Prologis, Inc. (PLD) Earnings

Management highlights

• Entered 2026 with solid momentum, first quarter results continued. Top priorities: record leasing with 64M sq ft signings, putting land bank to work with $2.1B starts (including $1.3B data center build-a-suits), expanding strategic capital platform with $1.6B joint venture with GIC and $1.2B with LaCasse. • Geopolitical backdrop uncertainty but lease signings, proposal volume, build-to-suit pipeline show continued strength. Customer insights show 2026 business plans unchanged. • Marked 10-year anniversary of Prologis Ventures, invested $300M across over 50 companies. • U.S. markets absorption 45M sq ft, vacancy flat at 7.5%. Globally market rents grew 30 bps. Strong leasing activity and constructive tone from customers. Pricing premium for quality assets. • Closed commitments for three additional vehicles, launched new acquisition vehicle in Japan. Raised over $2.6B of third-party equity.

Guidance

• Increase forecast for average occupancy to 95-95.75%. • Net effective same store growth expected 4.75-5.5%, cash growth 6.25-7%. • Strategic capital revenue expected $660-680M, G&A $510-525M. • Increase development starts to $4.5-5.5B (40% data center build-to-suits). • Acquisitions $1-1.5B, combined contribution and disposition activity $3.5-4.5B. • Net earnings range 380-405 per share. Core FFO including net promote expense 607-623 per share, excluding promote expense 612-628 per share.

Segment performance

Core FFO was $1.50 per share including net promote expense and $1.52 per share excluding it. Occupancy was 95.3% with retention at nearly 76%. Net effective rent change was 32% this quarter. Same-store NOI growth was 6.1% on net effective and 8.8% on cash. Started $2.1 billion of new development including $850 million in logistics and $1.3 billion in data centers. Data center starts totaled 350 megawatts with pre-leased projects. Sold or contributed ~$1.2 billion of assets. U.S. markets absorbed 45 million sq ft, vacancy 7.5%. Globally market rents grew 30 bps. Strategic capital raised over $2.6 billion of third-party equity. Raised $5.5 billion in new financing at ~3.75% weighted average rate.

Risks & headwinds

• Geopolitical uncertainty in Middle East introducing economic uncertainty via higher energy prices, renewed inflation and interest rate pressure. • Uncertainty could slow customer decision-making, though no meaningful evidence of that to date. • Supply chain crunch on equipment side for data centers creating bottlenecks for turnkey developments.

Analyst Q&A

• Q: Congrats on record leasing, pipeline back at record, comment on leasing spread decelerated and occupancy vs pricing going forward.

  A: Quarter had mix with west region U.S. softer conditions impacting rent change and free rent. Balancing occupancy and rent change is market by market and deal by deal, pushing rents in many markets but preserving for some occupancy.

• Q: Concern on data center development leasing with news of shelved projects or municipalities pushing back?

  A: Pipeline in data center build-a-suits is very strong, 1.3 gigawatts of deals under LOI, feel good about what's underway as customers need the space.

• Q: Assumed development margins on new data center starts?

  A: Data center margins within 25%-50% range, higher than typical logistics margins.

• Q: Average occupancy outperformed, any timing related downside in Q2?

  A: Outperformed by around 20 bps, lift in full year guidance reflects pulling forward of occupancy via surprise renewals and strong pipeline.

• Q: 1Q net absorption ahead, latest views on 2026 fundamentals?

  A: View unchanged, moving through inflection phase, net absorption on pace to approach 200M sq ft, completions 190M sq ft, rents and occupancies improving, balancing Middle East conflict risk with resilient customer demand.

• Q: Details on U.S. laggard markets and Europe exposure?

  A: U.S. laggard markets include LA County and Seattle with elevated vacancy, New York, New Jersey, San Francisco Bay Area entering transition phase. Europe Western European geographies like Germany and Netherlands leading, tone positive, business plans intact, large format 500k+ sq ft nearly sold out globally.

• Q: Which markets seeing real rent growth, same store NOI and cash outlook?

  A: Healthiest geographies include Atlanta, Dallas, Houston, Columbus, Latin America like Sao Paulo and Mexico City. 1Q benefited from favorable occupancy comps, guidance reflects expectations with lower occupancy comps effect in later quarters and rent change rolling through portfolio.

• Q: Data center equipment supply chain crunch, able to get ahead?

  A: Yes, procurement and fortress balance sheet ability to get ahead of long lead items is a differentiator, margins 25-50%, deals profitable.

• Q: New GIC and LaCasse JVs, increased focus on strategic capital?

  A: Proud of new vehicles launched, expanding into development activities purposefully to get ahead of growing deployment volumes in logistics and data centers, finding capital efficient formats for fees and promotes.

• Q: Lease proposal pipeline, driving factors, sectors, sizes?

  A: Driven by customers deferring growth requirements and responding to business growth, diverse by size (above and below 100k sq ft), organizational types (international vs local scale), renewal and new requirements.

• Q: Data center suppliers taking down logistics warehouse space, materiality and sustainability?

  A: New structural driver, went from less than 5% of new leasing a year ago to 10% now, forward-looking pipeline has greater share, tenants signing healthy term deals, shift in supply chains leading to solid momentum.

• Q: Data center tenants choosing power base vs turnkey build out?

  A: Every deal different, focused on Powered Shell initially, may see more turnkey over time depending on customer needs and cost of capital.

• Q: Acquisition side, cap rates in markets?

  A: Cap rates held steady last few quarters, normalized volumes, range 5-5.5% depending on location quality, divergence of class B and C, focused on total return of assets.

• Q: How determine developments in GIC and LaCasse ventures vs balance sheet?

  A: Longstanding allocation policy, deals cycle through various vehicles including balance sheet, dependent on conditions with good governance, PLD share matters economically.

• Q: Turnover costs per sq ft down, free rent ticked up, evolution of concessions?

  A: Concessions still elevated, some influenced by softer West region conditions, expect concessions to normalize as occupancies build to ~3% of lease value from current bulge.

• Q: Data center vehicle timing and 5.6 gigawatt capacity gross or leasable?

  A: Had constructive conversations with investors, current model of building on balance sheet and selling stabilized assets working well, 5.6 gigawatt is utility load, ~two-thirds critical.