pld-10q_20220630.htm

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, 2022

☐	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 August 4, 2022, was approximately 740,378,000.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended June 30, 2022, 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, 2022, the Parent owned 97.28% common general partnership interest in the OP and substantially all of the preferred units in the OP. The remaining 2.72% 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, 2022 and December 31, 2021		1
		Consolidated Statements of Income – Three and Six Months Ended June 30, 2022 and 2021		2
		Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2022 and 2021		3
		Consolidated Statements of Equity – Three and Six Months Ended June 30, 2022 and 2021		4
		Consolidated Statements of Cash Flows – Six Months Ended June 30, 2022 and 2021		5
	Prologis, L.P.:
		Consolidated Balance Sheets – June 30, 2022 and December 31, 2021		6
		Consolidated Statements of Income – Three and Six Months Ended June 30, 2022 and 2021		7
		Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2022 and 2021		8
		Consolidated Statements of Capital – Three and Six Months Ended June 30, 2022 and 2021		9
		Consolidated Statements of Cash Flows – Six Months Ended June 30, 2022 and 2021		10
	Prologis, Inc. and Prologis, L.P.:
		Notes to the Consolidated Financial Statements		11
		Note 1. General		11
		Note 2. Real Estate		12
		Note 3. Unconsolidated Entities		13
		Note 4. Assets Held for Sale or Contribution		15
		Note 5. Debt		15
		Note 6. Noncontrolling Interests		17
		Note 7. Long-Term Compensation		18
		Note 8. Earnings Per Common Share or Unit		19
		Note 9. Financial Instruments and Fair Value Measurements		20
		Note 10. Business Segments		24
		Note 11. 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		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)


	June 30, 2022			December 31, 2021
ASSETS
Investments in real estate properties	$	55,271,030		$	53,005,190
Less accumulated depreciation		8,251,995			7,668,187
Net investments in real estate properties		47,019,035			45,337,003
Investments in and advances to unconsolidated entities		8,443,644			8,610,958
Assets held for sale or contribution		403,617			669,688
Net investments in real estate		55,866,296			54,617,649

Cash and cash equivalents		437,515			556,117
Other assets		3,460,006			3,312,454
Total assets	$	59,763,817		$	58,486,220

LIABILITIES AND EQUITY
Liabilities:
Debt	$	18,040,832		$	17,715,054
Accounts payable and accrued expenses		1,042,086			1,252,767
Other liabilities		1,806,961			1,776,189
Total liabilities		20,889,879			20,744,010

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, 2022 and December 31, 2021		63,948			63,948
Common stock; $0.01 par value; 740,360 shares and 739,827 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		7,404			7,398
Additional paid-in capital		35,573,940			35,561,608
Accumulated other comprehensive loss		(328,761	)		(878,253	)
Distributions in excess of net earnings		(740,764	)		(1,327,828	)
Total Prologis, Inc. stockholders’ equity		34,575,767			33,426,873
Noncontrolling interests		4,298,171			4,315,337
Total equity		38,873,938			37,742,210
Total liabilities and equity	$	59,763,817		$	58,486,220

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,
	2022			2021			2022			2021
Revenues:
Rental	$	1,093,452		$	1,014,763		$	2,170,313		$	2,036,419
Strategic capital		156,239			129,387			290,164			249,348
Development management and other		2,389			6,692			10,731			13,391
Total revenues		1,252,080			1,150,842			2,471,208			2,299,158
Expenses:
Rental		270,465			245,133			546,139			523,017
Strategic capital		57,052			45,099			108,863			94,549
General and administrative		83,114			74,342			157,760			152,374
Depreciation and amortization		402,313			392,736			798,960			790,311
Other		11,621			7,194			21,210			10,638
Total expenses		824,565			764,504			1,632,932			1,570,889

Operating income before gains on real estate transactions, net		427,515			386,338			838,276			728,269
Gains on dispositions of development properties and land, net		105,802			187,361			316,008			361,004
Gains on other dispositions of investments in real estate, net		-			127,167			584,835			143,790
Operating income		533,317			700,866			1,739,119			1,233,063

Other income (expense):
Earnings from unconsolidated entities, net		79,594			72,419			156,556			139,468
Interest expense		(60,293	)		(68,412	)		(124,357	)		(139,693	)
Interest and other income, net		6,227			715			7,280			5,461
Foreign currency and derivative gains (losses), net		138,155			(6,080	)		185,511			74,072
Losses on early extinguishment of debt, net		(730	)		-			(18,895	)		(187,453	)
Total other income (expense)		162,953			(1,358	)		206,095			(108,145	)
Earnings before income taxes		696,270			699,508			1,945,214			1,124,918
Income tax expense		(49,834	)		(49,195	)		(79,056	)		(74,912	)
Consolidated net earnings		646,436			650,313			1,866,158			1,050,006
Less net earnings attributable to noncontrolling interests		35,043			50,137			103,980			82,483
Net earnings attributable to controlling interests		611,393			600,176			1,762,178			967,523
Less preferred stock dividends		1,538			1,551			3,069			3,083
Net earnings attributable to common stockholders	$	609,855		$	598,625		$	1,759,109		$	964,440

Weighted average common shares outstanding – Basic		740,637			739,190			740,506			739,105
Weighted average common shares outstanding – Diluted		766,074			764,652			765,859			764,724

Net earnings per share attributable to common stockholders – Basic	$	0.82		$	0.81		$	2.38		$	1.30

Net earnings per share attributable to common stockholders – Diluted	$	0.82		$	0.81		$	2.36		$	1.30

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,
	2022			2021			2022			2021
Consolidated net earnings	$	646,436		$	650,313		$	1,866,158		$	1,050,006
Other comprehensive income (loss):
Foreign currency translation gains (losses), net		332,517			(18,586	)		522,040			153,173
Unrealized gains on derivative contracts, net		28,979			4,810			42,328			9,631
Comprehensive income		1,007,932			636,537			2,430,526			1,212,810
Net earnings attributable to noncontrolling interests		(35,043	)		(50,137	)		(103,980	)		(82,483	)
Other comprehensive loss (income) attributable to noncontrolling interests		(9,137	)		207			(14,876	)		(4,185	)
Comprehensive income attributable to common stockholders	$	963,752		$	586,607		$	2,311,670		$	1,126,142

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, 2022 and 2021

			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

			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, 2021	$	63,948		739,746		$	7,397		$	35,454,066		$	(1,021,551	)	$	(2,495,343	)	$	4,376,686		$	36,385,203
Consolidated net earnings		-		-			-			-			-			600,176			50,137			650,313
Effect of equity compensation plans		-		(780	)		(8	)		9,263			-			-			17,265			26,520
Capital contributions		-		-			-			-			-			-			4,241			4,241
Redemption of noncontrolling interests		-		54			1			2,362			-			-			(76,558	)		(74,195	)
Consolidation of other venture		-		-			-			-			-			-			25,759			25,759
Foreign currency translation losses, net		-		-			-			-			(18,255	)		-			(331	)		(18,586	)
Unrealized gains on derivative contracts, net		-		-			-			-			4,686			-			124			4,810
Reallocation of equity		-		-			-			(32,847	)		-			-			32,847			-
Dividends ($0.63 per common share) and other distributions		-		-			-			(1	)		-			(468,181	)		(55,079	)		(523,261	)
Balance at June 30, 2021	$	63,948		739,020		$	7,390		$	35,432,843		$	(1,035,120	)	$	(2,363,348	)	$	4,375,091		$	36,480,804

Six Months Ended June 30, 2022 and 2021

			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

			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, 2021	$	63,948		739,381		$	7,394		$	35,488,634		$	(1,193,739	)	$	(2,394,690	)	$	4,353,033		$	36,324,580
Consolidated net earnings		-		-			-			-			-			967,523			82,483			1,050,006
Effect of equity compensation plans		-		(420	)		(5	)		13,302			-			-			44,563			57,860
Capital contributions		-		-			-			-			-			-			4,361			4,361
Redemption of noncontrolling interests		-		59			1			2,595			-			-			(108,163	)		(105,567	)
Consolidation of other venture		-		-			-			-			-			-			25,759			25,759
Foreign currency translation gains, net		-		-			-			-			149,244			-			3,929			153,173
Unrealized gains on derivative contracts, net		-		-			-			-			9,375			-			256			9,631
Reallocation of equity		-		-			-			(71,663	)		-			-			71,663			-
Dividends ($1.26 per common share) and other distributions		-		-			-			(25	)		-			(936,181	)		(102,793	)		(1,038,999	)
Balance at June 30, 2021	$	63,948		739,020		$	7,390		$	35,432,843		$	(1,035,120	)	$	(2,363,348	)	$	4,375,091		$	36,480,804

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,
	2022			2021
Operating activities:
Consolidated net earnings	$	1,866,158		$	1,050,006
Adjustments to reconcile net earnings to net cash provided by operating activities:
Straight-lined rents and amortization of above and below market leases		(72,666	)		(72,910	)
Equity-based compensation awards		78,352			58,521
Depreciation and amortization		798,960			790,311
Earnings from unconsolidated entities, net		(156,556	)		(139,468	)
Operating distributions from unconsolidated entities		192,210			196,751
Decrease (increase) in operating receivables from unconsolidated entities		(34,951	)		6,585
Amortization of debt discounts and debt issuance costs, net		4,275			4,168
Gains on dispositions of development properties and land, net		(316,008	)		(361,004	)
Gains on other dispositions of investments in real estate, net		(584,835	)		(143,790	)
Unrealized foreign currency and derivative gains, net		(154,965	)		(83,382	)
Losses on early extinguishment of debt, net		18,895			187,453
Deferred income tax expense		17,557			13,858
Decrease in accounts receivable and other assets		99,859			5,383
Decrease in accounts payable and accrued expenses and other liabilities		(110,808	)		(46,579	)
Net cash provided by operating activities		1,645,477			1,465,903
Investing activities:
Real estate development		(1,462,010	)		(997,328	)
Real estate acquisitions		(1,869,426	)		(830,574	)
Tenant improvements and lease commissions on previously leased space		(175,480	)		(148,037	)
Property improvements		(55,816	)		(41,129	)
Proceeds from dispositions and contributions of real estate		1,653,597			1,829,576
Investments in and advances to unconsolidated entities		(112,848	)		(366,644	)
Return of investment from unconsolidated entities		37,252			46,135
Proceeds from the settlement of net investment hedges		26,487			-
Payments on the settlement of net investment hedges		(771	)		(8,000	)
Net cash used in investing activities		(1,959,015	)		(516,001	)
Financing activities:
Proceeds from issuance of common stock		-			743
Dividends paid on common and preferred stock		(1,175,114	)		(936,181	)
Noncontrolling interests contributions		11,083			4,361
Noncontrolling interests distributions		(166,289	)		(102,793	)
Settlement of noncontrolling interests		(49,988	)		(105,567	)
Tax paid with shares withheld		(23,970	)		(17,472	)
Debt and equity issuance costs paid		(28,119	)		(20,483	)
Net proceeds from (payments on) credit facilities		127,454			(170,230	)
Repurchase of and payments on debt		(751,114	)		(2,185,209	)
Proceeds from the issuance of debt		2,285,021			2,617,854
Net cash provided by (used in) financing activities		228,964			(914,977	)

Effect of foreign currency exchange rate changes on cash		(34,028	)		(31,565	)
Net increase (decrease) in cash and cash equivalents		(118,602	)		3,360
Cash and cash equivalents, beginning of period		556,117			598,086
Cash and cash equivalents, end of period	$	437,515		$	601,446

See Note 11 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, 2022		December 31, 2021
ASSETS
Investments in real estate properties	$	55,271,030	$	53,005,190
Less accumulated depreciation		8,251,995		7,668,187
Net investments in real estate properties		47,019,035		45,337,003
Investments in and advances to unconsolidated entities		8,443,644		8,610,958
Assets held for sale or contribution		403,617		669,688
Net investments in real estate		55,866,296		54,617,649

Cash and cash equivalents		437,515		556,117
Other assets		3,460,006		3,312,454
Total assets	$	59,763,817	$	58,486,220

LIABILITIES AND CAPITAL
Liabilities:
Debt	$	18,040,832	$	17,715,054
Accounts payable and accrued expenses		1,042,086		1,252,767
Other liabilities		1,806,961		1,776,189
Total liabilities		20,889,879		20,744,010

Capital:
Partners’ capital:
General partner – preferred		63,948		63,948
General partner – common		34,511,819		33,362,925
Limited partners – common		590,224		557,097
Limited partners – Class A common		374,526		360,702
Total partners’ capital		35,540,517		34,344,672
Noncontrolling interests		3,333,421		3,397,538
Total capital		38,873,938		37,742,210
Total liabilities and capital	$	59,763,817	$	58,486,220

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,
	2022			2021			2022			2021
Revenues:
Rental	$	1,093,452		$	1,014,763		$	2,170,313		$	2,036,419
Strategic capital		156,239			129,387			290,164			249,348
Development management and other		2,389			6,692			10,731			13,391
Total revenues		1,252,080			1,150,842			2,471,208			2,299,158
Expenses:
Rental		270,465			245,133			546,139			523,017
Strategic capital		57,052			45,099			108,863			94,549
General and administrative		83,114			74,342			157,760			152,374
Depreciation and amortization		402,313			392,736			798,960			790,311
Other		11,621			7,194			21,210			10,638
Total expenses		824,565			764,504			1,632,932			1,570,889

Operating income before gains on real estate transactions, net		427,515			386,338			838,276			728,269
Gains on dispositions of development properties and land, net		105,802			187,361			316,008			361,004
Gains on other dispositions of investments in real estate, net		-			127,167			584,835			143,790
Operating income		533,317			700,866			1,739,119			1,233,063

Other income (expense):
Earnings from unconsolidated entities, net		79,594			72,419			156,556			139,468
Interest expense		(60,293	)		(68,412	)		(124,357	)		(139,693	)
Interest and other income, net		6,227			715			7,280			5,461
Foreign currency and derivative gains (losses), net		138,155			(6,080	)		185,511			74,072
Losses on early extinguishment of debt, net		(730	)		-			(18,895	)		(187,453	)
Total other income (expense)		162,953			(1,358	)		206,095			(108,145	)
Earnings before income taxes		696,270			699,508			1,945,214			1,124,918
Income tax expense		(49,834	)		(49,195	)		(79,056	)		(74,912	)
Consolidated net earnings		646,436			650,313			1,866,158			1,050,006
Less net earnings attributable to noncontrolling interests		17,612			33,284			54,278			55,362
Net earnings attributable to controlling interests		628,824			617,029			1,811,880			994,644
Less preferred unit distributions		1,538			1,551			3,069			3,083
Net earnings attributable to common unitholders	$	627,286		$	615,478		$	1,808,811		$	991,561

Weighted average common units outstanding – Basic		753,610			752,065			753,420			751,883
Weighted average common units outstanding – Diluted		766,074			764,652			765,859			764,724

Net earnings per unit attributable to common unitholders – Basic	$	0.82		$	0.81		$	2.38		$	1.30

Net earnings per unit attributable to common unitholders – Diluted	$	0.82		$	0.81		$	2.36		$	1.30

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,
	2022			2021			2022			2021
Consolidated net earnings	$	646,436		$	650,313		$	1,866,158		$	1,050,006
Other comprehensive income (loss):
Foreign currency translation gains (losses), net		332,517			(18,586	)		522,040			153,173
Unrealized gains on derivative contracts, net		28,979			4,810			42,328			9,631
Comprehensive income		1,007,932			636,537			2,430,526			1,212,810
Net earnings attributable to noncontrolling interests		(17,612	)		(33,284	)		(54,278	)		(55,362	)
Other comprehensive loss (income) attributable to noncontrolling interests		640			(319	)		485			157
Comprehensive income attributable to common unitholders	$	990,960		$	602,934		$	2,376,733		$	1,157,605

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, 2022 and 2021

	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

	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, 2021		1,279	$	63,948		739,746		$	31,944,569			12,856		$	555,176			8,595	$	348,048		$	3,473,462		$	36,385,203
Consolidated net earnings		-		-		-			600,176			-			10,397			-		6,456			33,284			650,313
Effect of equity compensation plans		-		-		(780	)		9,255			30			17,265			-		-			-			26,520
Capital contributions		-		-		-			-			-			-			-		-			4,241			4,241
Redemption of limited partners units		-		-		54			2,363			(655	)		(76,558	)		-		-			-			(74,195	)
Consolidation of other venture		-		-		-			-			-			-			-		-			25,759			25,759
Foreign currency translation gains (losses), net		-		-		-			(18,255	)		-			(441	)		-		(209	)		319			(18,586	)
Unrealized gains on derivative contracts, net		-		-		-			4,686			-			74			-		50			-			4,810
Reallocation of capital		-		-		-			(32,847	)		-			34,667			-		(1,820	)		-			-
Distributions ($0.63 per common unit) and other		-		-		-			(468,182	)		-			(10,254	)		-		(5,558	)		(39,267	)		(523,261	)
Balance at June 30, 2021		1,279	$	63,948		739,020		$	32,041,765			12,231		$	530,326			8,595	$	346,967		$	3,497,798		$	36,480,804

Six Months Ended June 30, 2022 and 2021

	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

	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, 2021		1,279	$	63,948		739,381		$	31,907,599			12,142		$	523,954			8,595	$	345,553		$	3,483,526		$	36,324,580
Consolidated net earnings		-		-		-			967,523			-			16,674			-		10,447			55,362			1,050,006
Effect of equity compensation plans		-		-		(420	)		13,297			1,085			44,563			-		-			-			57,860
Capital contributions		-		-		-			-			-			-			-		-			4,361			4,361
Redemption of limited partners units		-		-		59			2,596			(996	)		(108,163	)		-		-			-			(105,567	)
Consolidation of other venture		-		-		-			-			-			-			-		-			25,759			25,759
Foreign currency translation gains (losses), net		-		-					149,244			-			2,470			-		1,616			(157	)		153,173
Unrealized gains on derivative contracts, net		-		-		-			9,375			-			155			-		101			-			9,631
Reallocation of capital		-		-		-			(71,663	)		-			71,297			-		366			-			-
Distributions ($1.26 per common unit) and other		-		-		-			(936,206	)		-			(20,624	)		-		(11,116	)		(71,053	)		(1,038,999	)
Balance at June 30, 2021		1,279	$	63,948		739,020		$	32,041,765			12,231		$	530,326			8,595	$	346,967		$	3,497,798		$	36,480,804

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,
	2022			2021
Operating activities:
Consolidated net earnings	$	1,866,158		$	1,050,006
Adjustments to reconcile net earnings to net cash provided by operating activities:
Straight-lined rents and amortization of above and below market leases		(72,666	)		(72,910	)
Equity-based compensation awards		78,352			58,521
Depreciation and amortization		798,960			790,311
Earnings from unconsolidated entities, net		(156,556	)		(139,468	)
Operating distributions from unconsolidated entities		192,210			196,751
Decrease (increase) in operating receivables from unconsolidated entities		(34,951	)		6,585
Amortization of debt discounts and debt issuance costs, net		4,275			4,168
Gains on dispositions of development properties and land, net		(316,008	)		(361,004	)
Gains on other dispositions of investments in real estate, net		(584,835	)		(143,790	)
Unrealized foreign currency and derivative gains, net		(154,965	)		(83,382	)
Losses on early extinguishment of debt, net		18,895			187,453
Deferred income tax expense		17,557			13,858
Decrease in accounts receivable and other assets		99,859			5,383
Decrease in accounts payable and accrued expenses and other liabilities		(110,808	)		(46,579	)
Net cash provided by operating activities		1,645,477			1,465,903
Investing activities:
Real estate development		(1,462,010	)		(997,328	)
Real estate acquisitions		(1,869,426	)		(830,574	)
Tenant improvements and lease commissions on previously leased space		(175,480	)		(148,037	)
Property improvements		(55,816	)		(41,129	)
Proceeds from dispositions and contributions of real estate		1,653,597			1,829,576
Investments in and advances to unconsolidated entities		(112,848	)		(366,644	)
Return of investment from unconsolidated entities		37,252			46,135
Proceeds from the settlement of net investment hedges		26,487			-
Payments on the settlement of net investment hedges		(771	)		(8,000	)
Net cash used in investing activities		(1,959,015	)		(516,001	)
Financing activities:
Proceeds from issuance of common partnership units in exchange for contributions from Prologis, Inc.		-			743
Distributions paid on common and preferred units		(1,212,410	)		(967,921	)
Noncontrolling interests contributions		11,083			4,361
Noncontrolling interests distributions		(128,993	)		(71,053	)
Redemption of common limited partnership units		(49,988	)		(105,567	)
Tax paid with shares of the Parent withheld		(23,970	)		(17,472	)
Debt and equity issuance costs paid		(28,119	)		(20,483	)
Net proceeds from (payments on) credit facilities		127,454			(170,230	)
Repurchase of and payments on debt		(751,114	)		(2,185,209	)
Proceeds from the issuance of debt		2,285,021			2,617,854
Net cash provided by (used in) financing activities		228,964			(914,977	)

Effect of foreign currency exchange rate changes on cash		(34,028	)		(31,565	)
Net increase (decrease) in cash and cash equivalents		(118,602	)		3,360
Cash and cash equivalents, beginning of period		556,117			598,086
Cash and cash equivalents, end of period	$	437,515		$	601,446

See Note 11 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 Operations and Strategic Capital. Our Real Estate Operations segment represents the ownership and development of logistics properties. Our Strategic Capital segment represents the management of unconsolidated co-investment ventures and other ventures. See Note 10 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, 2022, the Parent owned a 97.28% common general partnership interest in the OP and substantially all of the preferred units in the OP. The remaining 2.72% 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, 2021, as filed with the SEC, and other public information.

Accounting Pronouncements.

Reference Rate Reform. In March 2020, the Financial Accounting Standards Board issued an Accounting Standard Update (“ASU”) that provided practical expedients to address existing guidance on contract modifications and hedge accounting due to the expected market transition from the London Inter-bank Offered Rate (“LIBOR”) and other interbank offered rates (together “IBORs”) to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). We refer to this transition as “reference rate reform.” The ASU was effective upon issuance on a prospective basis beginning January 1, 2020, and we elected to adopt the ASU over time as our reference rate reform activities occurred.

In March 2021, the Financial Conduct Authority formally announced that the publication of LIBOR was ending and confirmed that U.S. dollar LIBOR-indexed rates would cease to be published after June 30, 2023. In June 2022, we modified the base rate of the aggregate lender commitments in U.S. dollars from U.S. dollar LIBOR to SOFR for both of our global senior credit facilities. See Note 5 for more information on these modifications. There was no material impact on our Consolidated Financial Statements due to the adoption of this ASU. We do not anticipate modifying any derivative financial instruments, as none are impacted by this ASU at June 30, 2022.

Index

Proposed Merger. On June 11, 2022, we entered into a definitive agreement (the “Merger Agreement”) with Duke Realty Corporation (“Duke Realty”) and Duke Realty Limited Partnership. The purchase price consideration will be determined on the closing date as this is a stock-for-stock transaction based upon a fixed exchange ratio. The estimated acquisition price is approximately $25.5 billion including the assumption of debt. The transaction is subject to approval by the stockholders of Prologis and the shareholders of Duke Realty and other closing conditions and is expected to be consummated in the fourth quarter of 2022.

NOTE 2. 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,
	2022		2021		2022		2021		2022		2021
Operating properties:
Buildings and improvements		455,186		444,413		2,350		2,310	$	33,071,616	$	32,159,514
Improved land										12,636,656		12,294,246
Development portfolio, including land costs:
Prestabilized		11,120		6,325		28		16		1,198,958		710,091
Properties under development		33,476		28,638		99		83		2,266,480		2,019,249
Land ⁽¹⁾										2,855,734		2,519,590
Other real estate investments ⁽²⁾										3,241,586		3,302,500
Total investments in real estate properties										55,271,030		53,005,190
Less accumulated depreciation										8,251,995		7,668,187
Net investments in real estate properties									$	47,019,035	$	45,337,003

(1)	At June 30, 2022 and December 31, 2021, our land was comprised of 6,114 and 6,227 acres, respectively.

(2)

Included in other real estate investments were: (i) non-strategic real estate assets acquired that we do not intend to operate long-term; (ii) land parcels we own and lease to third parties; (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.

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,
	2022		2021		2022		2021
Number of operating properties		12		10		13		11
Square feet		1,491		2,088		1,794		2,113
Acquisition cost of net investments in real estate, excluding land and other real estate investments	$	181,881	$	284,106	$	264,082	$	289,149

Acres of land		628		445		1,206		706
Acquisition cost of land	$	801,860	$	351,709	$	984,144	$	575,716

Acquisition cost of other real estate investments	$	379,803	$	173,807	$	603,214	$	173,807

Index

Dispositions

The following table summarizes our dispositions of net investments in real estate which 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,
	2022		2021		2022		2021
Dispositions of development properties and land, net ⁽¹⁾
Number of properties		4		11		11		19
Square feet		1,180		5,174		3,763		9,461
Net proceeds	$	235,194	$	676,387	$	677,749	$	1,446,200
Gains on dispositions of development properties and land, net	$	105,802	$	187,361	$	316,008	$	361,004

Other dispositions of investments in real estate, net
Number of properties		-		42		102		43
Square feet		-		5,778		8,676		6,254
Net proceeds	$	-	$	572,430	$	1,264,280	$	595,772
Gains on other dispositions of investments in real estate, net	$	-	$	127,167	$	584,835	$	143,790

(1)	The gains we recognize in Gains on Dispositions of Development Properties and Land, Net are primarily 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 $492.1 million and $459.4 million within Other Assets and lease liabilities of $483.7 million and $448.4 million within Other Liabilities, for land and office space leases in which we are the lessee, on the Consolidated Balance Sheets at June 30, 2022 and December 31, 2021, respectively.

NOTE 3. 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 6 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.

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

	June 30,		December 31,
	2022		2021
Unconsolidated co-investment ventures	$	7,669,680	$	7,825,455
Other ventures		773,964		785,503
Total	$	8,443,644	$	8,610,958

Index

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,
	2022		2021		2022		2021
Recurring fees	$	115,806	$	96,845	$	229,043	$	187,882
Transactional fees		17,519		18,199		34,748		39,077
Promote revenue		19,514		10,636		19,514		12,251
Total strategic capital revenues from unconsolidated co-investment ventures ⁽¹⁾	$	152,839	$	125,680	$	283,305	$	239,210

(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:	Jun 30, 2022			Dec 31, 2021			Jun 30, 2022			Dec 31, 2021			Jun 30, 2022			Dec 31, 2021			Jun 30, 2022			Dec 31, 2021			Jun 30, 2022			Dec 31, 2021
Key property information:
Ventures		1			1			2			2			2			2			3			3			8			8
Operating properties		732			732			260			254			843			818			205			203			2,040			2,007
Square feet		123			122			58			56			205			198			82			82			468			458

Financial position:
Total assets ($)		11,614			11,619			3,548			3,349			18,281			18,373			9,513			10,746			42,956			44,087
Third-party debt ($)		3,069			3,069			1,151			1,052			3,990			3,737			3,685			4,157			11,895			12,015
Total liabilities ($)		3,724			3,717			1,261			1,116			5,935			5,619			4,115			4,685			15,035			15,137

Our investment balance ($) ⁽²⁾		2,390			2,393			865			840			3,665			3,712			750			880			7,670			7,825
Our weighted average ownership ⁽³⁾		26.9	%		27.0	%		40.4	%		40.8	%		31.0	%		30.9	%		15.1	%		15.1	%		27.2	%		26.9	%

	U.S.						Other Americas ⁽¹⁾						Europe						Asia						Total
Operating Information:	Jun 30, 2022			Jun 30, 2021			Jun 30, 2022			Jun 30, 2021			Jun 30, 2022			Jun 30, 2021			Jun 30, 2022			Jun 30, 2021			Jun 30, 2022			Jun 30, 2021
For the three months ended:
Total revenues ($)		291			257			96			78			354			343			157			160			898			838
Net earnings ($)		68			54			31			28			127			82			32			36			258			200

Our earnings from unconsolidated co-investment ventures, net ($)		19			15			10			10			39			26			5			6			73			57

For the six months ended:
Total revenues ($)		577			511			185			153			710			681			326			319			1,798			1,664
Net earnings ($)		140			103			64			58			231			169			66			71			501			401

Our earnings from unconsolidated co-investment ventures, net ($)		38			28			22			22			70			54			11			12			141			116

(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 June 30, 2022 and December 31, 2021, 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 ($193.2 million and $149.5 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.

Index

Equity Commitments Related to Certain Unconsolidated Co-Investment Ventures

At June 30, 2022, our outstanding equity commitments were $290.1 million, principally 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 4. 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, 2022 and December 31, 2021. 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,
	2022		2021
Number of operating properties		12		14
Square feet		2,208		5,486
Total assets held for sale or contribution	$	403,617	$	669,688
Total liabilities associated with assets held for sale or contribution – included in Other Liabilities	$	4,055	$	10,631

NOTE 5. DEBT

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

	June 30, 2022					December 31, 2021
	Weighted Average			Amount		Weighted Average			Amount
	Interest Rate⁽¹⁾	Term ⁽²⁾		Outstanding ⁽³⁾		Interest Rate⁽¹⁾	Term ⁽²⁾		Outstanding ⁽³⁾
Credit facilities	1.2%		2.2	$	612,267	0.8%		1.6	$	491,393
Senior notes	1.6%		11.0		15,546,790	1.7%		11.6		14,981,690
Term loans and unsecured other	1.0%		5.6		1,362,293	0.5%		4.2		1,825,195
Secured mortgage	2.4%		3.6		519,482	5.1%		4.7		416,776
Total	1.6%		10.1	$	18,040,832	1.6%		10.4	$	17,715,054

(1)

The weighted average interest rates presented 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 term 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:

	June 30, 2022								December 31, 2021
	Weighted Average Interest Rate			Amount Outstanding		% of Total			Weighted Average Interest Rate			Amount Outstanding		% of Total
British pound sterling		2.1	%	$	1,248,276		6.9	%		2.1	%	$	1,376,807		7.8	%
Canadian dollar		3.0	%		513,615		2.8	%		2.7	%		283,773		1.6	%
Euro		1.1	%		8,069,667		44.7	%		1.0	%		7,408,407		41.8	%
Japanese yen		0.8	%		2,773,102		15.4	%		0.9	%		2,878,542		16.2	%
U.S. dollar		2.5	%		5,436,172		30.2	%		2.6	%		5,767,525		32.6	%
Total		1.6	%	$	18,040,832		100.0	%		1.6	%	$	17,715,054		100.0	%

Index

Credit Facilities

In June, we terminated our global senior credit facility (the “2019 Global Facility”) and entered into the 2022 Global Facility with a borrowing capacity of up to $3.0 billion (subject to currency fluctuation). We also upsized our second global senior credit facility (the “2021 Global Facility”), increasing its borrowing capacity up to $2.0 billion (subject to currency fluctuation). 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 (subject to currency fluctuations). During the recast of both facilities, we modified the base rate of the aggregate lender commitments in U.S. dollars from U.S. dollar LIBOR to SOFR. 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 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.

We also have a Japanese yen revolver (the “Yen Credit Facility”) with total commitments of ¥55.0 billion ($403.6 million at June 30, 2022). We have the ability to increase the borrowing capacity of the Yen Credit Facility to ¥75.0 billion ($550.4 million at June 30, 2022), 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.

Liquidity

The following table summarizes information about our available liquidity at June 30, 2022 (in millions):


Aggregate lender commitments
Credit Facilities	$	5,380
Less:
Borrowings outstanding		612
Outstanding letters of credit		27
Current availability	$	4,741
Cash and cash equivalents		438
Total liquidity	$	5,179

Senior Notes

The following table summarizes the issuances of senior notes during the six months ended June 30, 2022 (principal in thousands):

	Aggregate Principal				Issuance Date Weighted Average
Issuance Date	Borrowing Currency		USD ⁽¹⁾		Interest Rate ⁽²⁾	Term⁽³⁾		Maturity Dates
January	£	60,000	$	80,932	2.1%		20.0	December 2041
February ⁽⁴⁾	€	1,550,000	$	1,768,240	1.0%		8.5	February 2024 – 2034
Total			$	1,849,172	1.1%		9.0

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

(2)	The weighted average interest rate represents the fixed or variable interest rates of the related debt at the issuance date.

(3)	The weighted average term represents the remaining maturity in years on the related debt at the issuance date.

(4)	Net proceeds from the issuance of these notes were used to finance green projects eligible under our green bond framework, repay or refinance indebtedness and for general corporate purposes.

Index

Long-Term Debt Maturities

Scheduled principal payments due on our debt for the remainder of 2022 and for each year through the period ended December 31, 2026, and thereafter were as follows at June 30, 2022 (in thousands):

			Unsecured
	Credit		Senior			Term Loans			Secured
Maturity	Facilities		Notes			and Other			Mortgage			Total
2022⁽¹⁾	$	-	$	311,610		$	9,239		$	3,691		$	324,540
2023⁽¹⁾		-		-			131,921			186,875			318,796
2024⁽²⁾		496,294		311,610			-			99,248			907,152
2025		-		36,693			-			142,415			179,108
2026⁽³⁾		115,973		919,229			623,778			3,466			1,662,446
Thereafter		-		14,049,349			601,763			74,629			14,725,741
Subtotal		612,267		15,628,491			1,366,701			510,324			18,117,783
Unamortized premiums (discounts), net		-		(4,832	)		-			10,033			5,201
Unamortized debt issuance costs, net		-		(76,869	)		(4,408	)		(875	)		(82,152	)
Total	$	612,267	$	15,546,790		$	1,362,293		$	519,482		$	18,040,832

(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 2021 Global Facility that can be extended until 2025.

(3)	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 June 30, 2022 were subject to certain financial covenants under their related documents. At June 30, 2022, 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 6. 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, 2022			Dec 31, 2021			Jun 30, 2022		Dec 31, 2021		Jun 30, 2022		Dec 31, 2021		Jun 30, 2022		Dec 31, 2021
Prologis U.S. Logistics Venture		55.0	%		55.0	%	$	3,204,880	$	3,264,337	$	7,253,495	$	7,397,195	$	139,521	$	147,545
Other consolidated entities⁽¹⁾	various			various				128,541		133,201		1,482,754		1,453,236		162,254		162,598
Prologis, L.P.								3,333,421		3,397,538		8,736,249		8,850,431		301,775		310,143
Limited partners in Prologis, L.P. ⁽²⁾⁽³⁾								964,750		917,799		-		-		-		-
Prologis, Inc.							$	4,298,171	$	4,315,337	$	8,736,249	$	8,850,431	$	301,775	$	310,143

(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, 2022 and December 31, 2021 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 8.0 million limited partnership units of the OP at June 30, 2022 and December 31, 2021.

(3)

There were limited partnership units in the OP, excluding the Class A Units, that were exchangeable into cash or, at our option, 8.3 million and 8.4 million shares of the Parent’s common stock, at June 30, 2022 and December 31, 2021, respectively. Also included are the vested OP Long-Term Incentive Plan Units (“LTIP Units”) associated with our long-term compensation plans of 4.4 million and 4.0 million shares of the Parent’s common stock at June 30, 2022 and December 31, 2021, respectively. See further discussion of LTIP Units in Note 7.

NOTE 7. 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 2022 – 2024 performance period in January 2022, with a fair value of $30.4 million using a Monte Carlo valuation model that assumed a risk-free interest rate of 1.0% and an expected volatility of 31.0% for Prologis and 29.0% for the MSCI US REIT Index. The 2022 – 2024 performance period has an absolute maximum cap of $100 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 2019 – 2021 performance period, which resulted in awards of $100.0 million being earned at December 31, 2021 and awarded in January 2022. Additionally, awards of $35.7 million were earned at December 31, 2021 and awarded in January 2022 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, 2022 (units in thousands):

				Weighted Average
	Unvested RSUs			Grant Date Fair Value
Balance at January 1, 2022		1,237		$	87.87
Granted		522			121.63
Vested and distributed		(396	)		91.68
Forfeited		(22	)		113.23
Balance at June 30, 2022		1,341		$	99.47

LTIP Units

The following table summarizes the activity for LTIP Units for the six months ended June 30, 2022 (units in thousands):

	Unvested			Weighted Average
	LTIP Units			Grant Date Fair Value
Balance at January 1, 2022		3,317		$	61.65
Granted		988			95.90
Vested LTIP Units		(707	)		86.90
Balance at June 30, 2022		3,598		$	66.08

NOTE 8. 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.	2022		2021		2022		2021
Net earnings attributable to common stockholders – Basic	$	609,855	$	598,625	$	1,759,109	$	964,440
Net earnings attributable to exchangeable limited partnership units⁽¹⁾		17,518		16,921		49,856		27,241
Adjusted net earnings attributable to common stockholders – Diluted	$	627,373	$	615,546	$	1,808,965	$	991,681

Weighted average common shares outstanding – Basic		740,637		739,190		740,506		739,105
Incremental weighted average effect on exchange of limited partnership units ⁽¹⁾		21,289		21,179		21,221		21,084
Incremental weighted average effect of equity awards		4,148		4,283		4,132		4,535
Weighted average common shares outstanding – Diluted⁽²⁾		766,074		764,652		765,859		764,724

Net earnings per share attributable to common stockholders:
Basic	$	0.82	$	0.81	$	2.38	$	1.30
Diluted	$	0.82	$	0.81	$	2.36	$	1.30

Index

	Three Months Ended						Six Months Ended
	June 30,						June 30,
Prologis, L.P.	2022			2021			2022			2021
Net earnings attributable to common unitholders	$	627,286		$	615,478		$	1,808,811		$	991,561
Net earnings attributable to Class A Units		(6,608	)		(6,456	)		(19,023	)		(10,447	)
Net earnings attributable to common unitholders – Basic		620,678			609,022			1,789,788			981,114
Net earnings attributable to Class A Units		6,608			6,456			19,023			10,447
Net earnings attributable to exchangeable other limited partnership units		87			68			154			120
Adjusted net earnings attributable to common unitholders – Diluted	$	627,373		$	615,546		$	1,808,965		$	991,681

Weighted average common partnership units outstanding – Basic		753,610			752,065			753,420			751,883
Incremental weighted average effect on exchange of Class A Units		8,017			8,005			8,008			8,006
Incremental weighted average effect on exchange of other limited partnership units		299			299			299			299
Incremental weighted average effect of equity awards of Prologis, Inc.		4,148			4,283			4,132			4,536
Weighted average common units outstanding – Diluted ⁽²⁾		766,074			764,652			765,859			764,724

Net earnings per unit attributable to common unitholders:
Basic	$	0.82		$	0.81		$	2.38		$	1.30
Diluted	$	0.82		$	0.81		$	2.36		$	1.30

(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				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Class A Units		8,017		8,005		8,008		8,006
Other limited partnership units		299		299		299		299
Equity awards		6,353		6,471		6,219		6,812
Prologis, L.P.		14,669		14,775		14,526		15,117
Common limited partnership units