--12-312033-062053-062034-022043-01Q1http://fasb.org/us-gaap/2022#OtherAssetshttp://fasb.org/us-gaap/2022#OtherLiabilitiesP3Y--12-31false0001045610falseQ12030-01http://fasb.org/us-gaap/2022#OtherAssetshttp://fasb.org/us-gaap/2022#OtherLiabilities00010456092042-070001045609us-gaap:OperatingSegmentsMemberpld:StrategicCapitalSegmentMember2023-01-012023-03-310001045609us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001045609us-gaap:SeniorNotesMember2022-01-012022-12-310001045609us-gaap:GeneralPartnerMemberpld:CommonCapitalMembersrt:PartnershipInterestMember2022-03-310001045609pld:ClassACapitalMember2023-01-012023-03-3100010456092021-12-310001045609us-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMembercurrency:JPY2022-03-310001045609pld:UnconsolidatedCoInvestmentsVenturesMembersrt:WeightedAverageMembersrt:EuropeMember2023-03-310001045609pld:IssuanceOfSeniorNotesMemberpld:FebruaryTwoThousandAndThirtyFourSeniorNotesMembercurrency:EUR2022-01-012022-09-300001045609pld:IssuanceOfSeniorNotesMembersrt:WeightedAverageMember2023-01-012023-03-310001045609currency:GBP2023-03-310001045609us-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMembercurrency:JPY2022-01-012022-03-310001045609pld:DevelopmentPortfolioIncludingCostOfLandPrestabilizedMember2022-12-310001045609pld:UnconsolidatedCoInvestmentVenturesMembersrt:EuropeMember2023-03-310001045609srt:AsiaMemberus-gaap:OperatingSegmentsMemberpld:RealEstateOperationsSegmentMember2023-03-310001045609pld:GlobalCreditFacility2022Member2023-03-310001045609us-gaap:SubsequentEventMemberpld:GlobalCreditFacility2023Member2023-04-052023-04-050001045609us-gaap:NondesignatedMembercurrency:CADus-gaap:ForeignExchangeContractMember2021-12-310001045609us-gaap:NondesignatedMembercurrency:SEKus-gaap:ForeignExchangeContractMember2022-12-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMembercurrency:EURus-gaap:InterestRateSwapMember2022-03-310001045609pld:UnconsolidatedCoInvestmentVenturesMembercountry:US2022-12-310001045609srt:PartnershipInterestMemberpld:ClassACapitalMember2022-01-012022-03-310001045609pld:CommonCapitalMembersrt:PartnershipInterestMemberus-gaap:LimitedPartnerMember2023-01-012023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMembercurrency:USDus-gaap:InterestRateSwapMember2023-01-012023-03-310001045609us-gaap:LandMember2023-03-310001045609us-gaap:NondesignatedMembercurrency:SEKus-gaap:ForeignExchangeContractMember2023-03-310001045609pld:TermLoansAndOtherDebtMember2023-01-012023-03-310001045609us-gaap:NondesignatedMembercurrency:GBPus-gaap:ForeignExchangeContractMember2022-03-310001045609srt:AsiaMemberus-gaap:OperatingSegmentsMemberpld:StrategicCapitalSegmentMember2022-12-310001045609us-gaap:DesignatedAsHedgingInstrumentMembercurrency:BRLus-gaap:NetInvestmentHedgingMemberus-gaap:ForeignExchangeContractMember2022-03-310001045609pld:OtherConsolidatedEntitiesMember2023-03-310001045609srt:MaximumMemberpld:OutperformancePlanMember2023-01-012023-03-310001045609currency:CNYus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMemberus-gaap:ForeignExchangeContractMember2022-12-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMembercurrency:CADus-gaap:ForeignExchangeContractMember2023-03-3100010456092023-01-012023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMemberus-gaap:ForeignExchangeContractMember2023-01-012023-03-310001045609pld:UnconsolidatedCoInvestmentVenturesMembersrt:EuropeMember2022-12-310001045609srt:MaximumMemberpld:JuneTwoThousandAndThirtyThreeSeniorNotesMemberpld:IssuanceOfSeniorNotesMembercurrency:USD2023-01-012023-03-310001045609srt:AsiaMemberpld:UnconsolidatedCoInvestmentsVenturesMembersrt:WeightedAverageMember2023-03-310001045609us-gaap:GeneralPartnerMembersrt:PartnershipInterestMemberpld:PreferredCapitalMember2022-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMembercurrency:GBPus-gaap:ForeignExchangeContractMember2022-01-012022-03-310001045609pld:UnconsolidatedCoInvestmentVenturesMemberpld:OtherAmericasMember2023-03-310001045609us-gaap:NondesignatedMembercurrency:GBPus-gaap:ForeignExchangeContractMember2021-12-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMembercurrency:CADus-gaap:ForeignExchangeContractMember2022-12-310001045609us-gaap:NondesignatedMembercurrency:EURus-gaap:ForeignExchangeContractMember2023-03-310001045609srt:PartnershipInterestMember2023-01-012023-03-310001045609pld:CommonCapitalMembersrt:PartnershipInterestMemberus-gaap:LimitedPartnerMember2022-01-012022-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMembercurrency:GBP2022-12-310001045609srt:MinimumMemberpld:JuneTwoThousandAndThirtyThreeSeniorNotesMemberpld:IssuanceOfSeniorNotesMembercurrency:USD2023-01-012023-03-310001045609pld:RealEstateOperationsSegmentMemberus-gaap:OperatingSegmentsMembersrt:EuropeMember2023-03-310001045609us-gaap:NoncontrollingInterestMember2023-03-310001045609pld:RealEstateOperationsSegmentMemberus-gaap:OperatingSegmentsMembercountry:US2022-12-310001045609pld:PropertiesUnderDevelopmentMember2023-03-310001045609pld:PrologisIncMember2023-03-310001045609us-gaap:NondesignatedMembercurrency:GBPus-gaap:ForeignExchangeContractMember2023-01-012023-03-310001045609pld:UnconsolidatedCoInvestmentVenturesMembersrt:EuropeMember2022-01-012022-03-3100010456092022-03-310001045609us-gaap:NoncontrollingInterestMember2021-12-310001045609srt:AsiaMemberpld:UnconsolidatedCoInvestmentVenturesMember2022-01-012022-03-310001045609pld:UnconsolidatedCoInvestmentVenturesMembercountry:US2023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMemberus-gaap:ForeignExchangeContractMember2022-01-012022-03-310001045609pld:JanuaryTwoThousandAndThirtySeniorNotesMembersrt:MinimumMemberpld:IssuanceOfSeniorNotesMembercurrency:EUR2023-01-012023-03-310001045609us-gaap:OperatingSegmentsMembersrt:AsiaMemberpld:RealEstateOperationsSegmentMember2022-01-012022-03-310001045609us-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2023-01-012023-03-310001045609pld:ClassACapitalMember2022-12-310001045609us-gaap:RestrictedStockUnitsRSUMember2022-12-310001045609pld:OtherCurrencyMemberus-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2023-03-310001045609pld:CommonUnitsMember2023-01-012023-03-310001045609us-gaap:OperatingSegmentsMember2023-03-310001045609srt:AsiaMemberpld:UnconsolidatedCoInvestmentVenturesMember2023-03-310001045609pld:PrologisUSLogisticsVentureMember2023-03-310001045609pld:OutperformancePlanMember2023-01-012023-03-3100010456092023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2022-03-310001045609us-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2021-12-310001045609currency:USD2023-03-310001045609pld:TermLoansAndOtherDebtMember2023-03-310001045609pld:UnconsolidatedCoInvestmentsVenturesMembercountry:USsrt:WeightedAverageMember2022-12-310001045609srt:PartnershipInterestMemberus-gaap:LimitedPartnerMemberpld:ClassACapitalMember2022-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMember2022-01-012022-03-310001045609currency:CNYus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMemberus-gaap:ForeignExchangeContractMember2023-03-310001045609us-gaap:PreferredStockMember2023-03-310001045609pld:AccumulatedGainLossOnNetInvestmentHedgesMember2023-01-012023-03-310001045609srt:PartnershipInterestMemberus-gaap:NoncontrollingInterestMember2021-12-310001045609srt:PartnershipInterestMemberus-gaap:NoncontrollingInterestMember2023-01-012023-03-310001045609pld:OtherCurrencyMemberus-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2022-12-310001045609us-gaap:SeniorNotesMember2022-12-310001045609us-gaap:NondesignatedMembercurrency:EURus-gaap:ForeignExchangeContractMember2022-03-310001045609us-gaap:GeneralPartnerMembersrt:PartnershipInterestMemberpld:CommonCapitalMember2022-01-012022-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMembercurrency:EURus-gaap:InterestRateSwapMember2021-12-310001045609us-gaap:NondesignatedMembercurrency:JPYus-gaap:ForeignExchangeContractMember2021-12-310001045609pld:GlobalCreditFacility2021Member2023-01-012023-03-310001045609pld:RealEstateOperationsSegmentMemberus-gaap:OperatingSegmentsMembersrt:EuropeMember2022-01-012022-03-310001045609us-gaap:GeneralPartnerMemberpld:CommonCapitalMembersrt:PartnershipInterestMember2021-12-310001045609us-gaap:NondesignatedMembercurrency:SEKus-gaap:ForeignExchangeContractMember2021-12-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMembercurrency:GBPus-gaap:ForeignExchangeContractMember2021-12-310001045609srt:PartnershipInterestMember2022-12-310001045609srt:PartnershipInterestMember2022-01-012022-03-310001045609pld:CommonCapitalMembersrt:PartnershipInterestMemberus-gaap:LimitedPartnerMember2022-12-310001045609us-gaap:OperatingSegmentsMemberpld:StrategicCapitalSegmentMember2023-03-310001045609srt:PartnershipInterestMemberpld:CommonUnitsMember2022-01-012022-03-310001045609us-gaap:ForwardContractsMember2023-01-012023-03-310001045609us-gaap:MaterialReconcilingItemsMember2023-01-012023-03-310001045609us-gaap:NondesignatedMembercurrency:EURus-gaap:ForeignExchangeContractMember2022-01-012022-03-310001045609us-gaap:MaterialReconcilingItemsMember2023-03-310001045609pld:PrologisYenFinanceLLCMember2018-08-012018-08-310001045609us-gaap:NondesignatedMember2023-01-012023-03-310001045609us-gaap:NondesignatedMembercurrency:SEKus-gaap:ForeignExchangeContractMember2022-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberpld:UnconsolidatedCoInvestmentVenturesMember2023-01-012023-03-310001045609us-gaap:SegmentContinuingOperationsMember2022-01-012022-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMembercurrency:CADus-gaap:ForeignExchangeContractMember2022-03-310001045609us-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2023-03-310001045609pld:YenCreditFacilityMember2023-01-012023-03-310001045609pld:YenCreditFacilityMember2023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2022-12-310001045609us-gaap:NondesignatedMembercurrency:JPYus-gaap:ForeignExchangeContractMember2023-01-012023-03-310001045609currency:CAD2023-03-310001045609us-gaap:OperatingSegmentsMemberpld:RealEstateOperationsSegmentMemberpld:OtherAmericasMember2023-01-012023-03-310001045609us-gaap:NoncontrollingInterestMember2022-12-310001045609us-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2023-01-012023-03-310001045609us-gaap:CommonStockMember2022-03-310001045609us-gaap:NoncontrollingInterestMember2022-03-310001045609us-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMembercurrency:JPY2022-12-310001045609us-gaap:NondesignatedMembercurrency:CADus-gaap:ForeignExchangeContractMember2023-03-310001045609pld:CashFlowHedgesMemberus-gaap:DesignatedAsHedgingInstrumentMember2023-01-012023-03-310001045609us-gaap:GeneralPartnerMembersrt:PartnershipInterestMemberpld:PreferredCapitalMember2021-12-310001045609currency:BRLus-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2023-03-310001045609pld:OtherCurrencyMemberus-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2021-12-310001045609srt:PartnershipInterestMemberus-gaap:LimitedPartnerMemberpld:ClassACapitalMember2022-12-310001045609pld:DevelopmentPortfolioIncludingCostOfLandPrestabilizedMember2023-03-310001045609us-gaap:LineOfCreditMember2022-12-310001045609us-gaap:CommonStockMember2023-01-012023-03-310001045609us-gaap:NondesignatedMembercurrency:GBPus-gaap:ForeignExchangeContractMember2022-12-310001045609currency:BRLus-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2022-12-310001045609us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001045609us-gaap:OperatingSegmentsMemberpld:RealEstateOperationsSegmentMemberpld:OtherAmericasMember2022-12-310001045609us-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMembercurrency:USD2022-12-310001045609us-gaap:MaterialReconcilingItemsMember2022-01-012022-03-310001045609us-gaap:OperatingSegmentsMemberpld:StrategicCapitalSegmentMembercountry:US2023-03-310001045609us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember2021-12-310001045609srt:PartnershipInterestMember2021-12-310001045609us-gaap:PreferredStockMember2021-12-310001045609pld:OutperformancePlanMemberpld:PriorToTwoThousandEighteenPerformancePeriodsMember2023-01-012023-01-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMembercurrency:GBP2023-03-310001045609us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001045609us-gaap:SecuredDebtMember2023-03-310001045609srt:AsiaMemberpld:UnconsolidatedCoInvestmentsVenturesMembersrt:WeightedAverageMember2022-12-310001045609us-gaap:SegmentDiscontinuedOperationsMember2022-01-012022-03-310001045609us-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2022-03-3100010456092022-01-012022-12-310001045609pld:PrologisSterlingFinanceLLCMember2018-10-012018-10-310001045609pld:JanuaryTwoThousandAndThirtySeniorNotesMemberpld:IssuanceOfSeniorNotesMembercurrency:EURsrt:WeightedAverageMember2023-01-012023-03-310001045609us-gaap:NondesignatedMembercurrency:EURus-gaap:ForeignExchangeContractMember2023-01-012023-03-310001045609pld:DukeRealtyCorporationAndDukeRealtyLimitedPartnershipMember2022-10-032022-10-030001045609us-gaap:OperatingSegmentsMemberpld:StrategicCapitalSegmentMembercountry:US2022-01-012022-03-310001045609us-gaap:SegmentContinuingOperationsMember2023-01-012023-03-310001045609us-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2022-01-012022-03-310001045609us-gaap:BuildingAndBuildingImprovementsMember2022-12-310001045609pld:OtherVenturesMember2022-12-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2022-01-012022-03-310001045609pld:OtherConsolidatedEntitiesMemberus-gaap:CommonStockMember2023-03-310001045609srt:PartnershipInterestMemberpld:ClassACapitalMember2022-12-310001045609srt:PartnershipInterestMemberus-gaap:NoncontrollingInterestMember2022-01-012022-03-310001045609pld:JanuaryTwoThousandAndThirtySeniorNotesMemberpld:IssuanceOfSeniorNotesMembercurrency:EURsrt:WeightedAverageMember2023-03-310001045609pld:ThreePointZeroZeroZeroPercentNotesDueTwoThousandTwentySixMemberpld:PrologisLimitedPartnershipMember2023-01-012023-03-310001045609us-gaap:SecuredDebtMember2022-01-012022-12-310001045609pld:PrologisLimitedPartnershipMember2023-01-012023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMembercurrency:GBPus-gaap:ForeignExchangeContractMember2022-03-310001045609pld:LessorMemberus-gaap:OtherLiabilitiesMemberpld:DukeRealtyCorporationAndDukeRealtyLimitedPartnershipMember2022-10-030001045609srt:PartnershipInterestMemberpld:ClassACapitalMember2023-03-310001045609pld:LongTermIncentivePlanUnitsMember2023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMembercurrency:BRLus-gaap:NetInvestmentHedgingMemberus-gaap:ForeignExchangeContractMember2022-01-012022-03-310001045609currency:CNYus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMemberus-gaap:ForeignExchangeContractMember2023-01-012023-03-310001045609us-gaap:AdditionalPaidInCapitalMember2021-12-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMembercurrency:USDus-gaap:InterestRateSwapMember2023-03-310001045609us-gaap:NondesignatedMembercurrency:EURus-gaap:ForeignExchangeContractMember2021-12-310001045609us-gaap:NondesignatedMembercurrency:CADus-gaap:ForeignExchangeContractMember2023-01-012023-03-310001045609us-gaap:OperatingSegmentsMembersrt:AsiaMemberpld:StrategicCapitalSegmentMember2022-01-012022-03-310001045609us-gaap:CommonStockMember2021-12-310001045609pld:OtherConsolidatedEntitiesMember2022-12-310001045609srt:PartnershipInterestMemberpld:CommonCapitalMemberus-gaap:LimitedPartnerMember2023-03-310001045609pld:UnconsolidatedCoInvestmentVenturesMembersrt:EuropeMember2023-01-012023-03-310001045609srt:PartnershipInterestMemberus-gaap:LimitedPartnerMemberpld:ClassACapitalMember2023-03-310001045609srt:PartnershipInterestMemberpld:CommonCapitalMember2022-12-310001045609pld:JulyTwoThousandAndFortyTwoSeniorNotesMemberpld:IssuanceOfSeniorNotesMembercurrency:JPY2022-01-012022-09-300001045609srt:PartnershipInterestMemberus-gaap:LimitedPartnerMemberpld:ClassACapitalMember2021-12-310001045609pld:SecuredMortgageDebtMember2023-03-310001045609us-gaap:LineOfCreditMember2023-03-310001045609pld:DukeTransactionMember2022-10-022022-10-030001045609pld:TermLoansAndOtherDebtMember2022-01-012022-12-310001045609us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember2023-03-310001045609us-gaap:OtherCapitalizedPropertyPlantAndEquipmentMember2023-03-310001045609us-gaap:NoncontrollingInterestMember2023-01-012023-03-310001045609srt:PartnershipInterestMember2022-03-310001045609pld:UnconsolidatedCoInvestmentVenturesMemberpld:OtherAmericasMember2023-01-012023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMembercurrency:EURus-gaap:InterestRateSwapMember2022-12-310001045609srt:PartnershipInterestMember2023-03-310001045609pld:ClassACapitalMember2023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMembercurrency:EURus-gaap:InterestRateSwapMember2023-03-310001045609us-gaap:AdditionalPaidInCapitalMember2022-12-310001045609us-gaap:NondesignatedMembercurrency:CADus-gaap:ForeignExchangeContractMember2022-03-310001045609us-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMembercurrency:USD2023-03-310001045609srt:PartnershipInterestMemberpld:PreferredCapitalMember2023-03-310001045609pld:OtherCurrencyMemberus-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2022-03-310001045609us-gaap:OperatingSegmentsMemberpld:RealEstateOperationsSegmentMemberpld:OtherAmericasMember2023-03-310001045609us-gaap:OperatingSegmentsMemberpld:StrategicCapitalSegmentMember2022-01-012022-03-310001045609pld:PrologisLimitedPartnershipMemberus-gaap:GeneralPartnerMember2023-01-012023-03-310001045609currency:GBP2022-12-310001045609pld:JanuaryTwoThousandAndThirtySeniorNotesMemberpld:IssuanceOfSeniorNotesMembercurrency:EUR2023-03-310001045609pld:GlobalCreditFacility2022Member2023-01-012023-03-310001045609us-gaap:NondesignatedMembercurrency:CADus-gaap:ForeignExchangeContractMember2022-12-310001045609us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember2023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMemberus-gaap:ForeignExchangeContractMember2021-12-310001045609us-gaap:LandImprovementsMember2023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMembercurrency:USDus-gaap:InterestRateSwapMember2022-12-310001045609us-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2023-03-310001045609pld:TwoThousandTwentyThreeToTwoThousandTwentyFivePerformancePeriodsMemberpld:OutperformancePlanMember2023-01-012023-01-310001045609pld:RealEstateOperationsSegmentMemberus-gaap:OperatingSegmentsMembercountry:US2023-01-012023-03-310001045609us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember2022-01-012022-03-310001045609us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMembercurrency:CADus-gaap:ForeignExchangeContractMember2022-01-012022-03-310001045609us-gaap:NondesignatedMembercurrency:GBPus-gaap:ForeignExchangeContractMember2022-01-012022-03-310001045609us-gaap:LineOfCreditMember2022-01-012022-12-310001045609srt:AsiaMemberpld:UnconsolidatedCoInvestmentVenturesMember2022-12-310001045609currency:CNYus-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMemberus-gaap:ForeignExchangeContractMember2022-03-310001045609srt:MinimumMemberpld:OutperformancePlanMember2023-01-012023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberpld:CanadianDollarSeniorNotesMember2023-03-310001045609us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember2023-01-012023-03-310001045609us-gaap:GeneralPartnerMembersrt:PartnershipInterestMemberpld:PreferredCapitalMember2023-03-310001045609us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember2022-12-310001045609us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-01-012022-12-310001045609srt:PartnershipInterestMemberpld:CommonCapitalMember2023-03-3100010456092022-01-012022-03-310001045609us-gaap:SeniorNotesMember2023-03-310001045609us-gaap:GeneralPartnerMembersrt:PartnershipInterestMemberpld:CommonCapitalMember2023-03-310001045609us-gaap:OperatingSegmentsMemberpld:StrategicCapitalSegmentMembersrt:EuropeMember2022-01-012022-03-310001045609us-gaap:NondesignatedMembercurrency:JPYus-gaap:ForeignExchangeContractMember2023-03-310001045609us-gaap:GeneralPartnerMemberpld:CommonCapitalMembersrt:PartnershipInterestMember2023-01-012023-03-310001045609us-gaap:NondesignatedMembercurrency:CADus-gaap:ForeignExchangeContractMember2022-01-012022-03-310001045609pld:DukeRealtyCorporationAndDukeRealtyLimitedPartnershipMember2022-10-030001045609currency:EUR2023-03-310001045609us-gaap:LineOfCreditMember2023-01-012023-03-310001045609pld:LessorMemberus-gaap:OtherAssetsMemberpld:DukeRealtyCorporationAndDukeRealtyLimitedPartnershipMember2022-10-030001045609us-gaap:OperatingSegmentsMemberpld:StrategicCapitalSegmentMembercountry:US2023-01-012023-03-310001045609pld:RealEstateOperationsSegmentMemberus-gaap:OperatingSegmentsMember2023-01-012023-03-310001045609currency:USD2022-12-310001045609us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001045609pld:IssuanceOfSeniorNotesMembersrt:WeightedAverageMember2023-03-3100010456092022-01-012022-09-300001045609srt:AsiaMemberpld:RealEstateOperationsSegmentMemberus-gaap:OperatingSegmentsMember2022-12-310001045609srt:PartnershipInterestMemberpld:ClassACapitalMember2023-01-012023-03-310001045609pld:RealEstateOperationsSegmentMember2022-12-310001045609us-gaap:OperatingSegmentsMemberpld:RealEstateOperationsSegmentMembercountry:US2023-03-310001045609pld:UnconsolidatedCoInvestmentsVenturesMemberpld:OtherAmericasMembersrt:WeightedAverageMember2023-03-310001045609us-gaap:OperatingSegmentsMemberpld:OtherAmericasMemberpld:StrategicCapitalSegmentMember2022-01-012022-03-310001045609pld:RealEstateOperationsSegmentMemberus-gaap:OperatingSegmentsMembersrt:EuropeMember2022-12-310001045609srt:PartnershipInterestMemberus-gaap:LimitedPartnerMemberpld:ClassACapitalMember2023-01-012023-03-310001045609us-gaap:CommonStockMember2022-01-012022-03-310001045609pld:JuneTwoThousandAndThirtyThreeSeniorNotesMemberpld:IssuanceOfSeniorNotesMembercurrency:USD2023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberpld:NonDerivativeNetInvestmentHedgeMember2022-01-012022-03-310001045609pld:UnconsolidatedCoInvestmentVenturesMember2023-01-012023-03-310001045609pld:SecuredMortgageDebtMember2022-12-310001045609pld:LessorMemberpld:DukeRealtyCorporationAndDukeRealtyLimitedPartnershipMember2022-10-030001045609pld:CommonUnitsMember2022-01-012022-12-310001045609pld:UnaffiliatedInvestorsAndCertainCurrentAndFormerDirectorsAndOfficersMember2023-01-012023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMembercurrency:CADus-gaap:ForeignExchangeContractMember2021-12-310001045609srt:AsiaMemberus-gaap:OperatingSegmentsMemberpld:StrategicCapitalSegmentMember2023-03-310001045609pld:OtherVenturesMember2023-03-310001045609srt:PartnershipInterestMemberus-gaap:LimitedPartnerMemberpld:ClassACapitalMember2022-01-012022-03-310001045609pld:StrategicCapitalSegmentMembersrt:EuropeMember2022-12-310001045609us-gaap:OperatingSegmentsMemberpld:StrategicCapitalSegmentMembersrt:EuropeMember2022-12-310001045609pld:TwoThousandTwentyThreeToTwoThousandTwentyFivePerformancePeriodsMemberpld:OutperformancePlanMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2023-01-012023-01-310001045609us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001045609us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-03-310001045609pld:CashFlowHedgesMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-01-012022-03-310001045609pld:GlobalCreditFacility2021Member2023-03-310001045609us-gaap:AdditionalPaidInCapitalMember2023-03-310001045609us-gaap:OperatingSegmentsMember2023-01-012023-03-310001045609us-gaap:ForwardContractsMember2022-01-012022-03-310001045609us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001045609us-gaap:SecuredDebtMember2022-12-310001045609pld:PrologisIncMemberus-gaap:NoncontrollingInterestMember2023-03-310001045609us-gaap:AdditionalPaidInCapitalMember2022-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2021-12-3100010456092023-04-260001045609us-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMembercurrency:EUR2022-12-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMembercurrency:CAD2022-12-310001045609pld:RealEstateOperationsSegmentMemberus-gaap:OperatingSegmentsMembersrt:AsiaMember2023-01-012023-03-310001045609pld:LongTermIncentivePlanUnitsMember2022-12-310001045609pld:OtherCurrencyMemberus-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2023-01-012023-03-310001045609us-gaap:GeneralPartnerMemberpld:CommonCapitalMembersrt:PartnershipInterestMember2022-12-310001045609us-gaap:MaterialReconcilingItemsMember2022-12-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2023-01-012023-03-310001045609us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember2022-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMember2023-01-012023-03-310001045609us-gaap:BuildingAndBuildingImprovementsMember2023-03-310001045609pld:UnconsolidatedCoInvestmentsVenturesMembersrt:WeightedAverageMember2023-03-310001045609pld:OtherConsolidatedEntitiesMember2023-01-012023-03-310001045609currency:CNYus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMember2022-12-310001045609pld:UnconsolidatedEntitiesMember2022-01-012022-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMembercurrency:GBPus-gaap:ForeignExchangeContractMember2023-03-310001045609srt:PartnershipInterestMemberpld:PreferredCapitalMember2022-12-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberpld:NonDerivativeNetInvestmentHedgeMember2023-01-012023-03-310001045609pld:PrologisUSLogisticsVentureMember2022-12-310001045609us-gaap:CommonStockMember2022-12-310001045609pld:DukeRealtyCorporationAndDukeRealtyLimitedPartnershipMember2022-09-300001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMembercurrency:EURus-gaap:InterestRateSwapMember2022-01-012022-03-310001045609pld:UnconsolidatedCoInvestmentVenturesMember2023-01-012023-03-310001045609pld:UnconsolidatedCoInvestmentsVenturesMemberpld:OtherAmericasMembersrt:WeightedAverageMember2022-12-310001045609pld:TwoPointTwoFiveZeroPercentNotesDueTwoThousandTwentyNineMemberpld:PrologisLimitedPartnershipMember2023-01-012023-03-310001045609us-gaap:OperatingSegmentsMemberpld:RealEstateOperationsSegmentMembercountry:US2022-01-012022-03-310001045609us-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMembercurrency:EUR2023-03-310001045609currency:JPY2022-12-310001045609us-gaap:PreferredStockMember2022-12-310001045609pld:CommonCapitalMembersrt:PartnershipInterestMemberus-gaap:LimitedPartnerMember2022-03-310001045609us-gaap:SecuredDebtMember2023-01-012023-03-310001045609pld:LongTermIncentivePlanUnitsMember2022-01-012022-12-310001045609pld:UnconsolidatedCoInvestmentVenturesMemberpld:OtherAmericasMember2022-01-012022-03-310001045609us-gaap:OperatingSegmentsMemberpld:StrategicCapitalSegmentMembersrt:EuropeMember2023-03-310001045609us-gaap:PreferredStockMember2022-03-310001045609pld:RealEstateOperationsSegmentMember2023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMemberus-gaap:ForeignExchangeContractMember2022-12-310001045609pld:OtherConsolidatedEntitiesMemberus-gaap:CommonStockMember2022-12-310001045609us-gaap:CommonStockMember2023-01-012023-03-310001045609us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001045609us-gaap:RestrictedStockUnitsRSUMember2023-03-310001045609pld:UnconsolidatedCoInvestmentsVenturesMembersrt:WeightedAverageMembersrt:EuropeMember2022-12-310001045609pld:JanuaryTwoThousandAndThirtySeniorNotesMembersrt:MaximumMemberpld:IssuanceOfSeniorNotesMembercurrency:EUR2023-01-012023-03-310001045609us-gaap:ShareBasedCompensationAwardTrancheTwoMemberpld:TwoThousandTwentyThreeToTwoThousandTwentyFivePerformancePeriodsMemberpld:OutperformancePlanMember2023-01-012023-01-310001045609srt:PartnershipInterestMemberus-gaap:NoncontrollingInterestMember2023-03-310001045609us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMembercurrency:GBPus-gaap:ForeignExchangeContractMember2023-01-012023-03-310001045609us-gaap:SubsequentEventMemberpld:GlobalCreditFacility2023Member2023-04-050001045609us-gaap:LandMember2022-12-310001045609us-gaap:OperatingSegmentsMemberpld:StrategicCapitalSegmentMembersrt:EuropeMember2023-01-012023-03-310001045609pld:UnconsolidatedCoInvestmentVenturesMembercountry:US2023-01-012023-03-310001045609pld:OtherCurrencyMemberus-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2022-01-012022-03-310001045609us-gaap:GeneralPartnerMembersrt:PartnershipInterestMemberpld:PreferredCapitalMember2022-12-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberpld:BritishPoundSterlingSeniorNotesMember2023-03-310001045609pld:IssuanceOfSeniorNotesMemberpld:JuneTwoThousandAndThirtyThreeSeniorNotesMembercurrency:USDsrt:WeightedAverageMember2023-01-012023-03-310001045609pld:AccumulatedGainLossOnNetInvestmentHedgesMember2022-01-012022-12-310001045609srt:PartnershipInterestMemberus-gaap:NoncontrollingInterestMember2022-12-310001045609us-gaap:OperatingSegmentsMemberpld:RealEstateOperationsSegmentMemberpld:OtherAmericasMember2022-01-012022-03-310001045609currency:CNYus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMember2023-03-310001045609us-gaap:SeniorNotesMember2023-01-012023-03-310001045609us-gaap:OperatingSegmentsMemberpld:RealEstateOperationsSegmentMember2022-01-012022-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMembercurrency:BRLus-gaap:NetInvestmentHedgingMemberus-gaap:ForeignExchangeContractMember2021-12-310001045609us-gaap:NondesignatedMembercurrency:SEKus-gaap:ForeignExchangeContractMember2022-01-012022-03-310001045609pld:PrologisIncMemberpld:OutperformancePlanMemberpld:TwoThousandTwentyThreeToTwoThousandTwentyFivePerformancePeriodsMember2023-01-012023-01-310001045609us-gaap:AccumulatedDistributionsInExcessOfNetIncomeMember2022-12-310001045609us-gaap:OperatingSegmentsMember2022-12-310001045609pld:OtherConsolidatedEntitiesMember2022-01-012022-12-310001045609pld:UnconsolidatedCoInvestmentVenturesMember2022-01-012022-03-310001045609pld:UnconsolidatedCoInvestmentVenturesMemberpld:OtherAmericasMember2022-12-310001045609us-gaap:NondesignatedMembercurrency:EURus-gaap:ForeignExchangeContractMember2022-12-310001045609us-gaap:OperatingSegmentsMemberpld:StrategicCapitalSegmentMembercountry:US2022-12-310001045609pld:PrologisEuroFinanceLLCMember2018-07-012018-07-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMembercurrency:CAD2023-03-310001045609us-gaap:SegmentDiscontinuedOperationsMember2023-01-012023-03-310001045609pld:PropertiesUnderDevelopmentMember2022-12-310001045609us-gaap:OtherCapitalizedPropertyPlantAndEquipmentMember2022-12-310001045609pld:TwoThousandNineteenToTwoThousandTwentyOnePerformancePeriodsMemberpld:OutperformancePlanMember2023-01-012023-01-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMembercurrency:GBPus-gaap:ForeignExchangeContractMember2022-12-310001045609us-gaap:NondesignatedMembercurrency:GBPus-gaap:ForeignExchangeContractMember2023-03-310001045609pld:UnconsolidatedCoInvestmentVenturesMembercountry:US2022-01-012022-03-310001045609us-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2022-12-310001045609srt:AsiaMemberpld:UnconsolidatedCoInvestmentVenturesMember2023-01-012023-03-310001045609pld:UnconsolidatedCoInvestmentsVenturesMembersrt:WeightedAverageMember2022-12-310001045609pld:UnconsolidatedCoInvestmentsVenturesMembercountry:USsrt:WeightedAverageMember2023-03-310001045609currency:JPY2023-03-310001045609pld:TwoThousandTwentyThreeToTwoThousandTwentyFivePerformancePeriodsMemberpld:OutperformancePlanMemberpld:MsciUsReitIndexMember2023-01-012023-01-310001045609currency:CAD2022-12-310001045609pld:UnconsolidatedCoInvestmentVenturesMember2022-12-310001045609pld:RealEstateOperationsSegmentMemberus-gaap:OperatingSegmentsMembersrt:EuropeMember2023-01-012023-03-310001045609pld:PrologisIncMemberus-gaap:NoncontrollingInterestMember2022-12-310001045609us-gaap:OperatingSegmentsMember2022-01-012022-03-310001045609pld:IssuanceOfSeniorNotesMember2023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberpld:UnconsolidatedCoInvestmentVenturesMember2022-01-012022-03-310001045609pld:CommonCapitalMembersrt:PartnershipInterestMemberus-gaap:LimitedPartnerMember2021-12-310001045609currency:EUR2022-12-310001045609pld:JuneTwoThousandAndThirtyThreeSeniorNotesMemberpld:IssuanceOfSeniorNotesMembercurrency:USDsrt:WeightedAverageMember2023-03-310001045609us-gaap:LandImprovementsMember2022-12-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMembercurrency:CADus-gaap:ForeignExchangeContractMember2023-01-012023-03-310001045609us-gaap:NoncontrollingInterestMember2022-01-012022-03-310001045609currency:CNYus-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2022-12-310001045609srt:PartnershipInterestMemberus-gaap:NoncontrollingInterestMember2022-03-310001045609us-gaap:OperatingSegmentsMemberpld:StrategicCapitalSegmentMember2022-12-310001045609pld:ClassACapitalMember2022-01-012022-12-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMembercurrency:EURus-gaap:InterestRateSwapMember2023-01-012023-03-310001045609us-gaap:OperatingSegmentsMembersrt:AsiaMemberpld:StrategicCapitalSegmentMember2023-01-012023-03-310001045609pld:UnconsolidatedCoInvestmentVenturesMember2023-03-310001045609us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-01-012023-03-310001045609us-gaap:CommonStockMember2023-03-310001045609pld:PrologisIncMember2022-12-3100010456092022-12-310001045609pld:LongTermIncentivePlanUnitsMember2023-01-012023-03-310001045609us-gaap:OperatingSegmentsMemberpld:OtherAmericasMemberpld:StrategicCapitalSegmentMember2023-01-012023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMemberus-gaap:ForeignExchangeContractMember2023-03-310001045609pld:CommonUnitsMembersrt:PartnershipInterestMember2023-01-012023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberpld:CanadianDollarSeniorNotesMember2022-12-310001045609pld:StrategicCapitalSegmentMembersrt:EuropeMember2023-03-310001045609us-gaap:DesignatedAsHedgingInstrumentMemberpld:BritishPoundSterlingSeniorNotesMember2022-12-310001045609pld:TermLoansAndOtherDebtMember2022-12-310001045609pld:PrologisIncMember2023-01-012023-03-31utr:acreiso4217:EURpld:Derivativepld:Ventureiso4217:JPYxbrli:pureutr:sqftpld:Buildingiso4217:USDxbrli:sharespld:Contractxbrli:sharespld:Segmentpld:Propertyiso4217:USD

 

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.)

 

img138996581_0.jpg 

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.

1

 


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.

2

 


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.

3

 


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.

4

 


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.

 

5

 


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.

6

 


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.

7

 


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.

8

 


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.

9

 


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.

10

 


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

11

 


Index

 

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.

 

12

 


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.

 

13

 


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.

14

 


Index

 

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

15

 


Index

 

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

 

 

16

 


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.

 

17

 


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

 

 

18

 


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

 

 

19

 


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

 

 

 

 

 

 

 

 

20

 


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

 

21

 


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

22

 


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.

23

 


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

 

 

24

 


Index

 

 

 

 

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.

25

 


Index

 

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

26

 


Index

 

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.

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

27

 


Index

 

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.

 

28

 


Index

 

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:

img138996581_1.jpg 

 

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.

 

29

 


Index

 

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):

 

img138996581_2.jpg 

 

(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.

 

30

 


Index

 

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.

 

img138996581_3.jpg 

 

(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

31

 


Index

 

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.

 

32

 


Index

 

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

 

 

 

 

 

 

 

 

 

33

 


Index

 

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):

 

img138996581_4.jpg
 

(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.

img138996581_5.jpg

 

(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.

 

34

 


Index

 

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