revenues, Operating Income, Earnings 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 not allocated but reflected as reconciling items.

Index

The following reconciliations are presented in thousands:


	Three Months Ended March 31,
	2023			2022
Revenues:
Real estate segment:
U.S.	$	1,574,567		$	1,038,991
Other Americas		25,572			22,191
Europe		19,156			12,008
Asia		14,591			12,013
Total real estate segment		1,633,886			1,085,203
Strategic capital segment:
U.S.		53,696			50,635
Other Americas		14,195			11,653
Europe		43,533			46,196
Asia		23,277			25,441
Total strategic capital segment		134,701			133,925

Total revenues		1,768,587			1,219,128

Segment net operating income: (1)
Real estate segment:
U.S. (2)		1,171,983			771,210
Other Americas		19,178			16,107
Europe		14,210			3,970
Asia		8,777			8,653
Total real estate segment		1,214,148			799,940
Strategic capital segment:
U.S. (2)		21,567			27,677
Other Americas		8,942			7,374
Europe		22,604			32,463
Asia		9,879			14,600
Total strategic capital segment		62,992			82,114

Total segment net operating income		1,277,140			882,054

Reconciling items:
General and administrative expenses		(99,777	)		(74,646	)
Depreciation and amortization expenses		(602,367	)		(396,647	)
Gains on dispositions of development properties and land, net		-			210,206
Gains on other dispositions of investments in real estate, net		4,047			584,835
Operating income		579,043			1,205,802

Earnings from unconsolidated entities, net		75,779			76,962
Interest expense		(136,011	)		(64,064	)
Foreign currency and derivative gains and other income, net		8,614			48,409
Gains (losses) on early extinguishment of debt, net		3,275			(18,165	)
Earnings before income taxes	$	530,700		$	1,248,944

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	March 31, 2023		December 31, 2022
Segment assets:
Real estate segment:
U.S.	$	71,965,308	$	71,858,560
Other Americas		1,899,350		1,831,956
Europe		2,159,880		1,952,160
Asia		934,822		1,031,135
Total real estate segment		76,959,360		76,673,811
Strategic capital segment: (3)
U.S.		10,605		10,817
Europe		25,280		25,280
Asia		224		231
Total strategic capital segment		36,109		36,328
Total segment assets		76,995,469		76,710,139

Reconciling items:
Investments in and advances to unconsolidated entities		9,680,097		9,698,898
Assets held for sale or contribution		734,106		531,257
Cash and cash equivalents		522,501		278,483
Other assets		588,711		678,671
Total reconciling items		11,525,415		11,187,309
Total assets	$	88,520,884	$	87,897,448

(1)

Net Operating Income ("NOI") from the Real Estate Segment is calculated directly from our Consolidated Financial Statements as Rental Revenues and Development Management and Other Revenues less Rental Expenses and Other Expenses. NOI from the Strategic Capital Segment is calculated directly from our Consolidated Financial Statements as Strategic Capital Revenues less Strategic Capital Expenses.

(2)

This includes compensation and personnel costs for employees who were located in the U.S. but also support other geographies.

(3)

Represents management contracts and goodwill recorded in connection with business combinations associated with the Strategic Capital Segment. Goodwill was $25.3 million at March 31, 2023 and December 31, 2022.

NOTE 12. SUPPLEMENTAL CASH FLOW INFORMATION

Our significant noncash investing and financing activities for the three months ended March 31, 2023 and 2022 included the following:

•

We recognized lease right-of-use assets and lease liabilities related to leases in which we are the lessee within Other Assets and Other Liabilities on the Consolidated Balance Sheets, including any new leases, renewals and modifications of $12.1 million in 2023 and $3.7 million in 2022 for both assets and liabilities.

•

We capitalized $14.7 million and $10.6 million in 2023 and 2022, respectively, of equity-based compensation expense.

•

We received $216.4 million in 2022, of ownership interests in certain unconsolidated co-investment ventures as a portion of our proceeds from the contribution of properties to these entities, as disclosed in Note 4.

•

We issued less than 0.1 million shares in 2023 and 2022, of the Parent’s common stock upon redemption of an equal number of common limited partnership units in the OP.

We paid $129.9 million and $62.9 million for interest, net of amounts capitalized, during the three months ended March 31, 2023 and 2022, respectively.

We paid $46.2 million and $30.7 million for income taxes, net of refunds, during the three months ended March 31, 2023 and 2022, respectively.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Prologis, Inc.:

Results of Review of Interim Financial Information

We have reviewed the consolidated balance sheet of Prologis, Inc. and subsidiaries (the Company) as of March 31, 2023, the related consolidated statements of income, comprehensive income, equity, and cash flows for the three-month periods ended March 31, 2023 and 2022, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2022, and the related consolidated statements of income, comprehensive income, equity, and cash flows for the year then ended (not presented herein); and in our report dated February 14, 2023, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2022 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ KPMG LLP

Denver, Colorado
April 28, 2023

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Report of Independent Registered Public Accounting Firm

To the Partners of Prologis, L.P. and the Board of Directors of Prologis, Inc.:

Results of Review of Interim Financial Information

We have reviewed the consolidated balance sheet of Prologis, L.P. and subsidiaries (the Operating Partnership) as of March 31, 2023, the related consolidated statements of income, comprehensive income, capital, and cash flows for the three-month periods ended March 31, 2023 and 2022, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Operating Partnership as of December 31, 2022, and the related consolidated statements of income, comprehensive income, capital, and cash flows for the year then ended (not presented herein); and in our report dated February 14, 2023, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2022 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This consolidated interim financial information is the responsibility of the Operating Partnership’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

/s/ KPMG LLP

Denver, Colorado
April 28, 2023

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following should be read in conjunction with the Consolidated Financial Statements and related Notes included in Item 1 of this report and our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the United States (“U.S.”) Securities and Exchange Commission (“SEC”).

The statements in this report that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which we operate as well as management’s beliefs and assumptions. Such statements involve uncertainties that could significantly impact our financial results. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” and “estimates” including variations of such words and similar expressions are intended to identify such forward-looking statements, which generally are not historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to rent and occupancy growth, acquisition and development activity, contribution and disposition activity, general conditions in the geographic areas where we operate, our debt, capital structure and financial position, our ability to earn revenues from co-investment ventures, form new co-investment ventures and the availability of capital in existing or new co-investment ventures — are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained, and therefore actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some of the factors that may affect outcomes and results include, but are not limited to: (i) international, national, regional and local economic and political climates and conditions; (ii) changes in global financial markets, interest rates and foreign currency exchange rates; (iii) increased or unanticipated competition for our properties; (iv) risks associated with acquisitions, dispositions and development of properties, including the integration of the operations of significant real estate portfolios; (v) maintenance of Real Estate Investment Trust (“REIT”) status, tax structuring and changes in income tax laws and rates; (vi) availability of financing and capital, the levels of debt that we maintain and our credit ratings; (vii) risks related to our investments in our co-investment ventures, including our ability to establish new co-investment ventures; (viii) risks of doing business internationally, including currency risks; (ix) environmental uncertainties, including risks of natural disasters; (x) risks related to global pandemics; and (xi) those additional factors discussed under Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022. We undertake no duty to update any forward-looking statements appearing in this report except as may be required by law.

Prologis, Inc. is a self-administered and self-managed REIT and is the sole general partner of Prologis, L.P. through which it holds substantially all of its assets. We operate Prologis, Inc. and Prologis, L.P. as one enterprise and, therefore, our discussion and analysis refers to Prologis, Inc. and its consolidated subsidiaries, including Prologis, L.P. We invest in real estate through wholly owned subsidiaries and other entities through which we co-invest with partners and investors. We have a significant ownership interest in the co-investment ventures, which are either consolidated or unconsolidated based on our level of control of the entity.

We operate, manage and measure the operating performance of our properties on an owned and managed (“O&M”) basis. Our O&M portfolio includes our consolidated properties as well as properties owned by our unconsolidated co-investment ventures, which we manage. We make operating decisions based on our total O&M portfolio as we manage the properties without regard to their ownership. We also evaluate our results based on our proportionate economic ownership of each entity or property included in the O&M portfolio (“our share”), whether consolidated or unconsolidated, to reflect our share of the financial results of the O&M portfolio.

Included in our discussion below are references to funds from operations (“FFO”) and net operating income (“NOI”), neither of which are United States ("U.S.") generally accepted accounting principles (“GAAP”). See below for a reconciliation of Net Earnings Attributable to Common Stockholders/Unitholders in the Consolidated Statements of Income to our FFO measures and a reconciliation of NOI to Operating Income, the most directly comparable GAAP measures.

MANAGEMENT'S OVERVIEW

Prologis is the global leader in logistics real estate with a focus on high-barrier, high growth markets. We own, manage and develop well-located, high-quality logistics facilities in 19 countries across four continents. Our portfolio focuses on the world’s most vibrant centers of commerce and our scale across these locations allows us to better serve our customers’ diverse logistics requirements. Our teams actively manage our portfolio and provide comprehensive real estate services, including leasing, property management, development, acquisitions and dispositions. We invest significant capital into new logistics properties principally through our development activity and third-party acquisitions. The contribution of newly developed properties to our co-investment ventures and the sale of non-strategic properties to third parties allows us to recycle capital back into our development and acquisition activities.

While the majority of our properties in the U.S. are wholly owned, we hold a significant ownership interest in properties both in the U.S. and internationally through our investment in the co-investment ventures. Partnering with the world’s largest institutional investors through co-investment ventures allows us to enhance and diversify our real estate returns as well as mitigate our exposure to foreign currency movements.

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Logistics supply chains have increased dramatically in their importance to our customers and the global economy. The long-term trends of e-commerce adoption and supply chain resiliency continue to drive the need for increased warehouse space to store and distribute goods. This demand has translated into meaningful increases in rents and has resulted in low vacancy. We believe this demand is driven by three primary factors: (i) customer supply chains re-positioning to address the significant shift to e-commerce and heightened service expectations; (ii) overall consumption and household growth; and (iii) our customers’ desire for more supply chain resiliency. We believe these forces will keep demand strong for the long term.

The nature of the services we are providing to our customers is expanding. The scale of our 1.2 billion square foot portfolio allows us to provide a platform of solutions to address challenges that companies face in global fulfillment today. Through Prologis Essentials, we focus on innovative ways to meet our customers’ operations, energy and sustainability, mobility and workforce needs. Our customer experience teams, proprietary technology and strategic partnerships are foundational to Prologis Essentials and allow us to provide our customers with unique and actionable insights to drive greater efficiency in their operations.

Our long-standing dedication to Environmental, Social and Governance (“ESG”) practices strengthens our relationships with our customers, investors, employees and the communities in which we do business. The principles of ESG are an important aspect of our business strategy that we believe delivers a strategic business advantage while positively impacting the environment.

Our Global Presence

In October 2022, we completed the acquisition of Duke Realty Corporation and Duke Realty Limited Partnership (collectively “Duke”) through a merger transaction that we refer to as the “Duke Transaction” and is detailed in Note 2 to the Consolidated Financial Statements. The Duke portfolio was primarily comprised of logistics real estate assets, including 494 industrial operating properties, aggregating 144 million square feet. The total acquisition price, including transaction costs, was $23.2 billion and was funded through the issuance of equity and the assumption of debt.

At March 31, 2023, we owned or had investments in, on a wholly-owned basis or through co-investment ventures, properties and development projects expected to total approximately 1.2 billion square feet across the following geographies:

Throughout this discussion, we reflect amounts in U.S. dollars, our reporting currency. Included in these amounts are consolidated and unconsolidated investments denominated in foreign currencies, principally the British pound sterling, Canadian dollar, euro and Japanese yen that are impacted by fluctuations in exchange rates when translated to U.S. dollars. We mitigate our exposure to foreign currency fluctuations by investing outside the U.S. through co-investment ventures, borrowing in the functional currency of our subsidiaries and utilizing derivative financial instruments.

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Our business comprises two operating segments: Real Estate (Rental Operations and Development) and Strategic Capital.

Below is information summarizing consolidated activity within our segments (in millions):

(1)

NOI from the Real Estate Segment is calculated directly from our Consolidated Financial Statements as Rental Revenues and Development Management and Other Revenues less Rental Expenses and Other Expenses. NOI from the Strategic Capital Segment is calculated directly from our Consolidated Financial Statements as Strategic Capital Revenues less Strategic Capital Expenses.‌

(2)

A developed property moves into the operating portfolio when it meets our definition of stabilization, which is the earlier of when a property that was developed has been completed for one year, is contributed to a co-investment venture following completion or is 90% occupied. Amounts represent our total expected investment ("TEI") upon stabilization, which includes the estimated cost of development or expansion, including land, construction and leasing costs.

Real Estate Segment

Rental Operations. Rental operations comprises the largest component of our operating segments and generally contributes 85% to 90% of our consolidated revenues, earnings and FFO. We collect rent from our customers through operating leases, including reimbursements for the majority of our property operating costs. For leases that commenced during the three months ended March 31, 2023, within the consolidated operating portfolio, the weighted average lease term was 58 months. We expect to generate internal growth by increasing rents, maintaining high occupancy rates and controlling expenses. The primary driver of our revenue growth will be the rolling of in-place leases to current market rents when leases expire, as discussed further below. We believe our active portfolio management, combined with the skills of our property, leasing, maintenance, capital, energy, sustainability and risk management teams allow us to maximize NOI across our portfolio. Substantially all of our consolidated rental revenue, NOI and cash flows from rental operations are generated in the U.S.

Development. Given the scarcity of modern logistics facilities in our target markets, our development business provides the opportunity to build to the requirements of our customers while deepening our market presence. We believe we have a competitive advantage due to (i) the strategic locations of our global land bank and redevelopment sites; (ii) the development expertise of our local teams; (iii) the depth of our customer relationships; (iv) our ability to integrate sustainable design features that result in cost-savings and operational efficiencies for our customers; and (v) our procurement capabilities that allow us to secure high-demand construction materials at lower cost. Successful development and redevelopment efforts provide significant earnings growth as projects are leased, generate income and increase the value of our Real Estate Segment. Generally, we develop properties in the U.S. for long- term hold and outside the U.S. for contribution to our unconsolidated co-investment ventures.

Strategic Capital Segment

Our Strategic Capital Segment allows us to partner with many of the world’s largest institutional investors. The business is capitalized principally through private and public equity of which 95% is either in perpetual open-ended or long-term ventures, and two publicly traded vehicles (Nippon Prologis REIT, Inc. in Japan and FIBRA Prologis in Mexico). We align our interests with our partners by holding significant ownership interests in all of our eight unconsolidated co-investment ventures (ranging from 15% to 50%). This structure allows us to reduce our exposure to foreign currency movements for investments outside the U.S.

This segment produces durable, long-term cash flows and generally contributes 10% to 15% of our recurring consolidated revenues, earnings and FFO, all while requiring minimal capital other than our investment in the venture. We generate strategic capital revenues from our unconsolidated co-investment ventures, principally through asset management and property management services. Asset management fees are primarily driven by the quarterly valuation of the real estate properties owned by the respective ventures. We earn additional revenues by providing leasing, acquisition, construction management, development and disposition services. In certain ventures, we also have the ability to earn revenues through incentive fees (“promotes” or “promote revenues”) periodically during the life of a venture, upon liquidation of a venture or upon stabilization of individual venture assets based primarily on the total return of the investments over certain financial hurdles. We plan to grow this business and increase revenues by increasing our assets under management in existing or new ventures. The majority of strategic capital revenues are generated outside the U.S.

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FUTURE GROWTH

We believe that the quality and scale of our portfolio, our ability to build out our land bank, our strategic capital business, the expertise of our team, the depth of our customer relationships and the strength of our balance sheet are differentiators that allow us to drive growth in revenues, NOI, earnings, FFO and cash flows.

(1)

Calculated using the trailing twelve months immediately prior to the period ended.

•

Rent Growth. We expect rents in our markets to continue to increase due to healthy demand combined with low vacancy. Due to strong market rent growth over the last several years, our in-place leases have considerable upside potential to drive future organic NOI growth. We estimate that our lease mark-to-market is approximately 68% (on a net effective basis), which represents the growth rate from in-place rents to current market rents based on our share of the O&M portfolio at March 31, 2023. Therefore, even if there was no additional market rent growth in the future, we expect our lease renewals to translate into significant increases in future income. We have experienced positive rent change on rollover (comparing the net effective rent (“NER”) of the new lease to the prior lease for the same space) in every quarter since 2013.

•

Value Creation from Development. The global nature of our development program provides a wide landscape of opportunities to pursue based on our judgment of market conditions, opportunities and risks. One of the ways in which we create value is through our focus on sourcing well-located land and redevelopment sites through acquisition opportunities, including our innovative approach with Covered Land Plays, which are income-producing assets acquired with the intention to redevelop for higher and better use as industrial properties. Based on our current estimates, our consolidated land, including options and Covered Land Plays, has the potential to support the development of $34.0 billion ($38.4 billion on an O&M basis) of TEI of new logistics space. We measure the estimated value creation of a development project as the stabilized value above our TEI. As properties are completed and leased, we expect to realize the value creation principally through gains realized through contributions of these properties to unconsolidated co-investment ventures and increases in the NOI of the consolidated portfolio.

•

Strategic Capital Advantages. We raise capital to support the long-term growth of the co-investment ventures while maintaining our own substantial investments in these vehicles. At March 31, 2023, the gross book value of the operating portfolio held by our eight unconsolidated co-investment ventures was $50.3 billion across 491 million square feet.

•

Balance Sheet Strength. At March 31, 2023, the weighted average remaining maturity of our consolidated debt was 10 years and the weighted average interest rate was 2.6%, primarily as a result of our refinancing activities over the last several years. Through our refinancing activities we have substantially addressed all our debt maturities until 2026 and have taken advantage of previously low interest rates. At March 31, 2023, we had total available liquidity of $5.7 billion. On April 5, 2023, we amended and restated our second global senior credit facility (the "2021 Global Facility" as the "2023 Global Facility") and upsized it by $1.0 billion, bringing the total borrowing capacity under our credit facilities to $6.5 billion. We continue to maintain low leverage as a percentage of our real estate investments and our market capitalization. As a result of our low leverage, available liquidity and investment capacity in the co-investment ventures, we have significant ability to capitalize on opportunistic value-added investments as they arise.

•

Economies of Scale from Growth. We have scalable systems and infrastructure in place to grow both our consolidated and O&M portfolios with limited incremental G&A expense. We believe we can continue to grow NOI and strategic capital revenues organically and through accretive development and acquisition activity while further reducing G&A as a percentage of our investments in real estate. The acquisition of the Duke portfolio in 2022 is a key example of this, where we increased our O&M portfolio significantly in the fourth quarter of 2022 and had minimal increases to G&A expenses, resulting in lower G&A expenses as a percentage of investments in real estate. While we plan to make future investments in our new lines of business through Prologis Essentials, we expect to maintain our operational efficiency.

•

Staying “Ahead of What’s Next™”. We are focused on creating value beyond real estate by enhancing our customers’ experience, leveraging our scale to obtain procurement savings and innovating through data analytics and digitization efforts. This includes $175 million of investments, at March 31, 2023, in early and growth-stage companies that are focused on emerging

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technology. Through Prologis Essentials we support our customers through service and product offerings, including innovative solutions to operations, energy and sustainability, mobility and workforce that can make our customers' decision process easier and their enterprise more efficient.

SUMMARY OF THE THREE MONTHS ENDED MARCH 31, 2023

Our operating results were strong during the three months ended March 31, 2023. Consistent demand and low vacancy in the global logistics markets drove increases in market rents, which along with our significant lease mark-to-market, translated into positive rent change on rollover and same-store growth in our O&M portfolio. Our O&M operating portfolio occupancy was 98.0% at March 31, 2023 and rent change on leases commenced during the three months ended March 31, 2023 was 68.8%, on a net effective basis, based on our ownership share. We believe our results for the three months ended March 31, 2023 are representative of the health of our business despite a slowing economy. Due to current market conditions, we continue to expect some decline in asset valuations and will remain disciplined as we evaluate capital deployment activities. We anticipate the pace of development starts and contributions into our open ended funds to increase in the second half of the year. We believe we are well-positioned to organically grow revenues given the increase in market rents over the last several years and our high lease mark-to-market. However, we will continue to be cautious as we manage our business in this uncertain macroeconomic environment.

At March 31, 2023, the weighted average remaining maturity of our consolidated debt was 10 years and the weighted average interest rate was 2.6%. We completed the following financing activities during the three months ended March 31, 2023:

•

At March 31, 2023, we had total available liquidity of $5.7 billion, with aggregate availability under our credit facilities of $5.2 billion and unrestricted cash balances of $0.5 billion. On April 5, 2023, we amended and restated our 2021 Global Facility as the 2023 Global Facility and upsized it by $1.0 billion, bringing the total borrowing capacity of our credit facilities to $6.5 billion.

•

We issued $2.6 billion of senior notes (principal in millions):


	Aggregate Principal				Issuance Date Weighted Average
Issuance Date	Borrowing Currency		USD (1)		Interest Rate	Years	Maturity Dates
January	€	1,250	$	1,354	4.1%	13.8	January 2030 – 2043
March	$	1,200	$	1,200	4.9%	17.7	June 2033 – 2053
Total			$	2,554	4.5%	15.6

(1)

The exchange rate used to calculate into U.S. dollars was the spot rate at the settlement date.

RESULTS OF OPERATIONS – THREE MONTHS ENDED MARCH 31, 2023 AND 2022

We evaluate our business operations based on the NOI of our two operating segments: Real Estate (Rental Operations and Development) and Strategic Capital. NOI by segment is a non-GAAP performance measure that is calculated using revenues and expenses directly from our financial statements. We consider NOI by segment to be an appropriate supplemental measure of our performance because it helps management and investors understand our operating results.

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Below is our NOI by segment per our Consolidated Financial Statements and a reconciliation of NOI by segment to Operating Income per the Consolidated Financial Statements for the three months ended March 31 (in millions).


	2023			2022
Real estate segment:
Rental revenues	$	1,634		$	1,077
Development management and other revenues		-			8
Rental expenses		(413	)		(276	)
Other expenses		(7	)		(9	)
Real Estate Segment – NOI		1,214			800

Strategic capital segment:
Strategic capital revenues		135			134
Strategic capital expenses		(72	)		(52	)
Strategic Capital Segment– NOI		63			82

General and administrative expenses		(100	)		(74	)
Depreciation and amortization expenses		(602	)		(397	)
Operating income before gains on real estate transactions, net		575			411
Gains on dispositions of development properties and land, net		-			210
Gains on other dispositions of investments in real estate, net		4			585
Operating income	$	579		$	1,206

See Note 11 to the Consolidated Financial Statements for more information on our segments and a reconciliation of each business segment’s NOI to Operating Income and Earnings Before Income Taxes.

Real Estate Segment

This operating segment principally includes rental revenue and rental expenses recognized from our consolidated properties. We allocate the costs of our property management and leasing functions to the Real Estate Segment through Rental Expenses and the Strategic Capital Segment through Strategic Capital Expenses based on the square footage of the relative portfolios. In addition, this segment is impacted by our development, acquisition and disposition activities.

Below are the components of Real Estate Segment NOI for the three months ended March 31, derived directly from line items in the Consolidated Financial Statements (in millions):


	2023			2022
Rental revenues	$	1,634		$	1,077
Development management and other revenues		-			8
Rental expenses		(413	)		(276	)
Other expenses		(7	)		(9	)
Real Estate Segment – NOI	$	1,214		$	800

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The change in Real Estate Segment (“RES”) NOI for the three months ended March 31, 2023 compared to the same period in 2022 of $414 million was impacted by the following activities (in millions):

(1)

Acquisition activity is primarily due to the Duke Transaction on October 3, 2022. This includes the net below market lease liabilities that are amortized to rental revenues over the remaining lease term, which on average was 64 months at acquisition.

(2)

During both periods, we experienced positive rental rate growth. Rental rate growth is a combination of higher rental rates on rollover of leases (or rent change) and contractual rent increases on existing leases. If a lease has a contractual rent increase driven by a metric that is not known at the time the lease commences, such as the consumer price index or a similar metric, the rent increase is not included in rent leveling and therefore impacts the rental revenue we recognize. Significant rent change during both periods continues to be a key driver in increasing rental income. See below for key metrics on rent change on rollover and occupancy.

(3)

We calculate changes in NOI from development completions period over period by comparing the change in NOI generated on the pool of developments that completed on or after January 1, 2022 through March 31, 2023.

(4)

The change is partially due to higher insurance costs from an unusually active storm season during the three months ended March 31, 2023.

Below are key operating metrics of our consolidated operating portfolio, which excludes non-strategic industrial properties.

(1)

In October 2022, we completed the Duke Transaction, which increased our consolidated square feet.

(2)

Consolidated square feet of leases commenced and weighted average net effective rent change were calculated for leases with initial terms of one year or greater.

(3)

Calculated using the trailing twelve months immediately prior to the period ended.

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Development Activity

The following table summarizes consolidated development activity for the three months ended March 31 (dollars and square feet in millions):


	2023		2022
Starts:
Number of new development buildings during the period		2