Prologis, Inc. Q4 FY2024 earnings call

• Acknowledged the impact of wildfires in Los Angeles and commitment to support recovery. - Bottoming process in markets progressing, with leasing accelerating post-U.S. election and pipeline healthy. - Discussed results including core FFO, occupancy, net effective rent changes. - Highlighted data center development capabilities with Elk Grove example, showcasing value creation. - Mentioned market conditions with vacancy topping out, rent inflection expected later, non-U.S. portfolio performing better, and customer engagement improving.

Core FFO including net promote income was $1.50 per share, with full-year results showing 8.4% growth over 2023, placing Prologis in the 86th percentile of all REITs. Average occupancy was 95.8% for the quarter and 96.3% for the year. Net effective rent change during the quarter was 66% and full-year was 69%, adding over $340 million in annualized NOI. Net effective lease mark-to-market finished the year at 30% ($1.4 billion incremental NOI). Net effective and cash same-store growth during the quarter were 6.6% and 6.7% respectively. Capital recycling activities included contributing $2 billion of assets to strategic capital ventures (full-year total over $3.3 billion), raising over $1.7 billion across the platform, disposing of over $900 million and acquiring ~$450 million in the quarter. Development portfolio stands at $4.7 billion with estimated value creation of $1.1 billion, $450 million to $600 million expected to be realized in 2025. Data center: 1.4 gigawatts of secured power and 1.6 gigawatts in advanced stages of procurement, with 10 gigawatts of development potential over 10 years, and 2025 goal to hit 1-gigawatt solar generation and storage by year-end.

Average occupancy forecasted to range between 94.5% and 95.5%, net effective same-store growth 3.5% to 4.5%, cash same-store growth 4% to 5%, G&A forecasted $440 million to $460 million, strategic capital revenue $560 million to $580 million. Development starts range $2.25 billion to $2.75 billion, acquisitions $750 million to $1.25 billion, combined contribution and disposition activity $2.5 billion to $3.5 billion. GAAP earnings guidance $3.45 to $3.70 per share, core FFO including net promote expense $5.65 to $5.81 per share, core FFO excluding net promote expense $5.70 to $5.86 per share. Data center starts expected 200 to 400 megawatts in 2025.

• Wildfires in Los Angeles impacting the portfolio and local communities. - Uncertainty from tariffs, immigration policies, and their potential impact on trade, labor supply, and market dynamics. - Volatility in capital markets and interest rates affecting valuations and returns on investments.

Q: Can we flesh out the 2025 guidance a little further?

A: Tim Arndt discussed rent spreads (50% range), bad debt (20-30 basis points), and occupancy mix.

Q: Flesh out the leasing acceleration post-election?

A: Dan Letter and others discussed post-election leasing boom, with pipeline up 17% January-to-January.

Q: Market rent growth trends?

A: Chris Caton and Dan Letter discussed rent trends, coastal vs non-coastal differences, and replacement cost rents being 50% higher than in-place rents.

Q: Occupancy and bad debt?

A: Tim Arndt and Hamid Moghadam discussed occupancy outperformance historically and bad debt averaging under 20 basis points over the cycle.

Q: Renewal business status?

A: Chris Caton and Hamid Moghadam discussed renewals continuing with new leasing pipeline expansion.

Q: Development starts and data center?

A: Dan Letter and others discussed development starts, data center spend, and 10 gigawatts of development potential over 10 years.

Q: Tariffs and trade impact?

A: Chris Caton and Hamid Moghadam discussed tariffs, trade impact, and labor supply uncertainties.

Q: Promote income from data center sale?

A: Tim Arndt and Hamid Moghadam explained promote income from data center sale due to value creation in data center business.

Q: Data center fund and net absorption?

A: Hamid Moghadam and Tim Arndt discussed data center fund structure and net absorption outlook for 2025.

Q: Treasury rates and IRRs?

A: Dan Letter and Hamid Moghadam discussed treasury rates impact on unlevered IRRs and appropriate yield for speculative development.

Q: Visibility and conservatism in guidance?

A: Hamid Moghadam and Dan Letter discussed visibility into operating environment and conservatism in guidance projections.