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Prologis (PLD)

Participants
Tracy Ward Senior Vice President, Investor Relations
Hamid Moghadam Chairman and Chief Executive Officer
Tom Olinger Chief Financial Officer
Gary Anderson Chief Operating Officer
Gene Reilly Chief Investment Officer
Chris Caton Managing Director, Global Strategy and Analytics
Ed Nekritz Chief Legal Officer and General Counsel
Mike Curless Chief Customer Officer
Steve Sakwa Evercore ISI
Emmanuel Korchman Citi
Caitlin Burrows Goldman Sachs
Craig Mailman KeyBanc
Vikram Malhotra Morgan Stanley
Jamie Feldman Bank of America
John Kim BMO Capital Markets
Jon Petersen Jefferies
Blaine Heck Wells Fargo
Michael Carroll RBC Capital Markets
Mike Mueller JPMorgan
Dave Rodgers Baird
Vince Tibone Green Street Advisors
Rob Simone Hedgeye Risk Management
Tom Catherwood BTIG
Ki Bin Kim Truist Securities
Call transcript
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Operator

Good morning, and thank you for standing by. Welcome to the Prologis Second Quarter 2021 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers’ presentation, we will have a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. my President hand Ward. of now to conference It’s Vice Senior Investor Instructions] pleasure the to over [Operator Relations, Tracy I you. to hand Tracy, it

Tracy Ward

the on Thanks, would available about under on our website at Welcome contain Securities Conference morning, Investor laws. The state beliefs our Holly, Relations. and based that forward-looking the under are XXXX conference I Call. projections is Quarter to and Earnings to statements document supplemental management’s prologis.com Federal and in operates, current good will Prologis like Second everyone. estimates call statements expectations, as which as industry market These well assumptions. and this

and statements operating a be results not may factors. by of Forward-looking are performance actual affected of guarantees variety

please or our refer notice in filings. SEC factors, forward-looking those statement the of XX-K to list a For

market with real-time that, will results, Reilly Dan Tom, Tom. turn begin? Colleen Moghadam, call please Gene guidance. Additionally, in press our do also non-GAAP those hear Olinger, Ed and we will measures such who and that Caton, our with With Mike from cover FFO will Curless, Gary Anderson, provided Tom Letter, This are McEwan to over and us contain Nekritz, morning, reconciliation Hamid accordance measures, today. have Reg financial here supplemental are second Chris and we a EBITDA CFO, results as conditions and measures. release quarter the to I will G, you

Tom Olinger

call Thank you, Tracy. Good thank joining everyone, morning, today. for and you our

and above set watermarks this space and quarter results remained and IDI of exceptional future Activity of is likewise and XX market and a million Index measures the lease With In largest second our new and we high driven and quarter. healthiest feet, million XX exceeded demand. outlook our square in high portfolio XXXX second were proposals second robust Customer quarter, the both is our in beyond. signings new strong XX-year development indicator and terms feet leasing early were several the Financing in diverse The average history. for our the square remain were lease quarter, conditions across both by expectations reached teams, an

is square for the demand is leasing feet. greatest mix XXX,XXX above spaces Currently, broad. Our

activity spaces, years. signed square the feet XX smaller is in picking For leases segment highest totaling three We the XXX in up. in this million volume quarter,

customer the lead to while ecommerce more continues players way new quarter, XX% many table. For signings seen segments, to at of new leasing, steady the in come the remains of representing have lease X% total second ecommerce Amazon we

signed Supply versus in in of we are going example, Containerized XXX they spaces view of new For ecommerce the chains as last half May XX% up pre-pandemic are imports XX first through more restock to replenished year. levels, and forward. as beginning half chains. XXXX we’ll retailers create raising, supply first demand the versus their

by U.S. million another square customers the feet. million by XX.X% levels is have from level their our at is have are and X% square long-term and We XX%. ongoing current levels. below are X% Putting momentum, our inventories formats up with absorption sales inventory. from grow XXX together the yet of our recent see raising the XXX to pre-pandemic While this struggled operating sign utilization, space year to XX% of risen retain suboptimal that of asset XXXX to we low average on as for inventories XX% the trough, are feet This forecast which they deliveries net

exists Customers continue rents XX.X% markets acute rose lease growth, driving basis XX percentage end. scarcity continued to in is foresee demand supply portfolio with and and and record for expensive we When difficult forward, and X.X% of cost. impacting entitlement markets lease vacancy buyable land, historic Looking and to permitting With look balanced balanced significant decisions and demand making the points lack by low at with increasingly barriers carrying while processes XXXX. replacement rapidly include of are in by factors our value our compete quarter we escalating supply, into operating at quarter just the space days. supply, XX in gestation faster and of a

research Our our you month, paper excellent released find team last an on on can which this website.

with translated list expectations. and growth of ultra a Our reviewed We very in to our markets Poland. leaving exceeding strong quarter, in Spain quite low our remains quarter small. X.X% just supply the Accelerating the vacancies Houston demand in rent watch combined U.S.

XX.X% rent our forecast globally, XXXX As estimate of U.S., a and prior our are we basis XXX up which basis points high up points. the is from all-time an for result, raising XX approximately X%

Our million is up the now in tank per share. XX.X%, in-place spread our gas rent history to NOI $X.XX nearly $XXX in represents widest points sequentially. basis in XXX This market of at or future the

with our alone to quarter more U.S. strongest history, XX% the X% Europe had X.X%. Turning second rising our than in in valuations, quarterly up the and up uplift assets

disclosure the of related the valuation, we in out to point topic On to management I property supplemental NAV our that want enhanced fees.

of substantial value advantages. Given through operational portfolio, the we size our created and our scale

to accelerated FFO of net a $XXX XXX Occupancy into conditions favorable deliver effectively management share was and excellent in team as XX%. the and up gears NAV our the across As in to quarter, estate our results Cash, end market million adjusted we continued result, more is now disposed change zero, sequentially. rent in per was promote know for was points our real Core with our net fee hands. portfolio. rollover XXX X.X%, tapped we NOI basis that basis We including bone points Accordingly, property assets of the Switching financial results. non-strategic $X.XX portfolio on XX.X%, at year-over-year. are disclosure. worth quarter NOI earnings income same-store growth to

It’s worth week, IPT our sold of acquisitions just and noting assets. assets we IPT above a portfolio more that of have than of underwriting. billion million non-strategic at addition, the to-date the and sale LPT managed we In last from completed non-strategic pricing $XXX XX% all including $X owned

quarter. partners to vehicles for all-time In almost the funds, prompted team has ascribed being more quarter understated. business interest Robust cues the Turning logistics the to away asset our equity our were high. investor sector-specific another to value cost, in shift Equity at of our particularly from capital second transactions limited strategic sector. public from $X.X million hitting end, recent light private billion capital, open-ended strategic is uniquely diversify management raised $XXX and to

between sheet, totaling financial strength to and our excellent with leverage and For continue $XX vehicles the balance combined we capacity Prologis open-ended maintain liquidity billion.

Moving to guidance XXXX. for

given valuations higher and robust improved further has rent growth, outlook demand. Our higher

key an basis. on share the updates our are Here

our to growth increasing now are same-store between X.XX%. XX We X.XX% by cash midpoint NOI basis range points and

of basis XX guidance We debt expense expect historical midpoint our XX points basis our prior to gross from be down revenues, below bad average. and of approximately points well

or midpoint strategic lease-up an our promote values. property to increase from leading revision We $XXX Faster and promotes, resulting excluding asset year, from income management now $X.XX $XX prior to million expect also of for values higher are this up from the for guidance. guidance. increasing revenue, prior net This upward higher $X.XX fees asset to capital are We increase development an million of is promotes. in due increased

than increasing and $XXX also billion. XX% expect $X.X development starts midpoint volume. development a comprise million of now Build-to-suits of by We more are will

supports billion several of compose future the over managed portfolio and land, $XX which land land and options, owned of covered development years. Our place next

year-over-year timing in also redeploy $XXX year remaining of range on drag to midpoint to are deployment incremental this share. midpoint $X.XX effectively We are dispositions will increasing million earnings midpoint Core of and $X.XX net the sources to we by almost at contributions XX%. narrowing excluding increasing roughly will growth the at midpoint $X.XX given increase share, leverage for the the have per between Taking $XXX XXXX. We account, flat into This total. $X.XX to expect these $X.XX proceeds. the in core with and FFO now promotes our FFO million and a $X.XX range by generate assumptions per representing

range payout outlook equally potential after year free continue billion. of the promising. dividend the guidance future strong our and clear. We into maintain organic and Visibility our flow a cash been and is exceptional very In implies our in the dividends of half to low extraordinary earnings coverage ratio first is XX% has XXXX closing, $X.X

embedded ability to We and in-place sheet spread, rent I’ll our create significant turn Holly to market development have a substantial beyond value capacity balance the the it to for for customers With ready questions. portfolio, that, land your back estate. real

Operator

Steve to from come first Instructions] of line Evercore the And [Operator ISI. Sakwa, is question going our

Steve Sakwa

the regions was Thanks. about Tom a some faster, bit Maybe context just know drivers but which little Good across just I you or the around of are you just more in demand of some regionally, businesses, most grew demand maybe maybe are the wondering you provide out up, in? little a morning which subsectors Hamid, talking seeing time spend there. various a more could little I if maybe and

Chris Caton

Hey, it’s Chris with share Gene color. some jump then, going highlights few a I to will Caton. Steve, in am I think and

four there represent or think three I are that trends demand themselves.

diversification broadly is The ecommerce. of first the

So, small and internationalization of players mid-size the major players stepping or up.

about goods of The pharmaceuticals, are and second companies. food leaders is leasing companies, safe. growth last durable Think the year

The third trend be supply would resilience. chain

among example, markets strongest been. see they’ve For port the the we ever

have several So, themes demand. through you playing clear

Gene Reilly

Yes.

coastal definitely I geographic Steve, would doing if are that only you is, to better. some add get thing So, to the is, want color markets

New There Latin Jersey dynamics. I in in weak where at the very by to look demand U.S., the strongest a I’d is they demand everywhere. find You strength globally and really think difficult far say But U.S. Southern California the also no that matter it’s Europe, the are, America, have market

Operator

And with of question line to Korchman Citi. come going Thank our the you. next from is Emmanuel

Emmanuel Korchman

of being asking come broad Hey. pinpointing can especially based another are Is get what they you whatever figure Chris, a of for want? they to Are of out customers demand from, Good they changing ecommerce you? willing you. for at But just is more they sort as are to one they But everyone. when markets? tapers wider all? to spoke maybe morning, demand. you actually what they they demand? Can us help the specific kind it Are specific or about

Chris Caton

Yes.

So, it’s look different. they and something on I want the diverse think slightly ecommerce if maturity you is message actually, all the different of very organizations, across

in for example large adjacent delivery have shortening lot We’ve a to do player, lot infrastructure location for location are or a mid-size on in in think the such is basic the of out sub-markets. build a might you international growth I more regional more getting a still much last But of pinpointed. they organizations online. focus There times. those seen be if an So, executing

Operator

the is Burrows Goldman with to next our of line Caitlin from And question come going Sachs.

Caitlin Burrows

development if I wondering could an maybe Good talk obviously just you Hi. active is team. was morning, Prologis about developer. of

the also and You increase stabilizations contributions. guidance development your for starts and

give you I detail a could think that lot. businesses, developing gains it How that’s be might valuation? your know how you related So, development peers’ the how some are different on to about activity? and than

Tom Olinger

Caitlin. Tom. Thanks shot for This take is I’ll a your at Hey, that. questions. first

there development our think business aspects quite are I unique. several that of are

$XX looking portfolio operate. XX% barrier I And high markets was out, our at at first size in would portfolio focused billion The that of the that our we build cap. of just think market almost very of which

different a advantage. huge solve having platform returns just build that and those development our durability opportunity land different got huge A very development markets diversified a high those out. and and I demand. in we’ve best of that’s very the to So all quality to very, menu just that leads the across to of a is customers’ can think high we seek XX build gains. It’s set that to portfolio the has And problems bank across out countries

of did record, XX% - record anincredibletrack So record Belf, by developing track if we’ve of and you got those our way. track results externally $XX durability. IRR by But of look the XX we billion verified at a assets, years, Dr. so unlevered

then, when exceptions unique it’s of being runway majority is billion the point opportunity quite held makes long in sheet think at the it those of And front on into and out, look your history And given our assets develop continue how very, there very us. presented with outside you how another to a build we U.S. able gains, I attractive that few vast just of that’s assets So, realized rates point balance are we Europe, very, to at are is sense of structure majority want Mexico. to funds works, of the but our those the contributing in vast $XX our of assets very Japan, to our developing funds. on in capital very structure are that

So a of those there gains. crystallization real is

IRRs should unlevered real were that’s embedded XX% – the a cash cash about AFFO and of that think in That of flow. all development, gains your majority you your in those when So, valuation. it’s part the and vast be realized

we when it the is of scatter CIP is because development, couple you you’ve got think approach at valuation to do. think for I I there in other that’s very you. particular have look Obviously, front in a things a shot

got that and You value to face that.

value. got right this land $XX platform, case There a residual bank, $XX also has to you is is your And have You for value in a billion our this unlevered billion and XX% that here. IRRs. there history of platform

you flows are can encourage all it ways our say, find you thing would take to different is this those obviously. and significantly I the put to capabilities look There for So, would development I that just to together. undervalued. historically are, the think I valuation going do generates at a think cash you I But

Operator

come you. with of Capital line KeyBanc question Mailman the Craig Thank Markets. And next will from our

Craig Mailman

Hey where update everyone. Clearly, net stats there think market growth appreciate you the I as and is. your absorption rent well.

update shortage prices a even to at like even and curious, how guys losing little continue looks through are rent and did now maybe point? how as does are you a transportation How versus list result factors? to conversation or that? are you equilibrium. they questions. with continuing are and accelerate continue kind even But just worst side? the are labor am of on up to and the push still talk rents tenants maybe of Just bit many changed Those on I just I this gas impacted high we getting deals places other the rents at rise few mean, us Maybe is

Gene Reilly

Gene. Yes. This is,

that. take I’ll So,

are I – customers So with if and points at excuse me. are relative their you you pain what – are the look we having think conversations

Tom Olinger

the to having a little it. is issue with Gene bit access of

he me let So, while cover is a sort there – of.

a labor. But sales of is with So and retail jump the is piece absolutely a money, pandemic of is through And there today, from is think out is losing this going the little that push to pricing conversations and when point. because knows percent from business, chain probability there flushed That pain have an continue very while. around are and mostly people ability I supply dry there cash us XX% god to our levels. pre-pandemic spending because levels are what for you to

fire trying to basically, up Mike, keep So, color is demand. on everybody’s And on additional with hair any that?

Mike Curless

Yes.

is I seen over that think more competing one way you can difficult really fact represent that the than we’ve ever and this we’ve some situations. space customers before had creates

start you to So very we minor space priority. availability and a rent But transparency becomes both the with with got the tell of becomes accessibility just parties. the always I that discussion

description of of I seeing So good a in that’s what terms think there are customers’ we out priorities. the

Tom Olinger

and deals be more were by rents to we not a geography X%, pushing me Craig, number it may on the because because that we basis of at quarterly I under look we enough. which means actually losing wish rent, is

the rents way, be a may fact losing those are great such not to a that in not So, bank. we deals

Gene Reilly

in me continue Let - my But prices, location much with is on to and point. the pretty jump with more respect gas important. There makes that here

with I think a tailwind respect So probably to that’s rents.

Operator

the with is Malhotra come And Morgan Stanley. from question our going next line of Vikram to

Vikram Malhotra

for taking question. Morning. the Thanks

capital strategic business. the around comments upon build to wanted maybe Just

am You assuming and the side. referenced several undervalued. business that’s times equity the potentially power being of the I on

managers, to platforms. of or value is who the some As asset clearly you these cover larger management different my multiples that use I talk colleagues asset there to

power seeing of are customer that the base be a that’d the of So platforms in logistics-only valuation, really focused us just the more business; and then are unpack bit little can maybe you you on the helpful? focused this terms for

Tom Olinger

Vikram, will Yes, it’s Tom. first. I take that

grown. let’s So, business that I has start how and think with that business

look you years, any CAGR. has that land and grown some of If the XX%, last over XX% revenues business five

by is has growth. XX% More generating importantly, that business that cash the EBITDA grown so incredible CAGR, flow or

As growth. the given very there I we strong think seeing, EBITDA we opportunities look for are are forward, just continued what

scalable I better certainly you what look A in cleared do. never business. around to I So for have think valuation, can been has clarity have been baseline at there I would transactions because that several there has this valuation And highly think we market a highly, think been business the public comps. there. lately about that’s relative It and

analysts at a multiple, you for the earnings think promotes. to we I the the think alternative ways, lot and see the comps I look in to include are going and mid-XXs managers those us, you at investors need there while the work of seeing, to but different when all as are looking through those multiples place asset for are and And you start. right are alternative on it of

So getting managers XX alternative asset strip and promotes. when or for you an promotes, seeing are on you a the multiple best higher, of out are they x

that I AUM how which perpetual clearly, So, talked business long that think of about them, for I vehicles. the We our also then yes, is the life AUM. you tell you growth there incredible of in we would our to would about say, think is need you compare very as we growth. lining demand or is have XX% and thinking support undervalued, are our investor to because - our to up plus is product, about profile stickiness

an equity at queue quarter was all-time Our high. end $X.X billion,

discussions on with visibility happy get all out this more on So, good there But valuation. of forward. going to you into lot

Chris Caton

assume which two add that Yes. of I we sort things, would are important.

focused on plus puts $XX measure mean, managers by one I the that anywhere asset estate property real and type. are scale. It’s billion the business. business’ us top among First any we a

significant most market. pretty desirable share that’s the in So a market

actually have returns And that say, days I AMD’s to would also, we early in producing the of goes longest history place these that’s back mid-XXs. the the So premium. to

So, as real expire. terms on income leverage not streams. the are, of upside promote estate pointed longevity, both very structure. are the that and because bunch the that I the that a the Tom of they out, of cash more quality cash funds these business have than sticky in fee of flow support long-lived stream, These would closed-end argue and flows that

this really life who to we way to lot me, are valued better but they I understand sector. are, they those are going explaining we for being do from that really a of So, follow that of this because of are the don’t investors job getting honestly the receptivity why business, a understand people

Operator

And come Bank of Feldman of our next question will line with the from Jamie America.

Jamie Feldman

you. Thank

Following up investment that billion the capacity, a we think keep ability clearly to How seen and large-scale good do last pricing large growing dear. portfolios to of your the last but question, few $XX trade through years, more amount about is getting transactions we’ve business to should more of acquisition?

Tom Olinger

that not care M&A. management of and growth no do is about We – It external skill iota one is the team. through

Just the our from us can fast. and M&A multiple fair that you just numbers strip out growing size at the would conversion people and dismiss to invite prevents from look that. that I

part opportunistic. So anybody in over our frankly never growth never any time. else’s we had plan our of and if of M&A, M&A business against It’s is rate outplay dollar another center

Operator

Capital of will And the our next from Markets. Thank with you. John come line BMO question Kim

John Kim

you. Thank

investments? in valuations I exit was you spread and going exit Given this and the cap updated and rates at partners had between increase are yields that when on looking you wondering if you’ve your provide could an quarter, view in

Hamid Moghadam

basis deal the relative the when bit points our cap projections quite a basis a increase used a more basis alike. on XX to X% a are XX in on But cap in when rates rents pencil that’s I in a pencil basis. were XX and was think even mid-Xs, great calculation – based the and rates we historically point Well, residual in point

non-strategic So, sell other again, we But mostly REIT, XX% about – in in our an We life ten we assets residual don’t we invest increase are calculations you assets. infinite When don’t are just using you a we years out. like. sell vehicle. that our

translates is the of dividends the those really of cash those that very or the value business. rate You in flow off assets and driver our nice look overall the into that which growth a fundamental IRR, assets comes at

Operator

our And of line you. the will question Thank Jefferies. come Petersen next from Jon with

Jonathon Petersen

Great. Thanks.

kind growth the occupancy international we’ve growing U.S., cash in guys press at mentioned portfolio But occupancy of faster I U.S. that from look your the what years. release I seen still NOI was which is think same-store the in higher a in in is than You flip recent

So, international maybe about you could growth? talk what’s driving that just higher

Gene Reilly

Yes. Tom, I’ll take that.

is and it other driven results I also was think Europe part in strong. strong of by Americas

I else. over Europe, have to and the on comp headwind I of a more are whether I a par it’s That’s better not I in see in that, QX than going the to year, growth would mean, think and particularly longer of more are markets term, large, last our But than rent our rates listen, expect, growth further several of Europe be in year XXXX it’s next reflection going we on think everything cap we dropped to in see if easier but of by U.S. years. a forward, been markets. going after the international

Tom Olinger

would out I not employment that allocating say land and because government in to is are even it the much the very Europe wild they is but in and tie more about a in U.S. bigger really difficult land they actor difficult Yes, also it’s logistics.

that So supply difficult. just more much land is

Operator

line Heck And Wells with from Fargo. question of the our come next Blaine will

Blaine Heck

Great. Thanks.

up So the lease quarter trending rents. last costs ticked this we percentage have on those turnover noticed over has value and leases as four been up costs of as quarters a free

demand guys seen, given highest of somewhat you ever increase Just counter-intuitive. those context seems that increase, you’ve the having the

forward? on can some just think give that color should those you we how concessions might about what be increase? So, driving going And

Tom Olinger

observation. of a new is and last quarter the second over four the in driving leasing. That’s levels that Tom. particularly quarters is good What this is Blaine, higher

but long-term QX the is generally are slightly with leasing leases concessions, sequentially. increased at slightly a result, And in new higher looking XX% new economics. versus key So QX higher we turnover come as costs

short-term what of getting a with but rents. to flow better a and bit are higher So, believe we be little pain we in cash yes, there is that

that’s think key. I So, the

getting in we do right think, But We clearly, at levels to I a four are decision at quarters, end than make. seen looking and I we’ve economic are moderate much in here long-term we to think last the the the of are economics at. new over leasing it’s the past, here the forward. that’s game long-term bit and looking going clearly going higher

Gene Reilly

Yes.

The other you should in are rents that mind we issue a harder were pushing before. is than keep we lot

that value the So, likely customers to existing and highest replace chain most have the efficient with customers the pay. ability to

has last reshuffle in been months. that So, accelerated the XX, XX

Operator

next from of And come the will Markets. line Capital RBC our Michael Carroll question with

Michael Carroll

wanted needs the their both? outsourcing on bit are of already a did you and they they of XPLs Yes. comments you right broadening little have from smaller is to players, guess. back earlier I are the or to e-commerce touch specifically looking are When insource insource to now versus it demand are say an logistics looking it seeing interest, I network to players, that companies or from just the regarding these tenant more out expand

Mike Curless

Hey. This is both. Mike. It’s certainly a bit of little

diversified – I think in leases some and Latin is, XX up about what over insourcing activity of fast there Last of and takeaway and the just time us the of get MercadoLibre here customers. is, or diversification as and of number forward, in the story This bigger robust bigger this smaller, the in players. brand that a to in quarters. more But front-end and variety plenty there like We very activity is three said here about Tom other combination were not of is year back-end coming XX smaller using while all a of the earnings Amazon? non-Amazon they’ve is there couple year, The e-com questions story their leased we wide walmart.com the about bigger Amazon. it’s next actually all big about is with of outsourcing. in like There terms lot with non-Amazon really story high it America, JD.com. asked XXX a customers. steady we larger is been times names the And these players is again,

Tom Olinger

with a on I lot catch-up pandemic frenzy as usual mean, can if take I in in think well. and a that’s is our very that strategy think now it are XPL I how of leasing anything approach up just metal is activity. and is ecommerce they sort the to a their of as - that and they they respect that creating business the important incremental suggested statistics to there pedal people showing playing are realizing

Operator

next the our of J.P. will Mueller question And with line Mike from come Morgan.

Mike Mueller

Yes. could see which about a do down this about said Hi. further? And Can versus we the think think you little bit spec your development year on drift I build-to-suit? you mix, margins you talk is XX%

Gene Reilly

is Yes. this Gene. Mike,

I hold. think the – I think that’s to going

because And In might has awful How be has with the But long build-to-suit percentage. I an creep negotiate has taken something see margins fact, to expect the it. higher both spec, and ultimately at careful of I cases, think we in you do think to lot do a to I’d looking the comparison it. margins mix build-to-suit with transaction up. to can between

the rent have expectations side. compression that’s that and underwriting cost and We us increasing we increases. growth construction overwhelms our ahead of on cost on the have return But

So I think, generally expand. see going margins to

Operator

Baird. will from next come question Rodgers the And of line our Dave with

Dave Rodgers

that trying Hi, the an more they up. near-term? to kind earlier. of I consideration to color in Those cost their and interest kind interest I sales if the to increase change of does be may how between you maybe sales for there. conversations the the at solve industries, from in sales willingness with on going be inventory not And type keeping guess, of guess, the topics down? to Gene. inventory Maybe perspective mentioned you big to Obviously, all? take to with Does into and talk helpful. vary how they - start any what inventory Mike and do carry guys are customers, inventory or would when is Wanted that ask that even

Chris Caton

Hey, off. Dave, kick I’ll Chris Caton. it’s it

into pre-pandemic as necessary. any the country. are it’s get down right from times, off, first XX% fulfillment has goods a shared by means Trying few now levels. So inventories been Look, to

And to get so, race really just in. levels it’s a

do relates not think this, their to more see They tactically I starting supply on are As at. we think phase numbers the at to focused looking it are are people specific are of I yet resilience, fixing but chains much strategic chain Refresh starting planning they survey we with, increasing of play year. and with issues conference our had ago, do to spoke supply four that XX% are top related people in they up see mind inventories poll have we days resilience of a this out. the said

Operator

question Street. line next the Vince Tibone with come of will from our And Green

Vince Tibone

Good to wanted last in which follow-up California, growth you on and reviews in I to quarter? how seeing little the fundamentals forecasting hear U.S. New get Jersey morning. Southern color more I market improvement also in rent are are growth And and just significant you increase Hi. a on wanted high just markets greatest alike? forecast. your

Chris Caton

Chris Hey, Caton. It’s Vince.

situation has rising, just that as did of a in markets the the And XXX in year, less coastal, When increase we look, these on Europe Toronto the first coast outperform markets was indeed, let’s basis the annual will U.S. That they Last we’ve facts in XXX the impressive. year. year and a really had returned. this about I make record. far start the X% an compressed Typically, differentiation and there I points. just to look, material are X% differentiation. up half are different the so categories, there. with major the nearly it’s think on basis rents think that’s are So in not of up the Rents U.S. are by

— this coming And see so, that should on say in outperformance to helps the going Toronto markets see we of I in hit think we I’d we discussed the these I relative years. year. some expect mid-teens, earlier, Hope this trends coastal are based And widen to you.

Tom Olinger

I tack Tom. mean, now. XX%, is of year earnings, this of Vince, are on I the on would – for and portfolio XX% our impact right? just our rolling a we around

good away. the right all not news So on growth this coming rent of P&L to is

in-place to want million I But would to to NOI rent as incremental significantly continue higher. at market little is quarter in where think you So almost it’s in-place to to go. gapped remarks, need see look at XX%. now that to almost March this continues going And $XXX growth I which a said market my and of prepared the out

Chris Caton

today’s have and other would cost, as I rents land some of been doesn’t strong Yes rents, construction one pencil. markets, in today’s with today’s these add, as development thing best cost, and

when to cap are rents rates that be thinking, developing, here. are here to tell clearing don’t to and I be your land means they from building know But I you which come way So, are today’s close have wrong. margin or that may they people grow quite development. wrong, you they in can significantly cost bit may from no cost, a that compress and that marginal going with

Operator

Risk And our from the line Management. come Rob will of Hedgeye Simone with next question

Rob Simone

taking for comments your to a strategic at and on the Thanks took helpful. back question. valuation really of that comments Kind earlier Tom, guys. question capital. your We get Hey, two-part were I me, for shot think, a

things side, is that’s and think one on so in handicap they The numbers, of contribution too deployments kind growth bit is, the from to more are tougher of raising. a I least the many growth from conservative. obvious from little historically. little outside a the the capital your the at sustainable rate ways, rate But, probably

on guys see So, that how to of was environment coming you year of This you hoping also, G&A. maybe excluding it’s kind interesting. comment proceeding the really years? kind first the the could income net your corporate is the over And promotes subsumed then, I secondarily fundraising that,

a how So think benefit huge you year. obviously valuation but big about a It’s change from perspective, prior a do that? addressing versus

Tom Olinger

Hey, Rob.

take is was ten ago, at time At billion. merger of June on exactly $XX years XX billion. shot AUM the the our me exactly of ago, XXXX, Let closed XX years – mid Today’s the merger it a third-party this. $XX

done management. to managers. the to asset higher you, plus, what So, you period, really bet the good. the be math. years some you as annual haven’t do company It’s than math. of representative you pretty any but growth years pretty CAGR, under certainly industrial higher in and funds ten billion The CAGR a public can growth years a so been But and and great we are to been. will the I model $XX than early if valuation math suggest of guys not do between lot to got it’s third-party It’s had be got because rate billion the think couple $XX has But past I whatever, I trying do what in But, it’s impressive. do the rate XX% anyway, have

we So we It’s the want the now. think just out we We can and on deployment that raise us. to that raise limiter – and have there have we opportunities if – raise capital right growth good than for capital. capital not is don’t go our more don’t ability

queues don’t lot see a making don’t we to other investors like to and places. we we certainly getting our too and get big forces a queue of in want long deal that frustrated So, want have

Chris Caton

somewhere This $X of be that years the of to billion new between capital investors, new year billion of and you raised is know course Prologis. will depending the last interested good capital from need. We’ve over the three XX% that’s $X raised to on new

of underscores So broadening logistics sector. that the in really the interest

I going find an thing XX% now think that as are other is of that you The investors imperative. the are to ESG diligencing interesting

So, strength. that been decades. than leader for to plays two our more really an We’ve ESG

that’s PLD. think I for So, differentiator a

Gene Reilly

equity these raising. just I’d They key rated focus point A extremely But are have a open-ended financing entities. Rob. significant are out Hey, funds from levered. are also They low minus on capacity.

out for five less last CAGR But the or runway over flow balance about grown thanks XX% power the that that the last And We money G&A So ten the the over just the of and of to much grow, point AUM the pointing drop to That’s using about as businesses. vast growth, mean, And XX scale. and the in it’s majority their that’s lot then we’ve cash last talked years. bottom-line. five we got tells years. a you of XX just ours. EBITDA. years going about all of by is scale I these sheets, your

Operator

the BTIG. of Catherwood, question come Tom from is going next our line And to

Tom Catherwood

just you, Hamid, that pre-ordering wanted and and of material by had industrial Thank a replacement I quarter, by you Prologis of guys. much cost out. steel. Excellent. Last on lot gotten ahead mentioned development mid to penciling follow-up including as XX% think that as on could that not comment had increase your

see for and today, utilize As could on thoughts thoughts And which What is margin are the material rates development current to are side market far we input and the that? on in pre-ordered there timeframe maybe costs of yet how what they to your you your you is a we those? sit take kind trend? could might fully as continue as more compression kind of

Hamid Moghadam

Yes.

we steel our that’s In want terms false program impression on I steel of the And our to that got didn’t pre-purchasing development are working steel, been hedged we’ve pretty much hedged. through costs. create the entire

in to think chain-related view out have that, Gene don’t is and growing that plants thing going So, little all where compressing rents two cost inflationary costs a is issues replacement escalation there normal up could forward. price affecting rates are once big are these I back period and impacted a cap some going My trend, of factor that’s producing. a a reverse was costs margins personal or steel there going the is the which most that the and are get material mentioned land than and forecasting faster ago, what year while important supply out are maybe back sort on up. margins subside But are a years of and

a housing going hasn’t kicked demand. not and the about changes the his are is I sectors how right all potential of and going can’t prices the absent now, different when And expand housing still much outlook know that, of was the housing. So near something for big you notably Chris the Housing anything given someone in in. asks and warehouse to And inventory think in that sectors consumer margins, space its material if are is particularly up it’s sector. anywhere that even how low unless

an engine growth for expect actually So of I that demand. additional to be

Operator

And Bin from Truist. line our the Kim next question with of Ki come will

Ki Bin Kim

Good Yes. morning.

to back go topic. to wanted Just the land

more year-to-date bought guys land in than you You XXXX. did

so a broad of Just curious - questions. couple just

just to work good relatively market you that there what already it that? the today? think to curious you to humming have behind thinking do more you as just – that we in wanted along? a is think it to lasting Is can is expect Or about that we that the had replenish to I demand we sizable it You land billion should about is kind the Should to and soon? element long so pretty base. land good build that the land secure get things feel am smaller term longer shouldn’t been inventory? to value is Or a to $XX maintain you you how level And a bank plan of land this start development? also, out keep put your

Tom Olinger

Bin. of couple Yes, things, Ki

land, land of of all, a flavors. of One but in First different not couple is which comes some unentitled buy we raw lot.

the period doesn’t shows Second land deal. the we comes options actually the we don’t show up in the It up buy. the that when of closed we form in made period that It actually option. in

So, be find be actually ago. many may of up But just be improving can land we as that finally, it options we I don’t in know negotiated the and that land. not moons are closing cost But specifics may the for it out. it And land existing land, additional at. infrastructure this quarter many, could that looking new you shows on infrastructure

Tracy doing with a shows For they that, foot need land along it infrastructure style are we Park, million and land. to the deals up XXXX. little square example, out we in like infrastructure that of that as put in But our are we with in going bought and

to land investments pencil we them increasing covered the percentage they they have even place them scrape our if redevelop and stream weren’t road. is as an going income an down land and of Finally, and

they product are new it. these land are that embedded right. Gene, But of own on attractive terms developing an anything? have purchases So, pretty deals in also their in actually upside

Gene Reilly

Yes.

you So, of about XX% to build time, Ki how out, land. replenishing at Bin, of bank pretty either if it we place $XX that those or much And ratios. at is we over the are land sticking are look billion covered option you if land look

size the got respect of comes to categories those grow. with two XX% of So, land and the bank, to in it it’s nearly

Our you and development along to see bank going growing grow is it. land the program are with

Tom Olinger

we Hilltop yield this land the are not to going way a are buying be retail that attention would transaction business. going No, that all just example of all of to this on the good with business? A got That’s the sudden retail we it. another

it’s but So, million. It’s chunky. $XXX

the move shows that bit. can that the as So in at given up end But it’s of the day. numbers quarter a place quite a by land covered around

Operator

of [Operator question Jamie is Feldman, America. a from Bank follow-up Instructions] And our next

Jamie Feldman

– of demand that with to see on yet driver is wanted and then continue thoughts secondly, your raised you could is with stabilizations full what the and in platform back this surprised mentioned housing bill not to growth? And anything starts a that just be the thoughts I you. I your across potential Thank we’ll coming re-shoring Any see board for could you - there out of have mean PLD at plans? development your Thanks. questions. demand. One guidance follow-up that on and infrastructure that then, also let its Would latest you Congress guidance. that say shortages, you specific going supply chain the pleasantly two Or to something about the quick is sector?

Tom Olinger

Yes.

it tell. On is the side, of isn’t a infrastructure, I can this lot infrastructure

them articles. of infrastructure do for set PPE. So is supplies and business. the newspaper lot I haven’t than I part, onshoring I things And great in month-after-month of really less I - only onshoring billion should think be seen of $X really will don’t are be to import the there for we if real necessarily this at Onshoring those actually records. see you going add look But and a now think medical numbers, is the business.

our are infrastructure, things we use to the But over-used speaking, resources, manufacture a anything? an just knowhow labor, into the containers. the the to don’t word. things that the the have of of Gene, some generally that lot come And strategic

Gene Reilly

seeing you see the you think your part think here. in see the I mean, don’t will I Mexico, I question? But was they Yes. of first re-shoring are it. What

Chris Caton

see we others. What

Gene Reilly

Right. Right.

Tom Olinger

no idea. I have Well,

Gene Reilly

to. need we Yes,

Tom Olinger

talk a out about – of our can in and this that is really tell couple and paying heard us for We’ve of – business, Yes, the taken middle that I you’ve customer I in But mean the dividends. it we’ll you the weeks. find and put years now.

So lot us business. this model will playbook customer-centric get the to everything a copied that By else. of way like like do allows

will Jamie, people business. the doing But to other we customer that great assume, last. far, you so the same doing. I do With Thanks the the that, major thing. were good work are So, are with teams

care. again you before thank So, Take quarter next we and for your talking forward you to to attention for look sure.

Operator

like to thank call. we’d participating again, Once you today’s for in conference Prologis

now may You disconnect.