10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2023

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

For the transition period from ______________ to ______________

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

Prologis, Inc.

Prologis, L.P.

(Exact name of registrant as specified in its charter)


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

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

(415) 394-9000

(Registrants’ telephone number, including area code)

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

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


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

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


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

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


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

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


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


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

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

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


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

The number of shares of Prologis, Inc.’s common stock outstanding at July 24, 2023, was approximately 923,862,000.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended June 30, 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 June 30, 2023, the Parent owned a 97.61% common general partnership interest in the OP and substantially all of the preferred units in the OP. The remaining 2.39% 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 – June 30, 2023 and December 31, 2022		1
		Consolidated Statements of Income – Three and Six Months Ended June 30, 2023 and 2022		2
		Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2023 and 2022		3
		Consolidated Statements of Equity – Three and Six Months Ended June 30, 2023 and 2022		4
		Consolidated Statements of Cash Flows – Six Months Ended June 30, 2023 and 2022		5
	Prologis, L.P.:
		Consolidated Balance Sheets – June 30, 2023 and December 31, 2022		6
		Consolidated Statements of Income – Three and Six Months Ended June 30, 2023 and 2022		7
		Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2023 and 2022		8
		Consolidated Statements of Capital – Three and Six Months Ended June 30, 2023 and 2022		9
		Consolidated Statements of Cash Flows – Six Months Ended June 30, 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		24
		Note 12. Supplemental Cash Flow Information		26
		Reports of Independent Registered Public Accounting Firm		27
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		29
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		49
	Item 4.	Controls and Procedures		50
PART II.	Other Information
	Item 1.	Legal Proceedings		51
	Item 1A.	Risk Factors		51
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		51
	Item 3.	Defaults Upon Senior Securities		51
	Item 4.	Mine Safety Disclosures		51
	Item 5.	Other Information		51
	Item 6.	Exhibits		51

Index

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

PROLOGIS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share data)



	June 30, 2023			December 31, 2022
ASSETS
Investments in real estate properties	$	86,550,420		$	81,623,396
Less accumulated depreciation		9,977,207			9,036,085
Net investments in real estate properties		76,573,213			72,587,311
Investments in and advances to unconsolidated entities		9,931,261			9,698,898
Assets held for sale or contribution		616,571			531,257
Net investments in real estate		87,121,045			82,817,466

Cash and cash equivalents		531,110			278,483
Other assets		4,739,886			4,801,499
Total assets	$	92,392,041		$	87,897,448

LIABILITIES AND EQUITY
Liabilities:
Debt	$	28,129,473		$	23,875,961
Accounts payable and accrued expenses		1,582,205			1,711,885
Other liabilities		4,602,539			4,446,509
Total liabilities		34,314,217			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 June 30, 2023 and December 31, 2022		63,948			63,948
Common stock; $0.01 par value; 923,861 shares and 923,142 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		9,239			9,231
Additional paid-in capital		54,115,592			54,065,407
Accumulated other comprehensive loss		(332,370	)		(443,609	)
Distributions in excess of net earnings		(390,779	)		(457,695	)
Total Prologis, Inc. stockholders’ equity		53,465,630			53,237,282
Noncontrolling interests		4,612,194			4,625,811
Total equity		58,077,824			57,863,093
Total liabilities and equity	$	92,392,041		$	87,897,448

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

Index

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Revenues:
Rental	$	1,651,454		$	1,093,452		$	3,285,224		$	2,170,313
Strategic capital		799,035			156,239			933,736			290,164
Development management and other		482			2,389			598			10,731
Total revenues		2,450,971			1,252,080			4,219,558			2,471,208
Expenses:
Rental		387,938			270,465			800,492			546,139
Strategic capital		150,906			57,052			222,615			108,863
General and administrative		95,647			83,114			195,424			157,760
Depreciation and amortization		602,168			402,313			1,204,535			798,960
Other		12,160			11,621			19,344			21,210
Total expenses		1,248,819			824,565			2,442,410			1,632,932

Operating income before gains on real estate transactions, net		1,202,152			427,515			1,777,148			838,276
Gains on dispositions of development properties and land, net		184,877			105,802			184,877			316,008
Gains on other dispositions of investments in real estate, net		24,761			-			28,808			584,835
Operating income		1,411,790			533,317			1,990,833			1,739,119

Other income (expense):
Earnings from unconsolidated entities, net		70,642			79,594			146,421			156,556
Interest expense		(149,818	)		(60,293	)		(285,829	)		(124,357	)
Foreign currency and derivative gains and other income, net		26,104			144,382			34,718			192,791
Gains (losses) on early extinguishment of debt, net		-			(730	)		3,275			(18,895	)
Total other income (expense)		(53,072	)		162,953			(101,415	)		206,095
Earnings before income taxes		1,358,718			696,270			1,889,418			1,945,214
Income tax expense		(79,227	)		(49,834	)		(111,298	)		(79,056	)
Consolidated net earnings		1,279,491			646,436			1,778,120			1,866,158
Less net earnings attributable to noncontrolling interests		63,463			35,043			97,469			103,980
Net earnings attributable to controlling interests		1,216,028			611,393			1,680,651			1,762,178
Less preferred stock dividends		1,475			1,538			2,928			3,069
Net earnings attributable to common stockholders	$	1,214,553		$	609,855		$	1,677,723		$	1,759,109

Weighted average common shares outstanding – Basic		924,191			740,637			924,087			740,506
Weighted average common shares outstanding – Diluted		951,706			766,074			951,638			765,859

Net earnings per share attributable to common stockholders – Basic	$	1.31		$	0.82		$	1.82		$	2.38

Net earnings per share attributable to common stockholders – Diluted	$	1.31		$	0.82		$	1.81		$	2.36

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

Index

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Consolidated net earnings	$	1,279,491		$	646,436		$	1,778,120		$	1,866,158
Other comprehensive income:
Foreign currency translation gains, net		166,049			332,517			137,948			522,040
Unrealized gains (losses) on derivative contracts, net		2,153			28,979			(23,700	)		42,328
Comprehensive income		1,447,693			1,007,932			1,892,368			2,430,526
Net earnings attributable to noncontrolling interests		(63,463	)		(35,043	)		(97,469	)		(103,980	)
Other comprehensive income attributable to noncontrolling interests		(4,148	)		(9,137	)		(3,009	)		(14,876	)
Comprehensive income attributable to common stockholders	$	1,380,082		$	963,752		$	1,791,890		$	2,311,670

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

Index

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands)

Three Months Ended June 30, 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			Income (Loss)			Earnings			Interests			Equity
Balance at April 1, 2023	$	63,948		923,453	$	9,235	$	54,058,036		$	(496,424	)	$	(799,577	)	$	4,630,011		$	57,465,229
Consolidated net earnings		-		-		-		-			-			1,216,028			63,463			1,279,491
Effect of equity compensation plans		-		36		-		21,687			-			-			32,410			54,097
Capital contributions		-		-		-		-			-			-			1,698			1,698
Redemption of noncontrolling interests		-		372		4		21,494			-			-			(45,698	)		(24,200	)
Foreign currency translation gains, net		-		-		-		-			161,967			-			4,082			166,049
Unrealized gains on derivative contracts, net		-		-		-		-			2,087			-			66			2,153
Reallocation of equity		-		-		-		14,378			-			-			(14,378	)		-
Dividends ($0.87 per common share) and other distributions		-		-		-		(3	)		-			(807,230	)		(59,460	)		(866,693	)
Balance at June 30, 2023	$	63,948		923,861	$	9,239	$	54,115,592		$	(332,370	)	$	(390,779	)	$	4,612,194		$	58,077,824


			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 April 1, 2022	$	63,948		740,189	$	7,402	$	35,546,263	$	(681,120	)	$	(764,425	)	$	4,290,134		$	38,462,202
Consolidated net earnings		-		-		-		-		-			611,393			35,043			646,436
Effect of equity compensation plans		-		36		1		16,900		-			-			24,452			41,353
Capital contributions		-		-		-		-		-			-			10,649			10,649
Redemption of noncontrolling interests		-		135		1		6,272		-			-			(29,992	)		(23,719	)
Foreign currency translation gains, net		-		-		-		-		324,163			-			8,354			332,517
Unrealized gains on derivative contracts, net		-		-		-		-		28,196			-			783			28,979
Reallocation of equity		-		-		-		4,505		-			-			(4,505	)		-
Dividends ($0.79 per common share) and other distributions		-		-		-		-		-			(587,732	)		(36,747	)		(624,479	)
Balance at June 30, 2022	$	63,948		740,360	$	7,404	$	35,573,940	$	(328,761	)	$	(740,764	)	$	4,298,171		$	38,873,938

Six Months Ended June 30, 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			Income (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		-		-		-		-			-			1,680,651			97,469			1,778,120
Effect of equity compensation plans		-		324		4		35,155			-			-			83,826			118,985
Capital contributions		-		-		-		-			-			-			1,698			1,698
Redemption of noncontrolling interests		-		395		4		22,798			-			-			(89,271	)		(66,469	)
Foreign currency translation gains, net		-		-		-		-			134,372			-			3,576			137,948
Unrealized losses on derivative contracts, net		-		-		-		-			(23,133	)		-			(567	)		(23,700	)
Reallocation of equity		-		-		-		(7,765	)		-			-			7,765			-
Dividends ($1.74 per common share) and other distributions		-		-		-		(3	)		-			(1,613,735	)		(118,113	)		(1,731,851	)
Balance at June 30, 2023	$	63,948		923,861	$	9,239	$	54,115,592		$	(332,370	)	$	(390,779	)	$	4,612,194		$	58,077,824


			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		-		-		-		-			-			1,762,178			103,980			1,866,158
Effect of equity compensation plans		-		326		4		21,117			-			-			60,399			81,520
Capital contributions		-		-		-		-			-			-			11,083			11,083
Redemption of noncontrolling interests		-		207		2		9,572			-			-			(59,562	)		(49,988	)
Foreign currency translation gains, net		-		-		-		-			508,315			-			13,725			522,040
Unrealized gains on derivative contracts, net		-		-		-		-			41,177			-			1,151			42,328
Reallocation of equity		-		-		-		(18,347	)		-			-			18,347			-
Dividends ($1.58 per common share) and other distributions		-		-		-		(10	)		-			(1,175,114	)		(166,289	)		(1,341,413	)
Balance at June 30, 2022	$	63,948		740,360	$	7,404	$	35,573,940		$	(328,761	)	$	(740,764	)	$	4,298,171		$	38,873,938

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

Index

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Six Months Ended
	June 30,
	2023			2022
Operating activities:
Consolidated net earnings	$	1,778,120		$	1,866,158
Adjustments to reconcile net earnings to net cash provided by operating activities:
Straight-lined rents and amortization of above and below market leases		(292,799	)		(72,666	)
Equity-based compensation awards		152,774			78,352
Depreciation and amortization		1,204,535			798,960
Earnings from unconsolidated entities, net		(146,421	)		(156,556	)
Operating distributions from unconsolidated entities		235,656			192,210
Increase in operating receivables from unconsolidated entities		(625,211	)		(34,951	)
Amortization of debt discounts and debt issuance costs, net		35,755			4,275
Gains on dispositions of development properties and land, net		(184,877	)		(316,008	)
Gains on other dispositions of investments in real estate, net		(28,808	)		(584,835	)
Unrealized foreign currency and derivative losses (gains), net		12,023			(154,965	)
Losses (gains) on early extinguishment of debt, net		(3,275	)		18,895
Deferred income tax expense		5,295			17,557
Decrease in other assets		122,475			99,859
Increase (decrease) in accounts payable and accrued expenses and other liabilities		64,193			(110,808	)
Net cash provided by operating activities		2,329,435			1,645,477
Investing activities:
Real estate development		(1,711,632	)		(1,462,010	)
Real estate acquisitions		(3,449,083	)		(1,869,426	)
Duke Transaction, net of cash acquired		(22,132	)		-
Tenant improvements and lease commissions on previously leased space		(168,054	)		(175,480	)
Property improvements		(73,800	)		(55,816	)
Proceeds from dispositions and contributions of real estate		774,625			1,653,597
Investments in and advances to unconsolidated entities		(172,843	)		(112,848	)
Return of investment from unconsolidated entities		288,501			37,252
Proceeds from the settlement of net investment hedges		21,231			26,487
Payments on the settlement of net investment hedges		-			(771	)
Net cash used in investing activities		(4,513,187	)		(1,959,015	)
Financing activities:
Dividends paid on common and preferred stock		(1,613,735	)		(1,175,114	)
Noncontrolling interests contributions		1,698			11,083
Noncontrolling interests distributions		(118,113	)		(166,289	)
Settlement of noncontrolling interests		(66,469	)		(49,988	)
Tax paid with shares withheld		(18,477	)		(23,970	)
Debt and equity issuance costs paid		(51,619	)		(28,119	)
Net proceeds from (payments on) credit facilities		(917,985	)		127,454
Repurchase of and payments on debt		(268,576	)		(751,114	)
Proceeds from the issuance of debt		5,505,222			2,285,021
Net cash provided by financing activities		2,451,946			228,964

Effect of foreign currency exchange rate changes on cash		(15,567	)		(34,028	)
Net increase (decrease) in cash and cash equivalents		252,627			(118,602	)
Cash and cash equivalents, beginning of period		278,483			556,117
Cash and cash equivalents, end of period	$	531,110		$	437,515

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

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

Index

PROLOGIS, L.P.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)



	June 30, 2023		December 31, 2022
ASSETS
Investments in real estate properties	$	86,550,420	$	81,623,396
Less accumulated depreciation		9,977,207		9,036,085
Net investments in real estate properties		76,573,213		72,587,311
Investments in and advances to unconsolidated entities		9,931,261		9,698,898
Assets held for sale or contribution		616,571		531,257
Net investments in real estate		87,121,045		82,817,466

Cash and cash equivalents		531,110		278,483
Other assets		4,739,886		4,801,499
Total assets	$	92,392,041	$	87,897,448

LIABILITIES AND CAPITAL
Liabilities:
Debt	$	28,129,473	$	23,875,961
Accounts payable and accrued expenses		1,582,205		1,711,885
Other liabilities		4,602,539		4,446,509
Total liabilities		34,314,217		30,034,355

Capital:
Partners’ capital:
General partner – preferred		63,948		63,948
General partner – common		53,401,682		53,173,334
Limited partners – common		840,369		843,263
Limited partners – Class A common		469,424		464,781
Total partners’ capital		54,775,423		54,545,326
Noncontrolling interests		3,302,401		3,317,767
Total capital		58,077,824		57,863,093
Total liabilities and capital	$	92,392,041	$	87,897,448

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

Index

PROLOGIS, L.P.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per unit amounts)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Revenues:
Rental	$	1,651,454		$	1,093,452		$	3,285,224		$	2,170,313
Strategic capital		799,035			156,239			933,736			290,164
Development management and other		482			2,389			598			10,731
Total revenues		2,450,971			1,252,080			4,219,558			2,471,208
Expenses:
Rental		387,938			270,465			800,492			546,139
Strategic capital		150,906			57,052			222,615			108,863
General and administrative		95,647			83,114			195,424			157,760
Depreciation and amortization		602,168			402,313			1,204,535			798,960
Other		12,160			11,621			19,344			21,210
Total expenses		1,248,819			824,565			2,442,410			1,632,932

Operating income before gains on real estate transactions, net		1,202,152			427,515			1,777,148			838,276
Gains on dispositions of development properties and land, net		184,877			105,802			184,877			316,008
Gains on other dispositions of investments in real estate, net		24,761			-			28,808			584,835
Operating income		1,411,790			533,317			1,990,833			1,739,119

Other income (expense):
Earnings from unconsolidated entities, net		70,642			79,594			146,421			156,556
Interest expense		(149,818	)		(60,293	)		(285,829	)		(124,357	)
Foreign currency and derivative gains and other income, net		26,104			144,382			34,718			192,791
Gains (losses) on early extinguishment of debt, net		-			(730	)		3,275			(18,895	)
Total other income (expense)		(53,072	)		162,953			(101,415	)		206,095
Earnings before income taxes		1,358,718			696,270			1,889,418			1,945,214
Income tax expense		(79,227	)		(49,834	)		(111,298	)		(79,056	)
Consolidated net earnings		1,279,491			646,436			1,778,120			1,866,158
Less net earnings attributable to noncontrolling interests		32,863			17,612			55,220			54,278
Net earnings attributable to controlling interests		1,246,628			628,824			1,722,900			1,811,880
Less preferred unit distributions		1,475			1,538			2,928			3,069
Net earnings attributable to common unitholders	$	1,245,153		$	627,286		$	1,719,972		$	1,808,811

Weighted average common units outstanding – Basic		939,250			753,610			939,276			753,420
Weighted average common units outstanding – Diluted		951,706			766,074			951,638			765,859

Net earnings per unit attributable to common unitholders – Basic	$	1.31		$	0.82		$	1.82		$	2.38

Net earnings per unit attributable to common unitholders – Diluted	$	1.31		$	0.82		$	1.81		$	2.36

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

Index

PROLOGIS, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Consolidated net earnings	$	1,279,491		$	646,436		$	1,778,120		$	1,866,158
Other comprehensive income:
Foreign currency translation gains, net		166,049			332,517			137,948			522,040
Unrealized gains (losses) on derivative contracts, net		2,153			28,979			(23,700	)		42,328
Comprehensive income		1,447,693			1,007,932			1,892,368			2,430,526
Net earnings attributable to noncontrolling interests		(32,863	)		(17,612	)		(55,220	)		(54,278	)
Other comprehensive loss (income) attributable to noncontrolling interests		(93	)		640			(280	)		485
Comprehensive income attributable to common unitholders	$	1,414,737		$	990,960		$	1,836,868		$	2,376,733

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

Index

PROLOGIS, L.P.

CONSOLIDATED STATEMENTS OF CAPITAL

(Unaudited)

(In thousands)

Three Months Ended June 30, 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 April 1, 2023		1,279	$	63,948		923,453	$	52,771,270			15,097		$	862,734			8,595	$	462,634		$	3,304,643		$	57,465,229
Consolidated net earnings		-		-		-		1,216,028			-			19,971			-		10,629			32,863			1,279,491
Effect of equity compensation plans		-		-		36		21,687			-			32,410			-		-			-			54,097
Capital contributions		-		-		-		-			-			-			-		-			1,698			1,698
Redemption of limited partners units		-		-		372		21,498			(559	)		(45,698	)		-		-			-			(24,200	)
Foreign currency translation gains, net		-		-		-		161,967			-			2,566			-		1,423			93			166,049
Unrealized gains on derivative contracts, net		-		-		-		2,087			-			48			-		18			-			2,153
Reallocation of capital		-		-		-		14,378			-			(14,656	)		-		278			-			-
Distributions ($0.87 per common unit) and other		-		-		-		(807,233	)		-			(17,006	)		-		(5,558	)		(36,896	)		(866,693	)
Balance at June 30, 2023		1,279	$	63,948		923,861	$	53,401,682			14,538		$	840,369			8,595	$	469,424		$	3,302,401		$	58,077,824


	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 April 1, 2022		1,279	$	63,948		740,189	$	34,108,120			12,949		$	596,682			8,595	$	369,402		$	3,324,050		$	38,462,202
Consolidated net earnings		-		-		-		611,393			-			10,823			-		6,608			17,612			646,436
Effect of equity compensation plans		-		-		36		16,901			1			24,452			-		-			-			41,353
Capital contributions		-		-		-		-			-			-			-		-			10,649			10,649
Redemption of limited partners units		-		-		135		6,273			(288	)		(29,992	)		-		-			-			(23,719	)
Foreign currency translation gains (losses), net		-		-		-		324,163			-			5,472			-		3,522			(640	)		332,517
Unrealized gains on derivative contracts, net		-		-		-		28,196			-			477			-		306			-			28,979
Reallocation of capital		-		-		-		4,505			-			(4,752	)		-		247			-			-
Distributions ($0.79 per common unit) and other		-		-		-		(587,732	)		-			(12,938	)		-		(5,559	)		(18,250	)		(624,479	)
Balance at June 30, 2022		1,279	$	63,948		740,360	$	34,511,819			12,662		$	590,224			8,595	$	374,526		$	3,333,421		$	38,873,938

Six Months Ended June 30, 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		-		-		-		1,680,651			-			27,575			-		14,674			55,220			1,778,120
Effect of equity compensation plans		-		-		324		35,159			843			83,826			-		-			-			118,985
Capital contributions		-		-		-		-			-			-			-		-			1,698			1,698
Redemption of limited partners units		-		-		395		22,802			(945	)		(89,271	)		-		-			-			(66,469	)
Foreign currency translation gains, net		-		-		-		134,372			-			2,115			-		1,181			280			137,948
Unrealized losses on derivative contracts, net		-		-		-		(23,133	)		-			(364	)		-		(203	)		-			(23,700	)
Reallocation of capital		-		-		-		(7,765	)		-			7,657			-		108			-			-
Distributions ($1.74 per common unit) and other		-		-		-		(1,613,738	)		-			(34,432	)		-		(11,117	)		(72,564	)		(1,731,851	)
Balance at June 30, 2023		1,279	$	63,948		923,861	$	53,401,682			14,538		$	840,369			8,595	$	469,424		$	3,302,401		$	58,077,824


	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		-		-		-		1,762,178			-			30,679			-		19,023			54,278			1,866,158
Effect of equity compensation plans		-		-		326		21,121			838			60,399			-		-			-			81,520
Capital contributions		-		-		-		-			-			-			-		-			11,083			11,083
Redemption of limited partners units		-		-		207		9,574			(530	)		(59,562	)		-		-			-			(49,988	)
Foreign currency translation gains (losses), net		-		-		-		508,315			-			8,694			-		5,516			(485	)		522,040
Unrealized gains on derivative contracts, net		-		-		-		41,177			-			704			-		447			-			42,328
Reallocation of capital		-		-		-		(18,347	)		-			18,392			-		(45	)		-			-
Distributions ($1.58 per common unit) and other		-		-		-		(1,175,124	)		-			(26,179	)		-		(11,117	)		(128,993	)		(1,341,413	)
Balance at June 30, 2022		1,279	$	63,948		740,360	$	34,511,819			12,662		$	590,224			8,595	$	374,526		$	3,333,421		$	38,873,938

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

Index

PROLOGIS, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Six Months Ended
	June 30,
	2023			2022
Operating activities:
Consolidated net earnings	$	1,778,120		$	1,866,158
Adjustments to reconcile net earnings to net cash provided by operating activities:
Straight-lined rents and amortization of above and below market leases		(292,799	)		(72,666	)
Equity-based compensation awards		152,774			78,352
Depreciation and amortization		1,204,535			798,960
Earnings from unconsolidated entities, net		(146,421	)		(156,556	)
Operating distributions from unconsolidated entities		235,656			192,210
Increase in operating receivables from unconsolidated entities		(625,211	)		(34,951	)
Amortization of debt discounts and debt issuance costs, net		35,755			4,275
Gains on dispositions of development properties and land, net		(184,877	)		(316,008	)
Gains on other dispositions of investments in real estate, net		(28,808	)		(584,835	)
Unrealized foreign currency and derivative losses (gains), net		12,023			(154,965	)
Losses (gains) on early extinguishment of debt, net		(3,275	)		18,895
Deferred income tax expense		5,295			17,557
Decrease in other assets		122,475			99,859
Increase (decrease) in accounts payable and accrued expenses and other liabilities		64,193			(110,808	)
Net cash provided by operating activities		2,329,435			1,645,477
Investing activities:
Real estate development		(1,711,632	)		(1,462,010	)
Real estate acquisitions		(3,449,083	)		(1,869,426	)
Duke Transaction, net of cash acquired		(22,132	)		-
Tenant improvements and lease commissions on previously leased space		(168,054	)		(175,480	)
Property improvements		(73,800	)		(55,816	)
Proceeds from dispositions and contributions of real estate		774,625			1,653,597
Investments in and advances to unconsolidated entities		(172,843	)		(112,848	)
Return of investment from unconsolidated entities		288,501			37,252
Proceeds from the settlement of net investment hedges		21,231			26,487
Payments on the settlement of net investment hedges		-			(771	)
Net cash used in investing activities		(4,513,187	)		(1,959,015	)
Financing activities:
Distributions paid on common and preferred units		(1,659,284	)		(1,212,410	)
Noncontrolling interests contributions		1,698			11,083
Noncontrolling interests distributions		(72,564	)		(128,993	)
Redemption of common limited partnership units		(66,469	)		(49,988	)
Tax paid with shares of the Parent withheld		(18,477	)		(23,970	)
Debt and equity issuance costs paid		(51,619	)		(28,119	)
Net proceeds from (payments on) credit facilities		(917,985	)		127,454
Repurchase of and payments on debt		(268,576	)		(751,114	)
Proceeds from the issuance of debt		5,505,222			2,285,021
Net cash provided by financing activities		2,451,946			228,964

Effect of foreign currency exchange rate changes on cash		(15,567	)		(34,028	)
Net increase (decrease) in cash and cash equivalents		252,627			(118,602	)
Cash and cash equivalents, beginning of period		278,483			556,117
Cash and cash equivalents, end of period	$	531,110		$	437,515

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

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

Index

PROLOGIS, INC. AND PROLOGIS, L.P.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. GENERAL

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

For each share of preferred or common stock the Parent issues, the OP issues a corresponding preferred or common partnership unit, as applicable, to the Parent in exchange for the contribution of the proceeds from the stock issuance. At June 30, 2023, the Parent owned a 97.61% common general partnership interest in the OP and substantially all of the preferred units in the OP. The remaining 2.39% 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.

Index

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 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
	Jun 30,		Dec 31,		Jun 30,		Dec 31,		Jun 30,		Dec 31,
	2023		2022		2023		2022		2023		2022
Operating properties:
Buildings and improvements		619,526		597,362		2,926		2,825	$	51,200,167	$	48,650,334
Improved land										22,343,052		20,388,461
Development portfolio, including land costs:
Prestabilized		12,050		4,874		33		15		1,460,258		597,553
Properties under development		27,603		44,011		82		121		2,759,500		3,614,601
Land (1)										3,620,821		3,338,121
Other real estate investments (2)										5,166,622		5,034,326
Total investments in real estate properties										86,550,420		81,623,396
Less accumulated depreciation										9,977,207		9,036,085
Net investments in real estate properties									$	76,573,213	$	72,587,311

(1)

At June 30, 2023 and December 31, 2022, our land was comprised of 7,336 and 7,188 acres, respectively.

(2)

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

Index

Acquisitions

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2023 (1)		2022		2023 (1)		2022
Number of operating properties		76		12		76		13
Square feet		14,941		1,491		14,941		1,794
Acres of land		118		628		238		1,206
Acquisition cost of net investments in real estate, excluding other real estate investments	$	3,470,086	$	983,741	$	3,510,560	$	1,248,226

Acquisition cost of other real estate investments	$	34,096	$	379,803	$	40,281	$	603,214

(1)

On June 29, 2023, we acquired a real estate portfolio comprised of 70 operating properties in the U.S., aggregating 13.8 million square feet, for cash consideration of $3.1 billion.

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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Dispositions of development properties and land, net (1)
Number of properties		5		4		5		11
Square feet		2,122		1,180		2,122		3,763
Net proceeds	$	465,957	$	235,194	$	465,957	$	677,749
Gains on dispositions of development properties and land, net	$	184,877	$	105,802	$	184,877	$	316,008

Other dispositions of investments in real estate, net (2)
Number of properties		-		-		5		102
Square feet		-		-		360		8,676
Net proceeds	$	314,565	$	-	$	371,573	$	1,264,280
Gains on other dispositions of investments in real estate, net	$	24,761	$	-	$	28,808	$	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.

(2)

During the three and six months ended June 30, 2023, we sold our ownership interest in an unconsolidated office joint venture.

Leases

We recognized lease right-of-use assets of $726.1 million and $735.4 million within Other Assets and lease liabilities of $637.3 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 June 30, 2023 and December 31, 2022, respectively.

NOTE 4. UNCONSOLIDATED ENTITIES

Summary of Investments

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

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

Index

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


	June 30,		December 31,
	2023		2022
Unconsolidated co-investment ventures	$	8,795,399	$	8,073,927
Other ventures (1)		1,135,862		1,624,971
Total	$	9,931,261	$	9,698,898

(1)

Included in other ventures is our $177.9 million and $162.6 million investment in early and growth-stage companies that are focused on emerging technologies in the logistics sector at June 30, 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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Recurring fees	$	113,338	$	115,806	$	226,895	$	229,043
Transactional fees		13,522		17,519		28,602		34,748
Promote revenue (1)		669,352		19,514		669,672		19,514
Total strategic capital revenues from unconsolidated co-investment ventures (2)	$	796,212	$	152,839	$	925,169	$	283,305

(1)

Includes promote revenue earned from unconsolidated co-investment ventures principally in the U.S. and Mexico during the three and six months ended June 30, 2023.

(2)

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 (2)						Total
At:	Jun 30, 2023			Dec 31, 2022			Jun 30, 2023			Dec 31, 2022			Jun 30, 2023			Dec 31, 2022			Jun 30, 2023			Dec 31, 2022			Jun 30, 2023			Dec 31, 2022
Key property information:
Ventures		1			1			2			2			2			2			4			3			9			8
Operating properties		739			739			264			260			994			989			223			217			2,220			2,205
Square feet		123			123			61			60			220			219			92			89			496			491

Financial position:
Total assets ($)		12,804			12,617			4,190			3,744			22,958			22,502			9,729			9,964			49,681			48,827
Third-party debt ($)		3,718			3,468			918			919			5,587			5,315			3,836			3,811			14,059			13,513
Total liabilities ($)		5,075			4,143			1,056			1,011			7,602			7,292			4,244			4,279			17,977			16,725

Our investment balance ($) (3)		2,990			2,398			1,145			1,070			3,868			3,786			792			820			8,795			8,074
Our weighted average ownership (4)		26.2	%		26.2	%		39.1	%		41.0	%		31.3	%		31.0	%		15.2	%		15.2	%		27.5	%		27.4	%

	U.S.						Other Americas (1)						Europe						Asia						Total
Operating Information:	Jun 30, 2023			Jun 30, 2022			Jun 30, 2023			Jun 30, 2022			Jun 30, 2023			Jun 30, 2022			Jun 30, 2023			Jun 30, 2022			Jun 30, 2023			Jun 30, 2022
For the three months ended:
Total revenues ($)		329			291			102			96			412			354			162			157			1,005			898
Net earnings ($)		75			68			47			31			91			127			1			32			214			258

Our earnings from unconsolidated co-investment ventures, net ($)		20			19			15			10			30			39			1			5			66			73

For the six months ended:
Total revenues ($)		653			577			205			185			826			710			327			326			2,011			1,798
Net earnings ($)		176			140			90			64			160			231			28			66			454			501

Our earnings from unconsolidated co-investment ventures, net ($)		47			38			31			22			51			70			5			11			134			141

(1)

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

(2)

In April 2023, we formed Prologis Japan Core Logistics Fund ("PJLF") with two investors through the initial contribution of assets for ¥30.3 billion ($222.8 million) for which we received cash and equity ownership. We account for our investment in PJLF under the equity method of accounting. At June 30, 2023 our ownership interest was 16.3% and the remaining equity commitments were ¥104.8 billion ($724.6 million) and ¥17.0 billion ($117.7 million) our share.

Index

(3)

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 June 30, 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 ($1.0 billion and $193.7 million, respectively); and (iv) customer security deposits retained subsequent to property contributions to Nippon Prologis REIT, Inc. The receivables balance at June 30, 2023 was primarily due to the promote revenue we earned from Prologis Targeted U.S. Logistics Fund during the second quarter of 2023.

(4)

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.

Equity Commitments Related to Certain Unconsolidated Co-Investment Ventures

At June 30, 2023, our outstanding equity commitments were $399.7 million, principally for Prologis China Logistics Venture and PJLF. The equity commitments expire from 2023 to 2033 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 June 30, 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):


	June 30,		December 31,
	2023		2022
Number of operating properties		17		21
Square feet		5,619		4,061
Total assets held for sale or contribution	$	616,571	$	531,257
Total liabilities associated with assets held for sale or contribution – included in Other Liabilities	$	15,060	$	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):


	June 30, 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	5.4%		3.0	$	629,512	4.2%		2.8	$	1,538,461
Senior notes	2.9%		10.7		25,073,147	2.3%		10.3		19,786,253
Term loans and unsecured other	2.6%		4.4		2,058,732	2.3%		4.9		2,106,592
Secured mortgage	3.7%		4.0		368,082	3.0%		4.3		444,655
Total	2.9%		10.0	$	28,129,473	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.

Index

(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:


	June 30, 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	%	$	1,293,757		4.6	%		2.1	%	$	1,228,483		5.1	%
Canadian dollar		4.9	%		830,034		2.9	%		4.5	%		814,491		3.4	%
Euro		2.0	%		9,891,790		35.2	%		1.3	%		7,991,301		33.5	%
Japanese yen		1.0	%		3,034,906		10.8	%		1.0	%		3,308,009		13.9	%
U.S. dollar		4.0	%		13,078,986		46.5	%		3.6	%		10,533,677		44.1	%
Total		2.9	%	$	28,129,473		100.0	%		2.5	%	$	23,875,961		100.0	%

Credit Facilities

The following table summarizes information about our available liquidity at June 30, 2023 (in millions):



Aggregate lender commitments
Credit facilities	$	6,500
Less:
Borrowings outstanding		630
Outstanding letters of credit		37
Current availability		5,833
Cash and cash equivalents		531
Total liquidity	$	6,364

We have a global senior credit facility (the “2022 Global Facility”) with a borrowing capacity of $3.0 billion (subject to currency fluctuations). On April 5, 2023, we amended and restated our other global senior credit facility (the “2021 Global Facility”) as the 2023 Global Facility and upsized its borrowing capacity to $3.0 billion (subject to currency fluctuations). 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. The 2022 Global Facility is scheduled to initially mature in June 2026 and the 2023 Global Facility in June 2027; however, we can extend the maturity date for each facility by six months on two occasions, subject to the payment of extension fees. We also have the ability to increase each credit 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 ($380.3 million at June 30, 2023). We have the ability to increase the borrowing capacity of the Yen Credit Facility to ¥75.0 billion ($518.5 million at June 30, 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 2022 Global Facility, the 2023 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.

Senior Notes

The following table summarizes the issuances of senior notes during the six months ended June 30, 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
May	€	750,000	$	808,425	4.6%		10.0	May 2033
June	$	2,000,000	$	2,000,000	5.1%		13.2	June 2028 – 2053
Total			$	5,362,550	4.7%		13.9

(1)

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

Index

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 June 30, 2023 (in thousands):


	Unsecured
	Credit		Senior			Term Loans			Secured
Maturity	Facilities		Notes			and Other			Mortgage			Total
2023 (1)	$	-	$	-		$	-		$	3,409		$	3,409
2024 (1) (2)		17,285		325,980			-			97,254			440,519
2025 (3)		-		34,570			727,097			163,012			924,679
2026 (2)		563,330		1,308,468			587,746			3,980			2,463,524
2027 (2)		48,897		1,727,445			49,477			4,156			1,829,975
Thereafter		-		22,283,329			697,784			89,135			23,070,248
Subtotal		629,512		25,679,792			2,062,104			360,946			28,732,354
Unamortized premiums (discounts), net		-		(492,085	)		828			8,335			(482,922	)
Unamortized debt issuance costs, net		-		(114,560	)		(4,200	)		(1,199	)		(119,959	)
Total	$	629,512	$	25,073,147		$	2,058,732		$	368,082		$	28,129,473

(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, 2026 and 2027 maturities were the Yen Credit Facility, the 2022 Global Facility and 2023 Global Facility, respectively, all of which can be extended for one year beyond the maturity date, subject to the payment of extension fees.

(3)

Included in the 2025 maturities was a Canadian term loan ($226.1 million at June 30, 2023) that can be extended until 2027.

Financial Debt Covenants

Our senior notes, term loans and Credit Facilities outstanding at June 30, 2023 were subject to certain financial covenants under their related documents. At June 30, 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.

Index

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


	Our Ownership Percentage						Noncontrolling Interests				Total Assets				Total Liabilities
	Jun 30, 2023			Dec 31, 2022			Jun 30, 2023		Dec 31, 2022		Jun 30, 2023		Dec 31, 2022		Jun 30, 2023		Dec 31, 2022
Prologis U.S. Logistics Venture		55.0	%		55.0	%	$	3,156,855	$	3,182,858	$	7,158,428	$	7,225,438	$	151,335	$	158,453
Other consolidated entities (1)	various			various				145,546		134,909		1,865,798		1,737,311		255,965		259,524
Prologis, L.P.								3,302,401		3,317,767		9,024,226		8,962,749		407,300		417,977
Limited partners in Prologis, L.P. (2)(3)								1,309,793		1,308,044		-		-		-		-
Prologis, Inc.							$	4,612,194	$	4,625,811	$	9,024,226	$	8,962,749	$	407,300	$	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 June 30, 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 June 30, 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, 9.3 million and 10.0 million shares of the Parent’s common stock, at June 30, 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 5.2 million and 4.6 million shares of the Parent’s common stock at June 30, 2023 and December 31, 2022, respectively. See further discussion of LTIP Units in Note 8.

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.

Index

Summary of Award Activity

RSUs

The following table summarizes the activity for RSUs for the six months ended June 30, 2023 (units in thousands):


				Weighted Average
	Unvested RSUs			Grant Date Fair Value
Balance at January 1, 2023		1,533		$	100.59
Granted		808			97.86
Vested and distributed		(372	)		117.38
Forfeited		(31	)		108.84
Balance at June 30, 2023		1,938		$	96.10

LTIP Units

The following table summarizes the activity for LTIP Units for the six months ended June 30, 2023 (units in thousands):


	Unvested			Weighted Average
	LTIP Units			Grant Date Fair Value
Balance at January 1, 2023		4,214		$	73.31
Granted		1,355			81.06
Vested LTIP Units		(688	)		106.00
Balance at June 30, 2023		4,881		$	70.86

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				Six Months Ended
	June 30,				June 30,
Prologis, Inc.	2023		2022		2023		2022
Net earnings attributable to common stockholders – Basic	$	1,214,553	$	609,855	$	1,677,723	$	1,759,109
Net earnings attributable to exchangeable limited partnership units (1)		30,700		17,518		42,443		49,856
Adjusted net earnings attributable to common stockholders – Diluted	$	1,245,253	$	627,373	$	1,720,166	$	1,808,965

Weighted average common shares outstanding – Basic		924,191		740,637		924,087		740,506
Incremental weighted average effect on exchange of limited partnership units (1)		23,453		21,289		23,570		21,221
Incremental weighted average effect of equity awards		4,062		4,148		3,981		4,132