UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
or
☐ 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.)
(State or other jurisdiction of
incorporation or organization)
Pier 1, Bay 1, San Francisco, California
(Address or principal executive offices)
94-3281941 (Prologis, Inc.)
94-3285362 (Prologis, L.P.)
(I.R.S. Employer
Identification No.)
94111
(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:
Prologis, Inc.
Prologis, L.P.
Prologis, L.P.
Title of Each Class
Common Stock, $0.01 par value
3.000% Notes due 2026
2.250% Notes due 2029
Trading Symbol(s)
PLD
PLD/26
PLD/29
Name of Each Exchange on Which Registered
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Prologis, Inc. – NONE
Prologis, L.P. – NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Prologis, Inc.: Yes ☑ No ☐
Prologis, L.P.: Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Prologis, Inc.: Yes ☐ No ☑
Prologis, L.P.: Yes ☐ No ☑
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 requirements 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 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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,”
“accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):
Prologis, Inc.:
Prologis, L.P.:
☑
☐
☐
☑
Large accelerated filer
Non-accelerated filer
Large accelerated filer
Non-accelerated filer
☐
Accelerated filer
☐
Accelerated filer
☐
☐
☐
☐
Smaller reporting company
Emerging growth company
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act
(15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery
period pursuant to §240.10D-1(b). ☐
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 ☑
Based on the closing price of Prologis, Inc.’s common stock on June 30, 2023 the aggregate market value of the voting common equity held by nonaffiliates of Prologis, Inc. was $112,988,239,238.
The number of shares of Prologis, Inc.’s common stock outstanding at February 9, 2024, was approximately 924,881,000.
Portions of Part III of this report are incorporated by reference to the registrant’s definitive proxy statement for the 2023 annual meeting of its stockholders or will be provided in an amendment filed on Form 10-K/A.
Auditor Name: KPMG LLP Auditor Location: Denver, CO Auditor Firm ID: 185
DOCUMENTS INCORPORATED BY REFERENCE
EXPLANATORY NOTE
This report combines the annual reports on Form 10-K for the year ended December 31, 2023, of Prologis, Inc. and Prologis, L.P. Unless stated otherwise or the context
otherwise requires, references to “Prologis, Inc.” or the “Parent” mean Prologis, Inc. and its consolidated subsidiaries; and references to “Prologis, L.P.” or the “Operating
Partnership” or the “OP” mean Prologis, L.P., and its consolidated subsidiaries. The terms “the Company,” “Prologis,” “we,” “our” or “us” means the Parent and the OP
collectively.
The Parent is a real estate investment trust (a “REIT”) and the general partner of the OP. At December 31, 2023, the Parent owned a 97.58% common general partnership
interest in the OP and substantially all of the preferred units in the OP. The remaining 2.42% 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 annual reports on Form 10-K 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.
TABLE OF CONTENTS
Description
PART I
Page
Table of Contents
Item
1.
Business
The Company
Operating Segments
Future Growth
Code of Ethics and Business Conduct
Environmental, Social and Governance
Environmental Matters
Governmental Matters
Insurance Coverage
1A.
1B.
1C.
2.
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
3.
4.
5.
6.
7.
7A.
8.
9.
9A.
9B.
9C.
10.
11.
12.
13.
14.
15.
16.
Geographic Distribution
Lease Expirations
Co-Investment Ventures
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
PART II
Market Information and Holders
Preferred Stock Dividends
Sales of Unregistered Securities
Purchases of Equity Securities
Securities Authorized for Issuance Under Equity Compensation Plans
Other Stockholder Matters
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Overview
Results of Operations
Environmental Matters
Liquidity and Capital Resources
Critical Accounting Policies
New Accounting Pronouncements
Funds from Operations Attributable to Common Stockholders/Unitholders
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Exhibits, Financial Statements and Schedules
Form 10-K Summary
PART IV
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The statements in this report that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on current expectations, estimates and projections about the
industry and markets in which we operate as well as management’s beliefs and assumptions. Such statements involve uncertainties that could significantly impact our
financial results. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” "aims," and “estimates” including variations of such words and similar
expressions are intended to identify such forward-looking statements, which generally are not historical in nature. All statements that address operating performance, events
or developments that we expect or anticipate will occur in the future — including statements relating to rent and occupancy growth, acquisition and development activity,
contribution and disposition activity, general conditions in the geographic areas where we operate, our debt, capital structure and financial position, our ability to earn
revenues from co-investment ventures, form new co-investment ventures and the availability of capital in existing or new co-investment ventures — are forward-looking
statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although we
believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained,
and therefore actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some of the factors that may affect
outcomes and results include, but are not limited to: (i) international, national, regional and local economic and political climates and conditions; (ii) changes in global
financial markets, interest rates and foreign currency exchange rates; (iii) increased or unanticipated competition for our properties; (iv) risks associated with acquisitions,
dispositions and development of properties, including the integration of the operations of significant real estate portfolios; (v) maintenance of Real Estate Investment Trust
(“REIT”) status, tax structuring and changes in income tax laws and rates; (vi) availability of financing and capital, the levels of debt that we maintain and our credit ratings;
(vii) risks related to our investments in and management of our co-investment ventures, including our ability to establish new co-investment ventures; (viii) risks of doing
business internationally, including currency risks; (ix) environmental uncertainties, including risks of natural disasters; (x) risks related to global pandemics; and (xi) those
additional factors discussed under Part I, Item 1A. Risk Factors in this report. We undertake no duty to update any forward-looking statements appearing in this report except
as may be required by law.
PART I
ITEM 1. Business
Prologis, Inc. is a self-administered and self-managed REIT and is the sole general partner of Prologis, L.P. through which it holds substantially all of its assets. We operate
Prologis, Inc. and Prologis, L.P. as one enterprise and, therefore, our discussion and analysis refers to Prologis, Inc. and its consolidated subsidiaries, including Prologis,
L.P. We invest in real estate through wholly owned subsidiaries and other entities through which we co-invest with partners and investors ("co-investment ventures"). We
have a significant ownership interest in the co-investment ventures, which are either consolidated or unconsolidated based on our level of control of the entity.
Prologis, Inc. began operating as a fully integrated real estate company in 1997 and elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended
(“Internal Revenue Code” or “IRC”). We believe the current organization and method of operation enable Prologis, Inc. to maintain its status as a REIT. Prologis, L.P. was
also formed in 1997.
We operate, manage and measure the operating performance of our properties on an owned and managed (“O&M”) basis. Our O&M portfolio includes our consolidated
properties as well as properties owned by our unconsolidated co-investment ventures, which we manage. We make operating decisions based on our total O&M portfolio as
we manage the properties without regard to their ownership. We also evaluate our results based on our proportionate economic ownership of each property included in the
O&M portfolio (“our share”).
Included in our discussion below are references to funds from operations (“FFO”) and net operating income (“NOI”), neither of which are United States (“U.S.”) generally
accepted accounting principles (“GAAP”). See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for a reconciliation of Net
Earnings Attributable to Common Stockholders/Unitholders in the Consolidated Statements of Income to our FFO measures and a reconciliation of NOI to Operating Income
in the Consolidated Statements of Income, the most directly comparable GAAP measures.
Our corporate headquarters is located at Pier 1, Bay 1, San Francisco, California 94111, and our other principal office locations are in Amsterdam, Denver, Mexico City, Sao
Paulo, Shanghai, Singapore and Tokyo.
Our Internet address is www.prologis.com. All reports required to be filed with the Securities and Exchange Commission (“SEC”) are available and can be accessed free of
charge through the Investor Relations section of our website. The common stock of Prologis, Inc. is listed on the New York Stock Exchange (“NYSE”) under the ticker “PLD”
and is a component of the Standard & Poor’s (“S&P”) 500.
THE COMPANY
Prologis is the global leader in logistics real estate with a focus on high-barrier, high-growth markets. We own, manage and develop well-located, high-quality logistics
facilities in 19 countries across four continents. Our portfolio focuses on the world’s most vibrant centers of commerce and our scale across these locations allows us to
better serve our customers’ diverse logistics requirements.
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The importance of logistics supply chains has increased dramatically to our customers and the global economy. The long-term trends of e-commerce adoption and supply
chain resiliency continue to drive the need for increased warehouse space to store and distribute goods. This demand has translated into meaningful increases in rents and
low vacancy. We believe this demand is driven by three primary factors: (i) customer supply chains re-positioning to address the significant shift to e-commerce and
heightened service expectations; (ii) overall consumption and household growth; and (iii) our customers’ desire for more supply chain resiliency. We believe these forces will
keep demand strong over the long-term.
Our teams actively manage our portfolio by providing comprehensive real estate services, including leasing, property management, development, acquisitions and
dispositions. We also invest significant capital into new logistics properties through our development activity and third-party acquisitions. Proceeds from the disposition of
properties, generally through the contribution of newly developed properties to our co-investment ventures and the sales of non-strategic properties to third parties, allow us
to recycle capital back into our investment activities.
While the majority of our properties in the U.S. are wholly owned, we hold a significant ownership interest in properties both in the U.S. and internationally through our
investment in the co-investment ventures. Partnering with the world’s largest institutional investors through co-investment ventures allows us to expand our investment
capacity, enhance and diversify our real estate returns and mitigate our exposure to foreign currency movements.
Our scale and customer-focused strategy have compelled us to expand the services we provide. Our 1.2 billion square foot portfolio has provided the foundation upon which
we have built a platform of solutions to address challenges that our customers face in global fulfillment today. Through Prologis Essentials, we focus on innovative ways to
meet our customers’ operations and energy and sustainability needs. Our customer experience teams, proprietary technology and strategic partnerships are foundational to
all aspects of our Prologis Essentials offerings. These resources allow us to provide our customers with unique and actionable insights and tools to help them make progress
on sustainability goals and drive greater efficiency in their operations.
Finally, our long-standing dedication to Environmental, Social and Governance (“ESG”) practices creates value for our customers, investors, employees and the communities
in which we do business. The principles of ESG are an important aspect of our business strategy that we believe delivers a strategic business advantage.
Our Global Presence
At December 31, 2023, we owned or had investments in, on a wholly-owned basis or through co-investment ventures, properties and development projects expected to total
approximately 1.2 billion square feet across the following geographies:
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Throughout this discussion, we reflect amounts in the U.S. dollar, our reporting currency. Included in these amounts are consolidated and unconsolidated investments
denominated in foreign currencies, principally the British pound sterling, Canadian dollar, euro and Japanese yen that are impacted by fluctuations in exchange rates when
translated to U.S. dollars. We mitigate our exposure to foreign currency fluctuations by investing outside the U.S. through co-investment ventures, borrowing in the functional
currency of our subsidiaries and utilizing derivative financial instruments.
OPERATING SEGMENTS
Our business comprises two operating segments: Real Estate (Rental Operations and Development) and Strategic Capital.
Below is information summarizing consolidated activity within our segments over the last three years (in millions):
(1)NOI from the Real Estate Segment is calculated directly from the Consolidated Financial Statements as Rental Revenues and Development Management and Other
Revenues less Rental Expenses and Other Expenses. NOI from the Strategic Capital Segment is calculated directly from the Consolidated Financial Statements as Strategic
Capital Revenues less Strategic Capital Expenses.
(2)A developed property moves into the operating portfolio when it meets our definition of stabilization, which is the earlier of when a property that was developed has been
completed for one year, is contributed to a co-investment venture following completion or is 90% occupied. Amounts represent our total expected investment (“TEI”) upon
stabilization, which includes the estimated cost of development or expansion, including land, construction and leasing costs.
Real Estate Segment
Rental Operations. Rental operations comprise the largest component of our operating segments and generally contributes 85% to 90% of our consolidated revenues,
earnings and FFO. We collect rent from our customers through operating leases, including reimbursements for the majority of our property operating costs. For leases that
commenced during 2023 within the consolidated operating portfolio, the weighted average lease term was 66 months. We expect to generate earnings growth by increasing
rents, maintaining high occupancy rates and controlling expenses. The primary driver of our revenue growth will be the rolling of in-place leases to current market rents when
leases expire, as discussed further below. We believe our active portfolio management, combined with the skills of our property, leasing, maintenance, energy, sustainability
and risk management teams allow us to maximize NOI across our portfolio. Substantially all of our consolidated rental revenue, NOI and cash flows from rental operations
are generated in the U.S.
Development. Given the scarcity of modern logistics facilities in our target markets, our development business provides the opportunity to build to the evolving requirements
of our customers while deepening our market presence. We believe we have a competitive advantage due to (i) the strategic locations of our global land bank and
redevelopment sites; (ii) the development expertise of our local teams; (iii) the depth of our customer relationships; (iv) our ability to integrate sustainable design features that
provide operational efficiencies for our customers; and (v) our procurement capabilities that allow us to secure high-demand construction materials at lower cost. Successful
development and redevelopment efforts provide significant earnings growth as projects are leased, generate income and increase the value of our Real Estate Segment.
Generally, we develop properties in the U.S. to hold for the long-term and outside the U.S. for contribution to our unconsolidated co-investment ventures.
Strategic Capital Segment
Through the Strategic Capital Segment we partner with many of the world’s largest institutional investors through unconsolidated co-investment ventures. The business is
capitalized principally through private and public equity of which 93% is either in perpetual open-ended or long-term ventures and two publicly traded vehicles (Nippon
Prologis REIT, Inc. in Japan and FIBRA Prologis in Mexico). We align our interests with our partners by holding significant ownership interests in our nine unconsolidated co-
investment ventures (ranging from 15% to 50%). This structure allows us to reduce our exposure to foreign currency movements for investments outside the U.S.
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This segment produces durable, long-term cash flows and generally contributes 10% to 15% of our consolidated revenues, earnings and FFO, excluding promotes, all while
requiring minimal capital other than our investment in the venture. We generate strategic capital revenues or fees from our unconsolidated co-investment ventures,
principally through asset management and property management services. Asset management fees are primarily driven by the quarterly valuation of the real estate
properties owned by the respective ventures. We earn additional revenues by providing leasing, acquisition, construction management, development and disposition
services. In certain ventures, we also have the ability to earn revenues through incentive fees (“promotes” or “promote revenues”) periodically during the life of a venture,
upon liquidation of a venture or upon stabilization of individual venture assets based primarily on the total return of the investments over certain financial hurdles. Promote
revenues are recognized when earned at the end of the promote period for the specific co-investment ventures. We plan to grow this business and increase revenues by
increasing our assets under management in existing or new ventures. The majority of the strategic capital revenues are generated outside the U.S.
FUTURE GROWTH
We believe that the quality and scale of our portfolio, our ability to build out our land bank and redevelopment sites, our strategic capital business, the depth of our customer
relationships and the strength of our balance sheet are differentiators that allow us to drive growth in revenues, NOI, earnings, FFO and cash flows.
(1)Net effective rent ("NER") is calculated at the beginning of the lease using estimated total cash base rent to be received over the term and annualized and excludes
amortization of fair value lease adjustments from acquisitions. Amounts derived in a currency other than the U.S. dollar have been translated using the average rate from the
previous twelve months.
Rent change represents the percentage change in net effective rental rates (average rate over the lease term), on new and renewed leases, commenced during the
period compared with previous net effective rental rates in that same space.
(2) Included in 2022 and 2023 were significant promotes earned in Europe and the U.S, respectively. We do not have any significant promote opportunities in 2024.
•Rent Growth. We expect rents in our markets to continue to increase due to demand and low vacancy. Due to strong market rent growth over the last several years, our in-
place leases have considerable upside potential to drive future organic NOI growth. This is evident in the positive rent change we have experienced in every quarter since
2013 and was significant to our operating results over the last several years. We estimate that our lease mark-to-market is approximately 57% (on an NER basis), which
represents the growth rate from in-place rents to current market rents based on our share of the O&M portfolio at December 31, 2023. Therefore, even if there was no
additional market rent growth in the future, we expect our lease renewals to translate into significant increases in future rental income.
•Value Creation from Development. The global nature of our development program provides a wide landscape of opportunities to pursue based on our judgment of market
conditions, opportunities and risks. One of the ways in which we create value is through our focus on sourcing well-located land and redevelopment sites through acquisition
opportunities, including our innovative approach with Covered Land Plays ("CLP"), which are income producing assets acquired with the intention to redevelop for higher and
better use as industrial properties. Based on our current estimates, our consolidated land, including options and CLP, has the potential to support the development of $35.7
billion ($40.0 billion on an O&M basis) of TEI of new logistics space. We measure the estimated value creation of a development project as the stabilized value above our
TEI. As properties are completed and leased, we expect to realize the value creation principally through gains realized through contributions of these properties to
unconsolidated co-investment ventures and increases in the NOI of the consolidated portfolio.
•Strategic Capital Advantages. The co-investment ventures provide additional capital from third parties that we can use to grow our company, contribute to self-funding our
development activities through the sale of newly developed assets to these vehicles and produce substantial fees for our management of the assets. We raise capital to
support the long-term growth of the co-investment ventures while maintaining our own substantial investments in these vehicles. At December 31, 2023, the gross book
value of the operating portfolio held by our nine unconsolidated co-investment ventures was $53.1 billion across 507 million square feet.
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(1)G&A Expenses is a line item in the Consolidated Financial Statements. Adjusted G&A expenses is calculated from our Consolidated Financial Statements as G&A
Expenses and Strategic Capital Expenses, less expenses under the Prologis Promote Plan (“PPP”) and property-level management expenses for the properties owned by
the ventures.
•Balance Sheet Strength. At December 31, 2023, the weighted average remaining maturity of our consolidated debt was 9 years and the weighted average interest rate
was 3.0%. Prior to the current rising interest rate environment, we were able to take advantage of lower interest rates through our refinancing activities and substantially
addressed our debt maturities until 2026. At December 31, 2023, we had total available liquidity of $6.0 billion. We continue to maintain low leverage as a percentage of our
real estate investments and our market capitalization. As a result of our low leverage, available liquidity and investment capacity in the co-investment ventures, we have
significant ability to capitalize on opportunistic value-added investments as they arise.
•Our Scale Drives Efficiency. We have scalable systems and infrastructure in place to grow both our consolidated and O&M portfolios with limited incremental G&A
expense. We use adjusted G&A expenses as a percentage of the O&M portfolio (based on gross book value) to measure and evaluate the overhead costs associated with
the O&M portfolio. We believe we can continue to grow NOI and strategic capital revenues organically and through accretive development and acquisition activity while
further reducing G&A as a percentage of our investments in real estate. As shown in the graph above, the acquisition of Duke Realty Corporation and Duke Realty Limited
Partnership (collectively "Duke" or the "Duke Transaction") on October 3, 2022 is an example of this. We increased our O&M portfolio significantly in the fourth quarter of
2022 as a result of the acquisition and had minimal increases to G&A expenses.
•Staying “Ahead of What’s Next™”. We are focused on creating value beyond real estate by enhancing our customers’ experience, leveraging our scale in procurement
and innovating through data analytics and digitization efforts. This includes investments in early and growth-stage companies that are focused on emerging technologies for
the logistics sector. Through Prologis Essentials, we support our customers through service and product offerings, including innovative solutions to operations and energy
and sustainability needs that can make our customers’ decision process easier while progressing on their environmental goals.
Competition
Real estate ownership is highly fragmented, and we face competition from many owners and operators. Competitively priced logistics space could impact our occupancy
rates and have an adverse effect on how much rent we can charge, which in turn could affect our operating results. We face competition regarding our capital deployment
activities, including regional, national and global operators and developers. We also face competition from investment managers for institutional capital within our strategic
capital business.
Despite the competition, our global reach and local market knowledge over the years have given us distinct competitive advantages, including the following:
•a portfolio of properties strategically located in markets characterized by large population densities, growing consumption and high barriers to entry, typically near large labor
pools and extensive transportation infrastructure, including our Last Touch® facilities;
•the ability to leverage the organizational scale and structure of our 1.2 billion square foot O&M portfolio to provide a single point of contact for our multi-market customers to
address their needs through our in-house global Customer Led Solutions Team;
•services and solutions offered through Prologis Essentials to assist our customers with their operations and energy and sustainability needs and at the same time enhancing
the value of our real estate;
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•a strategically located, global land bank and redevelopment sites that have the potential to support the development of $40.0 billion of TEI of new logistics space on an O&M
basis, including build-to-suit development and redevelopment as industrial properties or other higher use assets;
•local teams with the expertise, experience and relationships to lease our properties and deploy capital advantageously, supported by our in-house government and
community affairs and entitlement teams;
•development of logistics facilities with sustainable design features that meet customer needs for efficient, high-quality buildings while enabling them to make progress on
their own sustainability objectives;
•relationships and successful track record with current and prospective investors in our strategic capital business that is comprised of 93% perpetual open-ended or long-term
ventures and two publicly traded vehicles;
•a market intelligence team that allows us to track business conditions in real time, proactively pursue market opportunities and disruptions alike, and develop revenue-
generating capabilities to strengthen our operational excellence;
•an investment in technology and talent to support our sustainability objectives, including expanding our efforts around renewable energy;
•Prologis Ventures, our corporate venture capital group, tracks the leading edge of innovation and technologies within real estate and the supply chain, creating important
capabilities that connect Prologis with the C-suites of our customers; and
•a strong balance sheet and credit ratings, coupled with significant liquidity, borrowing capacity and long-term fixed debt with low rates.
Customers
At December 31, 2023, in our Real Estate Segment representing our consolidated properties, we had more than 4,000 customers occupying 634 million square feet of
logistics operating properties (6,700 customers occupying 1.2 billion square feet for our O&M portfolio). Our broad customer base represents a spectrum of international,
national, regional and local logistics users who operate in various industries, providing diverse goods to consumers throughout the globe.
The location of our global portfolio gives us the unique ability to provide our customers with the right real estate solutions for their supply chains that, in turn, allows them to
meet end-consumer delivery expectations. We have invested in properties located within infill and urban areas in our largest global markets with same day access (defined
as Last Touch®) and next day access (defined as city distribution), to the consumer population. We have also invested in facilities located at key transportation hubs on the
edge of these major infill and urban areas and gateway distribution facilities that incorporate access to major sea and intermodal ports.
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Below are the primary categories of goods in our consolidated real estate properties at December 31, 2023:
(1)Primary categories do not sum to 100% as the difference is attributable to customers that do not clearly fall into a single category. Additionally, primary categories are
listed in order of the largest percentage of NER for each category type.
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The following table details our top 25 customers for our consolidated and O&M real estate properties at December 31, 2023 (square feet in millions):
Consolidated - Real Estate
Segment
Owned and Managed
Top Customers
1. Amazon
2. Home Depot
3. FedEx
4. UPS
5. Geodis
6. Wal-Mart
7. DHL
8. Wayfair
9. DSV Panalpina
10. NFI Industries
Top 10 Customers
11. Pepsi
12. Maersk
13. GXO
14. U.S. Government
15. Ryder
16. Berkshire Hathaway
17. Lululemon
18. Samsung
19. OnTrac
20. Kellogg
21. Tesla
22. CEVA Logistics
23. Uline
24. Kuehne + Nagel
25. Target
Top 25 Customers
% of
NER
6.4
2.2
1.9
1.0
0.9
0.8
0.8
0.6
0.6
0.6
15.8
0.6
0.5
0.5
0.5
0.5
0.5
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.3
22.4
Total Occupied
Square Feet
34
15
8
6
6
6
4
6
2
3
90
3
3
4
2
2
3
2
3
1
3
1
3
2
2
2
126
Top Customers
1. Amazon
2. Home Depot
3. FedEx
4. Geodis
5. DHL
6. CEVA Logistics
7. Maersk
8. UPS
9. GXO
10. DSV Panalpina
Top 10 Customers
11. Kuehne + Nagel
12. Wal-Mart
13. ZOZO
14. DB Schenker
15. U.S. Government
16. Wayfair
17. Pepsi
18. Nippon Express
19. Cainiao (Alibaba)
20. NFI Industries
21. Samsung
22. Ryder
23. Tesla
24. Logisteed
25. Mercado Libre
Top 25 Customers
% of
NER
5.0
1.5
1.4
1.3
1.2
0.9
0.8
0.8
0.8
0.8
14.5
0.6
0.6
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.4
0.3
0.3
0.3
0.3
20.5
Total Occupied
Square Feet
43
17
11
17
13
13
7
9
10
8
148
7
7
5
6
3
6
3
4
5
3
5
3
2
4
4
215
In our Strategic Capital Segment, we view our partners and investors as our customers. At December 31, 2023, we had 154 investors in our private equity ventures, several
of which invest in multiple ventures.
Our People
Our people are the foundation of our business. They implement our strategy and create value for our customers and shareholders. We seek to recruit and retain talented
employees with varied experiences and viewpoints. The intent is to create an inclusive and diverse culture where each employee can do their best work and drive our
collective success.
We are committed to our diversity, equity, inclusion and belonging (“DEIB”) hiring practices. We update our employees on our DEIB strategy and invite their ideas and input.
In 2023, we set a goal to achieve two DEIB certifications by 2025: (i) Management Leadership for Tomorrow’s “Black Equity at Work;” and (ii) Management Leadership for
Tomorrow’s “Hispanic Equity at Work.” Our CEO is also a signatory to the CEO Action for Diversity and Inclusion. We conduct annual pay equity analyses that cover women
and people of color and aim to address differences in compensation not explained by relevant job factors accordingly.
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The following charts display diversity by levels of seniority of our workforce at December 31, 2023:
(1) Managers include employees with manager, director or vice president titles. Senior leaders include employees with senior vice president or higher titles.
We focus on learning and development at every level of the organization. We align employees’ goals with our overall strategic direction to create a clear link between
individual efforts and the long-term success of the company. We communicate at all levels of the organization throughout the year about company goals and strategic
initiatives to ensure awareness and alignment. We then provide continual feedback to all employees on their performance towards those goals as well as budget for external
learning and stretch opportunities to support their growth. Providing our employees learning and development through training, educational opportunities and mentorship is
critical to our ability to continue to innovate. In 2023, more than 1,600 employees completed more than 13,600 hours of company-provided or company-sponsored learning
and development training.
We provide opportunities for our employees to share their insights and perspectives on our company and their work experience. Our most recent employee engagement
survey, completed in September 2023, with a participation rate of 92%, indicated that 88% of Prologis employees are engaged based on their positive response to the
questions that comprise our engagement driver index.
We strive to cultivate a healthy and safe working environment for our employees. We provide workplace flexibility with accountability as determined by role. For those
employees who work on-site, we have protocols in place to help ensure a safe working environment. We continue to attract and retain talent in the industry through
competitive compensation, a robust benefit package, pathways to career advancement, talent recognition and individual development planning.
The following table summarizes our total number of employees at December 31, 2023:
Geographies
(1)
U.S.
Other Americas
Europe
Asia
Total
1,538
173
605
258
2,574
(1)This includes employees who were based in the U.S. but also support other geographies.
Prologis employees are not organized under collective bargaining agreements, other than in Brazil, France and Spain, and there is a works council in France.
CODE OF ETHICS AND BUSINESS CONDUCT
We maintain a Code of Ethics and Business Conduct applicable to our board of directors (the “Board”) and all of our officers and employees, including the principal executive
officer, the principal financial officer and the principal accounting officer, and other people performing similar functions. A copy of our Code of Ethics and Business Conduct is
available on our website, www.prologis.com. In addition to being accessible through our website, copies of our Code of Ethics and Business Conduct can be obtained, free of
charge, upon written request to Investor Relations, Pier 1, Bay 1, San Francisco, California 94111. Any amendments to or waivers of our Code of Ethics and Business
Conduct that apply to the principal executive officer, the principal financial officer, the principal accounting officer, or other people performing similar functions, and that relate
to any matter enumerated in Item 406(b) of Regulation S-K, will be disclosed on our website.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”)
Our integrated approach to ESG is an important aspect of our business strategy and strengthens our relationships with our customers, investors, employees and the
communities in which we do business. As we look toward the future, we have set sustainability goals and objectives that demonstrate our ambition, create accountability and
drive alignment with our business strategy. These goals include the
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utilization of renewable energy sources, along with sustainable development and redevelopment, that create energy savings and reduce our environmental footprint. We
have also set goals and objectives to support the communities in which we do business and employ strong governance practices.
Environmental
We develop modern and efficient buildings with state-of-the-art technology to stay ahead of our customers’ needs, advance structural, transportation and energy
requirements, and make progress on our own sustainability goals and objectives. This includes new development and redevelopment of buildings that align with leading
sustainable building standards and the implementation of solutions and services such as onsite solar generation, energy storage, heat pumps, cool roofs, LED lighting, EV
charging stations and other mobility solutions, recycling and xeriscaping. We regularly talk with customers on how Prologis can work with them to enhance the sustainability
of their operations. We believe these services and solutions can deliver operational efficiencies, reduce energy and water consumption and decrease greenhouse gas
emissions within our customers’ operations and across our own portfolio.
For the 2023 year, we committed to: (i) installing 100% LED lighting within our logistics facilities across our O&M operating properties by 2025; (ii) installing 1 gigawatt of
solar generation capacity, supported by storage, by 2025; and (iii) obtaining sustainable building certifications for 100% of our eligible new developments and
redevelopments. We believe our Prologis Essentials LED and SolarSmart solutions, which provide our customers with energy solutions and savings through efficient lighting
and solar panels on our rooftops, help reduce the environmental footprint of our customers and accelerate our progress in these areas. At December 31, 2023, we had
installed LED lighting across 74% of our logistics facilities (based on square feet) within our O&M operating properties. This metric excludes the real estate portfolio we
acquired with 70 operating properties in the U.S. on June 29, 2023. At December 31, 2023, 506 megawatts of solar generation capacity, supported by storage, were installed
within our O&M portfolio, marking the halfway point to our 2025 goal. Excluded from these megawatts were approximately 20 megawatts related to properties that have been
disposed of after the time of installation or assets that have been decommissioned. Beginning on January 1, 2024, we modified our LED lighting goal to prioritize installing
LED lighting within 100% of our eligible new developments and redevelopments and across 80% of our O&M operating properties by 2025.
To fund our sustainable development activities, we have utilized the proceeds from certain senior notes issuances to finance green projects eligible under our green bond
framework. For development properties in our O&M portfolio that were approved by our Investment Committee after June 2021 and that reached stabilization during 2023, we
certified 39% of our eligible developments and redevelopments with sustainable building certifications and 57% were scheduled for sustainable building certification, totaling
96% of eligible development and redevelopment.
Social
We are committed to social responsibility and strengthening relationships important to our business through customer partnerships, investor outreach, community
involvement, supplier engagement, labor solutions, and DEIB initiatives, as discussed above. We work in partnership with local leaders, institutions and organizations to
create jobs and job training programs, expand opportunities for students with diverse backgrounds to study real estate, promote health and safety and enhance recreational
and transit infrastructure. We believe these efforts help create a more stable and predictable business environment for Prologis and our customers, drive economic
development and support social wellness and well-being in the communities we serve.
For our customers, where recruitment and retention of logistics talent is a key challenge, we are helping build a talent pipeline through our Community Workforce Initiative
(“CWI”), founded in 2018. The CWI is a talent development program that advances the skills and capabilities of logistics talent, with an emphasis on revitalizing career
pathways and creating economic opportunities in the communities where we operate. In 2018, we set a goal to train 25,000 individuals by 2025 by partnering with leading
public sector organizations and leveraging digital learning technologies to develop innovative training solutions. At December 31, 2023, under the program, we trained
approximately 29,700 individuals towards this goal, resulting in us completing our goal two years early.
Beginning in 2019, we committed to spending 75,000 hours supporting our local communities by 2025. To achieve this goal, we enable our employees to spend 40 working
hours a year to volunteer, including at our company-sponsored day of service, where employees around the globe volunteer on projects to help in their local communities. At
December 31, 2023, we have contributed in excess of 54,500 hours towards our goal. In addition, we encourage our employees to support our local communities outside of
working hours with our Dollars for Doers and other matching gifts programs, through which Prologis donates to eligible charities and non-profit organizations based on
employees’ personal volunteer hours or dollar donations.
Governance
We strive to promote a culture of uncompromising integrity, including through our governance practices and corporate oversight. Our Board independence and diversity, open
communication with our stockholders and a risk management framework that supports our investment and process decisions all serve to mitigate risk and preserve value for
our company.
Over the past nine years we have onboarded six new directors with a breadth of experience, increasing the ethnic, gender and geographical diversity of the Board. The
charters of our Board Governance and Nomination Committee and Talent and Compensation Committee provide that such committees have specific oversight over ESG
matters and DEIB matters, respectively. Effective January
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1, 2024, we added our Chief Energy and Sustainability Officer to our management Executive Committee to support alignment between our real estate business and energy
and sustainability strategy.
The strength of our balance sheet and credit ratings, dedication to proactive risk mitigation and engagement with our employees through ethics and anti-corruption training
protects the financial, operational and reputational resilience of our company. Our global risk management team works with our Board to complete regular enterprise-wide
risk assessments to ensure proper oversight over real estate, financial and emerging risks across our global organization. We are committed to ensuring that 100% of our
employees complete ethics training each year and continued to achieve this commitment in 2023. Along with this commitment, our employees completed more than 1,800
hours of information technology security, compliance and other ethics training in 2023. Our approach is reinforced by our Code of Ethics and Business Conduct, as described
above.
ENVIRONMENTAL MATTERS
We are exposed to various environmental risks that may result in unanticipated losses and affect our operating results and financial condition. Either the previous owners or
we have conducted environmental reviews on a majority of the properties we have acquired, including land. While some of these assessments have led to further
investigation and sampling, none of the environmental assessments have revealed an environmental liability that we believe would have a material adverse effect beyond
amounts recorded at December 31, 2023. See further discussion in Item 1A. Risk Factors and Note 16 to the Consolidated Financial Statements in Item 8. Financial
Statements and Supplementary Data.
GOVERNMENTAL MATTERS
We are exposed to various regulatory requirements, taxes, tariffs, trade wars and laws within the countries in which we operate and unexpected changes in these items may
result in unanticipated losses, adverse tax consequences and affect our operating results and financial condition. In addition, we may be impacted by the ability of our non-
U.S. subsidiaries to distribute or otherwise transfer cash among our subsidiaries due to currency exchange control regulations and transfer pricing regulations. The impact of
regional or country-specific economic instability, including government shutdowns or other internal trade alliances or agreements could also have a material adverse effect
on our business, financial condition or results of operations. See further discussion in Item 1A. Risk Factors.
INSURANCE COVERAGE
We carry insurance coverage on our properties. We determine the type of coverage and the policy specifications and limits based on what we deem to be the risks
associated with our ownership of properties and our business operations in specific markets. Such coverage typically includes property damage and rental loss insurance
resulting from such perils as fire, windstorm, flood, earthquake and terrorism; commercial general liability insurance; and environmental insurance. Insurance is maintained
through a combination of commercial insurance, self-insurance and a wholly-owned captive insurance entity. The business of our wholly-owned captive insurance entity is
ancillary to the owning and operating of our real estate. The costs to insure our properties are primarily covered through expense reimbursements from our customers. We
believe our insurance coverage contains policy specifications and insured limits that are customary for similar properties, business activities and markets and we believe our
properties are adequately insured. See further discussion in Item 1A. Risk Factors.
ITEM 1A. Risk Factors
Our operations and structure involve various risks that could adversely affect our business and financial condition, including but not limited to, our financial position, results of
operations, cash flow, ability to make distributions and payments to security holders and the market value of our securities. These risks relate to Prologis as well as our
investments in consolidated and unconsolidated entities and include among others, (i) risks related to our global operations (ii) risks related to our business; (iii) risks related
to financing and capital; and (iv) risks related to income taxes.
Risks Related to our Global Operations
As a global company, we are subject to social, geopolitical and economic risks of doing business in many countries and our results of operations and financial
condition may be materially and adversely affected.
We conduct a significant portion of our business and employ a substantial number of people outside of the U.S. During 2023, we generated approximately $632 million or
7.9% of our consolidated revenues from operations outside the U.S. Circumstances and developments related to international operations that could negatively affect us
include, but are not limited to, the following factors:
•difficulties and costs of staffing and managing international operations in certain geographies, including differing employment practices and labor issues;
•local businesses and cultural factors that differ from our domestic standards and practices;
•volatility in currencies and currency restrictions, which may prevent the availability of capital or the transfer of profits to the U.S.;
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•challenges in establishing effective controls and procedures to regulate operations in different geographies and to monitor compliance with applicable regulations, such as
the Foreign Corrupt Practices Act, the United Kingdom (“U.K.”) Bribery Act and other similar laws;
•changes in regulatory and environmental requirements, taxes, tariffs, trade wars and laws within the countries in which we operate;
•the responsibility of complying with multiple and potentially conflicting laws, e.g., with respect to corrupt practices, human rights, employment and licensing;
•changes in general economic conditions from inflation, elevated interest rates, regional or country-specific business cycles, supply chain disruptions, economic downturns or
recessions and economic instability, including government shutdowns and withdrawals from the European Union or other international trade alliances or agreements;
•political instability, uncertainty over property rights, territorial disputes, military conflict, war or expansion of hostilities, civil unrest, drug trafficking, political activism or the
continuation or escalation of terrorist or gang activities;
•public health crises, such as outbreaks of global pandemics or contagious diseases;
•foreign ownership restrictions in operations with the respective countries; and
•access to capital may be more restricted, or unavailable on favorable terms or at all in certain locations.
In addition, we may be impacted by the ability of our non-U.S. subsidiaries to dividend or otherwise transfer cash among our subsidiaries due to currency exchange control
regulations, transfer pricing regulations and potentially adverse tax consequences, among other factors.
We cannot predict the extent to which these social, geopolitical and economic risks may impact our business and operating results and that of our co-investment ventures,
but their impact may include the following:
•existing customers and potential customers of our logistics facilities may be adversely affected by the decrease in economic activity, changes in regulation or disruptions in
the supply chain, which in turn could disrupt their business and their ability to enter into new leasing transactions or satisfy rental payments;
•government, labor or other restrictions may prevent us from completing the development or leasing of properties currently under development or making our properties ready
for our customers to move in;
•our ability to recover our investments in real estate assets may be impacted by current market conditions;
•increases in material costs as a result of labor shortages and supply chain disruptions may make the development of properties more costly than we originally budgeted or
impact transportation routes of our suppliers or our customers; and
•our workforce, including our executives, may become ill or have difficulty working remotely, caring for our properties and/or customers creating inefficiencies, delays or
disruptions in our business.
Any prolonged economic downturn, disruption in the financial markets or public health crises may also impact our ability to access capital markets to issue debt or equity
securities and to complete real estate transactions at attractive pricing or at all.
These items may materially and adversely affect our financial condition, results of operations, cash flows and real estate values.
Compliance or failure to comply with regulatory requirements could result in substantial costs.
We are required to comply with many regulations in different countries, including (but not limited to) the Foreign Corrupt Practices Act, the U.K. Bribery Act and similar laws
and regulations. Our properties are also subject to various federal, state and local regulatory requirements, such as the Americans with Disabilities Act and state and local
fire, life-safety, energy and greenhouse gas emissions requirements. Noncompliance could result in the imposition of governmental fines or the award of damages to private
litigants. While we believe that we are currently in material compliance with these regulatory requirements, the requirements may change or new requirements may be
imposed that could require significant unanticipated expenditures by us.
Disruptions in the global capital and credit markets may adversely affect our operating results and financial condition.
To the extent there is turmoil in the global financial markets, this turmoil has the potential to adversely affect (i) the value of our properties; (ii) the availability or the terms of
financing that we have or may anticipate utilizing; (iii) our ability to make principal and
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interest payments on, or refinance any outstanding debt when due; and (iv) the ability of our customers to enter into new leasing transactions or satisfy rental payments under
existing leases. Disruptions in the capital and credit markets may also adversely affect the market price of our securities and our ability to make distributions and payments to
our security holders.
The depreciation in the value of the foreign currency in countries where we have a significant investment may adversely affect our results of operations and
financial position.
We hold significant real estate investments in international markets where the U.S. dollar is not the functional currency. At December 31, 2023, approximately $10.6 billion or
11.4% of our total consolidated assets were invested in a currency other than the U.S. dollar, principally the British pound sterling, Canadian dollar, euro, and Japanese yen.
For the year ended December 31, 2023, $303.7 million or 5.1% of our total consolidated segment NOI was denominated in a currency other than the U.S. dollar. See Note
17 to the Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data for more information on these amounts. As a result, we are subject to
foreign currency risk due to potential fluctuations in exchange rates between foreign currencies and the U.S. dollar. While we endeavor to manage this risk through our
hedging and financing activities, a significant change in the value of the foreign currency of one or more countries where we have a significant investment may have a
material adverse effect on our business and, specifically, our U.S. dollar reported financial position and results of operations.
Our hedging of foreign currency and interest rate risk may not effectively limit our exposure to these risks.
We attempt to mitigate our risk by borrowing in the currencies in which we have significant investments thereby providing a natural hedge. We may also enter into derivative
financial instruments that we designate as net investment hedges, as these amounts offset the translation adjustments on the underlying net assets of our foreign
investments. We enter into other foreign currency contracts, such as forwards, to reduce fluctuations in foreign currency cash flow associated with the translation of future
earnings of our international subsidiaries. Although we attempt to mitigate the potential adverse effects of changes in foreign currency rates there can be no assurance that
those attempts will be successful. In addition, we occasionally use interest rate contracts to manage interest rate risk and limit the impact of future interest rate changes on
earnings and cash flows. Hedging arrangements involve risks, such as the risk of fluctuation in the relative value of the foreign currency or interest rates and the risk that
counterparties may fail to honor their obligations under these arrangements. The funds required to settle such arrangements could be significant depending on the stability
and movement of the hedged foreign currency or the size of the underlying financing and the applicable interest rates at the time of the breakage. The failure to hedge
effectively against foreign exchange changes or interest rate changes may adversely affect our business.
Risks Related to our Business
General economic conditions and other events or occurrences that affect areas in which our properties are geographically concentrated, may impact financial
results.
We are exposed to the economic conditions and other events and occurrences in the local, regional, national and international geographies in which we own properties. Our
operating performance is further impacted by the economic conditions of the specific markets in which we have concentrations of properties.
At December 31, 2023, 30.0% of our consolidated operating properties or $22.7 billion (based on consolidated gross book value, or investment before depreciation) were
located in California (Central Valley, San Francisco Bay Area and Southern California markets), which represented 23.2% of the aggregate square footage of our operating
properties and 31.7% of our consolidated operating property NOI. Our revenues from, and the value of, our properties located in California may be affected by local real
estate conditions (such as an oversupply of or reduced demand for logistics properties) and the local economic climate. Business layoffs, downsizing, industry slowdowns,
changing demographics and other factors may adversely impact California’s economic climate. Because of the investment we have located in California, a downturn in
California’s economy or real estate conditions, including state income tax and property tax laws, could adversely affect our business.
In addition to California, we also have significant holdings (defined as more than 3% of total consolidated investment before depreciation) in operating properties in certain
markets located in Atlanta, Chicago, Dallas/Fort Worth, Houston, Lehigh Valley, New Jersey/New York City, Seattle and South Florida. Of these markets, no single market
contributed more than 10% of our total consolidated investment before depreciation in operating properties, with the exception of New Jersey/New York City at 10.6%. Our
operating performance could be adversely affected if conditions become less favorable in any of the markets in which we have a concentration of properties. Conditions such
as an oversupply of logistics space or a reduction in demand for logistics space, among other factors, may impact operating conditions. Any material oversupply of logistics
space or material reduction in demand for logistics space could adversely affect our overall business.
Our O&M portfolio, which includes our consolidated properties and properties owned by our unconsolidated co-investment ventures, has concentrations of properties in the
same markets mentioned above, as well as in markets in Japan and the U.K., and are subject to the economic conditions in those markets.
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Real estate investments are not as liquid as certain other types of assets, which may reduce economic returns to investors.
Real estate investments are not as liquid as certain other types of investments and this lack of liquidity may limit our ability to react promptly to changes in economic or other
conditions. Significant expenditures associated with real estate investments, such as secured mortgage debt payments, real estate taxes and maintenance costs, are
generally not reduced when circumstances cause a reduction in income from the investments. As a REIT, under the IRC, we are only able to hold property for sale in the
ordinary course of business through taxable REIT subsidiaries in order to not incur punitive taxation on any tax gain from the sale of such property. We may dispose of
certain properties that have been held for investment to generate liquidity. If we do not satisfy certain safe harbors or we believe there is too much risk of incurring the
punitive tax on any tax gain from the sale, we may not pursue such sales.
We may decide to sell or contribute properties to certain of our co-investment ventures or sell properties to third parties to generate proceeds to fund our capital deployment
activities. Our ability to sell or contribute properties on advantageous terms is affected by: (i) competition from other owners of properties that are trying to dispose of their
properties; (ii) economic and market conditions, including the capitalization rates applicable to our properties; and (iii) other factors beyond our control. If our competitors sell
assets similar to assets we intend to divest in the same markets or at valuations below our valuations for comparable assets, we may be unable to divest our assets at
favorable pricing or at all. The co-investment ventures or third parties who might acquire our properties may need to have access to debt and equity capital, in the private and
public markets, in order to acquire properties from us. Should they have limited or no access to capital on favorable terms, then dispositions and contributions could be
delayed.
If we do not have sufficient cash available to us through our operations, sales or contributions of properties or available credit facilities to continue operating our business as
usual, we may need to find alternative ways to increase our liquidity. Such alternatives may include, without limitation, divesting properties at less than optimal terms,
incurring debt, entering into leases with new customers at lower rental rates or less than optimal terms or entering into lease renewals with our existing customers without an
increase in rental rates. There can be no assurance, however, that such alternative ways to increase our liquidity will be available to us. Additionally, taking such measures to
increase our liquidity may adversely affect our business, and in particular, our distributable cash flow and debt covenants.
Our investments are concentrated in the logistics sector and our business would be adversely affected by an economic downturn in that sector.
Our investments in real estate assets are concentrated in the logistics sector. This concentration may expose us to the risk of economic downturns in this sector to a greater
extent than if our business activities were more diversified.
Investments in real estate properties are subject to risks that could adversely affect our business.
Investments in real estate properties are subject to varying degrees of risk. While we seek to minimize these risks through geographic diversification of our portfolio, market
research and our asset management capabilities, these risks cannot be eliminated. Factors that may affect real estate values and cash flows include:
•local conditions, such as oversupply or a reduction in demand;
•technological changes, such as reconfiguration of supply chains, autonomous vehicles, robotics, 3D printing or other technologies;
•the attractiveness of our properties to potential customers and competition from other available properties;
•increasing costs of maintaining, insuring, renovating and making improvements to our properties;
•our ability to reposition our properties due to changes in the business and logistics needs of our customers;
•our ability to lease the properties at favorable rates and control variable operating costs; and
•governmental and environmental regulations and the associated potential liability under, and changes in, environmental, zoning, usage, tax, tariffs and other laws.
These factors may affect our ability to recover our investment in the properties and result in impairment charges.
Our customers may be unable to meet their lease obligations, we may be unable to lease vacant space or renew leases or re-lease space on favorable terms as
leases expire.
Our operating results and distributable cash flow would be adversely affected if a significant number of our customers were unable to meet their lease obligations. At
December 31, 2023, our top 10 customers accounted for 15.8% of our consolidated NER and 14.5% of our O&M NER. In the event of default by a significant number of
customers, we may experience delays and incur substantial costs in enforcing our rights as landlord, and we may be unable to re-lease spaces. A customer may experience
a downturn in its business,
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which may cause the loss of the customer or may weaken its financial condition, resulting in the customer’s failure to make rental payments when due or requiring a
restructuring that might reduce cash flow from the lease. In addition, a customer may seek the protection of bankruptcy, insolvency or similar laws, which could result in the
rejection and termination of such customer’s lease and thereby cause a reduction in our available cash flow.
We are also subject to the risk that, upon the expiration of leases they may not be renewed by existing customers, the space may not be re-leased to new customers or the
terms of renewal or re-leasing (including the cost of required renovations or concessions to customers) may be less favorable to us than current lease terms. Our competitors
may offer space at rental rates below current market rates or below the rental rates we currently charge our customers and we may be pressured to reduce our rental rates
below those we currently charge to retain customers when leases expire or we may lose potential customers. Additionally, rising inflation or costs could negatively impact our
net operating income on existing leases with contractual guaranteed base rent and fixed charges, inclusive of certain rental expenses.
We may acquire properties and companies that involve risks that could adversely affect our business and financial condition.
We have acquired properties and will continue to acquire properties through the direct acquisition of real estate, the acquisition of entities that own real estate or through
additional investments in co-investment ventures that acquire properties. The acquisition of properties involves risks, including the risk that the acquired property will not
perform as anticipated and that any actual costs for rehabilitation, repositioning, renovation and improvements identified in the pre-acquisition due diligence process will
exceed estimates. When we acquire properties, we may face risks associated with entering a new market such as a lack of market knowledge or understanding of the local
economy, forging new business relationships in the area and unfamiliarity with local government and permitting procedures. Additionally, there is, and it is expected there will
continue to be, significant competition for properties that meet our investment criteria as well as risks associated with obtaining financing for acquisition activities. The
acquired properties or entities may be subject to liabilities, including tax liabilities, which may be without any recourse, or with only limited recourse, with respect to unknown
liabilities. As a result, if a liability were asserted against us based on our new ownership of any of these entities or properties, then we may have to pay substantial sums to
settle it.
We may be unable to integrate the operations of newly acquired companies and realize the anticipated synergies and other benefits or do so within the anticipated timeframe.
Potential difficulties we may encounter in the integration process include: (i) the inability to dispose of non-industrial assets or operations that are outside of our area of
expertise; (ii) potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with these transactions; and (iii) performance
shortfalls as a result of the diversion of management’s attention caused by completing these transactions and integrating the companies’ operations.
Our real estate development and redevelopment strategies may not be successful.
Our real estate development and redevelopment strategy is focused on monetizing land and redevelopment sites in the future through development of logistics facilities to
hold for long-term investment and for contribution or sale to a co-investment venture or third party, depending on market conditions, our liquidity needs and other factors. We
may increase our investment in the development, renovation and redevelopment business and we expect to complete the build-out and leasing of our current development
portfolio. We may also develop, renovate and redevelop properties within existing or newly formed co-investment ventures. The real estate development, renovation and
redevelopment business includes the following significant risks:
•we may not be able to obtain financing for development projects on favorable terms or at all;
•we may explore development opportunities that may be abandoned and the related investment impaired;
•we may not be able to obtain, or may experience delays in obtaining, all necessary zoning, land-use, building, occupancy and other governmental permits and
authorizations;
•we may incur higher construction costs, due primarily to this inflationary environment, or additional costs related to regulation that exceed our estimates and projects may not
be completed, delivered or stabilized as planned due to defects or other issues;
•we may not be able to attract third-party investment in new development co-investment ventures or sufficient customer demand for our product;
•we may have properties that perform below anticipated levels, producing cash flows below budgeted amounts;
•we may seek to sell certain land parcels and not be able to find a third party to acquire such land or the sales price will not allow us to recover our investment, resulting in
impairment charges;
•we may not be able to lease properties we develop on favorable terms or at all;
•we may not be able to capture the anticipated enhanced value created by our value-added properties on expected timetables or at all;
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•we may experience delays (temporary or permanent) if there is public or government opposition to our activities; and
•we may have substantial renovation, new development and redevelopment activities, regardless of their ultimate success, that require a significant amount of management’s
time and attention, diverting their attention from our day-to-day operations.
We are subject to risks and liabilities in connection with forming and attracting third-party investment in co-investment ventures, investing in new or existing co-
investment ventures, and managing properties through co-investment ventures.
At December 31, 2023, we had investments in co-investment ventures, both public and private, that owned real estate with a gross book value of approximately $62.9 billion.
Our organizational documents do not limit the amount of available funds that we may invest in these ventures, and we may and currently intend to develop and acquire
properties through co-investment ventures and investments in other entities when warranted by the circumstances. However, there can be no assurance that we will be able
to form new co-investment ventures, or attract third-party investment or that additional investments in new or existing ventures to develop or acquire properties will be
successful. Further, there can be no assurance that we are able to realize value from our existing or future investments. The same factors that impact the valuation of our
consolidated portfolio, as discussed above, also impact the portfolios held by the co-investment ventures and could result in other than temporary impairment of our
investment and a reduction in fee revenues.
Our co-investment ventures involve certain additional risks that we do not otherwise face, including:
•our partners may share certain approval rights over major decisions made on behalf of the ventures;
•our partners may seek to redeem their investment, and may do so simultaneously, causing the venture to seek capital to satisfy these requests on less than optimal terms;
•if our partners fail to fund their share of any required capital contributions, then we may choose to contribute such capital;
•our partners might have economic or other business interests or goals that are inconsistent with our business interests or goals that would affect our ability to operate the
venture;
•the venture or other governing agreements often restrict the transfer of an interest in the co-investment venture or may otherwise restrict our ability to sell the interest when
we desire or on advantageous terms;
•our relationships with our partners are generally contractual in nature and may be terminated or dissolved under the terms of the agreements, and in such event, we may not
continue to invest in or manage the assets underlying such relationships resulting in a decrease in our assets under management and a reduction in fee revenues. This may
also require us to acquire the properties in order to maintain an investment in the portfolio; and
•disputes between us and our partners may result in litigation or arbitration that would increase our expenses and prevent our officers and directors from focusing their time
and effort on our business and result in subjecting the properties owned by the applicable co-investment venture to additional risk.
We generally seek to maintain sufficient influence over our co-investment ventures to permit us to achieve our business objectives; however, we may not be able to continue
to do so indefinitely. We have formed publicly traded investment vehicles, such as NPR and FIBRA Prologis, for which we serve as sponsor or manager. These entities bear
their own risks related to trading markets, foreign currency exchange rates and market demand. We have contributed, and may continue to contribute, assets into such
vehicles. There is a risk that our managerial relationship may be terminated.
We have also made investments in early and growth-stage companies that are focused on emerging technology. These companies may not be successful at raising
additional capital or generating cash flows to sustain operations, which could result in the impairment of our investment. In addition, through Prologis Essentials we are
investing in the development of new business lines that are complementary to our core business. These business lines may not be successful and may include risks that are
different than investing in our core real estate business.
We are exposed to various environmental risks, which may result in unanticipated losses that could affect our business and financial condition.
Under various federal, state and local laws, ordinances and regulations, a current or previous owner, developer or operator of real estate may be liable for the costs of
removal or remediation of certain hazardous or toxic substances. The costs of removal or remediation of such substances could be substantial. Such laws often impose
liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of such hazardous substances. In addition, third parties may
sue the owner or operator of a site for damages based on personal injury, property damage or other costs, including investigation and clean-up costs, resulting from the
environmental contamination.
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Environmental laws in some countries, including the U.S., also require that owners or operators of buildings containing asbestos properly manage and maintain the asbestos,
adequately inform or train those who may come into contact with asbestos and undertake special precautions, including removal or other abatement, in the event that
asbestos is disturbed during building renovation or demolition. These laws may impose fines and penalties on building owners or operators who fail to comply with these
requirements and may allow third parties to seek recovery from owners or operators for personal injury associated with exposure to asbestos. Some of our properties are
known to contain asbestos-containing building materials.
In addition, some of our properties are leased or have been leased, in part, to owners and operators of businesses that use, store or otherwise handle petroleum products or
other hazardous or toxic substances, creating a potential for the release of such hazardous or toxic substances. Furthermore, certain of our properties are on, adjacent to or
near other properties that have contained or currently contain petroleum products or other hazardous or toxic substances, or upon which others have engaged, are engaged
or may engage in activities that may release such hazardous or toxic substances. From time to time, we may acquire properties, or interests in properties, with known
adverse environmental conditions for which we believe that the environmental liabilities associated with these conditions are quantifiable and that the acquisition will yield a
superior risk-adjusted return. In connection with certain divested properties, we have agreed to remain responsible for, and to bear the cost of, remediating or monitoring
certain environmental conditions on the properties.
We are exposed to the impacts of climate change and could be required to comply with new or stricter regulations, which may result in unanticipated losses that
could affect our business and financial condition.
We are also exposed to physical risks from changes in climate. Our logistics facilities and the global supply chain are and may continue to be exposed to catastrophic
weather events, such as severe storms, fires or floods. If the frequency of extreme weather events increases, our exposure to these events could increase. We may also be
adversely impacted by transition risks, such as potential impacts to the supply chain as a real estate developer or changes in laws and regulations, such as stricter energy
efficiency standards or greenhouse gas regulations for the commercial building sectors. We cannot give any assurance that other such conditions do not exist or may not
arise in the future. The impacts of climate change on our real estate properties could adversely affect our ability to lease, develop or sell such properties or to borrow using
such properties as collateral.
Our business and operations could suffer in the event of system failures or cybersecurity attacks.
Despite system redundancy, the implementation of security measures and the existence of a disaster recovery plan for our internal and hosted information technology
systems, our systems are vulnerable to damages from any number of sources, including energy blackouts, natural disasters, terrorism, war, telecommunication failures and
cybersecurity attacks, such as malware, ransomware, or unauthorized access. Any system failure or accident that causes interruptions in our operations could result in a
material disruption to our business. We may incur additional costs to remedy damages caused by such disruptions. Third-party security events at vendors, sub-processors,
and service providers could also impact our data and operations via unauthorized access to information or disruption of services which may ultimately result in losses.
Despite training, detection systems and response procedures, an increase in email attacks (phishing and business email compromise) may create disruption to our business,
financial and reputational risk.
Although security incidents have had an insignificant financial impact on our operating results, the growing frequency of attempts may lead to increased costs to protect the
company and respond to any events, including additional personnel, consultants and protection technologies. Any compromise of our security could result in a violation of
applicable privacy and other laws, unauthorized access to information of ours and others, significant legal and financial exposure, damage to our reputation, loss or misuse of
the information and a loss of confidence in our security measures, which could harm our business. Additionally, remediation costs for security events may not be covered by
our insurance.
Our insurance coverage does not cover all potential losses.
We and our unconsolidated co-investment ventures carry insurance coverage including property damage and rental loss insurance resulting from certain perils such as fire
and additional perils as covered under an extended coverage policy, namely windstorm, flood, earthquake and terrorism; commercial general liability insurance; and
environmental insurance, as appropriate for the markets where each of our properties and business operations are located. The insurance coverage contains policy
specifications and insured limits customarily carried for similar properties, business activities and markets. We believe our properties and the properties of our co-investment
ventures are adequately insured. Certain losses, however, including losses from floods, earthquakes, acts of war, acts of terrorism or riots and pandemics, generally are not
insured against or not fully insured against because it is not deemed economically feasible or prudent to do so. If an uninsured loss or a loss in excess of insured limits
occurs with respect to one or more of our properties, we could experience a significant loss of capital invested and future revenues in these properties and could potentially
remain obligated under any recourse debt associated with the property.
Furthermore, we cannot be sure that the insurance companies will be able to continue to offer products with sufficient coverage at commercially reasonable rates. If we
experience a loss that is uninsured or that exceeds insured limits with respect to one or more of our properties or if the insurance companies fail to meet their coverage
commitments to us in the event of an insured loss, then we could lose the capital invested in the damaged properties, as well as the anticipated future revenues from those
properties and, if there
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is recourse debt, then we would remain obligated for any mortgage debt or other financial obligations related to the properties. Any such losses or higher insurance costs
could adversely affect our business.
A number of our investments, both wholly owned and owned through co-investment ventures, are located in areas that are known to be subject to earthquake activity. U.S.
properties located in active seismic areas include properties in our markets in California and Washington. International properties located in active seismic areas include
Japan and Mexico. We generally carry earthquake insurance on our properties located in areas historically subject to seismic activity, subject to coverage limitations and
deductibles, if we believe it is commercially reasonable. We evaluate our earthquake insurance coverage annually in light of current industry practice through an analysis
prepared by outside consultants and in some specific instances have elected to self-insure our earthquake exposure based on this analysis. We have elected not to carry
earthquake insurance for our assets in Japan based on this analysis. See Item 2. Properties for more information on the markets above exposed to seismic activities.
Furthermore, a number of our properties are located in areas that are known to be subject to hurricane or flood risk. We carry hurricane and flood hazard insurance on all of
our properties located in areas historically subject to such activity, subject to coverage limitations and deductibles, if we believe it is commercially reasonable. We evaluate
our insurance coverage annually in light of current industry practice through an analysis prepared by outside consultants.
Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal control over financial reporting.
The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements or
misrepresentations. While management continually reviews the effectiveness of our disclosure controls and procedures and internal control over financial reporting, there can
be no guarantee that our internal control over financial reporting will be effective in accomplishing all control objectives all of the time. Deficiencies, including any material
weakness, in our internal control over financial reporting that may occur in the future could result in misstatements or restatements of our financial statements or a decline in
the price of our securities.
Risks associated with our dependence on key personnel.
We depend on the deep industry knowledge and the efforts of our executive officers and other key employees. From time to time, our personnel and their roles may change.
While we believe that we are able to retain our key talent and find suitable employees to meet our needs, the loss of key personnel, any change in their roles or the limitation
of their availability could adversely affect our business. If we are unable to continue to attract and retain our executive officers or other key employees, or if compensation
costs required to attract and retain such personnel become more expensive, our performance and competitive position could be materially adversely affected.
Risks Related to Financing and Capital
In order to meet REIT distribution requirements we may need access to external sources of capital.
To qualify as a REIT, we are required each year to distribute at least 90% of our REIT taxable income (determined without regard to the dividends-paid deduction and by
excluding any net capital gain) to our stockholders and we may be subject to tax to the extent our taxable income is not fully distributed. Historically, we have satisfied these
distribution requirements by making cash distributions to our stockholders, however, we may elect to pay a portion of the distribution in shares of our stock. Assuming we
continue to satisfy these distribution requirements with cash, we may not be able to fund all future capital needs, including acquisition and development activities, from cash
retained from operations and may have to rely on third-party sources of capital. Furthermore, to maintain our REIT status and not have to pay federal income and excise
taxes, we may need to borrow funds on a short-term basis to meet the REIT distribution requirements even if the then-prevailing market conditions are not favorable for these
borrowings. These short-term borrowing needs could result from differences in timing between the actual receipt of cash and inclusion of income for federal income tax
purposes, or the effect of nondeductible capital expenditures, the creation of reserves or required debt or amortization payments. Our ability to access debt and equity capital
on favorable terms or at all depends on a number of factors, including general market conditions, the market’s perception of our growth potential, our current and potential
future earnings and cash distributions and the market price of our securities.
Covenants in our credit agreements could limit our flexibility and breaches of these covenants could adversely affect our financial condition.
The terms of our various credit agreements, including our credit facilities and term loans, the indentures under which certain of our senior notes are issued and other note
agreements, require us to comply with a number of customary financial covenants, such as maintaining debt service coverage ratios, leverage ratios and fixed charge
coverage ratios. These covenants may limit our flexibility to run our business, and breaches of these covenants could result in defaults under the instruments governing the
applicable indebtedness. If we default under the covenant provisions and are unable to cure the default, refinance the indebtedness or meet payment obligations, our
business and financial condition generally and, in particular, the amount of our distributable cash flow could be adversely affected.
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Adverse changes in our credit ratings could negatively affect our financing activity.
Our credit ratings at December 31, 2023 were A and A3 from Standard & Poor's and Moody’s, respectively, each with a stable outlook. A securities rating is not a
recommendation to buy, sell or hold securities and is subject to revision or withdrawal at any time by the rating organization.
The credit ratings of our senior notes and preferred stock are based on our operating performance, liquidity and leverage ratios, overall financial position and other factors
employed by the credit rating agencies in their rating analyses of us. Our credit ratings can affect the amount of capital we can access, as well as the terms and pricing of any
debt we may incur. There can be no assurance that we will be able to maintain our current credit ratings, and in the event our credit ratings are downgraded, we would likely
incur higher borrowing costs and may encounter difficulty in obtaining additional financing. Also, a downgrade in our credit ratings may trigger additional payments or other
negative consequences under our credit facilities and other debt instruments. Adverse changes in our credit ratings could negatively impact our business and, in particular,
our refinancing and other capital market activities, our ability to manage debt maturities, our future growth and our development and acquisition activity.
We may be unable to refinance our debt or our cash flow may be insufficient to make required debt payments.
We are subject to risks normally associated with debt financing, including the risk that our cash flow will be insufficient to meet required payments of principal and interest.
There can be no assurance that we will be able to refinance any maturing indebtedness, that such refinancing would be on terms as favorable as the terms of the maturing
indebtedness, or that we will be able to otherwise obtain funds by selling assets or raising equity to make required payments on maturing indebtedness. If we are unable to
refinance our indebtedness at maturity or meet our payment obligations, our business and financial condition will be negatively impacted and, if the maturing debt is secured,
the lender may foreclose on the property securing such indebtedness. Our credit facilities and certain other debt bears interest at variable rates. Increases in market interest
rates would increase our interest expense under these agreements.
Our stockholders may experience dilution if we issue additional common stock or units in the OP.
Any additional future issuance of common stock or OP units will reduce the percentage of our common stock and units owned by investors. In most circumstances,
stockholders and unitholders will not be entitled to vote on whether or not we issue additional common stock or units. In addition, depending on the terms and pricing of any
additional offering of our common stock or OP units and the utilization of the proceeds, our stockholders and unitholders may experience dilution in both book value and fair
value of their common stock or units.
Risks Related to Income Tax
The failure of Prologis, Inc. to qualify as a REIT would have serious adverse consequences.
Prologis, Inc. elected to be taxed as a REIT under Sections 856 through 860 of the IRC commencing with the taxable year ended December 31, 1997. We believe Prologis,
Inc. has been organized and operated to qualify as a REIT under the IRC and believe that the current organization and method of operation comply with the rules and
regulations promulgated under the IRC to enable Prologis, Inc. to continue to qualify as a REIT. However, it is possible that we are organized or have operated in a manner
that would not allow Prologis, Inc. to qualify as a REIT, or that our future operations could cause Prologis, Inc. to fail to qualify. Qualification as a REIT requires us to satisfy
numerous requirements (some annually and others on a quarterly basis) established under highly technical and complex sections of the IRC for which there are only limited
judicial and administrative interpretations and involves the determination of various factual matters and circumstances not entirely within our control. For example, to qualify
as a REIT, Prologis, Inc. must derive at least 95% of its gross income in any year from qualifying sources. In addition, Prologis, Inc. must pay dividends to its stockholders
aggregating annually at least 90% of its taxable income (determined without regard to the dividends paid deduction and by excluding capital gains) and must satisfy specified
asset tests on a quarterly basis. Historically, we have satisfied these distribution requirements by making cash distributions to our stockholders, but we may choose to satisfy
these requirements by making distributions of cash or other property, including, in limited circumstances, our own stock. The provisions of the IRC and applicable Treasury
regulations regarding qualification as a REIT are more complicated for Prologis, Inc. because we hold substantially all of our assets through the OP.
If Prologis, Inc. fails to qualify as a REIT in any taxable year, we will be required to pay federal income tax (including, for taxable years prior to 2018, any applicable
alternative minimum tax) on taxable income at regular corporate rates. Unless we are entitled to relief under certain statutory provisions, Prologis, Inc. would be disqualified
from treatment as a REIT for the four taxable years following the year in which it lost the qualification and would be subject to corporate tax on built-in gains that exist at the
time of REIT re-election if recognized within the five-year period after re-election, and potentially 10 years for certain states. If Prologis, Inc. lost its REIT status, our net
earnings would be significantly reduced for each of the years involved. In addition, we may need to borrow additional funds or liquidate some investments to pay any
additional tax liability. Accordingly, funds available for investment, operations and distributions would be reduced.
Furthermore, we own a direct or indirect interest in certain subsidiary REITs that elected to be taxed as REITs under Sections 856 through 860 of the IRC. Provided that each
subsidiary REIT qualifies as a REIT, our interest in such subsidiary REIT will be treated as a qualifying real estate asset for purposes of the REIT asset tests, and any
dividend income or gains derived by us from such subsidiary
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REIT will generally be treated as income that qualifies for purposes of the REIT 95% and 75% gross income tests. To qualify as a REIT, the subsidiary REIT must
independently satisfy all of the REIT qualification requirements. If such subsidiary REIT were to fail to qualify as a REIT, and certain relief provisions did not apply, it would be
treated as a regular taxable corporation and its income would be subject to U.S. federal income tax. In addition, a failure of the subsidiary REIT to qualify as a REIT would
have an adverse effect on the ability of Prologis, Inc. to comply with the REIT income and asset tests, and thus its ability to qualify as a REIT.
In addition, we may acquire properties through the acquisition of REIT entities that own the real estate. If a gain in such assets is not otherwise recognized by the seller or
target in such acquisitions, and such entities were to fail to satisfy the REIT requirements for any year, they would be disqualified from treatment as a REIT for the four
taxable years following the year in which the REIT qualification was lost and the acquired assets would be subject to corporate tax on built-in gains that exist at the time of
REIT re-election or, if earlier, at the time of Prologis’ acquisition of the assets. A sale of such assets within the 5-year recognition period, and potentially 10 years for certain
states, could result in corporate tax liabilities that could be significant.
Certain property transfers may generate prohibited transaction income, resulting in a penalty tax on gain attributable to the transaction.
From time to time, we may transfer or otherwise dispose of some of our properties, including by contributing properties to our co-investment ventures. Under the IRC, any
gain resulting from transfers of properties we hold as inventory or primarily for sale to customers in the ordinary course of business is treated as income from a prohibited
transaction subject to a 100% penalty tax. We do not believe that our transfers or disposals of property or our contributions of properties into our co-investment ventures are
prohibited transactions. However, whether property is held for investment purposes is a question of fact that depends on all the facts and circumstances surrounding the
particular transaction. The Internal Revenue Service (“IRS”) may contend that certain transfers or dispositions of properties by us or contributions of properties into our co-
investment ventures are prohibited transactions. While we believe that the IRS would not prevail in any such dispute, if the IRS were to argue successfully that a transfer,
disposition or contribution of property constituted a prohibited transaction, we would be required to pay a 100% penalty tax on any gain allocable to us from the prohibited
transaction. In addition, income from a prohibited transaction might adversely affect our ability to satisfy the income tests for qualification as a REIT.
Legislative or regulatory action could adversely affect us.
In recent years, numerous legislative, judicial and administrative changes have been made to the U.S., state, local and foreign income tax laws applicable to investments in
real estate, REITs, similar entities and investments. Additional changes are likely to continue to occur in the future, both in and outside of the U.S. and may impact our
taxation or that of our stockholders. Any increases in tax liability could be substantial and would reduce the amount of cash available for other purposes.
Complying with REIT requirements may limit our flexibility or cause us to forego otherwise attractive opportunities.
Our use of taxable REIT subsidiaries (“TRSs”) enables us to engage in non-REIT qualifying business activities. Under the IRC, no more than 20% of the value of the assets
of a REIT may be represented by securities of one or more TRSs and other non-qualifying assets. This limitation may hinder our ability to make certain attractive
investments, including the purchase of non-qualifying assets, the expansion of non-real estate activities and investments in the businesses to be conducted by our TRSs, and
to that extent limit our opportunities.
ITEM 1B. Unresolved Staff Comments
None.
ITEM 1C. Cybersecurity
Due to our reliance on digital technology and electronic communications to run our business, cybersecurity threats and incidents pose an ongoing and escalating risk to our
internal and third-party provided information systems and data, reputation and shareholder value, results of operations and financial condition. Our Chief Technology Officer,
who reports directly to our Chief Executive Officer, holds over 25 years of experience in information technology, specifically infrastructure, information security and fraud, and
identity solutions at large global companies, and our Vice President of Information Technology (“IT”) Governance, who reports to our Chief Technology Officer, holds 20
years of experience in various information security roles. Together, our Chief Technology Officer and Vice President of IT Governance ("IT leadership") oversee and lead our
information security program and our business strategy, financial planning and capital allocation around our cybersecurity risk management and governance practices. We
also have an established Incident Response Team (“IRT”) to respond to and manage cybersecurity events. This team includes our IT leadership as well as senior leadership
from our accounting, legal, corporate communications and risk management departments with subject-matter expertise and established tenure at Prologis in their respective
areas. The IRT is tasked with taking appropriate action to safeguard the integrity of our information systems, data and network resources, investigate whether a breach
occurred, define disclosures, communicate effectively with key audiences, including the Board as necessary, mitigate cybersecurity incident risks and provide a resolution
through our
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cybersecurity incident communication protocols. Additionally, on an annual basis the IRT is involved and engaged in security initiatives, including tabletop exercises
facilitated both internally and externally, to stay relevant on current practices in the areas of cybersecurity.
The processes implemented by our IT leadership and IRT to oversee and identify cybersecurity risks are based on the Prologis Information Security Policy governed by the
NIST Cybersecurity Framework. The framework focuses on five key categories of cybersecurity risk management and governance: (i) identify: develop an organizational
understanding to manage cybersecurity risk to systems, people, assets, data and capabilities; (ii) protect: develop and implement appropriate safeguards to ensure delivery
of critical services; (iii) detect: develop and implement appropriate activities to identify the occurrence of a cybersecurity event; (iv) respond: develop and implement
appropriate activities to take actions regarding a detected cybersecurity incident; and (v) recover: develop and implement appropriate activities to maintain plans for resilience
and to restore any capabilities or service that were impaired due to a cybersecurity incident. This framework is utilized within our organization as part of an integrated risk
management program that involves participation from employees, to our Board and third-party service providers, with whom we have protocols in place to mitigate
cybersecurity incident risks within our supply chain through the products and services we provide and use. Additionally, all employees and contractors are required to attend
mandatory cybersecurity training on an annual basis.
Our IT leadership reports to the Board on an annual basis on cybersecurity matters and, as necessary, when incidents arise in accordance with our cybersecurity incident
communication protocols. Our Board, specifically our Audit Committee, oversees cybersecurity risks and we believe contains the necessary expertise to perform those
duties, including specific industry experience within information technology. Additionally, Prologis’ cybersecurity risk management practices are reviewed and benchmarked
against its peers through regular participation in a third-party security benchmarking survey. Our IT infrastructure is externally audited as part of our Sarbanes-Oxley audit
process and our controls include information security standards. We also maintain standalone cybersecurity insurance and strive to adhere to local cybersecurity regulations
in all the countries we do business. We believe that risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected,
and are not reasonably likely to materially affect Prologis, including its business strategy, results of operations or financial condition. Please refer to “Our business and
operations could suffer in the event of system failures or cybersecurity attacks” under Item 1A. Risk Factors.
ITEM 2. Properties
GEOGRAPHIC DISTRIBUTION
We predominately invest in logistics facilities. Our properties are typically used for distribution, storage, packaging, assembly and light manufacturing of consumer products.
The vast majority of our operating properties are used by our customers for retail and online fulfillment and business-to-business transactions.
The following tables provide details of our consolidated operating properties, investment in land and development portfolio and our O&M portfolio. The O&M portfolio includes
the properties we consolidate and the properties owned by our unconsolidated co-investment ventures reflected at 100% of the amount included in the ventures’ financial
statements as calculated on a GAAP basis, not our proportionate share.
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Included in the operating property information below for our consolidated operating properties are 542 buildings owned primarily by one co-investment venture that we
consolidate but of which we own less than 100% of the equity. No individual property or market amounted to 10% or more of our consolidated total assets at December 31,
2023, or generated revenue equal to 10% or more of our consolidated total revenues for the year ended December 31, 2023, with the exception of the Southern California
market. Dollars and square feet in the following tables are in millions:
Geographies
U.S.:
Atlanta
Baltimore/Washington D.C.
Central PA
Central Valley
Chicago
Dallas/Ft. Worth
Houston
Lehigh Valley
New Jersey/New York City
San Francisco Bay Area
Seattle
South Florida
Southern California
Remaining Markets – U.S. (18 markets)
Subtotal U.S.
Other Americas:
(2)
Brazil
Canada
Mexico
Subtotal Other Americas
Europe:
France
Germany
Netherlands
U.K.
Remaining Countries – Europe (8 countries)
Subtotal Europe
(2)
Asia:
China
Japan
Singapore
Subtotal Asia
Total operating portfolio
(4)
Value-added properties
(3)
Total operating properties
Consolidated Operating Properties
O&M
Rentable Square
Footage
Gross Book
Value
Encumbrances
(1)
Rentable Square
Footage
Gross Book
Value
$
46
14
18
21
56
46
32
31
45
22
17
22
103
136
609
*
10
1
11
1
1
*
2
4
8
3,876 $
2,143
1,545
1,824
5,193
3,817
3,277
4,065
7,982
3,503
2,748
3,983
17,260
11,795
73,011
57
907
48
1,012
58
150
15
293
358
874
-
2
1
3
631
3
634
$
-
164
145
309
75,206
418
75,624 $
-
-
-
-
-
-
-
-
5
20
-
14
9
66
114
-
138
-
138
-
-
-
-
-
-
-
-
-
-
252
-
252
52 $
18
20
23
72
53
38
35
54
27
25
29
122
166
734
18
10
48
76
35
32
30
32
101
230
49
48
1
98
1,138
4
1,142 $
4,358
2,549
1,783
1,969
6,747
4,420
3,810
4,431
9,408
4,185
3,634
5,008
19,613
14,132
86,047
994
907
3,328
5,229
3,460
3,395
3,405
7,770
8,407
26,437
3,158
7,255
145
10,558
128,271
640
128,911
Items notated by ‘*’ indicate an amount less than one million that rounds to zero.
24
Table of Contents
Geographies
U.S.:
Atlanta
Baltimore/Washington D.C.
Central PA
Central Valley
Chicago
Dallas/Ft. Worth
Houston
Lehigh Valley
New Jersey/New York City
San Francisco Bay Area
Seattle
South Florida
Southern California
Remaining Markets – U.S. (18 markets)
Subtotal U.S.
Other Americas:
Brazil
Canada
Mexico
Subtotal Other Americas
Europe:
France
Germany
Netherlands
U.K.
Remaining Countries – Europe (8 countries)
Subtotal Europe
Asia:
Japan
Subtotal Asia
Total land and development portfolio
Consolidated – Investment in Land
Consolidated – Development Portfolio
Acres
Estimated Build Out
Potential
(square feet)
(5)
Current
Investment
Rentable Square
Footage Upon
Completion
(6)
TEI
510
96
-
805
84
386
443
105
183
70
97
100
505
2,178
5,562
419
239
748
1,406
168
38
23
284
674
1,187
42
42
8,197
5 $
1
-
14
1
6
6
1
3
1
1
1
9
31
80
9
4
13
26
3
1
1
5
13
23
3
3
132 $
67
57
-
196
24
130
149
38
337
111
54
96
577
653
2,489
72
408
238
718
136
30
15
228
124
533
36
36
3,776
1 $
*
-
1
1
2
-
1
1
2
1
1
5
7
23
-
2
3
5
-
1
*
2
4
7
5
5
40 $
87
124
-
63
184
320
-
176
295
500
171
231
1,106
2,026
5,283
-
460
231
691
-
126
62
495
406
1,089
712
712
7,775
Items notated by ‘*’ indicate an amount less than one million that rounds to zero.
(1)Certain of our consolidated properties are pledged as security under secured mortgage debt and assessment bonds. For purposes of this table, the total principal balance
of a debt issuance that is secured by a pool of properties is allocated among the properties in the pool based on each property’s investment balance. In addition to the
amounts reflected here, we also have $128 million of encumbrances related to two prestabilized properties and one land parcel included in the consolidated portfolio.
(2)No remaining market within the U.S. or country within Europe represented more than 2% of the total gross book value of the consolidated and O&M operating properties.
(3)Included in our consolidated operating properties are properties that we consider to be held for contribution and are presented within Assets Held for Sale or Contribution
in the Consolidated Balance Sheets. We include these properties in our operating portfolio as they are expected to be contributed to our co-investment ventures and remain
in our O&M operating portfolio. At December 31, 2023, we had investments in real estate properties that were expected to be contributed to our unconsolidated co-
investment ventures totaling $308 million and aggregating 3 million square feet. See Note 6 to the Consolidated Financial Statements in Item 8. Financial Statements and
Supplementary Data for further information on our Assets Held for Sale or Contribution.
(4)Value-added properties are properties we have either acquired at a discount and believe we could provide greater returns post-stabilization or properties we expect to
repurpose to a higher and better use.
(5)Represents the estimated finished square feet available for lease upon completion of a building on existing parcels of land.
(6)TEI is based on current projections and is subject to change. As noted in the table below, our current investment in the development portfolio was $4.4 billion, leaving
approximately $3.4 billion of additional required investment. At December 31, 2023, based on TEI, approximately 26% of the properties in the development portfolio were
completed but not yet stabilized, 48%
25
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of the properties were expected to be completed before December 31, 2024, and the remaining properties were expected to be completed before July 2026.
The following table summarizes our investment in consolidated real estate properties at December 31, 2023 (in millions):
Operating properties, excluding assets held for sale or contribution
Development portfolio, including cost of land
Land
Other real estate investments
(1)
Total consolidated real estate properties
Investment Before Depreciation
$
$
75,436
4,367
3,776
5,088
88,667
(1)Included in other real estate investments were: (i) land parcels we own and lease to third parties; (ii) non-strategic real estate assets, primarily acquired from the Duke
Transaction, that we do not intend to operate long term; (iii) non-industrial real estate assets that we intend to redevelop as industrial properties or other higher use assets;
and (iv) energy assets. Energy assets include solar panels, battery storage and mobility solutions.
LEASE EXPIRATIONS
We generally lease our properties on a long-term basis (the average term for leases commenced, including new leases and renewals, in 2023 was 66 months). The following
table summarizes the lease expirations of our consolidated operating portfolio for leases in place at December 31, 2023 (dollars and square feet in millions):
(1)
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
Thereafter
Month to month
Total consolidated
Occupied Square Feet
Dollars
% of Total
Dollars Per Square
Foot
NER
$
62
80
92
95
81
58
36
26
31
22
29
$
612
4
616
416
551
670
749
734
511
296
197
244
203
319
4,890
8.5 % $
11.3 %
13.7 %
15.3 %
15.0 %
10.4 %
6.1 %
4.0 %
5.0 %
4.2
%
6.5 %
100.0 % $
6.71
6.89
7.28
7.88
9.06
8.81
8.22
7.58
7.87
9.23
11.00
7.99
(1)We have signed leases that were due to expire in 2024, totaling 25 million square feet in our consolidated portfolio (3.3% of total NER). These are excluded from 2024
expirations and are reflected at their respective expiration year.
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CO-INVESTMENT VENTURES
Included in our O&M portfolio are consolidated and unconsolidated co-investment ventures that hold investments in real estate properties, primarily logistics facilities, that we
also manage. Our unconsolidated co-investment ventures are accounted for under the equity method. The amounts included for the unconsolidated ventures are reflected at
100% of the amount included in the ventures’ financial statements as calculated on a GAAP basis, not our proportionate share. The following table summarizes our
consolidated and unconsolidated co-investment ventures at December 31, 2023 (in millions):
Operating Properties
Square Feet
Gross
Book Value
Investment
in Land
Development
Portfolio – TEI
Consolidated Co-Investment Venture
U.S.:
Prologis U.S. Logistics Venture (“USLV”)
Total
Unconsolidated Co-Investment Ventures
U.S.:
Prologis Targeted U.S. Logistics Fund (“USLF”)
Other Americas:
FIBRA Prologis
Prologis Brazil Logistics Venture ("PBLV") and other joint
ventures
Subtotal Other Americas
Europe:
Prologis European Logistics Fund (“PELF”)
Prologis European Logistics Partners (“PELP”)
Subtotal Europe
Asia:
Nippon Prologis REIT (“NPR”)
Prologis Japan Core Logistics Fund ("PJLF")
Prologis China Core Logistics Fund (“PCCLF”)
Prologis China Logistics Venture
Subtotal Asia
Total
78
78
$
$
8,167 $
8,167 $
4 $
4 $
126
$
13,162 $
14 $
47
18
65
164
59
223
43
2
30
19
94
508
$
3,284
936
4,220
18,786
6,868
25,654
6,601
491
2,246
912
10,250
53,286 $
2
33
35
7
86
93
-
-
-
13
13
155 $
-
-
-
-
109
109
54
43
97
-
-
-
418
418
624
For more information regarding our unconsolidated and consolidated co-investment ventures, see Notes 5 and 11 to the Consolidated Financial Statements in Item 8.
Financial Statements and Supplementary Data.
ITEM 3. Legal Proceedings
From time to time, we and our co-investment ventures are parties to a variety of legal proceedings arising in the ordinary course of business. We believe that, with respect to
any such matters to which we are currently a party, the ultimate disposition of any such matter will not result in a material adverse effect on our business, financial position or
results of operations.
ITEM 4. Mine Safety Disclosures
Not Applicable.
PART II
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
MARKET INFORMATION AND HOLDERS
Our common stock is listed on the NYSE under the symbol “PLD.”
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Table of Contents
Stock Performance Graph
The following line graph compares the change in Prologis, Inc. cumulative total stockholder’s return on shares of its common stock from December 31, 2018, to the
cumulative total return of the S&P 500 Stock Index and the Financial Times and Stock Exchange NAREIT Equity REITs Index from December 31, 2018, to December 31,
2023. The graph assumes an initial investment of $100 in our common stock and each of the indices on December 31, 2018, and, as required by the SEC, the reinvestment
of all dividends. The return shown on the graph is not necessarily indicative of future performance.
This graph and the accompanying text are not “soliciting material,” are not deemed filed with the SEC and are not to be incorporated by reference in any filing by the
Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective
of any general incorporation language in any such filing.
PREFERRED STOCK DIVIDENDS
At December 31, 2023, we had 1.3 million shares of Series Q preferred stock outstanding with a liquidation preference of $50 per share that will be redeemable at our option
on or after November 13, 2026. Dividends payable per share were $4.27 for the year ended December 31, 2023.
For more information regarding dividends, see Note 9 to the Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data.
SALES OF UNREGISTERED SECURITIES
During 2023, we issued 0.8 million shares of common stock of Prologis, Inc. in connection with the redemption of common units of Prologis, L.P. in reliance on the exemption
from registration requirements of the Securities Act of 1933, as amended, afforded by Section 4(a)(2) thereof.
PURCHASES OF EQUITY SECURITIES
During 2023, we did not purchase any common stock of Prologis, Inc. in connection with our share purchase program.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
For information regarding securities authorized for issuance under our equity compensation plans, see Notes 9 and 12 to the Consolidated Financial Statements in Item 8.
Financial Statements and Supplementary Data.
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Table of Contents
OTHER STOCKHOLDER MATTERS
Common Stock Plans
Further information relative to our equity compensation plans will be provided in our 2023 Proxy Statement or in an amendment filed on Form 10-K/A.
ITEM 6. [Reserved]
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data of this
report and the matters described under Item 1A. Risk Factors.
A discussion regarding our financial condition and results of operations for 2023 compared to 2022 is presented below. Information on 2021 is included in graphs only to
show year over year trends in our results of operations and operating metrics. Our financial condition for 2021, results of operations for 2021, and 2022 compared to 2021
and details on the acquisition of Duke Realty Corporation and Duke Realty Limited Partnership (collectively "Duke" or the "Duke Transaction") is referenced throughout this
document and can be found under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, which is incorporated by reference
herein to our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 14, 2023, and is available on the SEC’s website at
www.sec.gov and our Investor Relations website at www.ir.prologis.com.
MANAGEMENT’S OVERVIEW
Summary of 2023
Our operating results were strong in 2023. Market rents continued to grow in most of the global logistics markets, which along with our existing lease mark-to-market, drove
significant rent change on rollover and same-store growth in our O&M portfolio. Our O&M operating portfolio occupancy was 97.6% at December 31, 2023 and rent change
on leases that commenced during the year was 76.4%, on a net effective basis based on our ownership share. While uncertainties remain in the economic and geopolitical
environment, our 2023 results are representative of the prospects we see for our business. We believe we are well positioned to organically grow revenues over the long-
term given the cumulative growth in market rents over the last several years and our existing high lease mark-to-market.
We completed the following significant activities in 2023, as described in the Notes to the Consolidated Financial Statements:
•On June 29, 2023, we acquired a real estate portfolio comprised of 70 operating properties in the U.S., aggregating 14 million square feet, for cash consideration of $3.1
billion.
•We generated net proceeds of $2.1 billion and realized net gains of $623 million, principally from the contribution of properties to our unconsolidated co-investment ventures
in Europe, Japan and Mexico and the sale of a U.S. portfolio of assets to a third-party. This activity also includes the sale of our investment in an unconsolidated office joint
venture.
•In April 2023, we formed PJLF, an unconsolidated co-investment venture in Japan, with two investors through the initial contribution of assets for which we received cash
and equity ownership. We made additional contributions to PJLF during 2023. At December 31, 2023, our ownership interest was 16.3%.
•We earned promotes aggregating $675 million ($495 million net of related strategic capital expenses), primarily during the second quarter of 2023 from the third-party
investors in USLF in the U.S.
•At December 31, 2023, we had total available liquidity of $6.0 billion, including borrowing capacity on our credit facilities of $5.5 billion and unrestricted cash balances of
$530 million.
•At December 31, 2023, our total debt portfolio of $29.0 billion had a weighted average maturity of 9 years and an effective interest rate of 3.0%. Our financing activities
during the year included the following:
•On April 5, 2023, we amended and restated our 2021 global senior credit facility (the "2021 Global Facility") as the 2023 Global Facility, increasing its borrowing
capacity to $3.0 billion and extended the initial maturity date to June 2027.
•On August 25, 2023, we amended and restated the Japanese yen revolver, increasing its borrowing capacity for total commitments of ¥58.5 billion ($414 million at
December 31, 2023) and extended the initial maturity date to August 2027.
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•In the third quarter of 2023, we entered into Chinese renminbi term loans totaling CN¥1.7 billion ($239 million) with an issuance date weighted average interest rate of
3.5% maturing between September 2024 to 2026.
•We issued senior notes of $5.4 billion (principal in millions):
Issuance Date
Borrowing
Currency
USD
(1)
Interest Rate
Years
Maturity Dates
Aggregate Principal
Issuance Date Weighted Average
January
March
May
June
Total
€
$
€
$
1,250 $
1,200 $
$
750
2,000 $
$
1,354
1,200
809
2,000
5,363
4.1%
4.9%
4.6%
5.1%
4.7%
(1)The exchange rate used to calculate into U.S. dollars was the spot rate at the settlement date.
13.8
17.7
10.0
13.2
13.9
January 2030 – 2043
June 2033 – 2053
May 2033
June 2028 – 2053
In January 2024, we issued senior notes of $1.3 billion with weighted average effective interest rates of 5.2% and a weighted average maturity of 17 years. In February 2024,
we issued senior notes of CN¥ 1.5 billion ($211 million) with an effective interest rate of 3.6% and a maturity of 3 years.
RESULTS OF OPERATIONS
We evaluate our business operations based on the NOI of our two operating segments: Real Estate (Rental Operations and Development) and Strategic Capital. NOI by
segment is a non-GAAP performance measure that is calculated using revenues and expenses directly from our financial statements. We consider NOI by segment to be an
appropriate supplemental measure of our performance because it helps management and investors understand our operating results.
Below is our NOI by segment per the Consolidated Financial Statements and a reconciliation of NOI by segment to Operating Income per the Consolidated Financial
Statements (in millions):
Real estate segment:
Rental revenues
Development management and other revenues
Rental expenses
Other expenses
Real Estate Segment – NOI
Strategic capital segment:
Strategic capital revenues
Strategic capital expenses
Strategic Capital Segment – NOI
General and administrative expenses
Depreciation and amortization expenses
Operating income before gains on real estate transactions, net
Gains on dispositions of development properties and land, net
Gains on other dispositions of investments in real estate, net
Operating income
2023
2022
$
6,819
5
(1,625 )
(54 )
5,145
1,200
(385 )
815
(390 )
(2,485 )
3,085
462
161
3,708
$
4,913
21
(1,206 )
(40 )
3,688
1,040
(304 )
736
(331 )
(1,813 )
2,280
598
589
3,467
$
$
See Note 17 to the Consolidated Financial Statements for more information on our segments and a reconciliation of each business segment’s NOI to Operating Income and
Earnings Before Income Taxes.
Real Estate Segment
This operating segment principally includes rental revenue and rental expenses recognized from our consolidated properties. We allocate the costs of our property
management and leasing functions to the Real Estate Segment through Rental Expenses and the Strategic Capital Segment through Strategic Capital Expenses, both in the
Consolidated Financial Statements, based on the square footage of the relative portfolios. In addition, this segment is impacted by our development, acquisition and
disposition activities.
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Table of Contents
Below are the components of Real Estate Segment NOI, derived directly from line items in the Consolidated Financial Statements (in millions):
Rental revenues
Development management and other revenues
Rental expenses
Other expenses
Real Estate Segment – NOI
$
$
2023
2022
6,819
5
(1,625 )
(54 )
5,145
$
$
4,913
21
(1,206 )
(40 )
3,688
The change in Real Estate Segment (“RES”) NOI in 2023 compared to 2022 of approximately $1.5 billion was impacted by the following activities (in millions):
(1)Acquisition activity is principally due to the Duke Transaction on October 3, 2022 and a $3.1 billion real estate portfolio acquired in the U.S. on June 29, 2023. Acquisition
activity also includes the amortization of fair value lease adjustments to rental revenues due to in-place leases that were primarily below market at the time of the acquisition.
(2)During both periods, we experienced positive rental rate growth. Rental rate growth is a combination of higher rental rates on rollover of leases (or rent change) and
contractual rent increases on existing leases. If a lease has a contractual rent increase driven by a metric that is not known at the time the lease commences, such as the
consumer price index or a similar metric, the rent increase is not included in rent leveling and therefore impacts the rental revenue we recognize. Significant rent change
during both periods continues to be a key driver in increasing rental income. See below for key metrics on rent change on rollover and occupancy.
(3)We calculate changes in NOI from development completions period over period by comparing the change in NOI generated on the pool of developments that completed
on or after January 1, 2022 through December 31, 2023.
(4)The change is principally due to higher insurance costs from a greater number of weather-related events and increases in the cost of our property management and
leasing functions in 2023. Development management and other also includes the operating results of our energy assets.
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Table of Contents
Below are key operating metrics of our consolidated operating portfolio:
(1)In October 2022, we completed the Duke Transaction, which increased our average consolidated square feet for 2023.
(2)Consolidated square feet of leases commenced and weighted average net effective rent change were calculated for leases with initial terms of one year or greater.
Development Activity
The following table summarizes consolidated development activity (dollars and square feet in millions):
Starts:
Number of new development buildings during the period
Square feet
(1)
TEI
Percentage of build-to-suits based on TEI
Stabilizations:
Number of development buildings stabilized during the period
Square feet
TEI
Percentage of build-to-suits based on TEI
Weighted average stabilized yield
Estimated value at completion
Estimated weighted average margin
Estimated value creation
(2)
(3)
2023
2022
55
13
3,361
54.0 %
61
22
3,058
44.0 %
6.3 %
3,974
30.0 %
916
$
$
$
$
91
31
4,679
39.1 %
69
22
2,772
38.9 %
6.2 %
4,294
54.9 %
1,522
$
$
$
$
(1)Included in TEI for 2023 was incremental spend of $161 million related to a development start that was previously reported.
(2)We calculate the weighted average stabilized yield as estimated NOI assuming stabilized occupancy divided by TEI.
(3)Estimated weighted average margin is calculated on development properties as estimated value creation, less estimated closing costs and taxes, if any, on properties
expected to be sold or contributed, divided by TEI. Development margins fluctuate depending on several factors including cost of capital, changes in capitalization rates that
are used to estimate value at completion, location and type of development, such as build-to-suit development.
At December 31, 2023, the consolidated development portfolio, including properties under development and pre-stabilized properties, was expected to be completed before
July 2026 with a TEI of $7.8 billion and was 37.9% leased. Our investment in the development portfolio was $4.4 billion at December 31, 2023 leaving $3.4 billion remaining
to be spent. For additional information on our development portfolio at December 31, 2023, see Item 2. Properties.
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Capital Expenditures
We capitalize costs incurred in improving and leasing our operating properties as part of the investment basis or within Other Assets in the Consolidated Balance Sheets. The
following graph summarizes recurring capitalized expenditures, excluding development costs and non-recurring costs, of our consolidated operating properties during each
year:
Our capital expenditures continue to increase year over year as we grow the consolidated operating portfolio through development and acquisitions. We plan to continue
allocating capital in 2024 to renovate and improve our operating portfolio, including the addition of sustainable and efficient building features.
Strategic Capital Segment
This operating segment includes revenues from asset management and property management services performed, transactional services for acquisition, disposition and
leasing activity and promote revenue earned from the unconsolidated co-investment ventures. Revenues associated with the Strategic Capital Segment fluctuate because of
changes in the size of the portfolios through acquisitions and dispositions, the fair value of the properties and other transactional activity including foreign currency exchange
rates and timing of promotes. These revenues are reduced by the direct costs associated with the asset and property-level management expenses for the properties owned
by these ventures. We allocate the costs of our property management and leasing functions to the Strategic Capital Segment through Strategic Capital Expenses and to the
Real Estate Segment through Rental Expenses both in the Consolidated Financial Statements, based on the square footage of the relative portfolios. For further details
regarding the key property information and summarized financial condition and operating results of our unconsolidated co-investment ventures, refer to Note 5 to the
Consolidated Financial Statements.
Below are the components of Strategic Capital Segment NOI derived directly from the line items in the Consolidated Financial Statements (in millions):
Strategic capital revenues
Strategic capital expenses
Strategic Capital Segment – NOI
Below is additional detail of our Strategic Capital Segment revenues, expenses and NOI (in millions):
$
$
2023
2022
1,200
(385 )
815
$
$
1,040
(304 )
736
Strategic capital revenues ($)
(3)
Recurring fees
Transactional fees
(5)
Promote revenue
(4)
Total strategic capital revenues ($)
Strategic capital expenses ($)
(5)
Strategic Capital Segment - NOI ($)
U.S.
(1)
2023
2022
Other Americas
2022
2023
Europe
Asia
(2)
Total
2023
2022
2023
2022
2023
2022
171
21
641
833
(204 )
629
178
22
15
215
(155 )
60
50
7
33
90
(27 )
63
45
6
32
83
(20 )
63
163
18
1
182
(103 )
79
167
20
458
645
(87 )
558
76
19
-
95
(51 )
44
78
19
-
460
65
675
97 1,200
(42 )
55
(385 )
815
468
67
505
1,040
(304 )
736
(1)The U.S. expenses include compensation and personnel costs for employees who are based in the U.S. but also support other geographies.
(2)In April 2023, we formed PJLF in Japan with two investors.
(3)Recurring fees include asset management and property management fees.
33
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(4)Transactional fees include leasing commissions and acquisition, disposition, development and other fees.
(5)We generally earn promote revenue directly from third-party investors in the co-investment ventures based on the cumulative returns of the venture over a three-year
period or the stabilization of individual development projects owned by the venture. Changes in asset valuations within the co-investment ventures during the promote period
is one of the significant inputs to the calculation of promote revenues. The asset valuations are prepared by third-party valuation firms. Included above is promote revenue
earned from USLF in the second quarter of 2023 and PELF in the third quarter of 2022. We do not have any significant promote opportunities in 2024.
Up to 40% of the third-party portion of the promote earned by us from the co-investment ventures is paid to our employees as a combination of cash and stock-based
awards pursuant to the terms of the PPP and expensed through Strategic Capital Expenses in the Consolidated Statements of Income, as vested.
G&A Expenses
G&A expenses were $390 million and $331 million for 2023 and 2022, respectively. G&A expenses increased in 2023 as compared to 2022, principally due to inflationary
increases, the expansion of Prologis Essentials and higher compensation expenses based on our performance. We capitalize certain internal costs that are incremental and
directly related to our development and building improvement activities.
The following table summarizes capitalized G&A (in millions):
Building and land development activities
Operating building improvements and other
Total capitalized G&A expenses
Capitalized compensation and related costs as a percent of total
Depreciation and Amortization Expenses
$
$
2023
2022
123 $
52
175 $
23.8 %
107
45
152
22.7 %
Depreciation and amortization expenses were $2.5 billion and $1.8 billion in 2023 and 2022, respectively.
The change in depreciation and amortization expenses in 2023 compared to 2022 of approximately $672 million was impacted by the following (in millions):
(1)Included in acquisitions are the operating properties, other real estate properties and related lease intangibles acquired in the Duke Transaction.
(2)Included in foreign currency and other is the depreciation and amortization expense associated with our energy assets.
Gains on Real Estate Transactions, Net
Gains on the disposition of development properties and land were $462 million and $598 million for 2023 and 2022, respectively, primarily from the contribution of properties
we developed to our unconsolidated co-investment ventures in Europe, Japan and Mexico
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for both years. Gains on other dispositions of investments in real estate were $161 million and $589 million for 2023 and 2022, respectively, and primarily represented sales
of U.S. non-strategic operating properties to third parties. Historically, we have utilized the proceeds from these transactions primarily to fund our acquisition and
development activities. See Note 4 to the Consolidated Financial Statements for further information on these transactions.
Our Owned and Managed (“O&M”) Operating Portfolio
We manage our business and review our operating fundamentals on an O&M basis, which includes our consolidated properties and properties owned by our unconsolidated
co-investment ventures. We believe reviewing the results in this way allows management to understand performance more broadly as we manage the properties without
regard to their ownership. We do not control the unconsolidated co-investment ventures for purposes of GAAP and the presentation of the ventures’ operating information
does not represent a legal claim.
Our O&M operating portfolio does not include our development portfolio, value-added properties, non-industrial properties or properties that we consider non-strategic and do
not have the intent to hold long term that are classified as either held for sale or within other real estate investments. Value-added properties are properties we have either
acquired at a discount and believe we could provide greater returns post-stabilization or properties we expect to repurpose to a higher and better use. See below for
information on our O&M operating portfolio at December 31 (square feet in millions):
Consolidated
Unconsolidated
Total
Number of
Properties
2,957
2,242
5,199
2023
Square
Feet
631
507
1,138
Percentage
Occupied
Number of
Properties
97.6 %
97.5 %
97.6 %
2,812
2,177
4,989
2022
Square
Feet
595
488
1,083
Percentage
Occupied
98.3 %
98.1 %
98.2 %
Below are the key leasing metrics of our O&M operating portfolio.
(1)Square feet of leases commenced and weighted average net effective rent change were calculated for leases with initial terms of one year or greater. We retained
approximately 70% or more of our customers, based on the total square feet of leases commenced, for each year. In 2023 and 2022, we experienced a significant increase
in net effective rent change due to increasing market rents.
(2)Turnover costs include external leasing commissions and tenant improvements and represent the obligations incurred in connection with the lease commencement for
leases greater than one year. In 2023 and 2022, spend on turnover costs remained similar to 2021, however, the value of the leases commenced increased due to strong
market rent growth.
Same Store Analysis
Our same store metrics are non-GAAP financial measures, which are commonly used in the real estate industry and expected from the financial community, presented on
both a net effective and cash basis. We evaluate the performance of the operating properties we own and manage using a “same store” analysis to ensure that the
population of properties in this analysis is consistent from period to period, allowing us and investors to analyze our ongoing business operations. We determine our same
store metrics on property NOI, which is calculated as rental revenue less rental expense for the applicable properties in the same store population for both consolidated and
unconsolidated properties based on our ownership interest, as further defined below.
We define our same store population for the three months ended December 31, 2023 as the properties in our O&M operating portfolio, including the property NOI for both
consolidated properties and properties owned by the unconsolidated co-investment ventures at January 1, 2022 and owned throughout the same three-month period in both
2022 and 2023. We believe the drivers of property NOI for the consolidated portfolio are generally the same for the properties owned by the ventures in which we invest and
therefore we evaluate
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the same store metrics of the O&M portfolio based on Prologis’ ownership in the properties (“Prologis Share”). The same store population excludes properties held for sale to
third parties, along with development properties that were not stabilized at the beginning of the period (January 1, 2022) and properties acquired or disposed of to third parties
during the period. To derive an appropriate measure of period-to-period operating performance, we remove the effects of foreign currency exchange rate movements by
using the reported period-end exchange rate to translate from local currency into the U.S. dollar, for both periods.
As non-GAAP financial measures, the same store metrics have certain limitations as analytical tools and may vary among real estate companies. As a result, we provide a
reconciliation of Rental Revenues less Rental Expenses (“Property NOI”) (from our Consolidated Financial Statements prepared in accordance with U.S. GAAP) to our Same
Store Property NOI measures.
We evaluate the results of our same store portfolio on a quarterly basis. The following is a reconciliation of our consolidated rental revenues, rental expenses and property
NOI for each quarter in 2023 and 2022 to the full year, as included in the Consolidated Statements of Income and within Note 19 to the Consolidated Financial Statements
and to the respective amounts in our same store portfolio analysis for the three months ended December 31 (dollars in millions):
2023
Rental revenues
Rental expenses
Property NOI
2022
Rental revenues
Rental expenses
Property NOI
March 31,
June 30,
September 30,
December 31,
Full Year
Three Months Ended
$
$
$
$
1,634
(413 )
1,221
1,077
(276 )
801
$
$
$
$
1,652
(388 )
1,264
1,093
(270 )
823
$
$
$
$
1,777
(416 )
1,361
1,152
(285 )
867
$
$
$
$
1,756
(408 )
1,348
1,591
(375 )
1,216
$
$
$
$
6,819
(1,625 )
5,194
4,913
(1,206 )
3,707
Three Months Ended
December 31,
2023
2022
% Change
Reconciliation of Consolidated Property NOI to Same Store Property NOI measures:
Rental revenues
Rental expenses
Consolidated Property NOI
(1)
(1)(2)
Adjustments to derive same store results:
Property NOI from consolidated properties not included in same store portfolio and
other adjustments
Property NOI from unconsolidated co-investment ventures included in same store
portfolio
Third parties' share of Property NOI from properties included in same store portfolio
Prologis Share of Same Store Property NOI – Net Effective
Consolidated properties straight-line rent and fair value lease adjustments
included in same store portfolio
Unconsolidated co-investment ventures straight-line rent and fair value lease
adjustments included in same store portfolio
Third parties' share of straight-line rent and fair value lease adjustments included
in same store portfolio
Prologis Share of Same Store Property NOI – Cash
(2)(3)
(2)(3)
(3)
(2)
(3)
(1)(2)
$
$
$
$
1,756
(408 )
1,348
$
$
(501 )
714
(575 )
986
$
(17 )
(7 )
6
968
$
1,591
(375 )
1,216
(432 )
671
(540 )
915
(20 )
(12 )
9
892
7.8 %
8.5 %
(1)We exclude properties held for sale to third parties, along with development properties that were not stabilized at the beginning of the period and properties acquired or
disposed of to third parties during the period. We also exclude net termination and renegotiation fees and write-offs of fair value lease assets or liabilities to allow us to
evaluate the growth or decline in each property’s rental revenues without regard to one-time items that are not indicative of the property’s recurring operating performance.
Net termination and renegotiation fees represent the gross fee negotiated to allow a customer to terminate or renegotiate their lease, offset by the write-off of the asset
recorded due to the adjustment to straight-line rents over the lease term. Same Store Property NOI is adjusted to include an allocation of property management expenses for
our consolidated properties based on the property management services provided to each property (generally, based on a percentage of revenues). On consolidation, these
amounts are eliminated and the actual costs of providing property management and leasing services are recognized as part of our consolidated rental expense.
(2)We include the Property NOI for the same store portfolio for both consolidated properties and properties owned by the co-investment ventures based on our investment in
the underlying properties. In order to calculate our share of Same Store Property NOI from the co-investment ventures in which we own less than 100%, we use the co-
investment ventures’ underlying Property
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NOI for the same store portfolio and apply our ownership percentage at December 31, 2023 to the Property NOI for both periods, including the properties contributed during
the period. We adjust the total Property NOI from the same store portfolio of the co-investment ventures by subtracting the third parties’ share of both consolidated and
unconsolidated co-investment ventures.
During the periods presented, certain wholly owned properties were contributed to a co-investment venture and are included in the same store portfolio. Neither our
consolidated results nor those of the co-investment ventures, when viewed individually, would be comparable on a same store basis because of the changes in
composition of the respective portfolios from period to period (e.g. the results of a contributed property are included in our consolidated results through the contribution
date and in the results of the venture subsequent to the contribution date based on our ownership interest at the end of the period). As a result, only line items labeled
“Prologis Share of Same Store Property NOI” are comparable period over period.
(3)We further remove certain noncash items (straight-line rent and amortization of fair value lease adjustments) included in the financial statements prepared in accordance
with U.S. GAAP to reflect a Same Store Property NOI – Cash measure.
We manage our business and compensate our executives based on the same store results of our O&M portfolio at 100% as we manage our portfolio on an ownership blind
basis. We calculate those results by including 100% of the properties included in our same store portfolio.
Other Components of Income (Expense)
Earnings from Unconsolidated Entities, Net
We recognized net earnings from unconsolidated entities, which are accounted for using the equity method, of $307 million and $311 million during 2023 and 2022,
respectively.
The earnings we recognize can be impacted by: (i) the size, rental rates and occupancy of the portfolio of properties owned by each venture; (ii) gains or losses from the
dispositions of properties and extinguishment of debt; (iii) our ownership interest in each venture; (iv) other variances in revenues and expenses of each venture; and (v)
fluctuations in foreign currency exchange rates used to translate our share of net earnings to U.S. dollars. See the discussion of our unconsolidated entities above in the
Strategic Capital Segment discussion and in Note 5 to the Consolidated Financial Statements for a further breakdown of our share of net earnings recognized.
Interest Expense
The following table details our net interest expense (dollars in millions):
Gross interest expense
Amortization of debt discount and debt issuance costs, net
Capitalized amounts
Net interest expense
Weighted average effective interest rate during the year
2023
2022
$
$
683
$
75
(117 )
$
641
2.8 %
345
24
(60 )
309
1.8 %
Interest expense increased in 2023, as compared to 2022, principally due to the financing of acquisition and development activity through the issuance of senior notes in
2023, the assumption of $4.2 billion of debt in the Duke Transaction which was marked to fair value in October 2022 and higher interest rates on new issuances and our
credit facilities. We issued $5.4 billion of senior notes during 2023 and $3.3 billion during 2022, with a weighted average interest rate of 4.7% and 2.3%, respectively, at the
issuance date.
See Note 8 to the Consolidated Financial Statements and the Liquidity and Capital Resources section below, for further discussion of our debt and borrowing costs.
Foreign Currency, Derivative and Other Gains and Other Income, Net
We recognized foreign currency, derivative and other gains and other income, net, of $87 million and $242 million for the year ended December 31, 2023, and 2022,
respectively. These amounts included interest income earned on short-term investments and mark-to-market adjustments associated with other financial investments.
We are exposed to foreign currency exchange risk related to investments in and earnings from our foreign investments. We primarily hedge our foreign currency risk related
to our investments by borrowing in the currencies in which we invest thereby providing a natural hedge. We have issued debt in a currency that is not the same functional
currency of the borrowing entity and have designated a portion of the debt as a nonderivative net investment hedge. We recognize the remeasurement and settlement of the
translation adjustment on the unhedged portion of the debt and accrued interest in unrealized gains or losses. We may use derivative financial instruments to manage foreign
currency exchange rate risk related to our earnings. We recognize the change in fair value of the undesignated derivative contracts in unrealized gains and losses. Upon
settlement of these transactions, we recognize realized gains or losses.
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The following table details our foreign currency and derivative gains, net included in earnings (in millions):
Realized foreign currency and derivative gains, net:
Gains on the settlement of undesignated derivatives
Gains on the settlement of transactions with third parties
Total realized foreign currency and derivative gains, net
Unrealized foreign currency and derivative gains (losses), net:
Gains (losses) on the change in fair value of undesignated derivatives and unhedged debt
Gains on remeasurement of certain assets and liabilities
Total unrealized foreign currency and derivative gains (losses), net
Total foreign currency and derivative gains (losses), net
2023
2022
$
$
60 $
1
61
(81 )
10
(71 )
(10 ) $
145
1
146
83
9
92
238
See Note 2 to the Consolidated Financial Statements for more information about our foreign currency and derivative financial instrument policies and Note 15 to the
Consolidated Financial Statements for more information about our derivative and nonderivative transactions.
Income Tax Expense
We recognize income tax expense related to our taxable REIT subsidiaries and in the local, state and foreign jurisdictions in which we operate. Our current income tax
expense (benefit) fluctuates from period to period based primarily on the timing of our taxable income, including gains on the disposition of properties, fees earned from the
co-investment ventures and taxable earnings from unconsolidated co-investment ventures. Deferred income tax expense (benefit) is generally a function of the period’s
temporary differences and the utilization of net operating losses generated in prior years that had been previously recognized as deferred income tax assets in taxable
subsidiaries.
The following table summarizes our income tax expense (benefit) (in millions):
Current income tax expense (benefit):
Income tax expense
Income tax expense on dispositions
Income tax benefit on dispositions related to acquired tax liabilities
Total current income tax expense
Deferred income tax expense (benefit):
Income tax expense
Total deferred income tax expense
Total income tax expense
2023
2022
$
$
165
39
(11 )
193
18
18
211
$
$
130
13
(21 )
122
13
13
135
Our income taxes are discussed in more detail in Note 13 to the Consolidated Financial Statements.
Net Earnings Attributable to Noncontrolling Interests
This amount represents the third-party investors’ share of the earnings generated in consolidated entities in which we do not own 100% of the equity, reduced by the third-
party share of fees or promotes payable to us and earned during the period. We had net earnings attributable to noncontrolling interests of $194 million and $191 million in
2023 and 2022, respectively. Included in these amounts were $77 million and $92 million in 2023 and 2022, respectively, of net earnings attributable to the common limited
partnership unitholders of Prologis, L.P.
See Note 11 to the Consolidated Financial Statements for further information on our noncontrolling interests.
Other Comprehensive Income (Loss)
The key driver of changes in Accumulated Other Comprehensive Income (Loss) (“AOCI/L”) in the Consolidated Financial Statements in 2023 and 2022 was the currency
translation adjustment derived from changes in exchange rates during both periods principally on our net investments in real estate outside the U.S. and the borrowings we
issue in the functional currencies of the countries where we invest. These borrowings serve as a natural hedge of our foreign investments. In addition, we use derivative
financial instruments, such as foreign currency contracts to manage foreign currency exchange rate risk related to our foreign investments and interest rate contracts to
manage interest rate risk, that when designated the change in fair value is included in AOCI/L.
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See Note 2 to the Consolidated Financial Statements for more information about our foreign currency and derivative financial instrument policies and Note 15 to the
Consolidated Financial Statements for more information about our derivative and nonderivative transactions and other comprehensive income (loss).
ENVIRONMENTAL MATTERS
See Note 16 in the Consolidated Financial Statements for further information about environmental liabilities.
LIQUIDITY AND CAPITAL RESOURCES
Overview
We consider our ability to generate cash from operating activities, distributions from our co-investment ventures, contributions and dispositions of properties and available
financing sources to be adequate to meet our anticipated future development, acquisition, operating, debt service, dividend and distribution requirements.
Near-Term Principal Cash Sources and Uses
In addition to dividends and distributions, we expect our primary cash needs will consist of the following:
•completion of the development and leasing of the properties in our consolidated development portfolio (at December 31, 2023, 130 properties in our development portfolio
were 37.9% leased with a current investment of $4.4 billion and a TEI of $7.8 billion when completed and leased, leaving $3.4 billion of estimated additional required
investment);
•development of new properties that we may hold for long-term investment or subsequently contribute to unconsolidated co-investment ventures, including the acquisition of
land;
•the acquisition of other real estate investments that we acquire with the intention of redeveloping into industrial properties;
•capital expenditures and leasing costs on properties in our operating portfolio;
•investments in energy assets such as solar panels, battery storage and mobility solutions to serve our customers;
•repayment of debt and scheduled principal payments of $531 million in 2024;
•additional investments in current and future unconsolidated co-investment ventures and other ventures; and
•the acquisition of operating properties or portfolios of operating properties (depending on market and other conditions) for direct, long-term investment in our consolidated
portfolio (this might include acquisitions from our unconsolidated entities).
We expect to fund our cash needs principally from the following sources (subject to market conditions):
•net cash flow from property operations;
•fees earned for services performed on behalf of co-investment ventures;
•distributions received from co-investment ventures;
•proceeds from the contribution of properties to current or future co-investment ventures;
•proceeds from the disposition of properties or other investments to third parties;
•available unrestricted cash balances ($530 million at December 31, 2023);
•borrowing capacity under our current credit facility arrangements that allow us to borrow on a short-term basis, with original maturities ranging from overnight to three
months ($5.5 billion available at December 31, 2023); and
•proceeds from the issuance of debt.
In the long term, we may also voluntarily repurchase our outstanding debt or equity securities (depending on prevailing market conditions, our liquidity, contractual
restrictions and other factors) through cash purchases, open-market purchases, privately negotiated transactions, tender offers or otherwise. We may also fund our cash
needs from the issuance of equity securities, subject to market conditions, and through the sale of a portion of our investments in co-investment ventures.
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Debt
The following table summarizes information about our consolidated debt by currency at December 31 (dollars in millions):
British pound sterling
Canadian dollar
Chinese renminbi
Euro
Japanese yen
U.S. dollar
Total debt
(1)
Weighted Average
Interest Rate
Amount
Outstanding
% of Total
Weighted Average
Interest Rate
2023
2022
Amount
Outstanding
% of Total
2.1 % $
5.0 %
3.7 %
2.0 %
1.0 %
4.1 %
3.0 % $
1,300
830
242
10,084
3,086
13,459
29,001
4.5 %
2.9 %
0.8 %
34.8 %
10.6 %
46.4 %
100.0 %
2.1 % $
4.5 %
-
1.3 %
1.0 %
3.6 %
2.5 % $
1,228
815
-
7,991
3,308
10,534
23,876
5.1 %
3.4 %
-
33.5 %
13.9 %
44.1 %
100.0 %
(1)The weighted average remaining maturity for total debt outstanding at both December 31, 2023 and 2022 was 9 years.
Our credit ratings at December 31, 2023 were A and A3 from Standard & Poor's and Moody’s, respectively, each with a stable outlook. These ratings allow us to borrow at an
advantageous interest rate. Adverse changes in our credit ratings could negatively impact our business and, in particular, our refinancing and other capital market activities,
our ability to manage debt maturities, our future growth and our development and acquisition activity. A securities rating is not a recommendation to buy, sell or hold
securities and is subject to revision or withdrawal at any time by the rating organization.
At December 31, 2023, we were in compliance with all of our financial debt covenants. These covenants include a number of customary financial covenants, such as
maintaining debt service coverage ratios, leverage ratios and fixed charge coverage ratios.
See Note 8 to the Consolidated Financial Statements for further discussion on our debt.
Equity Commitments Related to Certain Co-Investment Ventures
Certain co-investment ventures have equity commitments from us and our venture partners. Our venture partners fulfill their equity commitment with cash. We may fulfill our
equity commitment through contributions of properties or cash.
The following table summarizes the remaining equity commitments at December 31, 2023 (in millions):
Prologis Targeted U.S. Logistics Fund
Prologis Brazil Logistics Venture
Prologis European Logistics Fund
Prologis Japan Core Logistics Fund
Prologis China Logistics Venture
Total
Prologis
Equity Commitments
Venture Partners
(1)
Total
$
$
250
45
-
100
212
607
$
$
361
180
51
516
1,200
2,308
$
$
Expiration Date
(2)
2024 – 2026
2026
2026
2033
2024 – 2028
(2)
611
225
51
616
1,412
2,915
(1)The equity commitments for the co-investment ventures that operate in a different functional currency than the U.S. dollar were calculated using the foreign currency
exchange rate at December 31, 2023.
(2)Venture partners have the option to cancel their equity commitment starting 18 months after the initial commitment date.
See the Cash Flow Summary below for more information about our investment activity in our co-investment ventures.
Cash Flow Summary
The following table summarizes our cash flow activity (in millions):
Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by financing activities
Net increase (decrease) in cash and cash equivalents, including the effect of foreign
currency exchange rates on cash
40
2023
2022
5,373 $
(6,419 ) $
1,320 $
252
$
4,126
(4,499 )
116
(278 )
$
$
$
$
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Operating Activities
Cash provided by and used in operating activities, exclusive of changes in receivables and payables, was impacted by the following significant activities:
•Real Estate Segment. We receive the majority of our operating cash through the net revenues of our Real Estate Segment, including the recovery of our operating costs.
Cash flows generated by the Real Estate Segment are impacted by our acquisition, development and disposition activities, which are drivers of NOI recognized during each
period. See the Results of Operations section above for further explanation of our Real Estate Segment. The revenues from this segment include noncash adjustments for
straight-lined rents and amortization of above and below market leases of $613 million and $268 million for 2023 and 2022, respectively. The increase in straight-lined rents
and amortization of above and below market leases in 2023 was driven primarily from the Duke acquisition.
•Strategic Capital Segment. We also generate operating cash through our Strategic Capital Segment by providing asset management and property management and other
services to our unconsolidated co-investment ventures. See the Results of Operations section above for the key drivers of the net revenues from our Strategic Capital
Segment. Included in Strategic Capital Revenues in the Consolidated Statements of Income are the promotes we earn from the third-party investors in our co-investment
ventures, which are recognized in operating activities in the period the cash is received, generally the quarter after the revenue is recognized.
•G&A expenses and equity-based compensation awards. We incurred $390 million and $331 million of G&A expenses in 2023 and 2022, respectively. We recognized
equity-based, noncash compensation expenses of $268 million and $175 million in 2023 and 2022, respectively, which were recorded to Rental Expenses in the Real Estate
Segment, Strategic Capital Expenses in the Strategic Capital Segment and G&A Expenses in the Consolidated Statements of Income.
•Operating distributions from unconsolidated entities. We received $680 million and $410 million of distributions as a return on our investment from the cash flows
generated from the operations of our unconsolidated entities in 2023 and 2022, respectively.
•Cash paid for interest, net of amounts capitalized. We paid interest, net of amounts capitalized, of $457 million and $234 million in 2023 and 2022, respectively. See Note
8 to the Consolidated Financial Statements for further information on this activity.
•Cash paid for income taxes, net of refunds. We paid income taxes, net of refunds, of $149 million and $130 million in 2023 and 2022, respectively. See Note 13 to the
Consolidated Financial Statements for further information on this activity.
Investing Activities
Cash provided by investing activities is driven by proceeds from the sale of real estate assets that include the contribution of properties we developed to our unconsolidated
co-investment ventures as well as the sale of non-strategic operating properties. Cash used in investing activities is principally driven by our capital deployment activities of
investing in real estate development, acquisitions and capital expenditures as discussed above. This activity includes real estate portfolios, land for future development,
operating properties and other real estate assets. See Note 4 to the Consolidated Financial Statements for further information on these activities, including the $3.1 billion
real estate portfolio we acquired in the U.S. in the second quarter of 2023. In addition, the following significant transactions also impacted our cash used in and provided by
investing activities:
•Duke Transaction, net of cash acquired. We paid net cash of $92 million to complete the Duke Transaction in 2022 and an additional $33 million of transaction costs in
2023 that were accrued at the time of the acquisition in 2022. The acquisition was financed through the issuance of equity and the assumption of debt in 2022. A portion of
this debt was paid down subsequent to acquisition, see the Financing Activities section below. See Note 3 to the Consolidated Financial Statements for more information on
this transaction.
•Investments in and advances to our unconsolidated entities. We invested cash in our unconsolidated entities that represented our proportionate share, of $284 million
and $442 million in 2023 and 2022, respectively. The ventures used the funds for the acquisition of properties, development and repayment of debt. See Note 5 to the
Consolidated Financial Statements for more detail on our unconsolidated co-investment ventures.
•Return of investment from unconsolidated entities. We received distributions from unconsolidated entities as a return of investment of $348 million and $77 million in
2023 and 2022, respectively. Included in these amounts were distributions from venture activities including proceeds from property sales, debt refinancing and the
redemption of our investment in certain unconsolidated entities. Included in 2023 was also the redemption of our interest in an unconsolidated office joint venture. See Note
4 in the Consolidated Financial Statements for further information on this transaction.
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•Net proceeds from (payments on) the settlement of net investment hedges. We received net proceeds of $35 million and $56 million for the settlement of net
investment hedges in 2023 and 2022, respectively. See Note 15 to the Consolidated Financial Statements for further information on our derivative transactions.
Financing Activities
Cash provided by and used in financing activities is principally driven by proceeds from and payments on credit facilities and other debt, along with dividends paid on
common and preferred stock and noncontrolling interest contributions and distributions. Our credit facilities support our cash needs for development and acquisition activities
on a short-term basis. The original maturity of our borrowings under the credit facilities ranges from overnight to three months.
Our repurchase of and payments on debt and proceeds from the issuance of debt consisted of the following activity (in millions):
Repurchase of and payments on debt (including extinguishment costs)
Regularly scheduled debt principal payments and payments at maturity
Secured mortgage debt
Senior notes
Term loans
Total
Proceeds from the issuance of debt
Secured mortgage debt
Senior notes
Term loans
Total
2023
2022
(1)
$
30
153
89
-
272
$
120
5,323
312
5,755
$
$
914
328
3
136
1,381
331
3,256
529
4,116
$
$
$
$
(1)We completed the Duke Transaction in 2022 and assumed $4.2 billion of debt. We paid down the balance of $745 million on Duke’s line of credit subsequent to closing the
acquisition which is reflected in Net Proceeds From (Payments On) Credit Facilities in the Consolidated Statements of Cash Flow. The assumption of debt was excluded from
this table.
Unconsolidated Co-Investment Venture Debt
We had investments in and advances to our unconsolidated co-investment ventures of $8.4 billion at December 31, 2023. The ventures listed below had total third-party debt
of $14.9 billion at December 31, 2023 with a weighted average remaining maturity of 7 years and weighted average interest rate of 3.1%. Certain of our ventures do not have
third-party debt and are therefore excluded. This debt is non-recourse to Prologis and other investors in the co-investment ventures and bears interest as follows at
December 31, 2023 (dollars in millions):
Prologis Targeted U.S. Logistics Fund
FIBRA Prologis
Prologis European Logistics Fund
Nippon Prologis REIT
Prologis Japan Core Logistics Fund
Prologis China Core Logistics Fund
Prologis China Logistics Venture
Total
Total Debt
(1)
4,185
915
5,805
2,343
290
816
534
14,888
$
$
Weighted Average
Interest Rate
4.0%
4.0%
2.8%
0.7%
1.0%
4.9%
5.9%
$
$
Gross Book Value of
Real Estate
(1)
13,658
3,297
18,959
6,601
491
2,290
1,215
46,511
Ownership %
27.3%
45.1%
25.1%
15.1%
16.3%
15.5%
15.0%
(1)The weighted average loan-to-value ratio for all unconsolidated co-investment ventures was 27.3% at December 31, 2023. Loan-to-value, a non-GAAP measure, was
calculated as the percentage of total third-party debt to the gross book value of real estate for each venture and weighted based on the cumulative gross book value of all
unconsolidated co-investment ventures.
At December 31, 2023, we did not guarantee any third-party debt of the unconsolidated co-investment ventures. In our role as the manager or sponsor, we work with the co-
investment ventures to maintain sufficient liquidity and refinance their maturing debt. There can be no assurance that the co-investment ventures will be able to refinance any
maturing indebtedness on terms as favorable as the maturing debt, or at all. If the ventures are unable to refinance the maturing indebtedness with newly issued debt, they
may be able to obtain funds by voluntary capital contributions from us and our partners or by selling assets. Certain of our ventures also have credit facilities, or
unencumbered properties, both of which may be used to obtain funds.
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Dividend and Distribution Requirements
Our dividend policy on our common stock is to distribute a percentage of our cash flow to ensure that we will meet the dividend requirements of the IRC, relative to
maintaining our REIT status, while still allowing us to retain cash to fund our capital deployment and other investment activities.
Under the IRC, REITs may be subject to certain federal income and excise taxes on undistributed taxable income.
We paid quarterly cash dividends of $0.87 and $0.79 per common share in 2023 and 2022, respectively. Our future common stock dividends, if and as declared, may vary
and will be determined by the Board based upon the circumstances prevailing at the time, including our financial condition, operating results and REIT distribution
requirements, and may be adjusted at the discretion of the Board during the year.
We make distributions on the common limited partnership units outstanding at the same per unit amount as our common stock dividend. The Class A common limited
partnership units (“Class A Units”) in the OP are entitled to a quarterly distribution equal to $0.64665 per unit so long as the common units receive a quarterly distribution of at
least $0.40 per unit. We paid a quarterly cash distribution of $0.64665 per Class A Unit in 2023 and 2022.
At December 31, 2023, our Series Q preferred stock had an annual dividend rate of 8.54% per share and the dividends are payable quarterly in arrears.
Pursuant to the terms of our preferred stock, we are restricted from declaring or paying any dividend with respect to our common stock unless and until all cumulative
dividends with respect to the preferred stock have been paid and sufficient funds have been set aside for dividends that have been declared for the relevant dividend period
with respect to the preferred stock.
Other Commitments
On an ongoing basis, we are engaged in various stages of negotiations for the acquisition or disposition of individual properties or portfolios of properties.
CRITICAL ACCOUNTING POLICIES
A critical accounting policy is one that involves an estimate or assumption that is subjective and requires management judgment about the effect of a matter that is inherently
uncertain and material to an entity’s financial condition and results of operations. Management’s judgment considers historical and current economic conditions and
expectations for the future. Changes in estimates could affect our financial position and specific items in our results of operations that are used by stockholders, potential
investors, industry analysts and lenders in their evaluation of our performance. Of the significant accounting policies discussed in Note 2 to the Consolidated Financial
Statements, those presented below have been identified by us as meeting the criteria to be considered critical accounting policies as they relate to our financial condition at
December 31, 2023, and 2022 and our operating results for the three-year period ended December 31, 2023. Refer to Note 2 for more information on these critical
accounting policies.
Asset Acquisitions
We generally account for an acquisition of a single property or portfolio of properties as an asset acquisition. We measure the real estate assets acquired through an asset
acquisition based on their cost or total consideration exchanged. The difference between the cost and the estimated fair value (excess or bargain consideration) is allocated
to the real estate properties and related lease intangibles on a relative fair value basis. Assets we do not intend to hold long-term are recorded at fair value. At a property-
level, we allocate the fair value to the components, which include building, land, improvements, and intangible assets or liabilities related to acquired leases. The most
significant portion of the allocation is to building and land and requires the use of market based estimates and assumptions.
The fair value of real estate properties subject to purchase price allocation is based on the expected future cash flows of the property and various characteristics of the
markets where the property is located utilizing an income approach methodology, which may be a discounted cash flow analysis or applying a capitalization rate to the
estimated net operating income of a property. Key assumptions may include market rents and capitalization rates. Estimates of future cash flows are based on a number of
factors including historical operating results, known trends and market and economic conditions. We determine capitalization rates by market based on recent transactions
and other market data and adjust if necessary, based on the property characteristics. The fair value of land is generally based on relevant market data, such as a comparison
of the subject site to similar parcels that have recently been sold or are currently being offered on the market for sale. The use of different assumptions to value the acquired
properties and allocate the most significant portion of the property value between the building and land could affect the depreciation expense we recognize over the
estimated remaining useful life.
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Recoverability of Real Estate Assets
We assess the carrying values of our respective long-lived assets whenever events or changes in circumstances indicate that the carrying amounts of these assets may not
be fully recoverable. This assessment is primarily triggered based on the shortening of the expected hold period due to a change in our intent to sell a property in the near
term. We have processes to monitor our intent with regard to our investments and the estimated disposition value in comparison to the current carrying value. If our
assessment of potential triggering events indicates that the carrying value of a property that we expect to sell in the near term is not recoverable, we recognize an impairment
charge for the amount by which the carrying value exceeds the current estimated fair value of the property. We determine the fair value of the property based on the
estimated proceeds from disposition that are based on quoted market values, third-party appraisals or discounted cash flow models that utilize the future net operating
income of the property and expected market capitalization rates. The use of projected future cash flows is based on assumptions that are consistent with our estimates of
future expectations and the strategic plan we use to manage our underlying business. Changes in economic and operating conditions could impact our intent and the
assumptions used in determining the fair value that could result in future impairment.
NEW ACCOUNTING PRONOUNCEMENTS
See Note 2 to the Consolidated Financial Statements.
FUNDS FROM OPERATIONS ATTRIBUTABLE TO COMMON STOCKHOLDERS/UNITHOLDERS (“FFO”)
FFO is a non-GAAP financial measure that is commonly used in the real estate industry. The most directly comparable GAAP measure to FFO is net earnings.
The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as earnings computed under GAAP to exclude historical cost depreciation and gains and
losses from the sales net of any related tax, along with impairment charges, of previously depreciated properties. We also exclude the gains on revaluation of equity
investments upon acquisition of a controlling interest and the gain recognized from a partial sale of our investment, as these are similar to gains from the sales of previously
depreciated properties. We exclude similar adjustments from our unconsolidated entities and the third parties’ share of our consolidated co-investment ventures.
Our FFO Measures
Our FFO measures begin with NAREIT’s definition and we make certain adjustments to reflect our business and the way that management plans and executes our business
strategy. While not infrequent or unusual, the additional items we adjust for in calculating FFO, as modified by Prologis and Core FFO, both as defined below, are subject to
significant fluctuations from period to period. Although these items may have a material impact on our operations and are reflected in our financial statements, the removal of
the effects of these items allows us to better understand the core operating performance of our properties over the long term. These items have both positive and negative
short-term effects on our results of operations in inconsistent and unpredictable directions that are not relevant to our long-term outlook.
We calculate our FFO measures, as defined below, based on our proportionate ownership share of both our unconsolidated and consolidated ventures. We reflect our share
of our FFO measures for unconsolidated ventures by applying our average ownership percentage for the period to the applicable reconciling items on an entity-by-entity
basis. We reflect our share for consolidated ventures in which we do not own 100% of the equity by adjusting our FFO measures to remove the noncontrolling interests share
of the applicable reconciling items based on our average ownership percentage for the applicable periods.
These FFO measures are used by management as supplemental financial measures of operating performance and we believe that it is important that stockholders, potential
investors and financial analysts understand the measures management uses. We do not use our FFO measures as, nor should they be considered to be, alternatives to net
earnings computed under GAAP, as indicators of our operating performance, as alternatives to cash from operating activities computed under GAAP or as indicators of our
ability to fund our cash needs.
We analyze our operating performance principally by the rental revenue of our real estate and the revenues from our strategic capital business, net of operating,
administrative and financing expenses. This income stream is not directly impacted by fluctuations in the market value of our investments in real estate or debt securities.
FFO, as modified by Prologis attributable to common stockholders/unitholders (“FFO, as modified by Prologis”)
To arrive at FFO, as modified by Prologis, we adjust the NAREIT defined FFO measure to exclude the impact of foreign currency related items and deferred tax, specifically:
•deferred income tax benefits and deferred income tax expenses recognized by our subsidiaries;
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•current income tax expense related to acquired tax liabilities that were recorded as deferred tax liabilities in an acquisition, to the extent the expense is offset with a deferred
income tax benefit in earnings that is excluded from our defined FFO measure; and
•foreign currency exchange gains and losses resulting from (i) debt transactions between us and our foreign entities; (ii) third-party debt that is used to hedge our investment
in foreign entities; (iii) derivative financial instruments related to any such debt transactions, and (iv) mark-to-market adjustments associated with derivative and other
financial instruments.
We use FFO, as modified by Prologis, so that management, analysts and investors are able to evaluate our performance against other REITs that do not have similar
operations or operations in jurisdictions outside the U.S.
Core FFO attributable to common stockholders/unitholders (“Core FFO”)
In addition to FFO, as modified by Prologis, we also use Core FFO. To arrive at Core FFO, we adjust FFO, as modified by Prologis, to exclude the following recurring and
nonrecurring items that we recognize directly in FFO, as modified by Prologis:
•gains or losses from the disposition of land and development properties that were developed with the intent to contribute or sell;
•income tax expense related to the sale of investments in real estate;
•impairment charges recognized related to our investments in real estate generally as a result of our change in intent to contribute or sell these properties; and
•gains or losses from the early extinguishment of debt and redemption and repurchase of preferred stock.
We use Core FFO, including by segment and region, to: (i) assess our operating performance as compared to other real estate companies; (ii) evaluate our performance and
the performance of our properties in comparison with expected results and results of previous periods; (iii) evaluate the performance of our management; (iv) budget and
forecast future results to assist in the allocation of resources; (v) provide guidance to the financial markets to understand our expected operating performance; and (vi)
evaluate how a specific potential investment will impact our future results.
Limitations on the use of our FFO measures
While we believe our modified FFO measures are important supplemental measures, neither NAREIT’s nor our measures of FFO should be used alone because they
exclude significant economic components of net earnings computed under GAAP and are, therefore, limited as an analytical tool. Accordingly, these are only a few of the
many measures we use when analyzing our business. Some of the limitations are:
•The current income tax expenses that are excluded from our modified FFO measures represent the taxes that are payable.
•Depreciation and amortization of real estate assets are economic costs that are excluded from FFO. FFO is limited, as it does not reflect the cash requirements that may be
necessary for future replacements of the real estate assets. Furthermore, the amortization of capital expenditures and leasing costs necessary to maintain the operating
performance of logistics facilities are not reflected in FFO.
•Gains or losses from property dispositions and impairment charges related to expected dispositions represent changes in value of the properties. By excluding these gains
and losses, FFO does not capture realized changes in the value of disposed properties arising from changes in market conditions.
•The deferred income tax benefits and expenses that are excluded from our modified FFO measures result from the creation of a deferred income tax asset or liability that
may have to be settled at some future point. Our modified FFO measures do not currently reflect any income or expense that may result from such settlement.
•The foreign currency exchange gains and losses that are excluded from our modified FFO measures are generally recognized based on movements in foreign currency
exchange rates through a specific point in time. The ultimate settlement of our foreign currency-denominated net assets is indefinite as to timing and amount. Our FFO
measures are limited in that they do not reflect the current period changes in these net assets that result from periodic foreign currency exchange rate movements.
•The gains and losses on extinguishment of debt or preferred stock that we exclude from our Core FFO, may provide a benefit or cost to us as we may be settling our
obligation at less or more than our future obligation.
We compensate for these limitations by using our FFO measures only in conjunction with net earnings computed under GAAP when making our decisions. This information
should be read with our complete Consolidated Financial Statements prepared under GAAP. To
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assist investors in compensating for these limitations, we reconcile our modified FFO measures to our net earnings computed under GAAP as follows (in millions):
Reconciliation of net earnings attributable to common stockholders to FFO measures:
Net earnings attributable to common stockholders
2023
2022
$
3,053 $
3,359
Add (deduct) NAREIT defined adjustments:
Real estate related depreciation and amortization
Gains on other dispositions of investments in real estate, net of taxes
Reconciling items related to noncontrolling interests
Our share of reconciling items included in earnings related to unconsolidated entities
NAREIT defined FFO attributable to common stockholders/unitholders
Add (deduct) our modified adjustments:
Unrealized foreign currency, derivative and other losses (gains), net
Deferred income tax expense
Current income tax benefit on dispositions related to acquired tax liabilities
Our share of reconciling items included in earnings related to unconsolidated entities
FFO, as modified by Prologis attributable to common stockholders/unitholders
Adjustments to arrive at Core FFO:
Gains on dispositions of development properties and land, net
Current income tax expense on dispositions
Losses (gains) on early extinguishment of debt, net
Reconciling items related to noncontrolling interests
Our share of reconciling items included in earnings related to unconsolidated entities
Core FFO attributable to common stockholders/unitholders
2,434
(158 )
(38 )
455
5,746
18
18
(11 )
(11 )
5,760
(462 )
36
(3 )
9
(6 )
5,334 $
$
1,763
(595 )
(13 )
363
4,877
(85 )
13
(21 )
(42 )
4,742
(598 )
18
20
5
1
4,188
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to the impact of foreign exchange-related variability and earnings volatility on our foreign investments and interest rate changes. See our risk factors in Item
1A. Risk Factors, specifically Risks Related to our Global Operations and Risks Related to Financing and Capital. See also Notes 2 and 15 in the Consolidated Financial
Statements in Item 8. Financial Statements and Supplementary Data for more information about our foreign operations and derivative financial instruments.
We monitor our market risk exposures using a sensitivity analysis. Our sensitivity analysis estimates the exposure to market risk sensitive instruments assuming a
hypothetical 10% adverse change in foreign currency exchange rates or interest rates at December 31, 2023. The results of the sensitivity analysis are summarized in the
following sections. The sensitivity analysis is of limited predictive value. As a result, revenues and expenses, as well as our ultimate realized gains or losses with respect to
foreign currency exchange rate and interest rate fluctuations will depend on the exposures that arise during a future period, hedging strategies at the time and the prevailing
foreign currency exchange rates and interest rates.
Foreign Currency Risk
We are exposed to foreign currency exchange variability related to investments in and earnings from our foreign investments. Foreign currency market risk is the possibility
that our results of operations or financial position could be better or worse than planned because of changes in foreign currency exchange rates. We primarily hedge our
foreign currency risk by borrowing in the currencies in which we invest thereby providing a natural hedge. Additionally, we hedge our foreign currency risk by entering into
derivative financial instruments, such as foreign currency contracts, that we designate as net investment hedges, as these amounts offset the translation adjustments on the
underlying net assets of our foreign investments. At December 31, 2023, after consideration of our ability to borrow in the foreign currencies in which we invest and also
derivative and nonderivative financial instruments as discussed in Note 15 to the Consolidated Financial Statements, we had minimal net equity denominated in a currency
other than the U.S. dollar.
For the year ended December 31, 2023, $546 million or 6.8% of our total consolidated revenue was denominated in foreign currencies. We enter into foreign currency
contracts that we do not designate, such as forwards, to reduce the impact from fluctuations in foreign currency associated with the translation of the future earnings of our
international subsidiaries. At December 31, 2023, we had foreign currency contracts denominated principally in British pound sterling, Canadian dollar, euro and Japanese
yen, with an aggregate notional amount of $1.6 billion. As we do not designate these foreign currency contracts as hedges, the gain or loss on settlement is included in our
earnings and offsets the lower or higher translation of earnings from our investments denominated in currencies other than the U.S. dollar. Although the impact to net
earnings is mitigated through higher translated U.S. dollar earnings from these currencies, a weakening of the U.S. dollar against these currencies by 10% could result in a
$162 million cash payment on settlement of these contracts.
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Interest Rate Risk
We are also exposed to the impact of interest rate changes on future earnings and cash flows. To mitigate that risk, we generally borrow with fixed rate debt and we may use
derivative instruments to fix the interest rate on our variable rate debt. At December 31, 2023, $26.9 billion of our debt bore interest at fixed rates and therefore the fair value
of these instruments was affected by changes in market interest rates. At December 31, 2023, $2.7 billion of our debt bore interest at variable rates. The following table
summarizes the future repayment of debt and scheduled principal payments at December 31, 2023 (dollars in millions):
Fixed rate debt
Weighted average interest rate
(2)
(1)
Variable rate debt
Credit facilities
Secured mortgage debt
Senior notes
Term loans
Total variable rate debt
2024
2025
2026
2027
Thereafter
Total
Fair Value
365
$
2.0 %
176
$
3.2 %
1,463
$
3.3 %
1,796 $
2.0 %
23,090 $
2.9 %
26,890 $
2.8 %
24,096
-
-
166
-
166
$
$
-
38
-
726
764
$
$
355
-
-
601
956
$
$
624
-
-
-
624
$
$
-
-
-
177
177
$
$
979
38
166
1,504
2,687
$
$
979
38
166
1,503
2,686
$
$
$
(1)At December 31, 2023, we had one interest rate swap agreement to fix €150 million ($156 million) of our floating rate euro senior notes which is included in fixed rate debt.
(2)The weighted average interest rates represent the effective interest rates (including amortization of debt issuance costs and noncash premiums and discounts) at
December 31, 2023 for the debt outstanding and include the impact of designated interest rate swaps, which effectively fix the interest rate on certain variable rate debt.
At December 31, 2023, the weighted average effective interest rate on our variable rate debt was 3.6%, which was calculated using an average balance on our credit
facilities throughout the year and our other variable rate debt balances at December 31, 2023. Changes in interest rates can cause interest expense to fluctuate on our
variable rate debt. On the basis of our sensitivity analysis, a 10% increase in interest rates on our average outstanding variable rate debt balances would result in additional
annual interest expense of $8 million for the year ended December 31, 2023, which equates to a change in interest rates of 36 basis points on our average outstanding
variable rate debt balances and 3 basis points on our average total debt portfolio balances.
ITEM 8. Financial Statements and Supplementary Data
The Consolidated Balance Sheets of Prologis, Inc. and Prologis, L.P. at December 31, 2023 and 2022, the Consolidated Statements of Income of Prologis, Inc. and Prologis,
L.P., the Consolidated Statements of Comprehensive Income of Prologis, Inc. and Prologis, L.P., the Consolidated Statements of Equity of Prologis, Inc., the Consolidated
Statements of Capital of Prologis, L.P. and the Consolidated Statements of Cash Flows of Prologis, Inc. and Prologis, L.P. for each of the years in the three-year period
ended December 31, 2023, Notes to Consolidated Financial Statements and Schedule III — Real Estate and Accumulated Depreciation, together with the reports of KPMG
LLP, independent registered public accounting firm, are included under Item 15 of this report and are incorporated herein by reference. Selected unaudited quarterly financial
data are voluntarily presented in Note 19 of the Consolidated Financial Statements.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
ITEM 9A. Controls and Procedures
Controls and Procedures (Prologis, Inc.)
Prologis, Inc. carried out an evaluation under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of
the effectiveness of the disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934 (the “Exchange Act”)) at December
31, 2023. Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the disclosure controls and procedures are effective to
ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the SEC rules and forms. Subsequent to December 31, 2023, there were no significant changes in the internal controls or in other factors that could
significantly affect these controls, including any corrective actions with regard to significant deficiencies and material weaknesses.
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Changes in Internal Control over Financial Reporting
There have not been any changes in Prologis, Inc.’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that
occurred during the quarter ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, Prologis, Inc.’s internal control over financial
reporting.
Management’s Annual Report on Internal Control over Financial Reporting
We are responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the
internal control over financial reporting was conducted at December 31, 2023, based on the criteria described in “Internal Control — Integrated Framework” (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management determined that, at December 31, 2023, the internal
control over financial reporting was effective.
Our internal control over financial reporting at December 31, 2023, has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their
attestation report, which is included herein.
Limitations of the Effectiveness of Controls
Management’s assessment included an evaluation of the design of the internal control over financial reporting and testing of the operational effectiveness of the internal
control over financial reporting. The internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with GAAP. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Controls and Procedures (Prologis, L.P.)
Prologis, L.P. carried out an evaluation under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of
the effectiveness of the disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) at December 31, 2023. Based on this evaluation, the Chief
Executive Officer and the Chief Financial Officer have concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed
by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and
forms. Subsequent to December 31, 2023, there were no significant changes in the internal controls or in other factors that could significantly affect these controls, including
any corrective actions with regard to significant deficiencies and material weaknesses.
Changes in Internal Control over Financial Reporting
There have not been any changes in Prologis, L.P.’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that
occurred during the quarter ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, Prologis, L.P.’s internal control over
financial reporting.
Management’s Annual Report on Internal Control over Financial Reporting
We are responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the
internal control over financial reporting was conducted at December 31, 2023, based on the criteria described in “Internal Control — Integrated Framework” (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management determined that, at December 31, 2023, the internal
control over financial reporting was effective.
Limitations of the Effectiveness of Controls
Management’s assessment included an evaluation of the design of the internal control over financial reporting and testing of the operational effectiveness of the internal
control over financial reporting. The internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with GAAP. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
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become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
ITEM 9B. Other Information
During the period ended December 31, 2023, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated any Rule 10b5-1
trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K under the Act).
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance
The information required by this item is incorporated herein by reference to, including relevant sections in our 2023 Proxy Statement, under the captions entitled Board of
Directors and Corporate Governance; Executive Officers; Executive Compensation; Director Compensation; Security Ownership; Equity Compensation Plans and Additional
Information or will be provided in an amendment filed on Form 10-K/A.
ITEM 11. Executive Compensation
The information required by this item is incorporated herein by reference to the relevant sections in our 2023 Proxy Statement, under the captions entitled Board of Directors
and Corporate Governance; Executive Officers; Executive Compensation and Director Compensation or will be provided in an amendment filed on Form 10-K/A.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is incorporated herein by reference to the relevant sections in our 2023 Proxy Statement, under the captions entitled Security
Ownership and Equity Compensation Plans or will be provided in an amendment filed on Form 10-K/A.
ITEM 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated herein by reference to the relevant sections in our 2023 Proxy Statement, under the caption entitled Board of Directors
and Corporate Governance or will be provided in an amendment filed on Form 10-K/A.
ITEM 14. Principal Accounting Fees and Services
The information required by this item is incorporated herein by reference to the relevant sections in our 2023 Proxy Statement, under the caption entitled Audit Matters or will
be provided in an amendment filed on Form 10-K/A.
PART IV
ITEM 15. Exhibits, Financial Statements and Schedules
The following documents are filed as a part of this report:
(a) Financial Statements and Schedules:
1. Financial Statements:
See Index to the Consolidated Financial Statements and Schedule III on page 51 of this report, which is incorporated herein by reference.
2. Financial Statement Schedules:
Schedule III — Real Estate and Accumulated Depreciation
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All other schedules have been omitted since the required information is presented in the Consolidated Financial Statements and the related notes or is not applicable.
(b) Exhibits: The Exhibits required by Item 601 of Regulation S-K are listed in the Index to the Exhibits on pages 102 to 113 of this report, which is incorporated herein by
reference.
(c) Financial Statements: See Index to the Consolidated Financial Statements and Schedule III on page 51 of this report, which is incorporated by reference.
ITEM 16. Form 10-K Summary
Not Applicable.
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INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE III
Prologis, Inc. and Prologis, L.P.:
Reports of Independent Registered Public Accounting Firm
Prologis, Inc.:
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Equity
Consolidated Statements of Cash Flows
Prologis, L.P.:
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Capital
Consolidated Statements of Cash Flows
Prologis, Inc. and Prologis, L.P.:
Notes to the Consolidated Financial Statements
Note 1. Description of the Business
Note 2. Summary of Significant Accounting Policies
Note 3. Duke Transaction
Note 4. Real Estate
Note 5. Unconsolidated Entities
Note 6. Assets Held for Sale or Contribution
Note 7. Other Assets and Other Liabilities
Note 8. Debt
Note 9. Stockholders' Equity of Prologis, Inc.
Note 10. Partners' Capital of Prologis, L.P.
Note 11. Noncontrolling Interests
Note 12. Long-Term Compensation
Note 13. Income Taxes
Note 14. Earnings Per Common Share or Unit
Note 15. Financial Instruments and Fair Value Measurements
Note 16. Commitments and Contingencies
Note 17. Business Segments
Note 18. Supplemental Cash Flow Information
Note 19. Selected Quarterly Financial Data (Unaudited)
Schedule III — Real Estate and Accumulated Depreciation
51
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Table of Contents
Index to Item 15
To the Stockholders and Board of Directors
Prologis, Inc.:
Opinion on the Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying consolidated balance sheets of Prologis, Inc. and subsidiaries (the Company) as of December 31, 2023, and 2022, the related consolidated statements
of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes and financial statement schedule III
(collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2023, and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally
accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting
as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated February 13, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based
on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of
the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be
communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are
not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Assessment of the Company’s evaluation of the expected holding period for operating properties
As discussed in Notes 2 and 4 to the consolidated financial statements, the Company had $75,435 million of operating properties as of December 31, 2023. The Company tests the
recoverability of operating properties whenever events or changes in circumstances, including shortening the expected holding period of such assets, indicate that the carrying amount of
these assets may not be recoverable.
We identified the assessment of the Company’s evaluation of the expected holding period for operating properties as a critical audit matter. Subjective auditor judgment was required to
assess the relevant events or changes in circumstances that the Company used to evaluate its expected holding period. A shortening of the expected holding period could indicate a
potential impairment.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls
related to determining the expected holding period of operating properties and any related changes. We evaluated the Company’s expected holding period by inquiring of the Company
regarding changes to the expected holding period, considering certain factors related to the current economic environment, reading minutes of the meetings of the Company’s Board of
Directors, reading external communications with investors and analysts, and analyzing documents prepared by the Company regarding proposed real estate transactions and potential
changes to the expected holding period.
We have served as the Company’s auditor since 2002.
Denver, Colorado
February 13, 2024
/s/ KPMG LLP
52
Table of Contents
Index to Item 15
To the Partners of Prologis, L.P. and the Board of Directors of Prologis, Inc.:
Prologis, L.P.:
Opinion on the Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying consolidated balance sheets of Prologis, L.P. and subsidiaries (the Operating Partnership) as of December 31, 2023, and 2022, the related consolidated
statements of income, comprehensive income, capital, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes and financial statement
schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the
Operating Partnership as of December 31, 2023, and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in
conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These consolidated financial statements are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement, whether due to error or fraud. The Operating Partnership is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of
expressing an opinion on the effectiveness of the Operating Partnership’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be
communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are
not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Assessment of the Operating Partnership’s evaluation of the expected holding period for operating properties
As discussed in Notes 2 and 4 to the consolidated financial statements, the Operating Partnership had $75,435 million of operating properties as of December 31, 2023. The Operating
Partnership tests the recoverability of operating properties whenever events or changes in circumstances, including shortening the expected holding period of such assets, indicate that
the carrying amount of these assets may not be recoverable.
We identified the assessment of the Operating Partnership’s evaluation of the expected holding period for operating properties as a critical audit matter. Subjective auditor judgment was
required to assess the relevant events or changes in circumstances that the Operating Partnership used to evaluate its expected holding period. A shortening of the expected holding
period could indicate a potential impairment.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls
related to determining the expected holding period of operating properties and any related changes. We evaluated the Operating Partnership’s expected holding period by inquiring of
the Operating Partnership regarding changes to the expected holding period, considering certain factors related to the current economic environment, reading minutes of the meetings of
the Board of Directors of Prologis, Inc., reading external communications with investors and analysts, and analyzing documents prepared by the Operating Partnership regarding
proposed real estate transactions and potential changes to the expected holding period.
We have served as the Operating Partnership’s auditor since 2002.
Denver, Colorado
February 13, 2024
/s/ KPMG LLP
53
Table of Contents
Index to Item 15
To the Stockholders and Board of Directors
Prologis, Inc.:
Opinion on Internal Control Over Financial Reporting
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited Prologis, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control –
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of
December 31, 2023, and 2022, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended
December 31, 2023, and the related notes and financial statement schedule III (collectively, the consolidated financial statements), and our report dated February 13, 2024 expressed an
unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Denver, Colorado
February 13, 2024
/s/ KPMG LLP
54
PROLOGIS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
Table of Contents
Index to Item 15
ASSETS
Investments in real estate properties
Less accumulated depreciation
Net investments in real estate properties
Investments in and advances to unconsolidated entities
Assets held for sale or contribution
Net investments in real estate
Cash and cash equivalents
Other assets
Total assets
LIABILITIES AND EQUITY
Liabilities:
Debt
Accounts payable and accrued expenses
Other liabilities
Total liabilities
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 December 31, 2023 and 2022
Common stock; $0.01 par value; 924,391 and 923,142 shares issued and outstanding at December 31, 2023
and 2022, respectively
Additional paid-in capital
Accumulated other comprehensive loss
Distributions in excess of net earnings
Total Prologis, Inc. stockholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity
The accompanying notes are an integral part of these Consolidated Financial Statements.
55
December 31,
2023
2022
88,666,575 $
10,931,485
77,735,090
9,543,970
461,657
87,740,717
530,388
4,749,735
93,020,840 $
81,623,396
9,036,085
72,587,311
9,698,898
531,257
82,817,466
278,483
4,801,499
87,897,448
29,000,501 $
1,766,018
4,430,601
35,197,120
23,875,961
1,711,885
4,446,509
30,034,355
63,948
63,948
9,244
54,249,801
(514,201 )
(627,068 )
53,181,724
4,641,996
57,823,720
93,020,840 $
9,231
54,065,407
(443,609 )
(457,695 )
53,237,282
4,625,811
57,863,093
87,897,448
$
$
$
$
PROLOGIS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Table of Contents
Index to Item 15
Revenues:
Rental
Strategic capital
Development management and other
Total revenues
Expenses:
Rental
Strategic capital
General and administrative
Depreciation and amortization
Other
Total expenses
Operating income before gains on real estate transactions, net
Gains on dispositions of development properties and land, net
Gains on other dispositions of investments in real estate, net
Operating income
Other income (expense):
Earnings from unconsolidated entities, net
Interest expense
Foreign currency, derivative and other gains and other income, net
Gains (losses) on early extinguishment of debt
Total other income (expense)
Earnings before income taxes
Total income tax expense
Consolidated net earnings
Less net earnings attributable to noncontrolling interests
Net earnings attributable to controlling interests
Less preferred stock dividends
Net earnings attributable to common stockholders
Weighted average common shares outstanding – Basic
Weighted average common shares outstanding – Diluted
Net earnings per share attributable to common stockholders – Basic
Net earnings per share attributable to common stockholders – Diluted
Years Ended December 31,
2023
2022
2021
6,818,542
1,200,232
4,695
8,023,469
1,624,793
385,542
390,406
2,484,891
53,354
4,938,986
3,084,483
462,270
161,039
3,707,792
307,227
(641,332 )
87,221
3,275
(243,609 )
3,464,183
(211,038 )
3,253,145
193,931
3,059,214
5,841
3,053,373
924,351
951,791
$
4,913,171 $
1,039,585
20,936
5,973,692
1,205,738
303,356
331,083
1,812,777
40,336
3,693,290
2,280,402
597,745
589,391
3,467,538
310,872
(309,037 )
241,621
(20,184 )
223,272
3,690,810
(135,412 )
3,555,398
190,542
3,364,856
6,060
3,358,796 $
$
4,147,994
590,750
20,696
4,759,440
1,041,316
207,171
293,167
1,577,942
22,435
3,142,031
1,617,409
817,017
772,570
3,206,996
404,255
(266,228 )
165,278
(187,453 )
115,852
3,322,848
(174,258 )
3,148,590
208,867
2,939,723
6,152
2,933,571
785,675
811,608
739,363
764,762
3.30
$
4.28 $
3.97
3.29
$
4.25 $
3.94
$
$
$
$
The accompanying notes are an integral part of these Consolidated Financial Statements.
56
Table of Contents
Index to Item 15
PROLOGIS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Consolidated net earnings
Other comprehensive income:
Foreign currency translation gains, net
Unrealized gains (losses) on derivative contracts, net
Comprehensive income
Net earnings attributable to noncontrolling interests
Other comprehensive loss (income) attributable to noncontrolling interests
Comprehensive income attributable to common stockholders
2023
Years Ended December 31,
2022
2021
$
3,253,145
$
3,555,398
$
3,148,590
20,763
(92,703 )
3,181,205
(193,931 )
1,348
2,988,622
$
373,405
71,639
4,000,442
(190,542 )
(10,400 )
3,799,500
$
305,929
17,542
3,472,061
(208,867 )
(7,985 )
3,255,209
$
The accompanying notes are an integral part of these Consolidated Financial Statements.
57
Table of Contents
Index to Item 15
Balance at January 1, 2021
Consolidated net earnings
Effect of equity compensation plans
Capital contributions
Redemption of noncontrolling interests
Consolidation of other venture
Acquisitions by noncontrolling interests
Foreign currency translation gains, net
Unrealized gains on derivative
contracts, net
Reallocation of equity
Dividends ($2.52 per common share) and
other distributions
Balance at December 31, 2021
Consolidated net earnings
Effect of equity compensation plans
Duke Transaction, net of issuance costs
Capital contributions
Redemption of noncontrolling interests
Foreign currency translation gains, net
Unrealized gains on derivative contracts, net
Reallocation of equity
Dividends ($3.16 per common share) and
other distributions
Balance at December 31, 2022
Consolidated net earnings
Effect of equity compensation plans
Capital contributions
Redemption of noncontrolling interests
Foreign currency translation gains, net
Unrealized losses on derivative
contracts, net
Reallocation of equity
Dividends ($3.48 per common share) and
other distributions
Balance at December 31, 2023
PROLOGIS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands)
Preferred
Stock
Common Stock
Number
of
Shares
Par
Value
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Distributions
in Excess of
Net
Earnings
Non-
controlling
Interests
Total
Equity
$
$
$
63,948
-
-
-
-
-
-
-
-
-
-
63,948
-
-
-
-
-
-
-
-
-
63,948
-
-
-
-
-
-
-
$
739,381
-
(389 )
-
835
-
-
-
-
-
-
739,827
$
393
182,661
-
261
-
-
-
-
923,142
-
410
-
839
-
-
-
$
$
$
$
7,394
-
(4 )
-
8
-
-
-
-
-
-
7,398
-
4
1,827
-
2
-
-
-
-
9,231
-
5
-
8
-
-
-
$
$
$
35,488,634
-
38,114
-
37,238
-
-
-
-
(2,347 )
(31 )
35,561,608
-
66,647
18,551,852
-
12,445
-
-
(127,134 )
(11 )
54,065,407
-
84,719
-
48,349
-
-
51,328
$
(1,193,739 )
-
-
-
-
-
-
298,413
$
$
17,073
-
-
(878,253 )
-
-
-
-
-
364,725
69,919
-
-
(443,609 )
-
-
-
-
19,867
(90,459 )
-
$
$
$
(2,394,690 )
2,939,723
-
-
-
-
-
-
-
-
(1,872,861 )
(1,327,828 )
3,364,856
-
-
-
-
-
-
-
(2,494,723 )
(457,695 )
3,059,214
-
-
-
-
-
-
$
$
$
4,353,033
208,867
78,062
74,404
(190,482 )
25,759
130,416
7,516
469
2,347
(375,054 )
4,315,337
190,542
121,074
219,565
13,295
(101,427 )
8,680
1,720
127,134
(270,109 )
4,625,811
193,931
195,987
32,157
(118,164 )
896
(2,244 )
(51,328 )
36,324,580
3,148,590
116,172
74,404
(153,236 )
25,759
130,416
305,929
17,542
-
(2,247,946 )
37,742,210
3,555,398
187,725
18,773,244
13,295
(88,980 )
373,405
71,639
-
(2,764,843 )
57,863,093
3,253,145
280,711
32,157
(69,807 )
20,763
(92,703 )
-
-
63,948
$
-
924,391
$
-
9,244
$
(2 )
54,249,801
$
-
(514,201 )
$
(3,228,587 )
(627,068 )
$
(235,050 )
4,641,996
$
(3,463,639 )
57,823,720
The accompanying notes are an integral part of these Consolidated Financial Statements.
58
Table of Contents
Index to Item 15
PROLOGIS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Operating activities:
Consolidated net earnings
Adjustments to reconcile net earnings to net cash provided by operating activities:
Straight-lined rents and amortization of above and below market leases
Equity-based compensation awards
Depreciation and amortization
Earnings from unconsolidated entities, net
Operating distributions from unconsolidated entities
Increase in operating receivables from unconsolidated entities
Amortization of debt discounts and debt issuance costs, net
Gains on dispositions of development properties and land, net
Gains on other dispositions of investments in real estate, net
Unrealized foreign currency and derivative losses (gains), net
Losses (gains) on early extinguishment of debt, net
Deferred income tax expense
Increase in accounts receivable and other assets
Increase in accounts payable and accrued expenses and other liabilities
Net cash provided by operating activities
Investing activities:
Real estate and other development
Real estate acquisitions
Duke Transaction, net of cash acquired
Tenant improvements and lease commissions on previously leased space
Property improvements
Proceeds from dispositions and contributions of real estate
Investments in and advances to unconsolidated entities
Return of investment from unconsolidated entities
Proceeds from the settlement of net investment hedges
Payments on the settlement of net investment hedges
Proceeds from repayment of notes receivable backed by real estate
Net cash used in investing activities
Financing activities:
Proceeds from issuance of common stock
Dividends paid on common and preferred stock
Noncontrolling interests contributions
Noncontrolling interests distributions
Settlement of noncontrolling interests
Tax paid with shares withheld
Debt and equity issuance costs paid
Net proceeds from (payments on) credit facilities
Repurchase of and payments on debt
Proceeds from the issuance of debt
Net cash provided by (used in) financing activities
Effect of foreign currency exchange rate changes on cash
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Years Ended December 31,
2022
2023
2021
$
3,253,145
$
3,555,398 $
3,148,590
(613,005 )
267,648
2,484,891
(307,227 )
680,192
(82,375 )
74,589
(462,270 )
(161,039 )
71,627
(3,275 )
17,708
(102,610 )
255,059
5,373,058
(3,399,114 )
(4,195,714 )
(33,009 )
(388,814 )
(303,042 )
1,764,322
(284,185 )
348,276
37,113
(2,230 )
37,000
(6,419,397 )
-
(3,228,589 )
21,107
(235,050 )
(69,807 )
(24,536 )
(58,660 )
(567,076 )
)
(272,203
5,755,096
1,320,282
(267,709 )
175,356
1,812,777
(310,872 )
410,483
(63,947 )
23,736
(597,745 )
(589,391 )
(92,201 )
20,184
12,638
(71,307 )
109,030
4,126,430
(3,118,379 )
(2,492,108 )
(92,052 )
(339,234 )
(211,358 )
2,063,623
(442,366 )
76,994
59,281
(3,458 )
-
(4,499,057 )
-
(2,494,723 )
13,295
(270,109 )
(88,980 )
(27,688 )
(45,654 )
294,164
)
(1,381,005
4,116,489
115,789
(148,239 )
113,028
1,577,942
(404,255 )
440,034
(14,223 )
8,656
(817,017 )
(772,570 )
(173,026 )
187,453
1,322
(328,511 )
176,858
2,996,042
(2,639,872 )
(2,320,448 )
-
(329,059 )
(169,933 )
4,222,290
(798,103 )
58,275
3,305
(16,513 )
-
(1,990,058 )
743
(1,872,861 )
74,404
(375,054 )
(153,236 )
(19,855 )
(23,318 )
323,336
)
(2,560,174
3,597,690
(1,008,325 )
(22,038 )
251,905
278,483
530,388
$
(20,796 )
(277,634 )
556,117
278,483 $
(39,628 )
(41,969 )
598,086
556,117
$
See Note 18 for information on noncash investing and financing activities and other information.
The accompanying notes are an integral part of these Consolidated Financial Statements.
59
PROLOGIS, L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands)
Table of Contents
Index to Item 15
ASSETS
Investments in real estate properties
Less accumulated depreciation
Net investments in real estate properties
Investments in and advances to unconsolidated entities
Assets held for sale or contribution
Net investments in real estate
Cash and cash equivalents
Other assets
Total assets
LIABILITIES AND CAPITAL
Liabilities:
Debt
Accounts payable and accrued expenses
Other liabilities
Total liabilities
Capital:
Partners’ capital:
General partner – preferred
General partner – common
Limited partners – common
Limited partners – Class A common
Total partners’ capital
Noncontrolling interests
Total capital
Total liabilities and capital
December 31,
2023
2022
$
88,666,575
10,931,485
77,735,090
9,543,970
461,657
87,740,717
530,388
4,749,735
93,020,840
$
81,623,396
9,036,085
72,587,311
9,698,898
531,257
82,817,466
278,483
4,801,499
87,897,448
$
29,000,501
1,766,018
4,430,601
35,197,120
23,875,961
1,711,885
4,446,509
30,034,355
63,948
53,117,776
848,160
469,561
54,499,445
3,324,275
57,823,720
93,020,840
$
63,948
53,173,334
843,263
464,781
54,545,326
3,317,767
57,863,093
87,897,448
$
$
$
$
The accompanying notes are an integral part of these Consolidated Financial Statements.
60
PROLOGIS, L.P.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per unit amounts)
Table of Contents
Index to Item 15
Revenues:
Rental
Strategic capital
Development management and other
Total revenues
Expenses:
Rental
Strategic capital
General and administrative
Depreciation and amortization
Other
Total expenses
Operating income before gains on real estate transactions, net
Gains on dispositions of development properties and land, net
Gains on other dispositions of investments in real estate, net
Operating income
Other income (expense):
Earnings from unconsolidated entities, net
Interest expense
Foreign currency, derivative and other gains and other income, net
Gains (losses) on early extinguishment of debt
Total other income (expense)
Earnings before income taxes
Total income tax expense
Consolidated net earnings
Less net earnings attributable to noncontrolling interests
Net earnings attributable to controlling interests
Less preferred unit distributions
Net earnings attributable to common unitholders
Weighted average common units outstanding – Basic
Weighted average common units outstanding – Diluted
Net earnings per unit attributable to common unitholders – Basic
Net earnings per unit attributable to common unitholders – Diluted
2023
Years Ended December 31,
2022
2021
6,818,542
1,200,232
4,695
8,023,469
1,624,793
385,542
390,406
2,484,891
53,354
4,938,986
3,084,483
462,270
161,039
3,707,792
307,227
(641,332 )
87,221
3,275
(243,609 )
3,464,183
(211,038 )
3,253,145
116,657
3,136,488
5,841
3,130,647
939,635
951,791
$
4,913,171 $
1,039,585
20,936
5,973,692
1,205,738
303,356
331,083
1,812,777
40,336
3,693,290
2,280,402
597,745
589,391
3,467,538
310,872
(309,037 )
241,621
(20,184 )
223,272
3,690,810
(135,412 )
3,555,398
98,611
3,456,787
6,060
3,450,727 $
799,153
811,608
$
3.30
$
4.28 $
3.29
$
4.25 $
4,147,994
590,750
20,696
4,759,440
1,041,316
207,171
293,167
1,577,942
22,435
3,142,031
1,617,409
817,017
772,570
3,206,996
404,255
(266,228 )
165,278
(187,453 )
115,852
3,322,848
(174,258 )
3,148,590
127,075
3,021,515
6,152
3,015,363
751,973
764,762
3.97
3.94
$
$
$
$
The accompanying notes are an integral part of these Consolidated Financial Statements.
61
Table of Contents
Index to Item 15
PROLOGIS, L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Consolidated net earnings
Other comprehensive income:
Foreign currency translation gains, net
Unrealized gains (losses) on derivative contracts, net
Comprehensive income
Net earnings attributable to noncontrolling interests
Other comprehensive loss (income) attributable to noncontrolling interests
Comprehensive income attributable to common unitholders
2023
Years Ended December 31,
2022
2021
$
3,253,145
$
3,555,398
$
3,148,590
20,763
(92,703 )
3,181,205
(116,657 )
(404 )
3,064,144
$
373,405
71,639
4,000,442
(98,611 )
292
3,902,123
$
305,929
17,542
3,472,061
(127,075 )
692
3,345,678
$
The accompanying notes are an integral part of these Consolidated Financial Statements.
62
Table of Contents
Index to Item 15
Balance at January 1, 2021
Consolidated net earnings
Effect of equity compensation plans
Capital contributions
Redemption of limited partnership units
Consolidation of other venture
Issuance of units related to acquisitions
Foreign currency translation gains
(losses), net
Unrealized gains on derivative
contracts, net
Reallocation of capital
Distributions ($2.52 per common
unit) and other
Balance at December 31, 2021
Consolidated net earnings
Effect of equity compensation plans
Duke Transaction, net of issuance costs
Capital contributions
Redemption of limited partnership units
Foreign currency translation gains
(losses), net
Unrealized gains on derivative
contracts, net
Reallocation of capital
Distributions ($3.16 per common
unit) and other
Balance at December 31, 2022
Consolidated net earnings
Effect of equity compensation plans
Capital contributions
Redemption of limited partnership units
Foreign currency translation gains, net
Unrealized losses on derivative
contracts, net
Reallocation of capital
Distributions ($3.48 per common
unit) and other
Balance at December 31, 2023
PROLOGIS, L.P.
CONSOLIDATED STATEMENTS OF CAPITAL
(In thousands)
General Partner
Limited Partners
Preferred
Common
Common
Class A Common
Amount
Units
Amount
Units
Amount
Units
1,279 $
-
-
-
-
-
-
-
-
-
-
1,279 $
-
-
-
-
-
-
-
-
-
1,279 $
-
-
-
-
-
-
-
-
63,948
-
-
-
-
-
-
-
-
-
-
63,948
-
-
-
-
-
-
-
-
-
63,948
-
-
-
-
-
-
-
-
1,279
$
63,948
739,381 $
-
(389 )
-
835
-
-
-
-
-
-
739,827 $
-
393
182,661
-
261
-
-
-
-
923,142 $
-
410
-
839
-
-
-
-
924,391
$
Amount
31,907,599
2,939,723
38,110
-
37,246
-
-
Units
12,142 $
-
1,286
-
(2,105 )
-
1,031
298,413
17,073
(2,347 )
(1,872,892 )
33,362,925
3,364,856
66,651
18,553,679
-
12,447
364,725
69,919
(127,134 )
(2,494,734 )
53,173,334
3,059,214
84,724
-
48,357
19,867
(90,459 )
51,328
(3,228,589 )
-
-
-
-
12,354 $
-
1,064
2,140
-
(918 )
-
-
-
-
14,640 $
-
1,536
-
(1,416 )
-
-
-
-
53,117,776
14,760
$
523,954
50,034
78,062
-
(190,482 )
-
130,416
4,982
285
133
(40,287 )
557,097
57,620
121,074
217,385
-
(101,427 )
5,785
1,109
38,931
(54,311 )
843,263
50,490
195,987
-
(118,164 )
316
(1,444 )
(52,180 )
(70,108 )
848,160
8,595 $
-
-
-
-
-
-
-
-
-
-
8,595 $
-
-
-
-
-
-
-
-
-
8,595 $
-
-
-
-
-
-
-
-
8,595
$
The accompanying notes are an integral part of these Consolidated Financial Statements.
63
Non-
controlling
Interests
3,483,526 $
127,075
-
74,404
-
25,759
-
Total
36,324,580
3,148,590
116,172
74,404
(153,236 )
25,759
130,416
(692 )
305,929
-
-
(312,534 )
3,397,538 $
98,611
-
2,180
13,295
-
17,542
-
(2,247,946 )
37,742,210
3,555,398
187,725
18,773,244
13,295
(88,980 )
(292 )
373,405
-
-
(193,565 )
3,317,767 $
116,657
-
32,157
-
404
-
-
71,639
-
(2,764,843 )
57,863,093
3,253,145
280,711
32,157
(69,807 )
20,763
(92,703 )
-
345,553 $
31,758
-
-
-
-
-
3,226
184
2,214
(22,233 )
360,702 $
34,311
-
-
-
-
3,187
611
88,203
(22,233 )
464,781 $
26,784
-
-
-
176
(800 )
852
(22,232 )
469,561
$
(142,710 )
(3,463,639 )
3,324,275
$
57,823,720
Table of Contents
Index to Item 15
PROLOGIS, L.P
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Operating activities:
Consolidated net earnings
Adjustments to reconcile net earnings to net cash provided by operating activities:
Straight-lined rents and amortization of above and below market leases
Equity-based compensation awards
Depreciation and amortization
Earnings from unconsolidated entities, net
Operating distributions from unconsolidated entities
Increase in operating receivables from unconsolidated entities
Amortization of debt discounts and debt issuance costs, net
Gains on dispositions of development properties and land, net
Gains on other dispositions of investments in real estate, net
Unrealized foreign currency and derivative losses (gains), net
Losses (gains) on early extinguishment of debt, net
Deferred income tax expense
Increase in accounts receivable and other assets
Increase in accounts payable and accrued expenses and other liabilities
Net cash provided by operating activities
Investing activities:
Real estate and other development
Real estate acquisitions
Duke Transaction, net of cash acquired
Tenant improvements and lease commissions on previously leased space
Property improvements
Proceeds from dispositions and contributions of real estate
Investments in and advances to unconsolidated entities
Return of investment from unconsolidated entities
Proceeds from the settlement of net investment hedges
Payments on the settlement of net investment hedges
Proceeds from repayment of notes receivable backed by real estate
Net cash used in investing activities
Financing activities:
Proceeds from issuance of common partnership units in exchange for contributions from
Prologis, Inc.
Distributions paid on common and preferred units
Noncontrolling interests contributions
Noncontrolling interests distributions
Redemption of common limited partnership units
Tax paid with shares of the Parent withheld
Debt and equity issuance costs paid
Net proceeds from (payments on) credit facilities
Repurchase of and payments on debt
Proceeds from the issuance of debt
Net cash provided by (used in) financing activities
Years Ended December 31,
2022
2023
2021
$
3,253,145
$
3,555,398 $
3,148,590
(613,005 )
267,648
2,484,891
(307,227 )
680,192
(82,375 )
74,589
(462,270 )
(161,039 )
71,627
(3,275 )
17,708
(102,610 )
255,059
5,373,058
(3,399,114 )
(4,195,714 )
(33,009 )
(388,814 )
(303,042 )
1,764,322
(284,185 )
348,276
37,113
(2,230 )
37,000
(6,419,397 )
-
(3,320,929 )
21,107
(142,710 )
(69,807 )
(24,536 )
(58,660 )
(567,076 )
(272,203 )
5,755,096
1,320,282
(267,709 )
175,356
1,812,777
(310,872 )
410,483
(63,947 )
23,736
(597,745 )
(589,391 )
(92,201 )
20,184
12,638
(71,307 )
109,030
4,126,430
(3,118,379 )
(2,492,108 )
(92,052 )
(339,234 )
(211,358 )
2,063,623
(442,366 )
76,994
59,281
(3,458 )
-
(4,499,057 )
-
(2,571,267 )
13,295
(193,565 )
(88,980 )
(27,688 )
(45,654 )
294,164
(1,381,005 )
4,116,489
115,789
(148,239 )
113,028
1,577,942
(404,255 )
440,034
(14,223 )
8,656
(817,017 )
(772,570 )
(173,026 )
187,453
1,322
(328,511 )
176,858
2,996,042
(2,639,872 )
(2,320,448 )
-
(329,059 )
(169,933 )
4,222,290
(798,103 )
58,275
3,305
(16,513 )
-
(1,990,058 )
743
(1,935,381 )
74,404
(312,534 )
(153,236 )
(19,855 )
(23,318 )
323,336
(2,560,174 )
3,597,690
(1,008,325 )
(39,628
)
(41,969 )
598,086
556,117
Effect of foreign currency exchange rate changes on cash
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
See Note 18 for information on noncash investing and financing activities and other information.
(22,038
)
251,905
278,483
530,388
$
(20,796
)
(277,634 )
556,117
278,483 $
$
The accompanying notes are an integral part of these Consolidated Financial Statements.
64
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Index to Item 15
NOTE 1. DESCRIPTION OF THE BUSINESS
PROLOGIS, INC. AND PROLOGIS, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Prologis, Inc. (or the “Parent”) commenced operations as a fully integrated real estate company in 1997, elected to be taxed as a real estate investment trust (“REIT”)
under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code” or “IRC”), and believes the current organization and method of operation will enable it
to maintain its status as a REIT. The Parent is the general partner of Prologis, L.P. (or the “Operating Partnership” or “OP”). Through the OP, we are engaged in the
ownership, acquisition, development and management of logistics facilities with a focus on key markets in 19 countries on four continents. We invest in real estate through
wholly owned subsidiaries and other entities through which we co-invest with partners and investors. We maintain a significant level of ownership in these co-investment
ventures, which may be consolidated or unconsolidated based on our level of control of the entity. Our current business strategy consists of two operating business
segments: Real Estate (Rental Operations and Development) and Strategic Capital. Our Real Estate Segment represents the ownership, leasing and development of
logistics properties. Our Strategic Capital Segment represents the management of properties owned by our unconsolidated co-investment ventures and other ventures.
See Note 17 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 December 31, 2023, the Parent owned a 97.58% common general partnership interest in the OP
and substantially all of the preferred units in the OP. The remaining 2.42% 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.
Information with respect to the square footage, number of buildings and acres of land is unaudited.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
Consolidation. We consolidate all entities that are wholly owned and those in which we own less than 100% of the equity but control the entity, as well as any variable
interest entities (“VIEs”) in which we are the primary beneficiary. We evaluate our ability to control an entity and whether the entity is a VIE and we are the primary
beneficiary through consideration of substantive terms of the arrangement to identify which enterprise has the power to direct the activities of the entity that most
significantly impact the entity’s economic performance and the obligation to absorb losses and the right to receive benefits from the entity.
For entities that are not defined as VIEs, we first consider whether we are the general partner or the limited partner (or the equivalent in such investments that are not
structured as partnerships). We consolidate entities in which we are the general partner and the limited partners in such entities that do not have rights that would
preclude control. For entities in which we are the general partner but do not control the entity as the other partners hold substantive participating or kick-out rights, we
apply the equity method of accounting since, as the general partner, we have the ability to exercise significant influence over the operating and financial policies of the
venture. For ventures for which we are a limited partner, or our investment is in an entity that is not structured similar to a partnership, we consider factors such as
ownership interest, voting control, authority to make decisions and contractual and substantive participating rights of the partners. In instances where the factors indicate
that we have a controlling financial interest in the venture, we consolidate the entity. In instances where we do not have a controlling interest in the venture, we apply the
equity method of accounting when the factors indicate we have the ability to exercise significant influence over the venture.
65
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Index to Item 15
Use of Estimates. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and revenues and expenses during the reporting period. Although we believe the assumptions and estimates we made
are reasonable and appropriate, as discussed in the applicable sections throughout the Consolidated Financial Statements, different assumptions and estimates could
materially impact our reported results.
Foreign Operations. The U.S. dollar is the functional currency for our consolidated subsidiaries and unconsolidated entities operating in the U.S. and Mexico. The
functional currency for our consolidated subsidiaries and unconsolidated entities operating in other countries is the principal currency in which the entity’s assets,
liabilities, income and expenses are denominated, which may be different from the local currency of the country of incorporation or where the entity conducts its
operations. The functional currencies of entities outside of the U.S. and Mexico generally include the Brazilian real, British pound sterling, Canadian dollar, Chinese
renminbi, euro, Japanese yen, Singapore dollar and Swedish krona. We take part in business transactions denominated in these and other local currencies where we
operate.
For our consolidated subsidiaries whose functional currency is not the U.S. dollar, we translate their financial statements into U.S. dollars at the time we consolidate
those subsidiaries’ financial statements. Generally, assets and liabilities are translated at the exchange rate in effect at the balance sheet date. The resulting translation
adjustments are included in Accumulated Other Comprehensive Income (Loss) (“AOCI/L”) in the Consolidated Balance Sheets. Certain balance sheet items, principally
equity and capital-related accounts, are reflected at the historical exchange rate. Income statement accounts are translated using the average exchange rate for the
period; income statement accounts that represent significant nonrecurring transactions are translated at the rate in effect at the date of the transaction. We translate our
share of the net income or loss of our unconsolidated entities at the average exchange rate for the period other than significant nonrecurring transactions of the
unconsolidated entities which are translated at the rate in effect at the date of the transaction.
We and certain of our consolidated subsidiaries have intercompany and third-party debt that is not denominated in the entity’s functional currency. When the debt is
remeasured against the functional currency of the entity, a gain or loss can result. The resulting adjustment is reflected in Foreign Currency, Derivative and Other Gains
and Other Income, Net in the Consolidated Statements of Income, unless it is intercompany debt that is deemed to be long-term in nature or third-party debt that has
been designated as a nonderivative net investment hedge and then the adjustment is recorded as a cumulative translation adjustment in AOCI/L.
Acquisitions. We apply a screen test to evaluate if substantially all the fair value of the acquired property is concentrated in a single identifiable asset or group of similar
identifiable assets to determine whether a transaction is accounted for as an asset acquisition or business combination. As the fair value of most of our real estate
acquisitions is concentrated in either a single identifiable asset or a group of similar identifiable assets, our real estate transactions are generally accounted for as asset
acquisitions, which permits the capitalization of transaction costs to the basis of the acquired property. We measure the real estate assets acquired through an asset
acquisition based on their cost or total consideration exchanged. The difference between the cost and the estimated fair value (excess or bargain consideration) is
allocated to the real estate properties and related lease intangibles on a relative fair value basis. All other assets and liabilities assumed, including debt, and real estate
assets that we intend to sell in the next twelve months are recorded at fair value. At a property level, we allocate the fair value to the components which include building,
land, improvements and intangible assets or liabilities related to acquired leases. Purchase price allocations for a business combination are recorded at fair value.
When we obtain control of an unconsolidated entity and the acquisition qualifies as a business combination, we account for the acquisition in accordance with the
guidance for a business combination achieved in stages. We remeasure our previously held interest in the unconsolidated entity at its acquisition-date fair value and
recognize any resulting gain or loss in earnings.
We allocate the purchase price using principally Level 2 and Level 3 inputs (further defined in Fair Value Measurements below) as follows:
Investments in Real Estate Properties. We value operating properties as if vacant. We estimate fair value by applying an income approach methodology using either a
discounted cash flow analysis or applying a capitalization rate to the estimated net operating income, defined as rental revenues less rental expenses, of a property. Key
assumptions include market rents and rent growth, and discount and capitalization rates. Estimates of future cash flows are based on a number of factors including
historical operating results, known trends and market and economic conditions. We determine the discount or capitalization rate by market, based on recent transactions
and other market data and adjust if necessary, based on the property characteristics. The fair value of land is generally based on relevant market data, such as a
comparison of the subject site to similar parcels that have recently been sold or are currently being offered on the market for sale. At a property level, we allocate the fair
value to building, land and improvements.
Lease Intangibles. We determine the portion of the purchase price related to acquired in-place leases as intangible assets and liabilities as follows:
•Above and Below Market Leases. We recognize an asset or liability for acquired leases with in-place rents that are higher or lower than our estimate of current market
rents in each of the applicable markets. The above or below market lease intangibles are valued using a discounted cash flow approach through which we recognize the
present value of the difference in cash flows
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Index to Item 15
between in-place and market rents. The value is recorded in either Other Assets or Other Liabilities, as appropriate, and is amortized over the remaining term of the
respective leases, including any bargain renewal options, to rental revenues.
•Foregone Rent. We calculate the value of the revenue and recovery of costs which would be foregone during a reasonable lease-up period, if the space was vacant, in
each of the applicable markets. The values are recorded in Other Assets and amortized over the remaining life of the respective leases to amortization expense.
•Leasing Commissions. We recognize an asset for leasing commissions based on our estimate of the cost to lease space in the applicable markets. The value is
recorded in Other Assets and amortized over the remaining life of the respective leases to amortization expense.
Investments in Unconsolidated Entities. We estimate the fair value of the entity by using similar valuation methods as those used for the consolidated real estate
properties and debt. We apply our ownership percentage to the estimated net asset value of the entity to determine the fair value of our investment.
Debt. We estimate the fair value of debt based on contractual future cash flows discounted using borrowing spreads and market interest rates that would be available to
us for the issuance of debt with similar terms and remaining maturities. In the case of publicly traded debt, we estimate the fair value based on available market data. Any
discount or premium to the principal amount is included in the carrying value and amortized to interest expense over the remaining term of the related debt using the
effective interest method.
Noncontrolling Interests. We estimate the portion of the fair value of the net assets owned by third parties based on the fair value of the consolidated net assets,
principally real estate properties and debt.
Working Capital. We estimate the fair value of other acquired assets and assumed liabilities using the best information available.
Fair Value Measurements. The objective of fair value is to determine the price that would be received on the sale of an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (the exit price). We estimate fair value using available market information and valuation methodologies
we believe to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly,
they are not necessarily indicative of amounts that we would realize on disposition. The fair value hierarchy consists of three broad levels:
•Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
•Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
•Level 3 — Unobservable inputs for the asset or liability.
Fair Value Measurements on a Recurring Basis. We estimate the fair value of our financial instruments using available market information and valuation methodologies
we believe to be appropriate for these purposes. We determine the fair value of our derivative financial instruments using widely accepted valuation techniques. The
technique utilized depends on the type of derivative financial instrument being valued, principally foreign currency contracts and interest rate contracts, and involves the
contractual term of the derivative, observable market-based inputs and implied volatilities.
We determine the fair values of our interest rate contracts using a market standard methodology of netting the discounted future fixed cash receipts and the discounted
expected variable cash payments through a discounted cash flow analysis. We base the variable cash payments on an expectation of future interest rates, or forward
curves, derived from observable market interest rate curves through the contractual term of the debt. We determine the fair values of our foreign currency contracts by
comparing the contracted forward exchange rate to the current market exchange rate. We build a foreign exchange forward curve to determine the foreign exchange
forward rate that pertains to the specific maturity date. Using this foreign exchange forward rate, spot rates and the interest rate curve of the domestic currency as inputs,
we calculate the mark-to-market value of the foreign currency contract.
We incorporate credit valuation adjustments to appropriately reflect nonperformance risk for us and the respective counterparty in the fair value measurements. In
adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we consider the impact of netting and any applicable credit enhancements, such
as collateral postings, thresholds, mutual puts and guarantees.
We have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy. Although the credit valuation adjustments
associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties, we
assess the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation
adjustments are not significant to the overall valuation of our derivatives.
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Fair Value Measurements on a Nonrecurring Basis. Assets measured at fair value on a nonrecurring basis generally consist of real estate assets and investments in
unconsolidated entities that were subject to impairment charges due to our evaluation of recoverability whenever events or changes in circumstances indicate the
carrying amount may not be recoverable. As discussed below, our analysis of recoverability is primarily triggered based on the shortening of the expected hold period
due to our change in intent to sell a property in the near term. We estimate the fair value of our investments based on expected sales prices in the market (Level 2) or by
applying an income approach methodology using a discounted cash flow analysis (Level 3).
Fair Value of Financial Instruments. We estimate the fair value of our senior notes for disclosure purposes based on quoted market prices for the same (Level 1) or
similar (Level 2) issues when current quoted market prices are available. We estimate the fair value of our credit facilities, term loans, secured mortgage debt and other
debt by discounting the future cash flows using rates and borrowing spreads currently available to us (Level 3).
Real Estate Assets. Real estate assets are carried at depreciated cost. We capitalize costs incurred in developing, redeveloping and improving real estate assets as part
of the investment basis. We expense costs for repairs and maintenance as incurred.
Depreciation and Amortization. We charge the depreciable portions of real estate assets to depreciation expense on a straight-line basis over the respective estimated
useful lives. Depreciation on development buildings commences when the asset is ready for its intended use, which we define as the earlier of when a property that was
developed has been completed for one year, or is 90% occupied. We generally use the following useful lives: 5 to 7 years for capital improvements, 10 years for standard
tenant improvements, 15 to 25 years for depreciable land improvements, 25 to 40 years for operating properties acquired based on the age of the building and 40 years
for operating properties we develop. We depreciate building improvements on land parcels subject to land leases over the shorter of the estimated life of the building
improvement or the contractual term of the underlying land lease. Capitalized leasing costs are amortized over the estimated remaining lease term. The weighted
average lease term for leases that commenced during 2023, based on square feet, was 66 months.
Capitalization of Costs. During the land development and construction periods of qualifying projects, we capitalize interest costs, insurance, real estate taxes and general
and administrative costs of the personnel performing the development; if such costs are incremental and identifiable to a specific activity to ready the asset for its intended
use. We capitalize transaction costs related to the acquisition of land for future development and operating properties that qualify as asset acquisitions. We capitalize
incremental, third-party costs incurred to successfully originate a lease that result directly from obtaining a lease and would not have been incurred if the lease had not
been obtained. Leasing costs that meet the requirements for capitalization are presented as a component of Other Assets and all other capitalized costs are included in
the investment basis of the real estate assets.
Recoverability of Real Estate Assets. We assess the carrying values of our respective long-lived assets whenever events or changes in circumstances indicate that the
carrying amounts of these assets may not be fully recoverable. This assessment is primarily triggered based on the shortening of the expected hold period due to a
change in our intent to sell a property in the near term. We have processes to monitor our intent with regard to our investments and the estimated disposition value in
comparison to the current carrying value. If our assessment of potential triggering events indicates that the carrying value of a property that we expect to sell in the near
term is not recoverable, we recognize an impairment charge for the amount by which the carrying value exceeds the current estimated fair value of the property. We
determine the fair value of the property based on the estimated proceeds from disposition that are based on quoted market values, third-party appraisals or discounted
cash flow models that utilize the future net operating income from the property and expected market capitalization rates. The use of projected future cash flows is based
on assumptions that are consistent with our estimates of future expectations and the strategic plan we use to manage our underlying business. Changes in economic
and operating conditions could impact our intent and the assumptions used in determining the fair value that could result in future impairment.
At least annually or more frequently given the presence of a triggering event, we assess the recoverability of our assets based on our intent as follows:
•for real estate properties that we intend to hold long-term; including land held for development, properties currently under development and operating properties;
recoverability is assessed based on the estimated undiscounted future net operating income from the property and the terminal value, including anticipated costs to
develop;
•for real estate properties we intend to sell, including properties currently under development and operating properties; recoverability is assessed based on estimated
proceeds from disposition that are based on the future net operating income from the property, expected market capitalization rates and anticipated costs to develop;
•for land parcels we intend to sell, recoverability is assessed based on the estimated proceeds from disposition; and
•for costs incurred related to the potential acquisition of land and operating properties and future development projects, recoverability is assessed based on the probability
that the acquisition or development is likely to occur at the measurement date.
Assets Held for Sale or Contribution. We classify a property as held for sale or contribution when certain criteria are met in accordance with GAAP. Assets classified as
held for sale are expected to be sold to a third party and assets classified as held for
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contribution are generally newly developed assets we intend to contribute to an unconsolidated co-investment venture within twelve months. When the criteria are met,
the respective assets and liabilities are presented separately in the Consolidated Balance Sheets and depreciation is not recognized. Assets held for sale or contribution
are reported at the lower of carrying amount or estimated fair value less costs to sell.
Investments in Unconsolidated Entities. We present our investments in certain entities generally under the equity method. We use the equity method when we have
the ability to exercise significant influence over operating and financial policies of the venture but do not have control of the entity. Under the equity method, we initially
recognize these investments (including advances) in the balance sheet at our cost, including formation costs and net of deferred gains from the contribution of properties
(recognized prior to January 1, 2018), if applicable. The transaction costs related to the formation of equity method investments are also capitalized. We subsequently
adjust the accounts to reflect our proportionate share of net earnings or losses recognized and accumulated other comprehensive income or loss, distributions received,
contributions made, sales and redemptions of our investments and certain other adjustments, as appropriate. When circumstances indicate there may have been a
reduction in the value of an equity investment, we evaluate whether the loss in value is other than temporary. If we conclude it is other than temporary, we recognize an
impairment charge to reflect the equity investment at fair value.
With regard to distributions from unconsolidated entities, we have elected the nature of distribution approach as the information is available to us to determine the nature
of the underlying activity that generated the distributions. In accordance with the nature of distribution approach, cash flows generated from the operations of an
unconsolidated entity are classified as a return on investment (cash inflow from operating activities) and cash flows that are generated from property sales, debt
refinancing or sales and redemptions of our investments are classified as a return of investment (cash inflow from investing activities).
Cash and Cash Equivalents. We consider all cash on hand, demand deposits with financial institutions and short-term highly liquid investments with original maturities
of three months or less to be cash equivalents. Our cash and cash equivalents are financial instruments that are exposed to concentrations of credit risk. We invest our
cash with high-credit quality institutions both domestically and internationally. Cash balances may be invested in money market accounts that are not insured. We have
not realized any losses of such cash investments or accounts and believe that we are not exposed to any significant credit risk.
Derivative Financial Instruments. We primarily hedge our foreign currency risk by borrowing in the currencies in which we invest. We may use derivative financial
instruments, primarily foreign currency contracts to manage foreign currency exchange rate risk related to both our foreign investments and the related earnings. In
addition, we occasionally use interest rate contracts to manage interest rate risk and limit the impact of future interest rate changes on earnings and cash flows,
principally related to variable-rate debt and in anticipation of fixed-rate debt issuances.
We do not use derivative financial instruments for trading or speculative purposes. Each derivative transaction is customized and not exchange-traded. We recognize all
derivatives at fair value within the line items Other Assets or Other Liabilities. We do not net our derivative position by counterparty for purposes of balance sheet
presentation and disclosure. Management reviews our derivative positions, overall risk management strategy and hedging program, on a regular basis. We only enter
into transactions that we believe will be highly effective at offsetting the underlying risk. Our use of derivatives involves the risk that counterparties may default on a
derivative contract; therefore we: (i) establish exposure limits for each counterparty to minimize this risk and provide counterparty diversification; (ii) contract with
counterparties that have long-term credit ratings of single-A or better; (iii) enter into master agreements that generally allow for netting of certain exposures; thereby
significantly reducing the actual loss that would be incurred should a counterparty fail to perform its contractual obligations; and (iv) set minimum credit standards that
become more stringent as the duration of the derivative financial instrument increases. Based on these factors, we consider the risk of counterparty default to be minimal.
Designated Derivatives. We may choose to designate our derivative financial instruments, generally foreign currency contracts to hedge our net investment in foreign
operations or generally interest rate contracts to hedge future interest payments on variable debt and anticipated fixed-rate debt issuances. At inception of the
transaction, we formally designate and document the derivative financial instrument as a hedge of a specific underlying exposure, the risk management objective and the
strategy for undertaking the hedge transaction. We formally assess both at inception and at least quarterly thereafter, the effectiveness of our hedging transactions. Due
to the high degree of effectiveness between the hedging instruments and the underlying exposures hedged, fluctuations in the value of the derivative financial
instruments will generally be offset by changes in the cash flows or fair values of the underlying exposures being hedged.
Changes in the fair value of derivatives that are designated and qualify as net investment hedges of our foreign operations or cash flow hedges are recorded in AOCI/L.
For net investment hedges, these amounts offset the translation adjustments on the underlying net assets of our foreign investments and are recorded in AOCI/L. This
includes debt issued in a currency that is not the same functional currency of the borrowing entity that we may designate as a nonderivative net investment hedge. We
compare the net equity available from our foreign investments first to the derivative financial instruments designated as net investment hedges followed by any
nonderivative net investment hedges. If the total notional amount of the derivative and nonderivative financial instruments exceeds the net equity available, that excess
portion is considered unhedged and the translation of that excess portion is recognized in Foreign Currency, Derivative and Other Gains and Other Income, Net.
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For cash flow hedges, we hedge exposure to the variability of existing cash flows and future cash flows related to variable-rate debt and anticipated fixed-rate debt
issuances, respectively, typically over a period of 10 years, with a range of 5 to 30 years. We report the effective portion of the gain or loss as a component of AOCI/L and
reclassify it to the applicable line item in the Consolidated Statements of Income, generally Interest Expense, over the corresponding period of the underlying hedged
item. The ineffective portion of the change in fair value of a derivative financial instrument is recognized in earnings, generally Interest Expense, at the time the
ineffectiveness occurred. To the extent the hedged forecasted interest payments on debt related to our interest rate contracts are paid off, the remaining balance in
AOCI/L is recognized in Interest Expense in the Consolidated Statements of Income.
Undesignated Derivatives. We also use derivatives, such as foreign currency forwards and option contracts, that are not designated as hedges to manage foreign
currency exchange rate risk related to the translation of our results of operations. The changes in fair values of these derivatives that were not designated as hedging
instruments are immediately recognized in earnings within the line item Foreign Currency, Derivative and Other Gains and Other Income, Net. These gains or losses are
generally offset by lower or higher earnings due to the translation at exchange rates that were different than our expectations. In addition, we may choose to not
designate our interest rate contracts. If an interest rate contract is not designated as a hedge, the changes in fair value of this instrument is immediately recognized in
earnings within the line item Interest Expense in the Consolidated Statements of Income.
Noncontrolling Interests. Noncontrolling interests represent the share of consolidated entities owned by third parties. We recognize each noncontrolling holder’s
respective share of the estimated fair value of the net assets at the date of formation or acquisition. Noncontrolling interests are subsequently adjusted for the
noncontrolling holder’s share of additional contributions, distributions and their share of the net earnings or losses of each respective consolidated entity. We allocate net
income to noncontrolling interests based on the weighted average ownership interest during the period. The net income that is not attributable to us is reflected in the line
item Net Earnings Attributable to Noncontrolling Interests. We do not recognize a gain or loss on ownership transactions with a consolidated entity that do not result in a
change in control and recognize the difference between the carrying amount of the noncontrolling interest and the consideration paid or received as additional paid-in-
capital.
Certain limited partnership interests, including OP units, are exchangeable into our common stock. Common stock issued upon exchange of a holder’s noncontrolling
interest is accounted for at the carrying value of the surrendered limited partnership interest and the difference between the carrying value and the fair value of the
common stock issued is recorded to additional paid-in-capital.
Revenue Recognition.
Rental Revenues and Recoveries. We lease our operating properties to customers under agreements that are classified as operating leases. We recognize the total
minimum lease payments provided for under the leases on a straight-line basis over the lease term. Generally, under the terms of our leases, the majority of our rental
expenses are recovered from our customers, including common area maintenance, real estate taxes and insurance. Rental expenses recovered through reimbursements
received from customers are recognized in Rental Revenues in the Consolidated Statements of Income. We generally record amounts reimbursed by our customers
(“rental recoveries”) as revenues in the period that the applicable expenses are incurred. We account for and present rental revenue and rental recoveries as a single
component under Rental Revenues as the timing of recognition is the same, the pattern with which we transfer the right of use of the property and related services to the
lessee are both on a straight-line basis and our leases qualify as operating leases. We perform credit analyses of our customers prior to the execution of our leases and
continue these analyses for each individual lease on an ongoing basis in order to ensure the collectability of rental revenue. We recognize revenue to the extent that
amounts are determined to be collectible.
Strategic Capital Revenues. Strategic capital revenues include revenues or fees we earn from the management services we provide to unconsolidated entities. These
fees are determined in accordance with the terms specific to each arrangement and may include recurring fees such as asset management and property management
fees or transactional fees for leasing, acquisition, development, construction, financing and tax services provided. We recognize these fees as we provide the services or
on a cost basis for development fees.
We may also earn incentive returns (“promotes” or “promote revenues”) directly from third-party investors in the co-investment ventures based on the cumulative returns
of the venture over a three-year period or the stabilization of individual development projects owned by the venture. The returns are determined by both the operating
performance and real estate valuation of the venture, including highly variable inputs such as capitalization rates, market rents, interest rates and foreign currency
exchange rates. As these key inputs are highly volatile and out of our control, and such volatility can materially impact our promotes period over period, we recognize
promote revenues at the end of the performance period. We include the third-party investors’ share of promotes in Strategic Capital Revenues.
We also earn fees from ventures that we consolidate. Upon consolidation, these fees are eliminated from our earnings and the third-party investors’ share of these fees
are recognized as a reduction of Net Earnings Attributable to Noncontrolling Interests.
Development Management and Other Revenues. Development management and other revenues principally include development and construction management fees
from third parties and are recognized as we provide the services or on a cost basis.
Gains on Real Estate Transactions, Net. Throughout the Notes to the Consolidated Financial Statements, Gains on Real Estate Transactions, Net collectively refers to
Gains on Dispositions of Development Properties and Land, Net and Gains on Other Dispositions of Investments in Real Estate, Net.
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We recognize gains on the disposition of real estate when control transfers to the buyer, generally when consideration and title are exchanged and the risks and rewards
of ownership transfer. We recognize losses from the disposition of real estate when known.
Beginning January 1, 2018 with the adoption of the new revenue recognition guidance, we recognize the entire gain attributed to contributions of real estate properties to
unconsolidated entities. We previously recognized a gain on contribution only to the extent of the third-party ownership in the unconsolidated entity acquiring the property
and deferred the portion of the gain related to our ownership through a reduction to our investment in the applicable unconsolidated entity. We adjusted our proportionate
share of net earnings or losses recognized in future periods to reflect the entities’ recorded depreciation expense as if it were computed on our lower basis in the
contributed properties rather than on the entity’s basis. For deferred gains from partial sales recorded prior to the adoption of the revenue recognition standard, we
continue to recognize these gains over the lives of the underlying real estate properties or at the time of disposition to a third party. If our ownership interest in an
unconsolidated entity decreases and the decrease is expected to be permanent, we recognize the amounts relating to previously deferred gains to coincide with our new
ownership interest.
Gains on Dispositions of Development Properties and Land, Net. We present gains separately based on the type of real estate sold or contributed. We present gains on
sales to third parties or contributions to our unconsolidated co-investment ventures as Gains on Dispositions of Development Properties and Land, Net when the property
was included in our land portfolio or when we developed the property with the intent to sell or contribute.
Gains on Other Dispositions of Investments in Real Estate, Net. We present all other gains on sales to third parties or contributions to our unconsolidated entities of
primarily operating properties and other real estate transactions as Gains on Other Dispositions of Investments in Real Estate, Net. We also include gains or losses on the
remeasurement of equity investments to fair value upon acquisition of a controlling interest if the transaction is considered the acquisition of a business and gains or
losses upon the partial redemption or sale of our investment in an unconsolidated entity.
Rental Expenses. Rental expenses principally include the cost of our property management and leasing personnel, utilities, repairs and maintenance, property
insurance, real estate taxes and the other costs of managing our properties. We are also a lessee of land under leases which generally meet the criteria to be accounted
for as operating leases.
Strategic Capital Expenses. Strategic capital expenses generally include the direct expenses associated with the asset management of the co-investment ventures
provided by our employees who are assigned to our Strategic Capital Segment and the costs of our Prologis Promote Plan (“PPP”) based on earned promotes. For
further discussion on the PPP, see Note 12. In addition, in order to achieve efficiencies and economies of scale, all of our property management and leasing functions are
provided by property management and leasing personnel who are assigned to our Real Estate Segment. These individuals perform the property-level management and
leasing of the properties in our owned and managed portfolio, which includes properties we consolidate and those we manage that are owned by the unconsolidated co-
investment ventures. We allocate the costs of our property management and leasing teams to the properties we consolidate (included in Rental Expenses) and the
properties owned by the unconsolidated co-investment ventures (included in Strategic Capital Expenses) by using the square feet owned by the respective portfolios.
Equity-Based Compensation. We account for equity-based compensation by measuring the cost of employee services received in exchange for an award of an equity
instrument based on the fair value of the award on the grant date. We recognize the cost of the award on a straight-line basis over the period during which an employee
is required to provide service in exchange for the award, generally the vesting period.
Income Taxes. Under the IRC, to qualify as a REIT, we are required to distribute at least 90% of our taxable income, and meet certain income, asset and stockholder
tests. REITs which meet these certain income, asset and stockholder tests are generally not required to pay federal income taxes if they distribute 100% of their taxable
income. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes at regular corporate rates and may not be able to qualify as a REIT
for the four subsequent taxable years. Even as a REIT, we may be subject to certain foreign, state and local taxes on our own income and property, and to federal income
and excise taxes on our undistributed taxable income.
We have elected taxable REIT subsidiary (“TRS”) status for some of our consolidated subsidiaries. This allows us to provide services that would otherwise be considered
impermissible for REITs. Many of the foreign countries in which we have operations do not recognize REITs or do not accord REIT status under their respective tax laws
to our entities that operate in their jurisdiction. In the U.S., we are taxed in certain states in which we operate. Accordingly, we recognize income tax expense for the
federal and state income taxes incurred by our TRSs, taxes incurred in certain states and foreign jurisdictions, and interest and penalties associated with our
unrecognized tax benefit liabilities.
We evaluate tax positions taken in the Consolidated Financial Statements under the interpretation for accounting for uncertainty in income taxes. As a result of this
evaluation, we may recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing
authorities.
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We recognize deferred income taxes in certain taxable entities. For federal income tax purposes, certain acquisitions have been treated as tax-free transactions resulting
in a carry-over tax basis in assets and liabilities. For financial reporting purposes and in accordance with purchase accounting, we record all of the acquired assets and
assumed liabilities based on their relative fair value at date of acquisition, as discussed above. For our taxable subsidiaries, including certain international jurisdictions,
we recognize the deferred income tax liabilities that represent the tax effect of the difference between the tax basis carried over and the relative fair value of the tangible
and intangible assets at date of acquisition. Any subsequent increases or decreases to the deferred income tax liability recorded in connection with these acquisitions,
are reflected in earnings.
If taxable income is generated in these subsidiaries, we recognize a benefit in earnings as a result of the reversal of the deferred income tax liability previously recorded
at the acquisition date and we record current income tax expense representing the entire current income tax liability. If the reversal of the deferred income tax liability
results from a sale or contribution of assets, the classification of the reversal to the Consolidated Statements of Income is based on the taxability of the transaction. If the
sale or contribution is of the real estate asset and results in a taxable transaction, the reversal is recorded to deferred income tax benefit. If the sale or contribution is the
disposition of the entity that owns the asset, the reversal is recorded through gains.
Deferred income tax expense is generally a function of the period’s temporary differences (items that are treated differently for tax purposes than for financial reporting
purposes) and the utilization of tax net operating losses (“NOL”) generated in prior years that had been previously recognized as deferred income tax assets. We provide
for a valuation allowance for deferred income tax assets if we believe all or some portion of the deferred income tax asset may not be realized. Any increase or decrease
in the valuation allowance that results from a change in circumstances that causes a change in the estimated ability to realize the related deferred income tax asset is
included in deferred tax expense.
Environmental Costs. We incur certain environmental remediation costs, including cleanup costs, consulting fees for environmental studies and investigations,
monitoring costs, and legal costs relating to cleanup, litigation defense, and the pursuit of responsible third parties. We expense costs incurred in connection with
operating properties and properties previously sold. We capitalize costs related to undeveloped land as development costs and record any expected future environmental
liabilities at the time of acquisition. We maintain a liability for the estimated costs of environmental remediation expected to be incurred in connection with undeveloped
land, acquired operating properties and properties previously sold that we adjust as appropriate as information becomes available.
Accounting Pronouncements.
New Accounting Standards Issued but not yet Adopted
Segment Reporting. In November 2023, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update (“ASU”) to improve reportable
segments disclosure requirements. The ASU requires existing annual segment disclosures to also be disclosed on an interim basis, and also requires additional
disclosures around significant segment expenses and disclosures to identify the title and position of the CODM. The standard is effective for us on January 1, 2024. We
do not expect the standard to have a material impact on our Consolidated Financial Statements as we anticipate the primary change will be additional disclosures in Note
17.
NOTE 3. DUKE TRANSACTION
On October 3, 2022, we acquired Duke Realty Corporation and Duke Realty Limited Partnership (collectively “Duke” or the “Duke Transaction”). Through the Duke
Transaction, we acquired a portfolio primarily comprised of logistics real estate assets, including 494 industrial operating properties, aggregating 144.4 million square feet,
which are highly complementary to our U.S. portfolio in terms of product quality, location and growth potential in our key markets. There was approximately 15 million
square feet of non-strategic operating industrial properties acquired in the Duke Transaction for which our intent is not to operate these properties long-term. These assets
are classified as Other Real Estate Investments in the Consolidated Balance Sheets. The portfolio also included properties under development, land for future development
and investments in other ventures.
The Duke Transaction was completed for $23.2 billion through the issuance of equity based on the value of the Prologis common stock and units issued of $18.8 billion, the
assumption of debt of $4.2 billion and transaction costs. In connection with the transaction, each issued and outstanding share or unit held by a Duke shareholder or
unitholder was converted automatically into 0.475 shares of Prologis common stock or common units of Prologis, L.P., respectively, including shares and units under
Duke’s equity incentive plan that became fully vested at closing.
The aggregate equity consideration is calculated below (in millions, except price per share):
Number of Prologis shares and units issued upon conversion of
Duke's shares and units at October 3, 2022
Multiplied by price of Prologis' common stock on September 30, 2022
Fair value of Prologis shares and units issued
$
$
184.80
101.60
18,776
We accounted for the Duke Transaction as an asset acquisition and as a result, the transaction costs of $239.8 million were capitalized to the basis of the acquired
properties. Transaction costs included the direct costs incurred to acquire the real estate assets.
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Under acquisition accounting, the total cost or total consideration exchanged is allocated to the real estate properties and related lease intangibles on a relative fair value
basis. As the fair value of the properties acquired exceeded the purchase price, we allocated the bargain consideration at a property-level based on the relative fair value of
the property in comparison to the total portfolio. All other assets acquired and liabilities assumed, including debt, and real estate assets that we intend to sell in the next
twelve months were recorded at fair value. The total purchase price, including transaction costs, was allocated as follows (in millions):
Net investments in real estate
Cash and other assets
Debt
Intangible liabilities, net of intangible assets
Accounts payable, accrued expenses and other liabilities
Noncontrolling interests
Total purchase price, including transaction costs
(1)
$
$
24,915
441
(4,162 )
(1,457 )
(719 )
(2 )
19,016
(1)Intangible assets of $836.6 million and intangible liabilities of $2.3 billion were included within Other Assets and Other Liabilities, respectively, in the Consolidated
Balance Sheets. The acquired lease intangibles from the Duke Transaction will be amortized over the terms of the respective leases with a weighted average remaining
lease term of 64 months at acquisition.
NOTE 4. REAL ESTATE
Investments in real estate properties consisted of the following at December 31 (dollars and square feet in thousands):
Operating properties:
Buildings and improvements
Improved land
Development portfolio, including land costs:
Prestabilized
(1)
Properties under development
Land
Other real estate investments
Total investments in real estate properties
Less accumulated depreciation
(2)
Square Feet
2023
2022
Number of Buildings
2022
2023
2023
2022
630,955
597,362
2,960
2,825 $
52,626,191 $
22,809,306
48,650,334
20,388,461
13,369
26,438
4,874
44,011
45
85
15
1,838,805
597,553
121
$
2,528,650
3,775,553
5,088,070
88,666,575
10,931,485
77,735,090 $
3,614,601
3,338,121
5,034,326
81,623,396
9,036,085
72,587,311
Net investments in real estate properties
(1)At December 31, 2023, and 2022, our land was comprised of 8,197 and 7,188 acres, respectively.
(2)Included in other real estate investments were: (i) land parcels we own and lease to third parties; (ii) non-strategic real estate assets, primarily acquired from the Duke
Transaction, that we do not intend to operate long term; (iii) non-industrial real estate assets that we intend to redevelop as industrial properties or other higher use
assets; and (iv) energy assets. Energy assets include solar panels, battery storage and mobility solutions.
At December 31, 2023, we had investments in real estate assets in the U.S. and other Americas (Brazil, Canada and Mexico), Europe (Belgium, the Czech Republic,
France, Germany, Hungary, Italy, the Netherlands, Poland, Slovakia, Spain, Sweden and the United Kingdom (“U.K.”)) and Asia (China, Japan, and Singapore).
Acquisitions
The following table summarizes our real estate acquisition activity, excluding the Duke Transaction as discussed in Note 3 and energy assets, for the years ended
December 31 (dollars and square feet in thousands):
Number of operating properties
Square feet
Acres of land
Acquisition cost of net investments in real estate, excluding other real estate
investments
2023
(1)
2022
2021
(2)
85
17,503
1,620
23
5,169
2,218
31
6,760
2,684
$
4,194,468
$
1,828,256
$
2,517,644
Acquisition cost of other real estate investments
$
101,382 $
641,168 $
525,499
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(1)Included in 2023 is our acquisition of a real estate portfolio comprised of 70 operating properties in the U.S., aggregating 13.8 million square feet, for cash
consideration of $3.1 billion.
(2)Included in 2021 is our acquisition of additional ownership interest in certain unconsolidated other ventures that we acquired from our partners and subsequently
resulted in the consolidation of the real estate assets.
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 for the years ended December 31 (dollars and square feet in thousands):
Dispositions of development properties and land, net
(1)
Number of properties
Square feet
Net proceeds
Gains on dispositions of development properties and land, net
Other dispositions of investments in real estate, net
(2)
Number of properties
Square feet
Net proceeds
Gains on other dispositions of investments in real estate, net
2023
2022
2021
22
8,437
1,449,644
462,270
$
$
21
7,676
1,398,585 $
597,745 $
41
16,482
2,629,750
817,017
25
2,794
641,214
161,039
$
$
103
8,718
1,271,639 $
589,391 $
97
20,806
2,536,622
772,570
$
$
$
$
(1)The gains we recognize in Gains on Dispositions of Development Properties and Land, Net in the Consolidated Statements of Income are principally driven by the
contribution of newly developed properties to our unconsolidated co-investment ventures and occasionally sales to a third party.
(2)In 2023 and 2021, we sold our ownership interest in unconsolidated joint ventures. The net proceeds and gains from these transactions are included in the table.
Leases
As a Lessor
We lease our real estate properties to customers under agreements that are classified primarily as operating leases. We recognize the total minimum lease payments
provided for under the leases on a straight-line basis over the lease term. Our weighted average lease term remaining was 52 months based on square feet for all leases in
effect at December 31, 2023.
The following table summarizes the minimum lease payments due from our customers on leases for space in our operating properties, prestabilized and under
development properties, other real estate investments and assets held for sale or contribution at December 31, 2023 (in thousands):
2024
2025
2026
2027
2028
Thereafter
Total
$
$
4,985,561
4,793,495
4,250,129
3,514,299
2,753,907
10,201,357
30,498,748
These amounts do not reflect future rental revenue from the renewal or replacement of existing leases and exclude reimbursements of rental expenses. These amounts
also exclude rental increases that are not fixed.
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As a Lessee
We had approximately 135 land and office space leases in which we were the lessee at both December 31, 2023 and 2022, which primarily qualify as operating leases with
remaining lease terms of 1 to 74 years at December 31, 2023. Our lease liabilities were $597.6 million and $638.8 million at December 31, 2023, and 2022, respectively.
The following table summarizes the fixed, future minimum rental payments, excluding variable costs, for leases that had commenced at December 31, 2023, with
amounts discounted at lease commencement by our incremental borrowing rates to calculate the lease liabilities of our leases (in thousands):
2024
2025
2026
2027
2028
Thereafter
Total undiscounted rental payments
Less imputed interest
Total lease liabilities
$
$
75,926
62,009
51,669
46,372
38,848
1,110,251
1,385,075
787,512
597,563
The weighted average remaining lease term for these leases was 30 years and 31 years at December 31, 2023, and 2022, respectively. We do not include renewal options
in the lease term for calculating the lease liability unless we are reasonably certain we will exercise the option or the lessor has the sole ability to exercise the option. We
assigned a collateralized interest rate to each lease based on the term of the lease and the currency in which the lease was denominated. The weighted average discount
rate was 3.6% and 3.4% at December 31, 2023, and 2022, respectively.
NOTE 5. 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 11 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 generally 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 at December 31 (in thousands):
Unconsolidated co-investment ventures
Other ventures
Total
$
$
2023
2022
8,379,265
1,164,705
9,543,970
$
$
8,073,927
1,624,971
9,698,898
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Index to Item 15
Unconsolidated Co-Investment Ventures
The following table summarizes our investments in the individual co-investment ventures at December 31 (dollars in thousands):
(1)
Co-Investment Venture
Prologis Targeted U.S. Logistics Fund, L.P. (“USLF”)
FIBRA Prologis
Prologis Brazil Logistics Venture (“PBLV”) and other joint ventures
Prologis European Logistics Fund (“PELF”)
Prologis European Logistics Partners (“PELP”)
Nippon Prologis REIT, Inc. (“NPR”)
Prologis Japan Core Logistics Fund ("PJLF")
Prologis China Core Logistics Fund, LP (“PCCLF”)
Prologis China Logistics Venture I, LP, II, LP and III, LP
(“Prologis China Logistics Venture”)
(3) (4)
(4) (5)
(2)
(2)
Total
(2)
Ownership
Percentage
2023
2022
27.3 %
45.1 %
20.0 %
25.1 %
50.0 %
15.1 %
16.3 %
15.5 %
15.0 %
Investment in
and Advances to
$
26.2 % $
47.9 %
20.0 %
23.8 %
50.0 %
15.1 %
-
15.5 %
2023
2,256,939
959,421
192,987
2,098,180
2,027,299
595,920
45,736
80,229
2022
2,397,544
888,710
181,354
1,837,615
1,949,002
614,933
-
92,863
15.0 %
$
122,554
8,379,265
$
111,906
8,073,927
(1)At December 31, 2023, we owned 520.7 million units of FIBRA Prologis that had a closing price of Ps 80.75 ($4.78) per unit on the Mexican Stock Exchange. We have
granted FIBRA Prologis a right of first refusal with respect to stabilized properties that we plan to sell in Mexico.
(2)We have one partner in each of these co-investment ventures.
(3)At December 31, 2023, we owned 0.4 million units of NPR that had a closing price of ¥271,400 ($1,918) per share on the Tokyo Stock Exchange. For any properties
we develop and plan to sell in Japan, we have committed to offer those properties to NPR if we determine the properties meet NPR’s investment objectives.
(4)At December 31, 2023, and 2022, we had receivables from NPR and PJLF of $161.2 million and $161.4 million, respectively, related to customer security deposits that
originated through a leasing company owned by us that pertain to properties previously contributed to NPR and PJLF. We have a corresponding payable to NPR’s and
PJLF's customers in Other Liabilities. These amounts are repaid to us as the leases turn over.
(5)In 2023, we formed PJLF with two investors through the initial contribution of assets for which we received cash and equity ownership. We account for our investment
in PJLF under the equity method of accounting.
The amounts recognized in Strategic Capital Revenues and Earnings from Unconsolidated Entities, Net depend on the size, real estate valuations, operations and
transactions of the unconsolidated co-investment ventures, the timing of revenues earned through promotes and transactional fees, as well as fluctuations in foreign
currency exchange rates and our ownership interest. We recognized Strategic Capital Expenses for direct costs associated with the asset management of these ventures,
allocated property-level management and leasing costs for the properties owned by the ventures and compensation expenses under the PPP. For additional discussion on
the PPP, see Note 12.
The following table summarizes the Strategic Capital Revenues we recognized in the Consolidated Statements of Income related to our unconsolidated co-investment
ventures for the years ended December 31 (in thousands):
Recurring fees
Transactional fees
Promote revenue
Total strategic capital revenues from unconsolidated co-investment ventures
(1)
(2)
2023
450,682
60,467
674,629
1,185,778
$
$
2022
2021
455,385 $
67,048
503,779
1,026,212 $
395,765
78,552
77,199
551,516
$
$
(1)Includes promote revenue primarily earned from unconsolidated co-investment ventures in the U.S. in 2023 and Europe in 2022.
(2)These amounts exclude strategic capital revenues from other ventures.
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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 at December 31 and for the years
ended December 31 (dollars and square feet in millions):
At:
Key property information:
Ventures
Operating properties
Square feet
Financial position:
Total assets ($)
Third-party debt ($)
Total liabilities ($)
Our investment balance ($)
Our weighted average ownership
(3)
(4)
U.S.
Other Americas
(1)
Europe
(2)
Asia
Total
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
1
745
126
1
739
123
11,884
4,185
4,930
12,617
3,468
4,143
2
275
65
4,106
915
997
2
260
60
3,744
919
1,011
2
1,007
223
23,504
5,804
7,849
2
989
219
4
228
94
22,502
5,315
7,292
10,226
3,983
4,429
3
217
89
9,964
3,811
4,279
9
2,255
508
49,720
14,887
18,205
8
2,205
491
48,827
13,513
16,725
2,257
2,398
1,152
1,070
4,126
3,786
27.3 %
26.2 %
39.3 %
41.0 %
31.9 %
31.0 %
844
15.2 %
820
15.2 %
8,379
28.1 %
8,074
27.4 %
Operating Information:
2023
For the years ended:
U.S.
2022
2021
2023
2022
2021
2023
Other Americas
(1)
Europe
(2)
2022
2021
2023
2022
2021
2023
Asia
Total
2022
2021
Total revenues ($)
1,315
1,182
Net earnings ($)
344
292
1,0
39
31
2
427
191
383
137
321
120
1,695
1,424
1,387
65
4
341
493
1,070
74
62
9
11
4
65
3
16
0
4,091
3,618
3,400
950
1,036
1,662
Our earnings from
unconsolidated
co-investment
ventures, net ($)
95
79
82
67
47
43
112
150
214
13
19
27
287
295
366
(1)PBLV and our other Brazilian joint ventures are combined as one venture for the purpose of this table.
(2)In September 2022, PELF acquired a real estate portfolio that primarily included 125 industrial operating properties.
(3)Prologis’ investment balance is presented at our adjusted basis. The difference between our ownership interest of a venture’s equity and our investment balance at
December 31, 2023, and 2022, results principally from four types of transactions: (i) deferred gains from the contribution of property to a venture prior to January 1, 2018
($534.9 million and $546.9 million, respectively); (ii) recording additional costs associated with our investment in the venture ($91.7 million and $90.4 million,
respectively); (iii) receivables, principally for fees and promotes ($199.9 million and $193.7 million, respectively); and (iv) customer security deposits retained subsequent
to property contributions to NPR, as discussed above.
(4)Represents our weighted average ownership interest in all unconsolidated co-investment ventures based on each entity’s contribution of total assets before
depreciation, net of other liabilities.
Equity Commitments Related to Certain Unconsolidated Co-Investment Ventures
Certain unconsolidated co-investment ventures have equity commitments from us and our venture partners. Our venture partners fulfill their equity commitment with cash.
We may fulfill our equity commitment through contributions of properties or cash. The commitments are generally used for the acquisition or development of properties but
may be used for the repayment of debt or other general uses. The venture may obtain financing for the acquisition of properties and therefore the acquisition price of
additional investments that the venture could make may be more than the equity commitment. Depending on market conditions, the investment objectives of the ventures,
our liquidity needs and other factors, we may make additional contributions of properties or additional cash investments in these ventures.
At December 31, 2023, our outstanding equity commitments were $606.9 million, principally for USLF and Prologis China Logistics Venture. The equity commitments
expire from 2024 to 2033 if they have not been previously called. Typically, equity commitments are used for future development and acquisitions in the unconsolidated co-
investment ventures.
NOTE 6. 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 December 31, 2023, and 2022. At the time of
classification, these properties were expected to be sold to third parties or were recently stabilized and expected to be contributed to unconsolidated co-investment ventures
within twelve months. The amounts included in Assets Held for Sale or Contribution in the Consolidated Balance Sheets represented real estate investment balances and
the related assets and liabilities.
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Assets held for sale or contribution consisted of the following at December 31 (dollars and square feet in thousands):
Number of operating properties
Square feet
Total assets held for sale or contribution
Total liabilities associated with assets held for sale or contribution – included in Other Liabilities
NOTE 7. OTHER ASSETS AND OTHER LIABILITIES
2023
2022
12
3,469
461,657 $
14,182 $
21
4,061
531,257
4,536
$
$
The following table summarizes our other assets and liabilities, net of amortization and depreciation, if applicable, at December 31 (in thousands):
(1)
Acquired lease intangibles, net of $1.4 billion and $1.1 billion of accumulated amortization
Rent leveling
Leasing commissions
Lease right-of-use assets
Accounts receivable
Prepaid assets
Fixed assets
Value added taxes receivable
Derivative assets
Other notes receivable
Management contracts
Deferred income taxes
Other
Total other assets
Acquired lease intangibles, net of $720.1 million and $290.1 million of accumulated amortization
Lease liabilities
Tenant security deposits
Unearned rents
(1)
Environmental liabilities
Deferred income taxes
Derivative liabilities
Indemnification liability
Value added taxes payable
Deferred income
Liabilities associated with assets held for sale or contribution
Other
Total other liabilities
$
$
$
$
2023
2022
1,010,615
914,480
749,773
683,707
325,698
248,597
208,030
155,909
87,319
72,730
10,702
1,231
280,944
4,749,735
2,206,906
597,563
438,100
319,946
178,201
118,682
94,161
47,832
33,805
27,423
14,182
353,800
4,430,601
$
$
$
$
1,183,006
715,679
650,127
735,430
377,996
239,483
119,897
143,317
227,236
116,537
11,048
5,732
276,011
4,801,499
2,373,050
638,811
419,409
305,299
209,935
99,757
6,682
44,356
15,160
24,481
4,536
305,033
4,446,509
(1)For the amortization of the future minimum rental payments into rental expense and G&A expense on our land and office leases, respectively, refer to Note 4.
The following table summarizes the expected future amortization of leasing commissions and forgone rent (included in acquired lease intangibles above) into
amortization expense and above and below market leases (included in acquired lease intangibles above) and rent leveling net assets into rental revenues, all based on
the balances at December 31, 2023 (in thousands):
2024
2025
2026
2027
2028
Thereafter
Total
Amortization Expense
Net Increase to
Rental Revenues
$
$
391,395
317,912
256,933
199,057
146,550
367,716
1,679,563
$
$
491,011
299,106
181,588
102,828
55,424
81,644
1,211,601
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NOTE 8. DEBT
All debt is incurred by the OP or its consolidated subsidiaries. The following table summarizes our debt at December 31 (dollars in thousands):
2023
2022
Weighted Average
Amount
Interest Rate
(1)
Years
(2)
Outstanding
(3)
Weighted Average
(1)
Interest Rate
Years
(2)
Amount
Outstanding
(3)
Credit facilities
(4)
Senior notes
Term loans and
unsecured other
Secured mortgage
(5)
Total
5.9%
2.9%
2.8%
3.9%
3.0%
3.1 $
10.1
979,313
25,311,647
3.7
3.4
9.3 $
2,330,520
379,021
29,000,501
4.2%
2.3%
2.3%
3.0%
2.5%
2.8 $
10.3
4.9
4.3
9.2 $
1,538,461
19,786,253
2,106,592
444,655
23,875,961
(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 years 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 at December 31 were borrowings denominated in the
following currencies:
British pound sterling
Canadian dollar
Chinese renminbi
Euro
Japanese yen
U.S. dollar
Total
Weighted
Average Interest
Rate
2023
Amount
Outstanding
% of Total
Weighted
Average Interest
Rate
2022
Amount
Outstanding
% of Total
2.1 % $
5.0 %
3.7 %
2.0 %
1.0 %
4.1 %
3.0 % $
1,299,628
829,886
241,820
10,083,601
3,085,970
13,459,596
29,000,501
4.5 %
2.9 %
0.8 %
34.8 %
10.6 %
46.4 %
100.0 %
2.1 % $
4.5 %
-
1.3 %
1.0 %
3.6 %
2.5 % $
1,228,483
814,491
-
7,991,301
3,308,009
10,533,677
23,875,961
5.1 %
3.4 %
-
33.5 %
13.9 %
44.1 %
100.0 %
(4)Senior notes are due from February 2024 to June 2061 with effective interest rates ranging from 0.3% to 5.4% at December 31, 2023.
(5)Secured mortgage debt is due from June 2024 to September 2033 with effective interest rates ranging from 2.5% to 8.1% at December 31, 2023. The debt was
principally secured by 21 operating properties, two prestabilized properties and one land parcel with an aggregate undepreciated cost of $1.1 billion at December 31,
2023.
Credit Facilities
We have a global senior credit facility (the “2022 Global Facility”) with a borrowing capacity of $3.0 billion (subject to currency fluctuations). On April 5, 2023, we amended
and restated our 2021 global senior credit facility (the "2021 Global Facility") as the 2023 Global Facility, increasing its borrowing capacity to $3.0 billion (subject to currency
fluctuations). We may draw on both facilities in British pounds sterling, Canadian dollars, euro, Japanese yen, Mexican pesos and U.S. dollars on a revolving basis. The
2022 Global Facility is scheduled to initially mature in June 2026 and the 2023 Global Facility in June 2027; however, we can extend the maturity date for each facility by
six months on two occasions, subject to the payment of extension fees. We also have the ability to increase each credit facility to $4.0 billion, subject to currency
fluctuations and obtaining additional lender commitments.
We also have a Japanese yen revolver (the "Yen Credit Facility"). On August 25, 2023, we amended and restated the Yen Credit Facility, increasing its borrowing capacity
by ¥3.5 billion for total commitments of ¥58.5 billion ($413.5 million at December 31, 2023). We have the ability to increase the borrowing capacity of the Yen Credit Facility
to ¥75.0 billion ($530.1 million at December 31, 2023), subject to obtaining additional lender commitments. The Yen Credit Facility is initially scheduled to mature in August
2027; however, we may extend the maturity date for one year, subject to the payment of extension fees.
We refer to the 2022 Global Facility, the 2023 Global Facility and the Yen Credit Facility, collectively, as our “Credit Facilities.” Pricing for the Credit Facilities, including the
spread over the applicable benchmark and the rates applicable to facility fees and letter of credit fees, varies based on the public debt ratings of the OP.
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Our Credit Facilities are utilized to support our cash needs for development and acquisition activities on a short-term basis. The original maturity of our borrowings under
the Credit Facilities ranges from overnight to three months. The following table summarizes information about our Credit Facility activity and available liquidity (dollars in
millions):
Credit Facility activity for the years ended December 31:
Weighted average daily interest rate
Weighted average daily borrowings
Maximum borrowings outstanding at any month-end
Available liquidity at December 31:
Aggregate lender commitments
Credit Facilities
Less:
Borrowings outstanding
Outstanding letters of credit
Current availability
Cash and cash equivalents
Total liquidity
Senior Notes
2023
2022
2021
4.3 %
$
411
$
1,587
1.7 %
$
519
$
1,538
1.3 %
60
491
6,477
$
5,441
$
979
24
5,474
530
6,004
$
$
1,538
38
3,865
278
4,143
$
$
4,940
491
7
4,442
556
4,998
$
$
$
$
$
The senior notes are unsecured and our obligations are effectively subordinated in certain respects to any of our debt that is secured by a lien on real property, to the
extent of the value of such real property. The senior notes require interest payments be made quarterly, semi-annually or annually. The majority of the senior notes are
redeemable at any time at our option, subject to certain prepayment penalties. Such repurchase and other terms are governed by the provisions of indenture agreements,
various note purchase agreements or trust deeds. The following table summarizes the issuances of senior notes during 2023 (principal in thousands):
Issuance Date
January
March
May
June
Total
Aggregate Principal
Borrowing Currency
€
$
€
$
1,250,000 $
1,200,000 $
750,000 $
2,000,000 $
$
USD
(1)
1,354,125
1,200,000
808,425
2,000,000
5,362,550
Issuance Date Weighted Average
Interest Rate
Years
4.1%
4.9%
4.6%
5.1%
4.7%
Maturity Dates
January 2030 – 2043
June 2033 – 2053
May 2033
June 2028 – 2053
13.8
17.7
10.0
13.2
13.9
(1)The exchange rate used to calculate into U.S. dollars was the spot rate at the settlement date.
Early Extinguishment of Debt
We repurchased, redeemed or repaid certain debt before the maturity date in an effort to reduce our borrowing costs and extend our debt maturities. As a result, the
difference between the recorded debt (including premiums, discounts and related debt issuance costs) and the consideration we paid to retire the debt, including fees, was
recognized as gains or losses. Fees associated with the restructuring of debt that meets the modification criteria, along with existing unamortized premium or discount and
debt issuance costs, are amortized over the term of the new debt.
We recognized $3.3 million of gains and $20.2 million and $187.5 million of losses on the early extinguishment of debt in 2023, 2022 and 2021, respectively. The losses
during 2021 were driven by the redemption of $1.5 billion of senior notes with a weighted average interest rate of 3.6% and stated maturities between 2024 and 2025.
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Term Loans
The following table summarizes our outstanding term loans at December 31 (dollars and borrowing currency in thousands):
Term Loan
Borrowing
Currency
Issuance
Date
Lender Commitment at
2023
Amount
Outstanding
at 2023
Amount
Outstanding
at 2022
Interest Rate
Maturity Date
Borrowing
Currency
USD
USD
USD
(1)
March 2017 Yen
(1)
Term Loan
October 2017 Yen
Term Loan
December 2018 Yen
Term Loan
January 2019 Yen
Term Loan
March 2019 Yen
Term Loan
June 2022 Yen
(1)
Term Loan
2022 Canadian
(2)
Term Loan
2022 U.S. Dollar
Term Loan
(1)
JPY
JPY
JPY
JPY
JPY
JPY
March 2017
October 2017
December
2018
January 2019
March 2019
June 2022
¥
¥
¥
¥
¥
¥
12,000,000 $ 84,820
$
84,820
$
90,994
0.9% and 1.0%
March 2027 – 2028
10,000,000 $ 70,684
70,684
75,828
20,000,000 $
8
141,368
151,656
141,36
0.9%
1.2% and TIBOR +
0.7%
15,000,000 $
6
106,026
113,742
TIBOR + 0.5% to 0.6%
106,02
October 2032
December 2031 –
June 2033
January 2028 –
2030
85,000,000 $
2
600,812
644,540
TIBOR + 0.4%
March 2026
600,81
25,000,000 $
0
176,710
189,570
1.1% and 1.2%
June 2032 – 2034
176,71
226,40
CAD
August 2022
C$
300,000 $
3
226,403
221,593
CDOR + spread
August 2025
USD
October 2022
$
500,000 $
0
500,000
500,000
SOFR + 0.8%
March 2025
500,00
December 2022 Yen
Term Loan
2023 Yen
Term Loan
2023 Chinese
Term Loan
Subtotal
Debt issuance costs, net
(1)
Total term loans
JPY
JPY
CNH
December
2022
April 2023
September
2023
106,02
6
15,000,000 $
106,026
113,742
10,000,000 $ 70,684
70,684
-
¥
¥
CN¥
1,720,000 $
5
242,84
$
242,845
2,326,378
(4,683 )
2,321,695
$
-
2,101,665
(5,007 )
2,096,658
(1)This term loan includes more than one lender commitment each bearing a different interest rate and maturity date.
1.4%
1.5%
3.5% and 3.6%
December 2033
April 2031
September 2024 –
2026
(2)Our term loan in Canada ("2022 Canadian Term Loan") bears interest at the Canadian Dollar Offered Rate ("CDOR") plus a spread over the applicable benchmark. As
the CDOR interest rate will transition to the Canadian Overnight Repo Rate Average prior to June 28, 2024, we anticipate modifying the interest rate on this loan prior to
this transition and do not expect it to have a material impact on our Consolidated Financial Statements.
Long-Term Debt Maturities
Scheduled principal payments due on our debt for each year through the period ended December 31, 2028, and thereafter were as follows at December 31, 2023 (in
thousands):
(5)
(4)
(3)
Maturity
(1) (2)
2024
2025
2026
2027
2028
Thereafter
Subtotal
Unamortized premiums
(discounts), net
Unamortized debt issuance
costs, net
Total
Credit
Facilities
Unsecured
Senior
Notes
Term Loans
and Other
Secured
Mortgage
$
$
-
-
355,000
624,313
-
-
979,313
$
331,500
35,342
1,317,668
1,741,171
2,589,430
19,876,190
25,891,301
$
101,656
727,338
742,053
50,535
104,612
608,418
2,334,612
$
97,363
177,442
3,980
4,156
3,041
86,094
372,076
Total
530,519
940,122
2,418,701
2,420,175
2,697,083
20,570,702
29,577,302
-
(465,832 )
591
7,936
(457,305 )
$
-
979,313
$
(113,822 )
25,311,647
$
(4,683 )
2,330,520
$
(991 )
379,021
$
(119,496 )
29,000,501
(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.
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(2)Included in the 2024 maturities was the 2023 Chinese Term Loan ($101.7 million at December 31, 2023) that can be extended until 2026, subject to the prevailing
interest rate at the time of extension.
(3)Included in the 2025 maturities was the 2022 Canadian Term Loan ($226.4 million at December 31, 2023) that can be extended until 2027.
(4)Included in the 2026 maturities was the 2022 Global Facility ($355.0 million at December 31, 2023) that can be extended until 2027.
(5)Included in the 2027 maturities was the 2023 Global Facility ($624.3 million at December 31, 2023) that can be extended until 2028.
Interest Expense
The following table summarizes the components of interest expense for the years ended December 31 (in thousands):
Gross interest expense
Amortization of debt discounts (premiums), net
Amortization of debt issuance costs, net
Interest expense before capitalization
Capitalized amounts
Net interest expense
Total cash paid for interest, net of amounts capitalized
2023
(1)
2022
2021
$
$
$
$
683,363
51,980
22,609
757,952
(116,620 )
641,332
457,021
$
$
$
$
345,398
6,602
17,134
369,134
(60,097 )
309,037
234,131
$
$
$
$
299,115
(7,478 )
16,134
307,771
(41,543 )
266,228
278,861
(1)Interest expense increased in 2023, as compared to 2022, principally due to the financing of acquisition and development activity through the issuance of senior notes
in 2023, the assumption of $4.2 billion of debt in the Duke Transaction which was marked to fair value in October 2022 and higher interest rates on new issuances and
our credit facilities. We issued $5.4 billion of senior notes during 2023 and $3.3 billion during 2022, with a weighted average interest rate of 4.7% and 2.3%, respectively,
at the issuance date.
Financial Debt Covenants
Our senior notes, term loans and Credit Facilities outstanding at December 31, 2023 were subject to certain financial covenants under their related documents. At
December 31, 2023, we were in compliance with all of our financial debt covenants.
Guarantee of Finance Subsidiary Debt
We have finance subsidiaries as part of our operations in Europe (Prologis Euro Finance LLC), Japan (Prologis Yen Finance LLC) and the U.K. (Prologis Sterling Finance
LLC) in order to mitigate our foreign currency risk by borrowing in the currencies in which we invest. These entities are 100% indirectly owned by the OP and all unsecured
debt issued or to be issued by each entity is or will be fully and unconditionally guaranteed by the OP. There are no restrictions or limits on the OP’s ability to obtain funds
from its subsidiaries by dividend or loan. In reliance on Rule 13-01 of Regulation S-X, the separate financial statements of Prologis Euro Finance LLC, Prologis Yen
Finance LLC and Prologis Sterling Finance LLC are not provided.
NOTE 9. STOCKHOLDERS’ EQUITY OF PROLOGIS, INC.
Shares Authorized
At December 31, 2023, 2.1 billion shares were authorized to be issued by the Parent, of which 2.0 billion shares represent common stock and 0.1 billion shares represent
preferred stock. Our board of directors (the “Board”) may, without stockholder approval, classify or reclassify any unissued shares of our stock from time to time by setting
or changing the preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms or conditions of redemption of
such shares.
Common Stock
Our at-the-market program allows us to sell up to $1.5 billion in aggregate gross sales proceeds of shares of common stock through twenty designated agents. These
agents earn a fee of up to 2% of the gross sales price per share of common stock as agreed to on a transaction-by-transaction basis. We have not issued any shares of
common stock under this program.
On October 3, 2022, we issued 182.7 million common shares in the Duke Transaction. See Note 3 for more detail on these transactions.
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Under the 2020 Long-Term Incentive Plan, certain of our employees and outside directors are able to participate in equity-based compensation plans. See Note 12 for
additional information on equity-based compensation plans.
We may also issue common stock upon redemption of common limited partnership units in the OP.
Share Purchase Program
We have a share purchase program for the repurchase of outstanding shares of our common stock on the open market or in privately negotiated transactions for an
aggregate purchase price of up to $1.0 billion. During 2021, 2022 and 2023, we did not purchase any common stock of Prologis, Inc. in connection with our share purchase
program.
Preferred Stock
At December 31, 2023 and 2022 our Series Q preferred stock outstanding had a dividend rate of 8.54% and will be redeemable at our option on or after November 13,
2026. Holders have, subject to certain conditions, limited voting rights and all holders are entitled to receive cumulative preferential dividends based on liquidation
preference. The dividends are payable quarterly when, and if, they have been declared by the Board, out of funds legally available for the payment of dividends.
Ownership Restrictions
For us to qualify as a REIT, five or fewer individuals may not own more than 50% of the value of our outstanding stock at any time during the last half of our taxable year.
Therefore, our charter restricts beneficial ownership (or ownership generally attributed to a person under the REIT rules), by a person, or persons acting as a group, of
issued and outstanding common and preferred stock that would cause that person to own or be deemed to own more than 9.8% (by value or number of shares, whichever
is more restrictive) of our issued and outstanding common stock. Furthermore, subject to certain exceptions, no person shall at any time directly or indirectly acquire
ownership of more than 25% of any of the preferred stock. These provisions assist us in protecting and preserving our REIT status and protect the interests of stockholders
in takeover transactions by preventing the acquisition of a substantial block of outstanding shares of stock.
Shares of stock owned by a person or group of people in excess of these limits are subject to redemption by us. The provision does not apply where a majority of the
Board, in its sole and absolute discretion, waives such limit after determining that our status as a REIT for federal income tax purposes will not be jeopardized.
Dividends
To comply with the REIT requirements of the IRC, we are generally required to make common and preferred stock dividends (other than capital gain distributions) to our
stockholders in amounts that together at least equal (i) the sum of (a) 90% of our “REIT taxable income” computed without regard to the dividends paid deduction and net
capital gains and (b) 90% of the net income (after tax), if any, from foreclosure property; minus (ii) certain excess noncash income. Our common stock distribution policy is
to distribute a percentage of our cash flow that ensures that we will meet the distribution requirements of the IRC and that allows us to also retain cash to meet other needs,
such as capital improvements and other investment activities.
The taxability of our dividends for the years ended December 31, 2023, 2022 and 2021 are presented below. The taxability of dividends paid in 2023 was based on
management’s estimates as our tax return for the year ended December 31, 2023 has not been filed. As the statute of limitations is generally three years, our tax returns
for certain years remain subject to examination and consequently the taxability of the dividends is subject to change.
In 2023, 2022 and 2021, we paid all of our dividends in cash.
The following summarizes the taxability of our common and preferred stock dividends for the years ended December 31:
Common Stock:
Ordinary income
Qualified dividend
Capital gains
Total dividend
Preferred Stock – Series Q:
Ordinary income
Qualified dividend
Capital gains
Total dividend
2023
2022
2021
3.29
0.00
0.19
3.48
4.05
0.00
0.22
4.27
$
$
$
$
3.08
0.02
0.06
3.16
4.16
0.02
0.09
4.27
$
$
$
$
2.45
0.00
0.07
2.52
4.15
0.01
0.11
4.27
$
$
$
$
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Index to Item 15
Common stock dividends are characterized for federal income tax purposes as ordinary income, qualified dividend, capital gains, non-taxable return of capital or a
combination of the four. Common stock dividends that exceed our current and accumulated earnings and profits (calculated for tax purposes) constitute a return of capital
rather than a dividend and generally reduce the stockholder’s basis in the common stock. To the extent that a dividend exceeds both current and accumulated earnings and
profits and the stockholder’s basis in the common stock, it will generally be treated as a gain from the sale or exchange of that stockholder’s common stock. At the
beginning of each year, we notify our stockholders of the taxability of the common stock dividends paid during the preceding year.
Pursuant to the terms of our preferred stock, we are restricted from declaring or paying any dividend with respect to our common stock unless and until all cumulative
dividends with respect to the preferred stock have been paid and sufficient funds have been set aside for dividends that have been declared for the relevant dividend period
with respect to the preferred stock.
NOTE 10. PARTNERS’ CAPITAL OF PROLOGIS, L.P.
Distributions paid on the common limited partnership units, and the taxability of those distributions, are similar to dividends paid on the Parent’s common stock disclosed
above.
On October 3, 2022, we issued 2.1 million common limited partnership units in the OP in the Duke Transaction. In 2021, we issued 1.0 million limited partnership units to
our partner as partial consideration for the acquisition of additional ownership interest in an unconsolidated other venture.
We issued Class A Units in the OP through an acquisition of a portfolio of properties in 2015. The Class A Units generally have the same rights as the existing common
limited partnership units of the OP, except that the Class A Units are entitled to a quarterly distribution equal to $0.64665 per unit so long as the common limited partnership
units receive a quarterly distribution of at least $0.40 per unit (in the event the common limited partnership units receive a quarterly distribution of less than $0.40 per unit,
the Class A Unit distribution would be reduced by a proportionate amount). Class A Units are convertible into common limited partnership units at an initial conversion rate
of one-for-one. The conversion rate will be increased or decreased to the extent that, at the time of conversion, the net present value of the distributions paid with respect to
the Class A Units are less or more than the distributions paid on common limited partnership units from the time of issuance of the Class A Units until the time of
conversion. At December 31, 2023 and 2022, the Class A Units were convertible into 8.2 million common limited partnership units and 8.0 million common limited
partnership units, respectively. The OP may redeem the Class A Units at any time after October 7, 2025, for an amount in cash equal to the then-current number of the
common limited partnership units into which the Class A Units are convertible, multiplied by $43.11, subject to the holders’ right to convert the Class A Units into common
limited partnership units. Distributions paid to the Class A Units were $2.58660 annually during the years ended December 31, 2023, 2022 and 2021.
NOTE 11. 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.
As discussed in Note 1, the Parent has complete responsibility, power and discretion in the day-to-day management of the OP. The Parent, through its majority interest,
has the right to receive benefits from and incur losses of the OP. In addition, the OP does not have either substantive liquidation rights or substantive kick-out rights without
cause or substantive participating rights that could be exercised by a simple majority of noncontrolling interests. The absence of such rights renders the OP as a VIE.
Accordingly, the Parent is the primary beneficiary and therefore consolidates the OP.
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.
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The following table summarizes these entities at December 31 (dollars in thousands):
Prologis U.S. Logistics Venture
Other consolidated entities
Prologis, L.P.
Limited partners in Prologis, L.P.
(1)
(2)(3)
Prologis, Inc.
Our Ownership
Percentage
2023
2022
55.0 %
55.0 % $
various
various
$
Noncontrolling
Interests
Total Assets
Total Liabilities
2023
3,147,790
176,485
3,324,275
1,317,721
4,641,996
2023
2022
$ 3,182,858 $ 7,142,889
2,369,959
9,512,848
-
2022
$ 7,225,438
1,737,311
8,962,749
-
$ 4,625,811 $ 9,512,848 $ 8,962,749 $
134,909
3,317,767
1,308,044
$
$
2023
156,303
333,114
489,417
-
489,417 $
2022
158,453
259,524
417,977
-
417,977
(1)Includes two partnerships that have issued limited partnership units to third parties, as discussed above, along with various other consolidated entities. The limited
partnership units outstanding at December 31, 2023 and 2022 were exchangeable into cash or, at our option, 0.3 million shares of the Parent’s common stock.
(2)We had 8.6 million Class A Units at December 31, 2023 and 2022, that were convertible into 8.2 million and 8.0 million, respectively, limited partnership units of the OP
at the end of each year. See Note 10 for further discussion of our Class A Units.
(3)There were limited partnership units in the OP, excluding the Class A Units, that were exchangeable into cash or, at our option, 9.1 million and 10.0 million shares of
the Parent’s common stock, at December 31, 2023 and 2022, respectively. Also included are the vested OP Long-Term Incentive Plan Units (“LTIP Units”) associated
with our long-term compensation plans of 5.7 million and 4.6 million shares of the Parent’s common stock at December 31, 2023 and 2022, respectively. See further
discussion of LTIP Units in Note 12.
NOTE 12. LONG-TERM COMPENSATION
2020 Long-Term Incentive Plan
The 2020 Long-Term Incentive Plan ("2020 LTIP") provides for grants of awards to officers, directors, employees and consultants of the Parent or its subsidiaries. Awards
can be in the form of: full value awards, stock appreciation rights and stock options (non-qualified options and incentive stock options). Full value awards generally consist
of: (i) common stock; (ii) restricted stock units (“RSUs”); (iii) OP LTIP units (“LTIP Units”) and (iv) Prologis Outperformance Plan (“POP”) OP LTIP units (“POP LTIP Units”).
Awards may be made under the 2020 LTIP until it is terminated by the Board or until the ten-year anniversary of the effective date of the plan.
The awards have been issued under the following components of our equity-based compensation plans and programs at December 31, 2023: (i) POP; (ii) Prologis
Promote Plan (“PPP”); (iii) annual long-term incentive (“LTI”) equity award program (“Annual LTI Award”); and (iv) annual bonus exchange program. Under all of these
components, certain employees may elect to receive their equity award payout either in the form of RSUs or other equity of the Parent or LTIP Units of the OP.
At December 31, 2023, we had 32.7 million shares reserved or available for issuance, including 7.5 million shares of common stock to be issued upon vesting of awards
previously granted and 17.7 million shares of common stock remaining available for future issuance under equity compensation plans. Each LTIP Unit and POP LTIP Unit
counts as one share of common stock for purposes of calculating the limit on shares that may be issued.
Equity-Based Compensation Plans and Programs
Prologis Outperformance Plan (“POP”)
We have allocated participation points or a percentage of the compensation pool to participants under our POP corresponding to three-year performance periods beginning
every January 1. The fair value of the awards is measured at the grant date and amortized over the period from the grant date to the date at which the awards vest, which
ranges from three to ten years. The performance hurdle (“Outperformance Hurdle”) at the end of the initial three-year performance period requires our three-year
compound annualized total stockholder return (“TSR”) to exceed a threshold set at the three-year compound annualized TSR for the Morgan Stanley Capital International
(“MSCI”) US REIT Index for the same period plus 100 basis points. If the Outperformance Hurdle is met, a compensation pool will be formed equal to 3% of the excess
value created, subject to a maximum as defined by each performance period. POP awards cannot be paid at a time when we meet the outperformance hurdle yet our
absolute TSR is negative. If after seven years our absolute TSR has not been positive, the awards will be forfeited.
We granted participation points for the 2023 – 2025 performance period in January 2023, as discussed in the table below. The 2023 – 2025 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.
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Each participant is eligible to receive a percentage of the total compensation pool based on the number of participation points allocated to the participant, or in the case of
certain executive officers, a set percentage of the compensation pool. If the performance criteria are met, the participants’ points or compensation pool percentage will be
paid in the form of common stock, restricted stock units, POP LTIP Units or LTIP Units, as elected by the participant. Annually, a participant may exchange their
participation points or compensation pool percentage for POP LTIP Units. If the performance criteria are not met, the participants’ points, compensation pool percentage
and POP LTIP Units will be forfeited.
At December 31, 2023, all awards were equity classified. The grant date fair value was calculated using a Monte Carlo valuation model.
The following table details the assumptions used for each grant based on the year it was granted (dollars in thousands):
Risk free interest rate
Prologis expected volatility
MSCI US REIT Index expected volatility
Grant date fair value
2023
2022
2021
4.2 %
35.0 %
31.0 %
28,300 $
1.0 %
31.0 %
29.0 %
30,400 $
0.2 %
32.0 %
29.0 %
30,300
$
Total remaining compensation cost related to the POP at December 31, 2023, was $60.3 million, prior to adjustments for capitalized amounts due to our development
activities. The remaining compensation cost will be recognized through 2032, with a weighted average period of 2.7 years.
The performance criteria were met for the last three years and the absolute maximum cap was earned and awarded in January of the following year. 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.
Other Equity-Based Compensation Plans and Programs
Awards may be issued in the form of RSUs or LTIP Units at the participants’ elections under the following equity-based compensation plans and programs. 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. The service period is generally four years, except for awards under the annual bonus exchange program. Dividends and distributions are paid with
respect to both RSUs and LTIP Units during the vesting period, and therefore they are considered participating securities. We do not allocate undistributed earnings to
participating securities as our net earnings per share or unit would not be materially different. The value of the dividend is charged to retained earnings for RSUs and the
distribution is charged to Net Earnings Attributable to Noncontrolling Interests in the OP for LTIP Units in the Consolidated Financial Statements of the Parent.
Prologis Promote Plan (“PPP”)
Under the PPP, we establish a compensation pool for certain employees up to 40% of the third-party portion of promotes earned by Prologis from the co-investment
ventures. The awards may be settled in some combination of cash and full value awards, at our election.
Annual LTI Equity Award Program (“Annual LTI Award”)
The Annual LTI Award provides for grants to certain employees subject to our performance against benchmark indices that relate to the most recent year’s performance.
Annual Bonus Exchange Program
Under our bonus exchange program, generally all our employees may elect to receive all or a portion of their annual cash bonus in equity. Equity awards granted through
the bonus exchange are valued at a premium to the cash bonus exchanged and vest over three years, excluding certain executive officers. As certain executive officers do
not receive a bonus exchange premium for participating in the bonus exchange program, the equity they receive upon exchange for their cash bonuses does not have a
vesting period.
Summary of Award Activity
RSUs
Each RSU represents the right to receive one share of common stock of the Parent.
The following table summarizes the activity for RSUs for the year ended December 31, 2023 (units in thousands):
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Balance at January 1, 2023
Granted
Vested and distributed
Forfeited
Balance at December 31, 2023
Unvested RSUs
Weighted Average Grant Date
Fair Value
1,533
1,164
(553 )
(47 )
2,097
$
$
100.59
104.89
117.46
113.85
98.23
The fair value of stock awards granted and vested was $122.1 million and $65.0 million for 2023, respectively, and $98.9 million and $48.6 million for 2022, respectively,
based on the weighted average grant date fair value per unit.
Total remaining compensation cost related to RSUs outstanding, excluding POP, at December 31, 2023, was $119.0 million, prior to adjustments for capitalized amounts
due to our development activities. The remaining compensation cost will be recognized through 2028, with a weighted average period of 1.4 years.
LTIP Units
An LTIP Unit represents a partnership interest in the OP. After vesting and the satisfaction of certain conditions, an LTIP Unit may be exchangeable for a common limited
partnership unit in the OP and then redeemable for a share of common stock or cash at our option.
The following table summarizes the activity for LTIP Units for the year ended December 31, 2023 (units in thousands):
Balance at January 1, 2023
Granted
Vested LTIP Units
Forfeited
Balance at December 31, 2023
Unvested LTIP Units
Weighted Average Grant Date
Fair Value
4,214
2,585
(1,381 )
(39 )
5,379
$
$
73.31
100.20
109.44
106.45
76.72
The fair value of unit awards granted and vested was $259.0 million and $151.1 million for 2023, respectively, and $188.8 million and $84.3 million for 2022, respectively,
based on the weighted average grant date fair value per unit.
Total remaining compensation cost related to LTIP Units, excluding POP, at December 31, 2023, was $189.2 million, prior to adjustments for capitalized amounts due to
our development activities. The remaining compensation cost will be recognized through 2030, with a weighted average period of 1.5 years.
Other Plans
The Prologis 401(k) Plan (the “401(k) Plan”) includes a matching employer contribution of $0.50 for every dollar contributed by an employee, up to 12% of the employee’s
annual compensation (within the statutory compensation limit). The matching employer contribution was previously up to 6% of the employee's annual compensation. In the
401(k) Plan, vesting in the matching employer contributions is based on the employee's years of service, with 100% vesting at the completion of one year of service. Our
contributions under the matching provisions were $8.9 million, $8.1 million and $5.8 million for the years ended December 31, 2023, 2022 and 2021, respectively.
We have a non-qualified savings plan that allows highly compensated employees the opportunity to defer the receipt and income taxation of a certain portion of their
compensation in excess of the amount permitted under the 401(k) Plan. There has been no employer matching within this plan in the three-year period ended December
31, 2023.
NOTE 13. INCOME TAXES
Components of Earnings Before Income Taxes
The following table summarizes the components of earnings before income taxes for the years ended December 31 (in thousands):
Domestic
International
Earnings before income taxes
2023
2,891,644 $
572,539
3,464,183 $
2022
2,423,809 $
1,267,001
3,690,810 $
2021
2,208,168
1,114,680
3,322,848
$
$
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Index to Item 15
Summary of Current and Deferred Income Taxes
The following table summarizes the components of the provision for income taxes for the years ended December 31 (in thousands):
Current income tax expense (benefit):
U.S. federal
International
State and local
Total current income tax expense
Deferred income tax expense (benefit):
U.S. federal
International
Total deferred income tax expense
Total income tax expense
Current Income Taxes
2023
2022
2021
$
(953 ) $
(6,645 ) $
175,121
19,162
193,330
112,489
16,930
122,774
58,906
103,488
10,542
172,936
12,936
4,772
17,708
211,038
$
3,359
9,279
12,638
135,412 $
2,895
(1,573 )
1,322
174,258
$
We recognize current income tax expense for the federal and state income taxes incurred by our TRSs and taxes incurred in certain states and foreign jurisdictions. Current
income tax expense fluctuates from period to period based primarily on the timing of our taxable income. Taxable income incurred over the last three years was principally
due to the following: (i) the contribution of real estate properties to our unconsolidated co-investment ventures and sales to third parties; (ii) recurring and transactional
strategic capital fees earned; (iii) taxable earnings from unconsolidated co-investment ventures; and (iv) adjustments to acquired tax liabilities.
During the years ended December 31, 2023, 2022 and 2021, cash paid for income taxes, net of refunds, was $149.1 million, $130.0 million and $148.7 million, respectively.
Deferred Income Taxes
The deferred income tax expense recognized in 2023, 2022 and 2021 was principally due to changes in temporary differences and utilization of NOLs.
The following table summarizes the deferred income tax assets and liabilities at December 31 (in thousands):
Gross deferred income tax assets:
NOL carryforwards
Basis difference – real estate properties
Basis difference – equity investments
Section 163(j) interest limitation
Capital loss carryforward
Other – temporary differences
Total gross deferred income tax assets
Valuation allowance
Gross deferred income tax assets, net of valuation allowance
Gross deferred income tax liabilities:
Basis difference – real estate properties
Basis difference – equity investments
Other – temporary differences
Total gross deferred income tax liabilities
Net deferred income tax liabilities
At December 31, 2023, we had NOL carryforwards as follows (in thousands):
2023
2022
$
246,768
$
229,410
48,460
18,051
1,689
7,161
9,142
331,271
(305,063 )
26,208
98,529
43,457
1,673
143,659
117,451 $
$
94,610
17,042
2,218
6,903
9,250
359,433
(295,834 )
63,599
116,102
40,333
1,189
157,624
94,025
Gross NOL carryforward
Tax-effected NOL carryforward
Valuation allowance
Net deferred tax asset – NOL carryforward
Expiration periods
U.S.
Europe
Mexico
Japan
Other
$
$
72,151
18,345
17,741
604
$
$
608,128
157,593
150,836
6,757
$
$
170,656
53,622
53,622
-
$
$
68,754 $
9,219
9,219
- $
32,399
7,989
7,989
-
2024 – 2043
2024 – indefinite
2024 – 2034
2024 – 2033
2024 – indefinite
88
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Index to Item 15
The deferred tax asset valuation allowance at December 31, 2023, was adequate to reduce the total deferred tax asset to an amount that we estimate will more likely than
not be realized.
Liability for Uncertain Tax Positions
During the years ended December 31, 2023, 2022 and 2021, we believe that we had complied with the REIT requirements of the IRC. The statute of limitations for our tax
returns is generally three years. As such, our tax returns that remain subject to examination would be primarily from 2020 and thereafter. Liabilities or any related
settlements for uncertain tax positions for the years ended December 31, 2023, 2022 and 2021 were not material to our Consolidated Financial Statements.
NOTE 14. 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 for the years ended December 31 was as follows (in thousands, except per share and unit
amounts):
Prologis, Inc.
Net earnings attributable to common stockholders – Basic
Net earnings attributable to exchangeable limited partnership units
(1)
Adjusted net earnings attributable to common stockholders – Diluted
Weighted average common shares outstanding – Basic
Incremental weighted average effect on exchange of limited partnership units
(1)
Incremental weighted average effect of equity awards
Weighted average common shares outstanding – Diluted
(2)
Net earnings per share attributable to common stockholders:
Basic
Diluted
Prologis, L.P.
Net earnings attributable to common unitholders
Net earnings attributable to Class A Units
Net earnings attributable to common unitholders – Basic
Net earnings attributable to Class A Units
Net earnings attributable to exchangeable other limited partnership units
Adjusted net earnings attributable to common unitholders – Diluted
Weighted average common partnership units outstanding – Basic
Incremental weighted average effect on exchange of Class A Units
Incremental weighted average effect on exchange of other limited partnership units
Incremental weighted average effect of equity awards of Prologis, Inc.
Weighted average common units outstanding – Diluted
(2)
Net earnings per unit attributable to common unitholders:
Basic
Diluted
2023
3,053,373
77,806
3,131,179
$
$
2022
3,358,796 $
92,236
3,451,032 $
2021
2,933,571
82,092
3,015,663
$
$
924,351
23,693
3,747
951,791
785,675
21,803
4,130
739,363
20,913
4,486
811,608
764,762
$
$
$
3.30
3.29
$
$
4.28
$
4.25 $
3.97
3.94
2023
3,130,647
(26,784 )
3,103,863
$
2022
3,450,727 $
(34,311 )
3,416,416
2021
3,015,363
(31,758 )
2,983,605
26,784
532
3,131,179
$
34,311
305
3,451,032 $
31,758
300
3,015,663
$
939,635
8,110
299
3,747
951,791
799,153
8,026
299
4,130
811,608
751,973
8,004
299
4,486
764,762
$
$
3.30
3.29
$
$
4.28
4.25
$
$
3.97
3.94
(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 for the years ended December 31 consisted of the
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Index to Item 15
following:
Class A Units
Other limited partnership units
Equity awards
Prologis, L.P.
Common limited partnership units
Prologis, Inc.
2023
2022
2021
8,110
299
7,455
15,864
15,284
31,148
8,026
299
6,298
14,623
13,478
28,101
8,004
299
6,719
15,022
12,610
27,632
NOTE 15. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Derivative Financial Instruments
In the normal course of business, our operations are exposed to market risks, including the effect of changes in foreign currency exchange rates and interest rates. We may
enter into derivative financial instruments to offset these underlying market risks. See Note 2 for our derivative financial instruments policy.
The following table presents the fair value of our derivative financial instruments recognized within Other Assets and Other Liabilities in the Consolidated Balance Sheets
at December 31 (in thousands):
Undesignated derivatives
Foreign currency contracts
Forwards
Brazilian real
British pound sterling
Canadian dollar
Chinese renminbi
Euro
Japanese yen
Mexican peso
Swedish krona
Options
Mexican peso
Designated derivatives
Foreign currency contracts
Net investment hedges
British pound sterling
Canadian dollar
Interest rate contracts
Cash flow hedges
Euro
U.S. dollar
Total fair value of derivatives
2023
2022
Asset
Liability
Asset
Liability
$
$
-
9,608
4,480
1,630
19,252
45,149
-
3,304
1,263
$
291
9,862
1,225
50
8,229
589
-
2,279
-
$
35
29,187
12,074
657
51,317
34,022
-
6,292
-
1,759
756
7,030
5,608
23,534
24,552
494
648
2
364
2,801
2,344
-
-
-
-
-
118
-
87,319
$
27,034
31,964
94,161
$
44,982
584
227,236
$
-
29
6,682
$
90
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Index to Item 15
Undesignated Derivative Financial Instruments
Foreign Currency Contracts
The following table summarizes the activity of our undesignated foreign currency contracts for the years ended December 31 (in millions, except for weighted average
forward rates and number of active contracts):
Notional amounts at January 1 ($)
New contracts ($)
Matured, expired or settled
contracts ($)
Notional amounts at
December 31 ($)
Weighted average forward rate at
December 31
Active contracts at December 31
CAD
EUR
GBP
JPY
Other
Total
CAD
EUR
GBP
JPY
Other
Total
CAD
EUR
GBP
JPY
Other
Total
2023
2022
2021
283
15
(85)
213
601
173
349
192
331
140
81
(10)
1,645
510
(250)
(99)
(87)
(15)
(536)
524
442
384
56
1,619
175
172
(64)
283
749
658
383
264
250
181
105
92
1,662
1,367
163
225
474
437
207
308
252
76
66
91
1,162
1,137
(806)
(298)
(100)
(116)
(1,384)
(213)
(162)
(132)
(78)
(52)
(637)
601
349
331
81
1,645
175
749
383
250
105
1,662
1.30
74
1.16
72
1.27 115.40
96
96
1.29
103
1.18
97
1.31 109.79
96
90
1.26
72
1.22
86
1.20 103.14
74
70
The following table summarizes the undesignated derivative financial instruments exercised and associated realized and unrealized gains (losses) in Foreign Currency,
Derivative and Other Gains and Other Income, Net in the Consolidated Statements of Income for the years ended December 31 (in millions, except for number of
exercised contracts):
Exercised contracts
Realized gains (losses) on the matured, expired or settled contracts
Unrealized gains (losses) on the change in fair value of outstanding contracts
Designated Derivative Financial Instruments
2023
2022
2021
$
$
218
60
(58 )
$
$
158
145
39
$
$
161
(8 )
88
Changes in the fair value of derivatives that are designated as net investment hedges of our foreign operations and cash flow hedges are recorded in AOCI/L in the
Consolidated Balance Sheets and reflected within the AOCI/L table below.
Foreign Currency Contracts
The following table summarizes the activity of our foreign currency contracts designated as net investment hedges for the years ended December 31 (in millions, except
for weighted average forward rates and number of active contracts):
Notional amounts at January 1 ($)
New contracts ($)
Matured, expired or settled contracts ($)
Notional amounts at December 31 ($)
Weighted average forward rate at December 31
Active contracts at December 31
Interest Rate Contracts
2023
CAD
CNH
GBP
Total
CAD
2022
GBP
Total
CAD
2021
GBP
Total
534
467
(485 )
516
1.33
6
-
100
(100 )
-
-
-
440
343
(351 )
432
1.26
4
974
910
(936 )
948
535
964
(965 )
534
432
440
(432 )
440
967
1,404
(1,39
7 )
974
1.29
1.28
6
4
512
967
(512 )
967
377
535
(377 )
535
135
432
(135 )
432
1.25
1.37
6
4
The following table summarizes the activity of our interest rate contracts designated as cash flow hedges for the years ended December 31 (in millions):
EUR
2023
USD
Total
EUR USD CAD
JPY
Total
2022
Notional amounts at January 1 ($)
New contracts ($)
Matured, expired or settled contracts ($)
Notional amounts at December 31 ($)
447
1,113
(860 )
700
597
150
2,300
3,413
(1,900 ) (2,760 )
1,250
550
165
1,004
(722 )
447
-
400
(250 )
150
-
184
(184 )
-
91
-
165
104 1,692
(104 ) (1,260 )
597
-
2021
EUR USD
Total
165
-
-
165
250
-
(250 )
-
415
-
(250 )
165
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Index to Item 15
Designated Nonderivative Financial Instruments
The following table summarizes our debt and accrued interest, designated as a hedge of our net investment in international subsidiaries at December 31 (in millions):
British pound sterling
Canadian dollar
2023
2022
2021
$
$
1,305 $
373 $
1,237
370
$
$
624
-
The following table summarizes the unrealized gains (losses) in Foreign Currency, Derivative and Other Gains and Other Income, Net in the Consolidated Statements of
Income on the remeasurement of the unhedged portion of our euro denominated debt and accrued interest, for the years ended December 31 (in millions):
Unrealized gains (losses) on the unhedged portion
$
(23 )
$
44
$
81
2023
2022
2021
Accumulated Other Comprehensive Income (Loss) ("AOCI/L")
The change in AOCI/L in the Consolidated Statements of Equity during the periods presented was due to the translation into U.S. dollars from the consolidation of the
financial statements of our consolidated subsidiaries whose functional currency is not the U.S. dollar. The change in fair value of the effective portion of our derivative
financial instruments that have been designated as net investment hedges and cash flow hedges and the translation of the hedged portion of our debt, as discussed above,
are also included in AOCI/L.
The following table presents these changes in AOCI/L for the years ended December 31 (in thousands):
Unrealized gains
(losses) on cash
flow hedges
(1)
Our share of
derivatives from
unconsolidated co-
investment
ventures
Derivative net
investment hedges
Debt designated as
nonderivative net
investment hedges
(2)
Foreign currency
translation
adjustments
Total Accumulated
Other
Comprehensive
Income (Loss)
$
(22,893 )
$
(10,970 )
$
228,169
$
204,638
$
(1,592,683 ) $
(1,193,739 )
$
$
$
8,851
8,222
9,792
(10,075 )
298,696
315,486
(14,042 )
$
(2,748 )
$
237,961
$
194,563
$
(1,293,987 )
$
(878,253 )
44,587
25,332
95,012
135,420
134,293
434,644
30,545
$
22,584
$
332,973
$
329,983
$
(1,159,694 )
$
(443,609 )
(76,289 )
(14,170 )
(22,447 )
(75,881 )
118,195
(70,592 )
(45,744 )
$
8,414
$
310,526
$
254,102
$
(1,041,499 )
$
(514,201 )
Balance at
January 1, 2021
Other comprehensive
income (loss), net
Balance at
December 31, 2021
Other comprehensive
income, net
Balance at
December 31, 2022
Other comprehensive
income (loss), net
Balance at
December 31, 2023
(1)We estimate an additional expense of $3.7 million will be reclassified to Interest Expense in the Consolidated Statements of Income over the next 12 months from
December 31, 2023, due to the amortization of previously settled derivatives designated as cash flow hedges. The amounts reclassified for the years ended December
31, 2023, 2022 and 2021 were not material to our Consolidated Financial Statements.
(2)Reclassification of amounts out of AOCI/L due to the remeasurement of the unhedged portion of our euro denominated debt and accrued interest is included herein.
Fair Value Measurements
We have estimated the fair value of our financial instruments using available market information and valuation methodologies we believe to be appropriate for these
purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of
amounts that we would realize on disposition. See Note 2 for more information on our fair value measurements policy.
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Fair Value Measurements on a Recurring Basis
At December 31, 2023 and 2022, other than the derivatives discussed previously, we had no significant financial assets or financial liabilities that were measured at fair
value on a recurring basis in the Consolidated Financial Statements. All of our derivatives held at December 31, 2023 and 2022 were classified as Level 2 of the fair value
hierarchy.
Fair Value Measurements on Nonrecurring Basis
Acquired properties and assets we expect to sell or contribute are significant nonfinancial assets that met the criteria to be measured at fair value on a nonrecurring basis,
as detailed in our accounting policy in Note 2. At December 31, 2023 and 2022, we estimated the fair value of our properties using Level 2 or Level 3 inputs from the fair
value hierarchy. See more information on our acquired properties in Notes 3 and 4 and assets held for sale or contribution in Note 6.
Fair Value of Financial Instruments
At December 31, 2023 and 2022, the carrying amounts of certain financial instruments, including cash and cash equivalents, accounts and notes receivable, accounts
payable and accrued expenses were representative of their fair values.
The differences in the fair value of our debt from the carrying value in the table below were the result of differences in interest rates or borrowing spreads that were
available to us at December 31, 2023 and 2022, as compared with those in effect when the debt was issued or assumed, including lower borrowing spreads due to our
credit ratings. See Note 8 for more information on our debt activity.
The following table reflects the carrying amounts and estimated fair values of our debt at December 31 (in thousands):
Credit Facilities
Senior notes
Term loans and unsecured other
Secured mortgage
Total
NOTE 16. COMMITMENTS AND CONTINGENCIES
Environmental Matters
2023
2022
Carrying Value
Fair Value
Carrying Value
Fair Value
$
$
979,313
25,311,647
2,330,520
379,021
29,000,501
$
$
979,313
23,121,936
2,322,827
357,731
26,781,807
$
$
1,538,461
19,786,253
2,106,592
444,655
23,875,961
$
$
1,538,461
16,604,241
2,092,264
420,964
20,655,930
A majority of the properties we acquire, including land, are subjected to environmental reviews either by us or the previous owners. In addition, we may incur environmental
remediation costs associated with certain land parcels we acquire in connection with the development of the land. We have acquired certain properties that may have been
leased to or previously owned by companies that discharged hazardous materials. We establish a liability at the time of acquisition to cover such costs and adjust the
liabilities as appropriate when additional information becomes available. We record our environmental liabilities in Other Liabilities in the Consolidated Balance Sheets. We
purchase various environmental insurance policies to mitigate our exposure to environmental liabilities. We are not aware of any environmental liabilities that would have a
material adverse effect on our business, financial condition or results of operations.
Indemnification Agreements
We have entered into agreements whereby we indemnify certain co-investment ventures, or our venture partners, outside of the U.S. for taxes that may be assessed with
respect to certain properties we contributed to these ventures. Our contributions to these ventures are generally structured as contributions of shares of companies that own
the real estate assets. Accordingly, the capital gains associated with the step up in the value of the underlying real estate assets, for tax purposes, are deferred and
transferred at contribution. We have generally indemnified these ventures to the extent that the ventures incur capital gains or withholding tax as a result of a direct sale.
The agreements limit the amount that is subject to our indemnification with respect to each property to 100% of the actual tax liabilities related to the capital gains that are
deferred and transferred by us to the ventures at the time of the initial contribution less any deferred tax assets transferred with the property.
The outcome under these agreements is uncertain as it depends on the method and timing of dissolution of the related venture or disposition of any properties by the
venture. We record liabilities related to the indemnification agreements in Other Liabilities in the Consolidated Balance Sheets. We continue to monitor these agreements
and the likelihood of the sale of assets that would result in recognition and will adjust the potential liability in the future as facts and circumstances dictate.
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Off-Balance Sheet Liabilities
We have issued performance and surety bonds, standby letters of credit and guarantees in connection with certain development and energy projects. Performance and
surety bonds and letters of credit are commonly required by public agencies, including utilities, from real estate and energy asset developers. They are renewable and
expire on the completion of the improvements and infrastructure. We typically issue performance and surety bonds that have terms of four years and standby letters of
credit that have terms of a year to an indefinite period of time. Guarantees are provided on behalf of subsidiaries in support of such subsidiaries' payment obligations in
connection with the development of energy assets. They expire upon the satisfaction of the payment obligation in accordance with the contract terms. At December 31,
2023, and 2022, we had $498.5 million and $456.0 million, respectively, outstanding under such arrangements.
We may be required under capital commitments or we may choose to make additional capital contributions to certain of our unconsolidated entities, representing our
proportionate ownership interest, should additional capital contributions be necessary to fund development or acquisition costs, repayment of debt or operational shortfalls.
See Note 5 for further discussion related to equity commitments to our unconsolidated co-investment ventures.
Litigation
From time to time, we are party to a variety of legal proceedings arising in the ordinary course of business. We believe that, with respect to any such matters that we are
currently a party to, the ultimate disposition of any such matter will not have material adverse effect on our business, financial position or results of operations.
NOTE 17. BUSINESS SEGMENTS
Our current business strategy includes two operating segments: Real Estate (Rental Operations and Development) and Strategic Capital. We generate revenues, earnings,
net operating income and cash flows through our segments, as follows:
•Real Estate Segment. This operating segment represents the ownership and development of operating properties and is the largest component of our revenue and
earnings. We collect rent from our customers through operating leases, including reimbursements for the majority of our property operating costs. Each operating property
is considered to be an individual operating segment with similar economic characteristics; these properties are combined within the reportable business segment based on
geographic location. The Real Estate Segment also includes development activities that lead to rental operations, including land held for development and properties
currently under development, and other real estate investments, including energy assets. Within this line of business, we utilize the following: (i) our land bank; (ii) the
development and leasing expertise of our local teams; and (iii) our customer relationships.
•Strategic Capital Segment. This operating segment represents the management of unconsolidated co-investment ventures. We generate strategic capital revenues
primarily from our unconsolidated co-investment ventures through asset management and property management services and we earn additional revenues by providing
leasing, acquisition, construction, development, financing and disposition services. Depending on the structure of the venture and the returns provided to our partners, we
also earn revenues through promotes periodically during the life of a venture or upon liquidation. Each unconsolidated co-investment venture we manage is considered to
be an individual operating segment with similar economic characteristics; these ventures are combined within the reportable business segment based on geographic
location.
Below we present: (i) each reportable business segment’s revenues from external customers to Total Revenues; (ii) each reportable business segment’s net operating
income from external customers to Operating Income and Earnings Before Income Taxes; and (iii) each reportable business segment’s assets to Total Assets. Our chief
operating decision makers ("CODMs") rely principally on net operating income and similar measures to make decisions about allocating resources and assessing segment
performance. The applicable components of Total Revenues, Operating Income, Earnings Before Income Taxes and Total Assets in the Consolidated Financial Statements
are allocated to each reportable business segment’s revenues, net operating income and assets. Items that are not directly assignable to a segment are not allocated but
reflected as non-segment items (G&A expenses and real estate adjustments for depreciation and gains and losses on contributions and sales) due to how our CODMs
utilize segment information for planning and execution of our business strategy.
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The following reportable business segment revenues, net operating income and assets are presented in thousands:
Revenues:
Real estate segment:
U.S.
Other Americas
Europe
Asia
Total real estate segment
Strategic capital segment:
U.S.
Other Americas
Europe
Asia
Total strategic capital segment
Total revenues
(1)
(2)
Segment net operating income:
Real estate segment:
U.S.
Other Americas
Europe
Asia
Total real estate segment
(2)
Strategic capital segment:
U.S.
Other Americas
Europe
Asia
Total strategic capital segment
Years Ended December 31,
2022
2023
2021
$
6,558,051
110,305
95,915
58,966
6,823,237
833,402
89,783
181,651
95,396
1,200,232
$
4,726,072 $
92,751
56,731
58,553
4,934,107
3,967,180
98,620
55,533
47,357
4,168,690
215,416
82,462
644,832
96,875
1,039,585
171,761
58,655
249,600
110,734
590,750
8,023,469
5,973,692
4,759,440
4,954,565
84,922
68,200
37,403
5,145,090
629,336
62,765
78,626
43,963
814,690
3,555,627
67,552
24,738
40,116
3,688,033
59,561
63,464
557,676
55,528
736,229
2,966,498
72,424
31,163
34,854
3,104,939
59,991
47,247
203,779
72,562
383,579
Total segment net operating income
5,959,780
4,424,262
3,488,518
Non-segment items:
General and administrative expenses
Depreciation and amortization expenses
Gains on dispositions of development properties and land, net
Gains on other dispositions of investments in real estate, net
Operating income
Earnings from unconsolidated entities, net
Interest expense
Foreign currency, derivative and other gains and other
income, net
Gains (losses) on early extinguishment of debt, net
Earnings before income taxes
95
(390,406 )
(2,484,891 )
462,270
161,039
3,707,792
(331,083 )
(1,812,777 )
597,745
589,391
3,467,538
(293,167 )
(1,577,942 )
817,017
772,570
3,206,996
307,227
(641,332 )
310,872
(309,037 )
404,255
(266,228 )
87,221
3,275
3,464,183
$
241,621
(20,184 )
3,690,810 $
165,278
(187,453 )
3,322,848
$
Table of Contents
Index to Item 15
Segment assets:
Real estate segment:
U.S.
Other Americas
Europe
Asia
Total real estate segment
(3)
Strategic capital segment:
U.S.
Europe
Asia
Total strategic capital segment
Total segment assets
Non-segment items:
Investments in and advances to unconsolidated entities
Assets held for sale or contribution
Cash and cash equivalents
Other assets
Total non-segment items
Total assets
December 31,
2023
2022
$
$
76,633,566
2,029,438
2,366,539
793,916
81,823,459
10,499
25,280
203
35,982
81,859,441
71,858,560
1,831,956
1,952,160
1,031,135
76,673,811
10,817
25,280
231
36,328
76,710,139
9,543,970
9,698,898
461,657
530,388
625,384
11,161,399
93,020,840
$
531,257
278,483
678,671
11,187,309
87,897,448
$
(1)Net Operating Income ("NOI") from the Real Estate Segment is calculated directly from the Consolidated Financial Statements as Rental Revenues and Development
Management and Other Revenues less Rental Expenses and Other Expenses. NOI from the Strategic Capital Segment is calculated directly from the Consolidated
Financial Statements as Strategic Capital Revenues less Strategic Capital Expenses.
(2)This includes compensation and personnel costs for employees who were located in the U.S. but also support other geographies.
(3)Represents management contracts and goodwill recorded in connection with business combinations associated with the Strategic Capital Segment. Goodwill was
$25.3 million at December 31, 2023, and 2022.
NOTE 18. SUPPLEMENTAL CASH FLOW INFORMATION
Our significant noncash investing and financing activities for the years ended December 31, 2023, 2022 and 2021 included the following:
•We recognized lease right-of-use assets and lease liabilities related to leases in which we are the lessee within Other Assets and Other Liabilities on the Consolidated
Balance Sheets, including any new leases, renewals and modifications of $43.0 million in 2023, $162.5 million in 2022 and $71.4 million in 2021 for both assets and
liabilities.
•We capitalized $38.6 million, $34.9 million and $25.6 million in 2023, 2022 and 2021, respectively, of equity-based compensation expense.
•We received $379.1 million, $695.7 million and $902.0 million of ownership interests in certain unconsolidated co-investment ventures, primarily as a portion of our
proceeds from the contribution of properties to these entities during 2023, 2022 and 2021, respectively.
•We issued 0.8 million, 0.3 million and 0.8 million shares in 2023, 2022 and 2021, respectively, of the Parent’s common stock upon redemption of an equal number of
common limited partnership units in the OP.
•We completed the Duke Transaction on October 3, 2022 for $23.2 billion through the issuance of equity and the assumption of debt. See Note 3 for more information on
this transaction.
•We issued 1.0 million common limited partnership units for $130.4 million to our partner and assumed debt of $215.3 million in our acquisition of additional ownership
interest in and subsequent consolidation of two unconsolidated other ventures in 2021.
•We received a distribution of proceeds from Prologis U.K. Logistics Venture for the sale of real estate properties that we subsequently reinvested in PELF and PELP of
$153.0 million in 2021.
96
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Index to Item 15
NOTE 19. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following table details our selected quarterly financial data (in thousands, except per share and unit data):
Prologis, Inc.
2023:
Rental revenues
Total revenues
Rental expenses
Gains on dispositions of development properties and land, net
Gains on other dispositions of investments in real estate, net
Operating income
Consolidated net earnings
Net earnings attributable to common stockholders
Net earnings per share attributable to common
stockholders – Basic
Net earnings per share attributable to common
stockholders – Diluted
(1)(2)
(1)
2022:
Rental revenues
Total revenues
Rental expenses
Gains on dispositions of development properties and land, net
Gains on other dispositions of investments in real estate, net
Operating income
Consolidated net earnings
Net earnings attributable to common stockholders
Net earnings per share attributable to common
stockholders – Basic
Net earnings per share attributable to common
stockholders – Diluted
(1)(2)
(1)
(1)
Prologis, L.P.
2023:
Rental revenues
Total revenues
Rental expenses
Gains on dispositions of development properties and land, net
Gains on other dispositions of investments in real estate, net
Operating income
Consolidated net earnings
Net earnings attributable to common unitholders
Net earnings per unit attributable to common unitholders –
Basic
Net earnings per unit attributable to common unitholders –
Diluted
2022:
Rental revenues
Total revenues
Rental expenses
Gains on dispositions of development properties and land, net
Gains on other dispositions of investments in real estate, net
Operating income
Consolidated net earnings
Net earnings attributable to common unitholders
Net earnings per unit attributable to common unitholders –
Basic
Net earnings per unit attributable to common unitholders –
Diluted
(1)
(1)
(1)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
March 31,
June 30,
September 30,
December 31,
Three Months Ended
1,633,770
1,768,587
(412,554 )
-
4,047
579,043
498,629
463,170
$
$
$
$
$
$
$
$
1,651,454 $
$
2,450,971
(387,938 ) $
$
184,877
24,761 $
1,411,790
$
1,279,491 $
$
1,214,553
1,777,359
1,914,664
(416,076 )
89,030
129,584
882,108
799,141
746,174
$
$
$
$
$
$
$
$
0.50
$
1.31
$
0.81
$
0.50
$
1.31
$
0.80
$
1,076,861
1,219,128
(275,674 )
210,206
584,835
1,205,802
1,219,722
1,149,254
$
$
$
$
$
$
$
$
1,093,452 $
$
1,252,080
(270,465 ) $
105,802 $
- $
$
$
$
533,317
646,436
609,855
1,151,846
1,750,892
(284,707 )
74,678
1,019
914,970
1,069,174
1,013,933
$
$
$
$
$
$
$
$
1.55
$
0.82
$
1.37
$
1.54
$
0.82
$
1.36
$
1,633,770
1,768,587
(412,554 )
-
4,047
579,043
498,629
474,819
$
$
$
$
$
$
$
$
$
1,651,454
$
2,450,971
$
(387,938 )
184,877
$
24,761 $
$
$
$
1,411,790
1,279,491
1,245,153
1,777,359
1,914,664
(416,076 )
89,030
129,584
882,108
799,141
765,075
$
$
$
$
$
$
$
$
0.50
$
1.31
$
0.81
$
0.50
$
1.31
$
0.80
$
1,076,861
1,219,128
(275,674 )
210,206
584,835
1,205,802
1,219,722
1,181,525
$
$
$
$
$
$
$
$
1,093,452
1,252,080
(270,465 )
105,802
533,317
646,436
627,286
$
$
$
$
- $
$
$
$
1,151,846
1,750,892
(284,707 )
74,678
1,019
914,970
1,069,174
1,042,664
$
$
$
$
$
$
$
$
1.55
$
0.82
$
1.37
$
1.54
$
0.82
$
1.36
$
1,755,959
1,889,247
(408,225 )
188,363
2,647
834,851
675,884
629,476
0.68
0.68
1,591,012
1,751,592
(374,892 )
207,059
3,537
813,449
620,066
585,754
0.64
0.63
1,755,959
1,889,247
(408,225 )
188,363
2,647
834,851
675,884
645,600
0.68
0.68
1,591,012
1,751,592
(374,892 )
207,059
3,537
813,449
620,066
599,252
0.64
0.63
(1)Quarterly earnings per common share or unit amounts may not total to the annual amounts due to rounding and the changes in the number of weighted average
common shares or units outstanding included in the calculation of basic and diluted shares or units.
97
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Index to Item 15
(2)Income allocated to the exchangeable OP units not held by the Parent has been included in the numerator and exchangeable OP units have been included in the
denominator for the purpose of computing diluted earnings per share for all periods since the per share and unit is the same.
98
Table of Contents
Index to Item 15
Description
Operating Properties
U.S. Markets
Atlanta
Austin
Baltimore/Washington
Central PA
Central Valley
Charlotte
Chicago
Cincinnati
Columbus
Dallas/Ft. Worth
Denver
Houston
Indianapolis
Jacksonville
Las Vegas
Lehigh Valley
Louisville
Nashville
New Jersey/New York City
Orlando
Phoenix
Portland
Raleigh Durham
Reno
San Antonio
San Francisco Bay Area
Savannah
Seattle
South Florida
Southern California
Tampa
Subtotal U.S. Markets:
Other Americas Markets
Brazil
Canada
Mexico
Subtotal Other Americas Markets:
Europe Markets
Belgium
Czech Republic
France
Germany
Hungary
Italy
Netherlands
Poland
Slovakia
Spain
United Kingdom
Subtotal Europe Markets:
Asia Markets
Japan
Singapore
Subtotal Asia Markets:
Total Operating Properties
PROLOGIS, INC. AND PROLOGIS, L.P.
SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2023
(In thousands of U.S. dollars, as applicable)
Initial Cost to
Prologis
No. of
Bldgs.
Encum-
brances
Land
Building &
Improvements
Costs
Capitalized
Subsequent
to
Acquisition
Gross Amounts at Which Carried
at December 31, 2023
Land
Building &
Improvements
Total
(a,b)
Accumulated
Depreciation
(c)
Date of
Construction/
Acquisition
(d)
(d)
(e)
(d)
(d)
(d)
(e)
(d)
182
10
105
35
41
46
244
61
33
195
38
197
37
1
62
67
12
48
163
103
63
43
37
18
20
238
27
110
178
434
26
2,874
5
35
1
41
3
2
1
5
2
4
3
1
2
6
6
35
5
5
10
2,960
850,745
12,783
628,758
297,201
262,046
121,073
1,184,242
157,634
65,940
750,113
115,979
529,247
91,337
-
249,046
1,260,436
48,140
237,160
3,025,911
316,275
266,247
142,421
107,899
29,960
25,735
1,192,748
225,576
882,017
1,394,537
6,864,553
92,357
21,428,116
-
261,666
730
262,396
16,587
20,740
2,916
57,443
4,487
22,112
24,081
8,905
3,032
23,967
143,309
327,579
2,426,596
52,335
1,160,132
1,043,676
555,484
346,000
3,195,498
849,859
369,748
2,423,634
295,412
2,222,141
600,850
2,892
422,687
2,371,123
188,696
595,896
4,127,158
880,549
723,625
318,783
407,505
142,279
95,828
1,737,610
522,311
1,434,654
598,417
10,452
354,221
204,550
1,006,298
127,508
813,725
156,602
84,684
642,756
186,770
525,642
91,311
273
380,768
433,921
96,719
283,868
863,541
279,489
394,059
226,785
30,696
173,748
51,234
662,201
40,112
431,654
876,090
12,837
643,418
314,948
283,094
134,927
1,213,147
166,697
69,190
773,387
116,519
574,826
93,209
-
233,797
1,339,839
50,392
241,928
3,080,038
320,513
296,453
196,774
112,638
34,171
25,957
1,204,501
227,477
911,689
2,999,668
62,733
1,499,693
1,230,479
1,540,734
459,654
3,980,318
997,398
451,182
3,043,116
481,642
2,702,204
690,289
3,165
818,704
2,725,641
283,163
874,996
4,936,572
1,155,800
1,087,478
491,215
433,462
311,816
146,840
2,388,058
560,522
1,836,636
3,875,758
75,570
2,143,111
1,545,427
1,823,828
594,581
5,193,465
1,164,095
520,372
3,816,503
598,161
3,277,030
783,498
3,165
1,052,501
4,065,480
333,555
1,116,924
8,016,610
1,476,313
1,383,931
687,989
546,100
345,987
172,797
3,592,559
787,999
2,748,325
(471,928 )
(31,432 )
(247,868 )
(284,679 )
(316,805 )
(101,927 )
(934,824 )
(133,429 )
(121,534 )
(648,818 )
(171,941 )
(448,806 )
(100,522 )
(3,121 )
(155,619 )
(372,761 )
(91,452 )
(107,919 )
(949,899 )
(198,544 )
(158,332 )
(94,675 )
(32,146 )
(106,166 )
(75,563 )
(963,576 )
(28,093 )
(371,501 )
2,166,816
8,381,266
244,738
40,305,781
421,403
2,155,067
28,744
11,757,218
1,415,287
7,124,304
99,091
22,187,138
2,567,469
10,276,582
266,748
51,303,977
3,982,756
17,400,886
365,839
73,491,115
(422,333 )
(2,168,514 )
(22,666 )
(10,337,393 )
57,419
381,323
2,287
441,029
4,948
-
-
7,323
-
5,728
3,655
-
-
35,746
11,543
68,943
142
263,622
3,226
266,990
(52 )
4,091
19,590
54,778
14,420
64,454
-
3,022
11,998
36,715
49,382
258,398
-
273,648
735
274,383
16,587
9,305
2,340
62,598
4,487
24,629
24,081
2,013
2,229
22,880
163,306
334,455
57,561
632,963
5,508
696,032
4,896
15,526
20,166
56,946
14,420
67,665
3,655
9,914
12,801
73,548
40,928
320,465
57,561
906,611
6,243
970,415
21,483
24,831
22,506
119,544
18,907
92,294
27,736
11,927
15,030
96,428
204,234
654,920
(2,753 )
(185,312 )
(1,908 )
(189,973 )
(573 )
(548 )
(65 )
(9,274 )
(325 )
(1,777 )
(75 )
(309 )
(724 )
(20,919 )
(5,261 )
(39,850 )
13,330
-
13,330
22,031,421
142,030
139,702
281,732
41,097,485
18,462
5,523
23,985
12,306,591
13,330
-
13,330
22,809,306
160,492
145,225
305,717
52,626,191
173,822
145,225
319,047
75,435,497
(4,387 )
(82,687 )
(87,074 )
(10,654,290 )
99
1994-2023
1994-2015
1995-2023
2002-2023
1999-2023
1994-2023
1995-2023
1996-2022
1996-2022
1994-2023
1993-2022
1993-2023
1995-2022
2011
1996-2023
2004-2023
2005-2022
1995-2023
1996-2023
1994-2023
1992-2023
2006-2023
2020-2022
1994-2022
1994-2016
1993-2023
2022-2023
2008-2023
1994-2023
2005-2023
2020-2022
2022
2008-2023
2011
2022
2022
2023
2011-2022
2022
2022-2023
2023
2022
2021
2011-2023
2019-2023
2019-2022
2011
Table of Contents
Index to Item 15
Description
Development Portfolio
U.S. Markets
Atlanta
Austin
Baltimore/Washington D.C.
Central Valley
Chicago
Cincinnati
Dallas/Ft. Worth
Indianapolis
Las Vegas
Lehigh Valley
Nashville
New Jersey/New York City
Portland
Phoenix
Reno
San Francisco Bay Area
Seattle
South Florida
Southern California
Subtotal U.S. Markets:
Other Americas Markets
Canada
Mexico
Subtotal Other Americas Markets:
Europe Markets
Belgium
Czech Republic
Germany
Hungary
Italy
Netherlands
Poland
Slovakia
Spain
Sweden
U.K.
Subtotal Europe Markets:
Asia Markets
Japan
Subtotal Asia Markets:
Total Development Portfolio
GRAND TOTAL
Schedule III – Footnotes
PROLOGIS, INC. AND PROLOGIS, L.P.
SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2023
(In thousands of U.S. dollars, as applicable)
Initial Cost to
Prologis
No. of
Bldgs.
Encum-
brances
Land
Building &
Improvements
Costs
Capitalized
Subsequent
to
Acquisition
Gross Amounts at Which Carried
at December 31, 2023
Land
Building &
Improvements
Total
(a,b)
Accumulated
Depreciation
(c)
Date of
Construction/
Acquisition
(f)
2
5
1
1
5
1
10
2
3
2
4
4
1
6
2
6
3
6
9
73
6
9
15
1
3
3
1
2
1
2
1
2
3
14
33
9
9
130
3,090
8,606
43,899
12,328
5,420
46,751
2,541
81,066
11,474
16,773
48,910
36,835
76,712
1,040
45,602
15,364
109,015
61,784
66,132
434,433
1,124,685
102,325
55,798
158,123
9,522
5,524
34,062
3,338
18,656
16,514
8,571
2,758
14,458
47,555
73,309
234,267
-
-
-
-
967
-
-
17,058
-
-
-
-
-
-
-
2,527
-
-
56,638
77,190
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,099
152,216
1,622
12,339
107,133
14,020
125,283
56,862
97,244
98,383
23,340
86,553
1,368
132,298
63,903
191,569
64,340
86,568
372,670
1,709,810
110,156
63,033
173,189
34,059
32,524
3,130
13,738
5,599
20,185
31,432
5,918
31,014
43,465
283,017
504,081
8,606
43,899
12,328
5,420
46,751
2,541
81,066
11,474
16,773
48,910
36,835
76,712
1,040
45,602
15,364
109,015
61,784
66,132
434,433
1,124,685
102,325
55,798
158,123
9,522
5,524
34,062
3,338
18,656
16,514
8,571
2,758
14,458
47,555
73,309
234,267
22,099
152,216
1,622
12,339
108,100
14,020
125,283
73,920
97,244
98,383
23,340
86,553
1,368
132,298
63,903
194,096
64,340
30,705
196,115
13,950
17,759
154,851
16,561
206,349
85,394
114,017
147,293
60,175
163,265
2,408
177,900
79,267
303,111
126,124
86,568
429,308
1,787,000
152,700
863,741
2,911,685
110,156
63,033
173,189
34,059
32,524
3,130
13,738
5,599
20,185
31,432
5,918
31,014
43,465
283,017
504,081
212,481
118,831
331,312
43,581
38,048
37,192
17,076
24,255
36,699
40,003
8,676
45,472
91,020
356,326
738,348
106,137
106,137
1,623,212
-
-
77,190
279,973
279,973
2,667,053
106,137
106,137
1,623,212
279,973
279,973
2,744,243
386,110
386,110
4,367,455
23,654,633
41,174,675
14,973,644
24,432,518
55,370,434
79,802,952
(10,654,290 )
2023
2023
2023
2023
2023
2023
2023
2023
2023
2023
2023
2023
2023
2023
2023
2023
2023
2023
2023
(a)The following table reconciles real estate assets per Schedule III to the Consolidated Balance Sheets in Item 8. Financial Statements and Supplementary Data at
December 31, 2023 (in thousands):
Total operating properties and development portfolio per Schedule III
Land
Other real estate investments
(i)
Total per Consolidated Balance Sheets
$
$
79,802,952 (g)
3,775,553
5,088,070
88,666,575
(i)Included in other real estate investments were: (i) land parcels we own and lease to third parties; (ii) non-strategic real estate assets, primarily acquired from the
Duke Transaction, that we do not intend to operate long-term; (iii) non-industrial real estate assets that we intend to redevelop as industrial properties or other
higher use assets; and (iv) energy assets.
(b)The aggregate cost for federal tax purposes at December 31, 2023, of our real estate assets was approximately $65 billion (unaudited).
(c)Real estate assets (excluding land balances) are depreciated over their estimated useful lives. These useful lives are generally 5 to 7 years for capital improvements, 10
years for standard tenant improvements, 15 to 25 years for depreciable land
100
Table of Contents
Index to Item 15
improvements, 25 to 40 years for operating properties acquired based on the age of the building and 40 years for operating properties we develop.
The following table reconciles accumulated depreciation per Schedule III to the Consolidated Balance Sheets in Item 8. Financial Statements and Supplementary
Data at December 31, 2023 (in thousands):
Total accumulated depreciation per Schedule III
Accumulated depreciation on other real estate investments
(i)
Total per Consolidated Balance Sheets
(i)Accumulated depreciation in other real estate investments includes energy assets.
$
$
10,654,290 (g)
277,195
10,931,485
(d)Properties with an aggregate undepreciated cost of $634.4 million secure $243.6 million of mortgage notes. See Note 8 to the Consolidated Financial Statements in Item
8. Financial Statements and Supplementary Data for more information related to our secured mortgage debt.
(e)Assessment bonds of $8.2 million are secured by assessments (similar to property taxes) on various underlying real estate properties with an aggregate undepreciated
cost of $586.8 million. The assessment bonds are included in term loans and unsecured other debt in Note 8 to the Consolidated Financial Statements in Item 8. Financial
Statements and Supplementary Data.
(f)Date of construction is provided for properties in the development portfolio that were completed but not yet stabilized.
(g)The following table summarizes our real estate assets and accumulated depreciation per Schedule III for the years ended December 31 (in thousands):
Real estate assets:
Balance at beginning of year
Acquisitions of and improvements to operating properties, development
activity and net effect of changes in foreign exchange rates and other
Basis of operating properties disposed of
Change in the development portfolio balance, including the acquisition of
properties
Assets transferred to held for sale and contribution
Balance at end year
Accumulated depreciation:
Balance at beginning of year
Depreciation expense
Balances retired upon disposition of operating properties and net effect of
changes in foreign exchange rates and other
Assets transferred to held for sale and contribution
Balance at end of year
101
2023
2022
2021
$
73,250,949 $
47,183,100 $
45,390,230
7,138,283
(404,914 )
25,281,173
(445,558 )
3,351,730
(1,589,527 )
155,301
(336,667 )
79,802,952 $
1,482,814
(250,580 )
73,250,949 $
846,729
(816,062 )
47,183,100
8,815,724 $
1,837,145
7,451,382 $
1,357,180
6,370,341
1,143,758
7,697
(6,276 )
10,654,290 $
9,090
(1,928 )
8,815,724 $
(42,483 )
(20,234 )
7,451,382
$
$
$
Table of Contents
Index to Item 15
Certain of the following documents are filed herewith. Certain other of the following documents that have been previously filed with the Securities and Exchange Commission
and, pursuant to Rule 12b-32, are incorporated herein by reference.
2.1‡
Agreement and Plan of Merger, dated as of June 11, 2022, by and among the Prologis Parties and the DRE Parties (incorporated by reference to Exhibit 2.1
to Prologis’ Current Report on Form 8-K filed June 13, 2022).
2.2
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11
3.12
3.13
4.1†
4.2
4.3
4.4
Letter Agreement, dated as of September 16, 2022, by and among the Prologis Parties and the DRE Parties (incorporated by reference to Exhibit 2.1 to
Prologis' Current Form 8-K filed on September 16, 2022).
Articles of Incorporation of Prologis (incorporated by reference to Exhibit 3.1 to Prologis’ Registration Statement on Form S-11/A (No. 333-35915) filed
November 4, 1997).
Articles Supplementary establishing and fixing the rights and preferences of the Series Q Cumulative Redeemable Preferred Stock of Prologis (incorporated
by reference to Exhibit 3.4 to Prologis’ Registration Statement on Form 8-A filed June 2, 2011).
Articles of Merger of New Pumpkin Inc., a Maryland corporation, with and into Prologis, Inc., a Maryland corporation, changing the name of “AMB Property
Corporation” to “Prologis, Inc.”, as filed with the Stated Department of Assessments and Taxation of Maryland on June 2, 2011, and effective June 3, 2011
(incorporated by reference to Exhibit 3.1 to Prologis’ Current Report on Form 8-K filed June 8, 2011).
Articles of Amendment (incorporated by reference to Exhibit 3.1 to Prologis’ Current Report on Form 8-K filed May 8, 2012).
Thirteenth Amended and Restated Agreement of Limited Partnership of the Operating Partnership (incorporated by reference to Exhibit 3.6 to Prologis’
Current Report on Form 8-K filed June 8, 2011).
First Amendment to Thirteenth Amended and Restated Agreement of Limited Partnership of Prologis, L.P., dated February 27, 2014, (incorporated by
reference to Exhibit 3.1 to Prologis’ Current Report on Form 8-K filed on February 27, 2014).
Second Amendment to the Thirteenth Amended and Restated Agreement of the Limited Partnership of Prologis, L.P., dated October 7, 2015 (incorporated
by reference to Exhibit 3.1 to Prologis’ Current Report on Form 8-K filed on October 13, 2015).
Amended and Restated Certificate of Limited Partnership of the Operating Partnership (incorporated by reference to Exhibit 3.7 to Prologis’ Current Report
on Form 8-K filed June 8, 2011).
Articles Supplementary dated April 3, 2014, (incorporated by reference to Exhibit 3.1 to Prologis’ Current Report on Form 8-K filed on April 3, 2014).
Third Amendment to Thirteenth Amended and Restated Agreement of Limited Partnership of Prologis, L.P. (incorporated by reference to Exhibit 3.1 to
Prologis’ Current Report on Form 8-K filed on February 4, 2020).
Prologis, Inc. Articles of Amendment, dated May 4, 2020 (incorporated by reference to Exhibit 3.1 to Prologis’ Current Report Form 8-K filed on May 4,
2020).
Ninth Amended and Restated Bylaws of Prologis, Inc. (incorporated by reference to Exhibit 3.1 to Prologis’ Current Report on Form 8-K filed on September
24, 2021).
Fourth Amendment to Thirteenth Amended and Restated Agreement of Limited Partnership of Prologis, L.P., dated April 27, 2023 (incorporated by reference
to Exhibit 3.1 to Prologis' Current Report Form 10-Q filed on April 28, 2023).
Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
Form of Certificate for Common Stock of Prologis (incorporated by reference to Exhibit 4.1 to Prologis’ Registration Statement on Form S-4/A (No. 333-
172741) filed April 12, 2011).
Form of Certificate for the Series Q Cumulative Redeemable Preferred Stock of Prologis (incorporated by reference to Exhibit 4.2 to Prologis’ Registration
Statement on Form S-4/A (No. 333-172741) filed April 28, 2011).
Indenture, dated as of June 8, 2011, by and among the Operating Partnership, as issuer, Prologis, as guarantor, and U.S. Bank National Association, as
trustee (incorporated by reference to Exhibit 4.2 to Prologis’ Registration Statement on Form S-3 (No. 333-177112) filed September 30, 2011).
102
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Index to Item 15
4.5
4.6
4.7
4.8
4.9
Fifth Supplemental Indenture, dated as of August 15, 2013, among Prologis, Inc., Prologis, L.P. and U.S. Bank National Association (incorporated by
reference to Exhibit 4.1 to Prologis’ Current Report on Form 8-K filed August 15, 2013).
Form of Sixth Supplemental Indenture among Prologis, Inc., Prologis, L.P., Elavon Financial Services Limited, UK Branch, Elavon Financial Services Limited
and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to Prologis’ Current Report on Form 8-K filed December 2, 2013).
Form of Seventh Supplemental Indenture among Prologis, Inc., Prologis, L.P., Elavon Financial Services Limited, UK Branch, Elavon Financial Services
Limited and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to Prologis’ Current Report on Form 8-K filed February 18, 2014).
Form of Eighth Supplemental Indenture among Prologis, Inc., Prologis, L.P., U.S. Bank National Association and Elavon Financial Services DAC, UK Branch
(incorporated by reference to Exhibit 4.1 to Prologis’ Current Report Form 8-K filed on June 6, 2017).
Indenture dated as of August 1, 2018 among Prologis Euro Finance LLC, Prologis, L.P. and U.S. Bank National Association, as trustee (incorporated by
reference to Exhibit 4.1 to Prologis’ Registration Statement on Form 8-K/A filed on August 1, 2018).
4.10
First Supplemental Indenture dated as of August 1, 2018 among Prologis Euro Finance LLC, Prologis, L.P., U.S. Bank National Association, as trustee,
transfer agent and security registrar and Elavon Financial Services DAC, UK Branch, as paying agent (incorporated by reference to Exhibit 4.2 to Prologis’
Registration Statement on Form 8-K/A filed on August 1, 2018).
4.11
4.12
Form of lndenture dated as of September 25, 2018 among Prologis Yen Finance LLC, Prologis, L.P. and U.S. Bank National Association, as trustee
(incorporated by reference to Exhibit 4.9 to Prologis’ Current Report Form 8-K/A filed on September 24, 2018).
Form of First Supplemental Indenture dated as of September 25, 2018 among Prologis Yen Finance LLC, Prologis, L.P., U.S. Bank National Association, as
trustee, transfer agent, paying agent and security registrar (incorporated by reference to Exhibit 4.10 to Prologis’ Current Report Form 8-K/A filed on
September 24, 2018).
4.13
Second Supplemental Indenture dated as of March 26, 2019 among Prologis Yen Finance LLC, Prologis, L.P. and U.S. Bank National Association as
trustee, transfer agent, paying agent and security registrar (incorporated by reference to Exhibit 4.1 to Prologis’ Current Report Form 10-Q filed on April 23,
2019).
4.14
4.15
4.16
4.17
4.18
4.19
4.20
4.21
4.22
4.23
Form of 3.00% Notes due 2026 (incorporated by reference to Exhibit 4.2 to Prologis’ Current Report on Form 8-K filed on May 28, 2014).
Form of 2.250% Notes due 2029 (incorporated by reference to Exhibit 4.3 to Prologis’ Current Report Form 8-K filed on June 6, 2017).
Form of 3.875% Notes Due 2028 (incorporated by reference to Exhibit 4.1 to Prologis’ Current Report Form 8-K filed on June 20, 2018).
Form of 4.375% Notes Due 2048 (incorporated by reference to Exhibit 4.2 to Prologis’ Current Report Form 8-K filed on June 20, 2018).
Form of 1.875% Notes Due 2029 (incorporated by reference to Exhibit 4.4 to Prologis’ Current Report Form 8-K filed on July 31, 2018).
Form of 0.652% Notes due 2025 (incorporated by reference to Exhibit 4.1 to Prologis’ Current Report Form 8-K/A filed on September 24, 2018).
Form of 0.972% Notes due 2028 (incorporated by reference to Exhibit 4.2 to Prologis’ Current Report Form 8-K/A filed on September 24, 2018).
Form of 1.077% Notes due 2030 (incorporated by reference to Exhibit 4.3 to Prologis’ Current Report Form 8-K/A filed on September 24, 2018).
Form of 1.470% Notes due 2038 (incorporated by reference to Exhibit 4.4 to Prologis’ Current Report Form 8-K/A filed on September 24, 2018).
Form of 1.15% Notes due 2039 (incorporated by reference to Exhibit 4.2 to Prologis’ Current Report Form 10-Q filed on April 23, 2019).
103
Table of Contents
Index to Item 15
4.24
4.25
4.26
4.27
4.28
4.29
4.30
4.31
4.32
4.33
4.34
4.35
4.36
4.37
4.38
4.39
4.40
4.41
4.42
4.43
4.44
Form of 0.250% Notes due 2027 (incorporated by reference to Exhibit 4.1 to Prologis’ Registration Statement 8-A12B filed on September 10, 2019).
Form of 0.625% Notes due 2031 (incorporated by reference to Exhibit 4.4 to Prologis’ Registration Statement 8-A12B filed on September 10, 2019).
Form of 1.500% Notes due 2049 (incorporated by reference to Exhibit 4.6 to Prologis’ Registration Statement 8-A12B filed on September 10, 2019).
Form of Officer’s Certificate related to the 3.00% Notes due 2026 (incorporated by reference to Exhibit 4.1 to Prologis’ Current Report on Form 8-K filed on
May 28, 2014).
Form of Officers’ Certificate related to 2.250% Notes due 2029 (incorporated by reference to Exhibit 4.2 to Prologis’ Current Report Form 8-K filed on June 6,
2017).
Form of Officer’s Certificate related to 3.875% Notes Due 2028 (incorporated by reference to Exhibit 4.3 to Prologis’ Current Report Form 8-K/A filed on June
20, 2018).
Form of Officer’s Certificate related to 4.375% Notes Due 2048 (incorporated by reference to Exhibit 4.4 to Prologis’ Current Report Form 8-K/A filed on June
20, 2018).
Form of Officers’ Certificate related to 0.652% Notes due 2025 (incorporated by reference to Exhibit 4.5 to Prologis’ Current Report Form 8-K/A filed on
September 24, 2018).
Form of Officers’ Certificate related to 0.972% Notes due 2028 (incorporated by reference to Exhibit 4.6 to Prologis’ Current Report Form 8-K/A filed on
September 24, 2018).
Form of Officers’ Certificate related to 1.077% Notes due 2030 (incorporated by reference to Exhibit 4.7 to Prologis’ Current Report Form 8-K/A filed on
September 24, 2018).
Form of Officers’ Certificate related to 1.470% Notes due 2038 (incorporated by reference to Exhibit 4.8 to Prologis’ Current Report Form 8-K/A filed on
September 24, 2018).
Form of Officer’s Certificate related to 1.875% Notes Due 2029 (incorporated by reference to Exhibit 4.3 to Prologis’ Registration Statement on Form 8-K/A
filed on August 1, 2018).
Form of Officer’s Certificate related to the 1.15% Notes due 2039 (incorporated by reference to Exhibit 4.3 to Prologis’ Current Report Form 10-Q filed in April
23, 2019).
Form of Officer’s Certificate related to the 0.250% Notes due 2027 (incorporated by reference to Exhibit 4.1 to Prologis’ Registration Statement 8-A12B filed
on September 10, 2019).
Form of Officer’s Certificate related to the 0.625% Notes due 2031 (incorporated by reference to Exhibit 4.3 to Prologis’ Registration Statement 8-A12B filed
on September 10, 2019).
Form of Officer’s Certificate related to the 1.500% Notes due 2049 (incorporated by reference to Exhibit 4.5 to Prologis’ Registration Statement 8-A12B filed
on September 10, 2019).
Form of Officers’ Certificate related to the 0.375% Notes due 2028 (incorporated by reference to Exhibit 4.1 to Prologis L.P.’s Registration Statement on
Form 8-A12B filed on February 10, 2020).
Form of 0.375% Notes due 2028 (incorporated by reference to Exhibit 4.2 to Prologis L.P.’s Registration Statement on Form 8-A12B filed on February 10,
2020).
Form of Officers’ Certificate related to the 1.000% Notes due 2035 (incorporated by reference to Exhibit 4.3 to Prologis L.P.’s Registration Statement on
Form 8-A12B filed on February 10, 2020).
Form of 1.000% Notes due 2035 (incorporated by reference to Exhibit 4.4 to Prologis L.P.’s Registration Statement on Form 8-A12B filed on February 10,
2020).
Form of Officers’ Certificate related to the 3.250% Notes due 2026 (incorporated by reference to Exhibit 4.1 to Prologis L.P.’s Current Report on Form 8-K
filed on February 14, 2020).
104
Table of Contents
Index to Item 15
4.45
4.46
4.47
4.48
4.49
4.50
4.51
4.52
4.53
4.54
4.55
4.56
4.57
4.58
4.59
4.60
4.61
4.62
4.63
4.64
4.65
Form of 3.250% Notes due 2026 (incorporated by reference to Exhibit 4.2 to Prologis L.P.’s Current Report on Form 8-K filed on February 14, 2020).
Form of Officers’ Certificate related to the 4.375% Notes due 2029 (incorporated by reference to Exhibit 4.3 to Prologis L.P.’s Current Report Form 8-K filed
on February 14, 2020).
Form of 4.375% Notes due 2029 (incorporated by reference to Exhibit 4.4 to Prologis L.P.’s Current Report Form 8-K filed on February 14, 2020).
Form of Officers’ Certificate related to the 2.125% Notes due 2027 (incorporated by reference to Exhibit 4.5 to Prologis L.P.’s Current Report Form 8-K filed
on February 14, 2020).
Form of 2.125% Notes due 2027 (incorporated by reference to Exhibit 4.6 to Prologis L.P.’s Current Report Form 8-K filed on February 14, 2020).
Form of Officers’ Certificate related to the 2.250% Notes due 2030 (incorporated by reference to Exhibit 4.7 to Prologis L.P.’s Current Report Form 8-K filed
on February 14, 2020).
Form of 2.250% Notes due 2030 (incorporated by reference to Exhibit 4.8 to Prologis L.P.’s Current Report Form 8-K filed on February 14, 2020).
Form of Officers’ Certificate related to the 3.000% Notes due 2050 (incorporated by reference to Exhibit 4.9 to Prologis L.P.’s Current Report Form 8-K filed
on February 14, 2020).
Form of 3.000% Notes due 2050 (incorporated by reference to Exhibit 4.10 to Prologis L.P.’s Current Report Form 8-K filed on February 14, 2020).
Form of Officers’ Certificate related to the 0.589% Notes due 2027 (incorporated by reference to Exhibit 4.1 to Prologis’ Current Report Form 8-K filed on
June 23, 2020).
Form of 0.589% Notes due 2027 (incorporated by reference to Exhibit 4.2 to Prologis' Current Report Form 8-K filed on June 23, 2020).
Form of Officers’ Certificate related to the 0.850% Notes due 2030 (incorporated by reference to Exhibit 4.3 to Prologis’ Current Report Form 8-K filed on
June 23, 2020).
Form of 0.850% Notes due 2030 (incorporated by reference to Exhibit 4.4 to Prologis' Current Report Form 8-K filed on June 23, 2020).
Form of Officers’ Certificate related to the 1.003% Notes due 2032 (incorporated by reference to Exhibit 4.5 to Prologis’ Current Report Form 8-K filed on
June 23, 2020).
Form of 1.003% Notes due 2032 (incorporated by reference to Exhibit 4.6 to Prologis' Current Report Form 8-K filed on June 23, 2020).
Form of Officers’ Certificate related to the 1.222% Notes due 2035 (incorporated by reference to Exhibit 4.7 to Prologis’ Current Report Form 8-K filed on
June 23, 2020).
Form of 1.222% Notes due 2035 (incorporated by reference to Exhibit 4.8 to Prologis' Current Report Form 8-K filed on June 23, 2020).
Form of Officers’ Certificate related to the 1.600% Notes due 2050 (incorporated by reference to Exhibit 4.9 to Prologis’ Current Report Form 8-K filed on
June 23, 2020).
Form of 1.600% Notes due 2050 (incorporated by reference to Exhibit 4.10 to Prologis' Current Report Form 8-K filed on June 23, 2020).
Form of Officers’ Certificate related to the 1.250% Notes due 2030 (incorporated by reference to Exhibit 4.1 to Prologis’ Current Report Form 8-K filed on
August 19, 2020).
Form of 1.250% Notes due 2030 (incorporated by reference to Exhibit 4.2 to Prologis’ Current Report Form 8-K filed on August 19, 2020).
105
Table of Contents
Index to Item 15
4.66
4.67
4.68
4.69
4.70
4.71
4.72
4.73
4.74
4.75
4.76
4.77
4.78
4.79
4.80
4.81
4.82
4.83
4.84
4.85
4.86
Form of Officers’ Certificate related to the 2.125% Notes due 2050 (incorporated by reference to Exhibit 4.3 to Prologis’ Current Report Form 8-K filed on
August 19, 2020).
Form of 2.125% Notes due 2050 (incorporated by reference to Exhibit 4.4 to Prologis’ Current Report Form 8-K filed on August 19, 2020).
Form of Officers’ Certificate related to the 0.500% Notes due 2032 (incorporated by reference to Exhibit 4.1 to Prologis’ Current Report Form 8-K filed on
February 16, 2021).
Form of 0.500% Notes due 2032 (incorporated by reference to Exhibit 4.2 to Prologis' Current Report Form 8-K filed on February 16, 2021).
Form of Officers’ Certificate related to the 1.000% Notes due 2041 (incorporated by reference to Exhibit 4.3 to Prologis’ Current Report Form 8-K filed on
February 16, 2021).
Form of 1.000% Notes due 2041 (incorporated by reference to Exhibit 4.4 to Prologis' Current Report Form 8-K filed on February 16, 2021).
Form of Officers’ Certificate related to the 1.625% Notes due 2031 (incorporated by reference to Exhibit 4.1 to Prologis’ Current Report Form 8-K filed on
February 19, 2021).
Form of 1.625% Notes due 2031 (incorporated by reference to Exhibit 4.2 to Prologis' Current Report Form 8-K filed on February 19, 2021).
Form of Officers’ Certificate related to the 0.448% Notes due 2028 (incorporated by reference to Exhibit 4.1 to Prologis’ Current Report Form 8-K filed on
June 28, 2021).
Form of 0.448% Notes due 2028 (incorporated by reference to Exhibit 4.2 to Prologis' Current Report Form 8-K filed on June 28, 2021).
Form of Officers’ Certificate related to the 0.564% Notes due 2031 (incorporated by reference to Exhibit 4.3 to Prologis’ Current Report Form 8-K filed on
June 28, 2021).
Form of 0.564% Notes due 2031 (incorporated by reference to Exhibit 4.4 to Prologis' Current Report Form 8-K filed on June 28, 2021).
Form of Officers’ Certificate related to the 0.885% Notes due 2036 (incorporated by reference to Exhibit 4.5 to Prologis’ Current Report Form 8-K filed on
June 28, 2021).
Form of 0.885% Notes due 2036 (incorporated by reference to Exhibit 4.6 to Prologis' Current Report Form 8-K filed on June 28, 2021).
Form of Officers’ Certificate related to the 1.134% Notes due 2041 (incorporated by reference to Exhibit 4.7 to Prologis’ Current Report Form 8-K filed on
June 28, 2021).
Form of 1.134% Notes due 2041 (incorporated by reference to Exhibit 4.8 to Prologis' Current Report Form 8-K filed on June 28, 2021).
Form of Officers’ Certificate related to the 1.550% Notes due 2061 (incorporated by reference to Exhibit 4.9 to Prologis’ Current Report Form 8-K filed on
June 28, 2021).
Form of 1.550% Notes due 2061 (incorporated by reference to Exhibit 4.10 to Prologis' Current Report Form 8-K filed on June 28, 2021).
Form of Officers’ Certificate related to the Floating Rate Notes due 2024 (incorporated by reference to Exhibit 4.1 to Prologis’ Current Report Form 8-K filed
on February 8, 2022).
Form of Floating Rate Notes due 2024 (incorporated by reference to Exhibit 4.2 to Prologis’ Current Report Form 8-K filed on February 8, 2022).
Form of Officers’ Certificate related to the 1.000% Notes due 2029 (incorporated by reference to Exhibit 4.3 to Prologis’ Current Report Form 8-K filed on
February 8, 2022).
106
Table of Contents
Index to Item 15
4.87
4.88
4.89
4.90
4.91
4.92
4.93
4.94
4.95
4.96
4.97
4.98
4.99
4.100
4.101
4.102
4.103
Form of 1.000% Notes due 2029 (incorporated by reference to Exhibit 4.4 to Prologis’ Current Report Form 8-K filed on February 8, 2022).
Form of Officers’ Certificate related to the 1.500% Notes due 2034 (incorporated by reference to Exhibit 4.5 to Prologis’ Current Report Form 8-K filed on
February 8, 2022).
Form of 1.500% Notes due 2034 (incorporated by reference to Exhibit 4.6 to Prologis’ Current Report Form 8-K filed on February 8, 2022).
Form of Officers’ Certificate related to the 4.625% Notes due 2033 (incorporated by reference to Exhibit 4.1 to Prologis’ Current Report Form 8-K filed on
September 15, 2022).
Form of 4.625% Notes due 2033 (incorporated by reference to Exhibit 4.2 to Prologis' Current Report Form 8-K filed on September 15, 2022).
Form of 3.250% Senior Notes due 2026 (incorporated by reference to Exhibit 4.1 to Prologis' Current Report Form 8-K filed on October 6, 2022).
Officers’ Certificate related to the 3.250% Senior Notes due 2026 (incorporated by reference to Exhibit 4.2 to Prologis' Current Report Form 8-K filed on
October 6, 2022).
Form of 3.375% Senior Notes due 2027 (incorporated by reference to Exhibit 4.3 to Prologis' Current Report Form 8-K filed on October 6, 2022).
Officers’ Certificate related to the 3.375% Senior Notes due 2027 (incorporated by reference to Exhibit 4.4 to Prologis' Current Report Form 8-K filed on
October 6, 2022).
Form of 7.250% Senior Notes due June 2028 (incorporated by reference to Exhibit 4.5 to Prologis' Current Report Form 8-K filed on October 6, 2022).
Officers’ Certificate related to the 7.250% Senior Notes due June 2028 (incorporated by reference to Exhibit 4.6 to Prologis' Current Report Form 8-K filed on
October 6, 2022).
Form of 4.000% Senior Notes due September 2028 (incorporated by reference to Exhibit 4.7 to Prologis' Current Report Form 8-K filed on October 6, 2022).
Officers’ Certificate related to the 4.000% Senior Notes due September 2028 (incorporated by reference to Exhibit 4.8 to Prologis' Current Report Form 8-K
filed on October 6, 2022).
Form of 2.875% Senior Notes due 2029 (incorporated by reference to Exhibit 4.9 to Prologis' Current Report Form 8-K filed on October 6, 2022).
Officers' Certificate related to the 2.875% Senior Notes due 2029 (incorporated by reference to Exhibit 4.10 to Prologis' Current Report Form 8-K filed on
October 6, 2022).
Form of 1.750% Senior Notes due 2030 (incorporated by reference to Exhibit 4.11 to Prologis' Current Report Form 8-K filed on October 6, 2022).
Officers’ Certificate related to the 1.750% Senior Notes due 2030 (incorporated by reference to Exhibit 4.12 to Prologis' Current Report Form 8-K filed on
October 6, 2022).
4.104
Form of 1.750% Senior Notes due 2031 (incorporated by reference to Exhibit 4.13 to Prologis' Current Report Form 8-K filed on October 6, 2022).
4.105
Officers’ Certificate related to the 1.750% Senior Notes due 2031 (incorporated by reference to Exhibit 4.14 to Prologis' Current Report Form 8-K filed on
October 6, 2022).
4.106
4.107
Form of 2.250% Senior Notes due 2032 (incorporated by reference to Exhibit 4.15 to Prologis' Current Report Form 8-K filed on October 6, 2022).
Officers’ Certificate related to the 2.250% Senior Notes due 2032 (incorporated by reference to Exhibit 4.16 to Prologis' Current Report Form 8-K filed on
October 6, 2022).
107
Table of Contents
Index to Item 15
4.108
4.109
Form of 3.050% Senior Notes due 2050 (incorporated by reference to Exhibit 4.17 to Prologis' Current Report Form 8-K filed on October 6, 2022).
Officers’ Certificate related to the 3.050% Senior Notes due 2050 (incorporated by reference to Exhibit 4.18 to Prologis' Current Report Form 8-K filed on
October 6, 2022).
4.110
Ninth Supplemental Indenture, dated November 3, 2022, by and among Prologis, L.P., Prologis, Inc. and U.S. Bank Trust Company, National Association
(incorporated by reference to Exhibit 4.1 to Prologis' Current Report Form 8-K filed on November 3, 2022).
4.111
Form of Officers’ Certificate related to the 5.250% Notes due 2031 (incorporated by reference to Exhibit 4.2 to Prologis' Current Report Form 8-K filed on
November 3, 2022).
4.112
4.113
4.114
4.115
4.116
4.117
4.118
4.119
4.120
4.121
4.122
4.123
4.124
4.125
4.126
4.127
Form of 5.250% Notes due 2031 (incorporated by reference to Exhibit 4.2 to Prologis' Current Report Form 8-K filed on November 3, 2022).
Form of Officers’ Certificate related to the 1.003% Notes due 2027 (incorporated by reference to Exhibit 4.1 to Prologis’ Current Report filed on December 1,
2022).
Form of 1.003% Notes due 2027 (incorporated by reference to Exhibit 4.2 to Prologis' Current Report Form 8-K filed on December 1, 2022).
Form of Officers’ Certificate related to the 1.323% Notes due 2029 (incorporated by reference to Exhibit 4.3 to Prologis' Current Report Form 8-K filed on
December 1, 2022).
Form of 1.323% Notes due 2029 (incorporated by reference to Exhibit 4.4 to Prologis' Current Report Form 8-K filed on December 1, 2022).
Form of Officers’ Certificate related to the 1.903% Notes due 2037(incorporated by reference to Exhibit 4.5 to Prologis' Current Report Form 8-K filed on
December 1, 2022).
Form of 1.903% Notes due 2037 (incorporated by reference to Exhibit 4.6 to Prologis' Current Report Form 8-K filed on December 1, 2022).
Form of Officers’ Certificate related to the 3.875% Notes due 2030 (incorporated by reference to Exhibit 4.1 to Prologis' Current Report Form 8-K filed on
January 31, 2023).
Form of 3.875% Notes due 2030 (incorporated by reference to Exhibit 4.2 to Prologis' Current Report Form 8-K filed on January 31, 2023).
Form of Officers’ Certificate related to the 4.250% Notes due 2043 (incorporated by reference to Exhibit 4.3 to Prologis' Current Report Form 8-K filed on
January 31, 2023).
Form of 4.250% Notes due 2043 (incorporated by reference to Exhibit 4.4 to Prologis' Current Report Form 8-K filed on January 31, 2023).
Form of Officers’ Certificate related to the 4.750% Notes due 2033 (incorporated by reference to Exhibit 4.1 to Prologis' Current Report Form 8-K filed on
March 30, 2023).
Form of 4.750% Notes due 2033 (incorporated by reference to Exhibit 4.2 to Prologis' Current Report Form 8-K filed on March 30, 2023).
Form of Officers’ Certificate related to the 5.250% Notes due 2053 (incorporated by reference to Exhibit 4.3 to Prologis' Current Report Form 8-K filed on
March 30, 2023).
Form of 5.250% Notes due 2053 (incorporated by reference to Exhibit 4.4 to Prologis' Current Report Form 8-K filed on March 30, 2023).
Form of Officers’ Certificate related to the 4.625% Notes due 2033 (incorporated by reference to Exhibit 4.1 to Prologis' Current Report Form 8-K filed on
May 23, 2023).
108
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Index to Item 15
4.128
4.129
4.130
4.131
4.132
4.133
Form of 4.625% Notes due 2033 (incorporated by reference to Exhibit 4.2 to Prologis' Current Report Form 8-K filed on May 23, 2023).
Form of Officers’ Certificate related to the 4.875% Notes due 2028 (incorporated by reference to Exhibit 4.1 to Prologis' Current Report Form 8-K filed on
June 28, 2023).
Form of 4.875% Notes due 2028 (incorporated by reference to Exhibit 4.2 to Prologis' Current Report Form 8-K filed on June 28, 2023).
Form of Officers’ Certificate related to the 5.125% Notes due 2034 (incorporated by reference to Exhibit 4.3 to Prologis' Current Report Form 8-K filed on
June 28, 2023).
Form of 5.125% Notes due 2034 (incorporated by reference to Exhibit 4.4 to Prologis' Current Report Form 8-K filed on June 28, 2023).
Form of Officers’ Certificate related to the 5.250% Notes due 2053 (incorporated by reference to Exhibit 4.5 to Prologis' Current Report Form 8-K filed on
June 28, 2023).
4.134
Form of 5.250% Notes due 2053 (incorporated by reference to Exhibit 4.6 to Prologis' Current Report Form 8-K filed on June 28, 2023).
Other debt instruments are omitted in accordance with Item 601(b)(4)(iii)(A) of Registration S-K. Copies of such instruments will be furnished to the Securities and Exchange
Commission upon request.
10.1
10.2
10.3*
10.4*
10.5*
10.6*
10.7*
10.8*
10.9*
10.10*
10.11*
10.12*
Amended and Restated Agreement of Limited Partnership of ProLogis Fraser, L.P., dated as of August 4, 2004 (incorporated by reference to Exhibit 10.1 to
the Trust’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004).
Fifteenth Amended and Restated Agreement of Limited Partnership of Prologis 2, L.P., (f/k/a AMB Property II, L.P.) dated February 19, 2010 (incorporated
by reference to Exhibit 10.6 to Prologis’ Annual Report on Form 10-K for the year ended December 31, 2009).
Amended and Restated 2002 Nonqualified Deferred Compensation Plan (incorporated by reference to Exhibit 10.2 to Prologis’ Current Report on Form 8-K
filed October 4, 2006 and also incorporated by reference to Exhibit 10.2 to the Operating Partnership’s Current Report on Form 8-K filed October 4, 2006).
The Amended and Restated 2002 Stock Option and Incentive Plan of AMB Property Corporation and AMB Property, L.P. (incorporated by reference to
Exhibit 10.1 to Prologis’ Current Report on Form 8-K filed May 15, 2007 and also incorporated by reference to Exhibit 10.1 to the Operating Partnership’s
Current Report on Form 8-K filed May 15, 2007).
Prologis Outperformance Plan (incorporated by reference to Exhibit 10.1 to Prologis’ Current Report on Form 8-K filed December 22, 2011).
Prologis, Inc. 2016 Outperformance Plan (incorporated by reference to Exhibit 10.1 to Prologis’ Current Report on Form 8-K filed on August 16, 2016).
Form of Prologis, Inc. 2016 Outperformance Plan LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.2 to Prologis’ Current Report on Form
8-K filed on August 16, 2016).
Form of Participation Points and LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.1 to Prologis’ Current Report on Form 8-K filed on
February 27, 2014).
Second Amended and Restated Prologis Promote Plan (incorporated by reference to Exhibit 10.1 to Prologis’ Current Report on Form 8-K filed on August 1,
2014).
Form of Prologis, Inc. Second Amended and Restated Prologis Promote Plan LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.1 to
Prologis’ Current Report on Form 8-K filed on August 18, 2014).
Form of Prologis, Inc. Long-Term Incentive Plan LTIP Unit Award Agreement (General) (incorporated by reference to Exhibit 10.3 to Prologis’ Quarterly
Report on Form 10-Q for the quarter ended September 30, 2014).
Form of Prologis, Inc. 2012 Long-Term Incentive Plan Restricted Stock Unit Agreement (LTIP Unit election) (incorporated by reference to Exhibit 10.27 to
Prologis’ Annual Report on Form 10-K for the year ended December 31, 2015).
109
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Index to Item 15
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
10.23*
10.24*
10.25*
10.26*
10.27*
10.28*
10.29*
10.30*
10.31*
10.32*
10.33*
10.34*
Form of Prologis, Inc. 2012 Long-Term Incentive Plan Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.5 to Prologis’ Quarterly
Report on Form 10-Q for the quarter ended September 30, 2014).
Form of Prologis, Inc. 2012 Long-Term Incentive Plan Restricted Stock Unit Agreement (Bonus exchange) (incorporated by reference to Exhibit 10.6 to
Prologis’ Quarterly Report on Form 10-Q for the quarter ended September 30, 2014).
ProLogis 2006 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the Trust’s Current Report on Form 8-K filed June 2, 2006).
First Amendment of the ProLogis 2006 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Trust’s Quarterly Report on Form 10-Q for
the quarter ended March 31, 2010).
Second Amendment of the ProLogis 2006 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Trust’s Current Report on Form 8-K
filed May 19, 2010).
Third Amendment of the ProLogis 2006 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Trust’s Quarterly Report on Form 10-Q for
the quarter ended September 30, 2010).
Form of Non-Qualified Share Option Award Terms; The Trust 2006 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.25 to the Trust’s
Annual Report on Form 10-K for the year ended December 31, 2009).
Form of Restricted Share Award Terms; ProLogis 2006 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.27 to the Trust’s Annual Report on
Form 10-K for the year ended December 31, 2009).
Form of Performance Share Award Terms; ProLogis 2006 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.26 to the Trust’s Annual Report
on Form 10-K for the year ended December 31, 2009).
ProLogis 2000 Share Option Plan for Outside Trustees (as Amended and Restated Effective as of December 31, 2008) (incorporated by reference to exhibit
10.13 to ProLogis’ Form 10-K for the year ended December 31, 2008).
ProLogis Deferred Fee Plan for Trustees (As Amended and Restated Effective as of May 14, 2010) (incorporated by reference to exhibit 10.3 to ProLogis’
Form 8-K filed on May 19, 2010).
Form of Indemnification Agreement between ProLogis and certain directors and executive officers (incorporated by reference to Exhibit 10.1 to Prologis’
Current Report on Form 8-K filed June 8, 2011).
Form of Restricted Stock Unit Agreement; Prologis, Inc. 2012 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to Prologis’ Quarterly
Report on Form 10-Q for the quarter ended September 30, 2012).
Prologis, Inc. 2012 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to Prologis’ Current Report on Form 8-K filed May 8, 2012).
Form of Director Deferred Stock Unit Award terms (incorporated by reference to Exhibit 10.2 to Prologis’ Current Report on Form 8-K filed May 8, 2012).
Form of Change of Control and Noncompetition Agreement by and between Prologis, Inc. and its executive officers (incorporated by reference to Exhibit 10.2
to Prologis’ Current Report on Form 8-K filed August 16, 2013).
Form of Prologis, Inc. Long-Term Incentive Plan LTIP Unit Award Agreement (General form 2015) (incorporated by reference to Exhibit 10.57 to Prologis’
Annual Report on Form 10-K for the year ended December 31, 2014).
Form of Prologis, Inc. Long-Term Incentive Plan LTIP Unit Award Agreement (Bonus exchange) (incorporated by reference to Exhibit 10.2 to Prologis’
Quarterly Report on Form 10-Q for the quarter ended March 31, 2015).
Form of Prologis, Inc. Long-Term Incentive Plan LTIP Unit Award Agreement (General form 2016) (incorporated by reference to Exhibit 10.48 to Prologis’
Annual Report on Form 10-K for the year ended December 31, 2015).
Form of Prologis, Inc. Outperformance Plan LTIP Unit Exchange Award Agreement (incorporated by reference to Exhibit 10.58 to Prologis’ Annual Report on
Form 10-K for the year ended December 31, 2014).
Form of Prologis, Inc. Long-Term Incentive Plan Equity Exchange Offer LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.59 to Prologis’
Annual Report on Form 10-K for the year ended December 31, 2014).
Amended and Restated Prologis, Inc. 2011 Notional Account Deferred Compensation Plan (incorporated by reference to Exhibit 10.60 to Prologis’ Annual
Report on Form 10-K for the year ended December 31, 2014).
110
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Index to Item 15
10.35*
10.36*
10.37*
10.38*
10.39*
10.40*
10.41
10.42*
10.43*
10.44*
10.45*
10.46*
10.47*
10.48*
10.49
10.50
10.51*
10.52*
10.53*
10.54*
Amended and Restated Prologis, Inc. Nonqualified Deferred Compensation Plan (incorporated by reference to Exhibit 10.61 to Prologis’ Annual Report on
Form 10-K for the year ended December 31, 2014).
Second Amended and Restated Prologis 2005 Nonqualified Deferred Compensation Plan (incorporated by reference to Exhibit 10.62 to Prologis’ Annual
Report on Form 10-K for the year ended December 31, 2014).
Prologis, Inc. 2018 Outperformance Plan (incorporated by reference to Exhibit 10.1 to Prologis’ Current Report Form 8-K filed on January 18, 2018).
Prologis, Inc. Amended and Restated 2018 Outperformance Plan (incorporated by reference to Exhibit 10.1 to Prologis’ Current Report Form 8-K filed on
March 27, 2018).
Form of Prologis, Inc. 2018 Amendment to Outperformance Plan LTIP Unit Award Agreements (incorporated by reference to Exhibit 10.2 to Prologis’ Current
Report Form 8-K filed on March 27, 2018).
Amended and Restated Director Deferred Stock Unit Award Terms (incorporated by reference to Exhibit 10.1 to Prologis’ Current Report on Form 8-K filed on
May 7, 2018).
Form of Time-Sharing Agreement for Hamid Moghadam (incorporated by reference to Exhibit 10.1 to Prologis’ Current Report on Form 10-Q filed on October
22, 2018).
Prologis, Inc. Second Amended and Restated 2018 Outperformance Plan (incorporated by reference to Exhibit 10.1 to Prologis’ Current Report Form 8-K
filed on August 28, 2018).
Form of Outperformance Plan LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.2 to Prologis’ Current Report Form 8-K filed on August
28, 2018).
Form of LTIP Unit Award Agreement (Bonus Exchange) (incorporated by reference to Exhibit 10.3 to Prologis’ Current Report Form 8-K filed on August 28,
2018).
Form of LTIP Unit Award Agreement (Omnibus) (incorporated by reference to Exhibit 10.4 to Prologis’ Current Report Form 8-K filed on August 28, 2018).
Form of RSU Agreement (Global) (incorporated by reference to Exhibit 10.5 to Prologis’ Current Report Form 8-K filed on August 28, 2018).
Form of RSU Agreement (LTIP Unit Election) (incorporated by reference to Exhibit 10.6 to Prologis’ Current Report Form 8-K filed on August 28, 2018).
Letter Agreement dated February 3, 2017 by and between Prologis, Inc. and Hamid R. Moghadam (incorporated by reference to Exhibit 10.1 to Prologis’
Current Report Form 8-K filed on February 3, 2017).
Term Loan Agreement dated as of March 4, 2019 among Prologis GK Holdings Y.K., as borrower, Prologis, L.P., as guarantor, the lenders party thereto, and
Sumitomo Mitsui Banking Corporation, as Administrative Agent (incorporated by reference to Exhibit 10.1 to Prologis’ Current Report Form 8-K filed on
March 6, 2019).
Guaranty of Payment dated as of March 4, 2019 between Prologis, L.P., as guarantor, and Sumitomo Mitsui Banking Corporation, as Administrative Agent,
for the lenders that are from time to time parties to the Term Loan Agreement dated as of March 4, 2019 (incorporated by reference to Exhibit 10.2 to
Prologis’ Current Report Form 8-K filed on March 6, 2019).
Amended and Restated Change in Control and Noncompetition Agreement, dated April 30, 2019, between Prologis, Inc. and Hamid R. Moghadam
(incorporated by reference to Exhibit 10.1 to Prologis’ Current Report From 8-K filed on May 3, 2019).
Prologis, Inc. 2020 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to Prologis’ Current Report Form 8-K filed on May 4, 2020).
Form of First Amendment to Amended and Restated Prologis, Inc. 2011 Notional Account Deferred Compensation Plan (incorporated by reference to Exhibit
10.1 to Prologis’ Current Report Form 8-K filed on September 25, 2020).
Form of LTIP Unit Award Agreement (Omnibus 2020) (incorporated by reference to Exhibit 10.2 to Prologis’ Current Report Form 8-K filed on September 25,
2020).
111
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Index to Item 15
10.55*
10.56*
10.57*
10.58*
10.59*
10.60*
10.61*
10.62
Form of LTIP Unit Award Agreement (Bonus Exchange 2020) (incorporated by reference to Exhibit 10.3 to Prologis’ Current Report Form 8-K filed on
September 25, 2020).
Form of Outperformance Plan LTIP Unit Award Agreement for Named Executive Officers (2020) (incorporated by reference to Exhibit 10.4 to Prologis’
Current Report Form 8-K filed on September 25, 2020).
Form of Outperformance Plan LTIP Unit Award Agreement (General 2020) (incorporated by reference to Exhibit 10.5 to Prologis’ Current Report Form 8-K
filed on September 25, 2020).
Form of Deferred Compensation LTIP Unit Award Agreement (2020) (incorporated by reference to Exhibit 10.6 to Prologis’ Current Report Form 8-K filed on
September 25, 2020).
Form of RSU Agreement (Global 2020) (incorporated by reference to Exhibit 10.7 to Prologis’ Current Report Form 8-K filed on September 25, 2020).
Form of RSU Agreement (Bonus Exchange 2020) (incorporated by reference to Exhibit 10.8 to Prologis’ Current Report Form 8-K filed on September 25,
2020).
Form of RSU Agreement (LTIP Unit Election 2020) (incorporated by reference to Exhibit 10.9 to Prologis’ Current Report Form 8-K filed on September 25,
2020).
First Amendment to Term Loan Agreement, dated as of October 1, 2021 among Prologis GK Holdings Y.K, as borrower, Prologis, L.P., as guarantor, the
lenders party thereto, and Sumitomo Mitsui Banking Corporation, as Administrative Agent (incorporated by reference to Exhibit 10.2 to Prologis’ Current
Report Form 10-Q filed on October 26, 2021).
10.63*
Third Amended and Restated Prologis Promote Plan (incorporated by reference to Exhibit 10.1 to Prologis’ Current Report on Form 8-K filed on December 2,
2021).
10.64
Global Senior Credit Agreement dated as of June 30, 2022 among Prologis, L.P., various affiliates of Prologis, L.P., various lenders and agents, and Bank of
America, N.A., as Global Administrative Agent (incorporated by reference to Exhibit 10.1 to Prologis’ Current Report on Form 8-K filed July 6, 2022).
10.65*
10.66*
10.67*
10.68*
10.69
10.70*
10.71*
10.72
Form of LTIP Unit Award Agreement (Omnibus 2022) (incorporated by reference to Exhibit 10.1 to Prologis’ Current Report Form 8-K filed on September 27,
2022).
Form of Third Amended and Restated Prologis 2005 Nonqualified Deferred Compensation Plan (incorporated by reference to Exhibit 10.1 to Prologis’
Current Report Form 8-K filed on December 12, 2022).
Form of Second Amended and Restated Prologis, Inc. 2011 Notional Account Deferred Compensation Plan (incorporated by reference to Exhibit 10.2 to
Prologis’ Current Report Form 8-K filed on December 12, 2022).
Form of Second Amended and Restated Prologis, Inc. Nonqualified Deferred Compensation Plan (incorporated by reference to Exhibit 10.3 to Prologis’
Current Report Form 8-K filed on December 12, 2022).
Prologis Bonus Exchange 2022 LTIP Unit Award Agreement - Advance Grant No Pre-Retirement Election (incorporated by reference to Exhibit 10.83 to
Prologis' Annual Report on Form 10-K filed for the year ended December 31, 2022).
Prologis Bonus Exchange 2022 LTIP Unit Award Agreement - Advance Grant Pre-Retirement Election (incorporated by reference to Exhibit 10.84 to
Prologis’ Annual Report on Form 10-K for the year ended December 31, 2022).
Form of Change of Control and Noncompetition Agreement by and between Prologis, Inc. and its executive officers (incorporated by reference to Exhibit 10.2
to Prologis’ Current Report Form 8-K filed on January 5, 2023).
Amended and Restated Global Senior Credit Agreement dated as of April 5, 2023 among Prologis, L.P., various affiliates of Prologis, L.P., various lenders
and agents, and Bank of America, N.A., as Global Administrative Agent (incorporated by reference to Exhibit 10.1 Prologis' Current Report Form 8-K filed on
April 7, 2023).
10.73*
Form of Amended Agreement Relating to Retirement Eligibility and Vesting of Equity-Based Awards (incorporated by reference to Exhibit 10.2 to Prologis’
Quarterly Report Form 10-Q filed on July 26, 2023).
10.74*
10.75
Fourth Amended and Restated Prologis Promote Plan, dated June 30, 2023 (incorporated by reference to Exhibit 10.3 to Prologis' Quarterly Report Form
10-Q filed on July 26, 2023).
Seventh Amended and Restated Revolving Credit Agreement, dated as of August 25, 2023, among Prologis Marunouchi Finance Investment Limited
Partnership, as initial borrower, Prologis, L.P., as guarantor, the lenders listed on the
112
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Index to Item 15
signature pages thereof, and Sumitomo Mitsui Banking Corporation, as Administrative Agent (incorporated by reference to Exhibit 10.1 to Prologis' Current
Report Form 8-K filed on August 31, 2023).
Guaranty of Payment, dated as of August 25, 2023, between Prologis, L.P., as guarantor, and Sumitomo Mitsui Banking Corporation, as Administrative
Agent, for the banks that are from time to time parties to the Seventh Amended and Restated Revolving Credit Agreement (incorporated by reference to
Exhibit 10.2 to Prologis' Current Report Form 8-K filed on August 31, 2023).
Policy Governing Material, Non-Public Information and the Prevention of Insider Trading.
Subsidiaries of Prologis, Inc. and Prologis, L.P.
Subsidiary guarantors and issuers of guaranteed securities.
Consent of KPMG LLP with respect to Prologis, Inc.
Consent of KPMG LLP with respect to Prologis, L.P.
Power of Attorney for Prologis, Inc. (included in signature page of this annual report).
Power of Attorney for Prologis, L.P. (included in signature page of this annual report).
Certification of Chief Executive Officer of Prologis, Inc.
Certification of Chief Financial Officer of Prologis, Inc.
Certification of Chief Executive Officer for Prologis, L.P.
Certification of Chief Financial Officer for Prologis, L.P.
Certification of Chief Executive Officer and Chief Financial Officer of Prologis, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Executive Officer and Chief Financial Officer for Prologis, L.P., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Policy Relating to Recovery of Erroneously Awarded Compensation.
10.76
19.1†
21.1†
22.1†
23.1†
23.2†
24.1†
24.2†
31.1†
31.2†
31.3†
31.4†
32.1†
32.2†
97.1†
101. INS†
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL
document
101. SCH†
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Management Contract or Compensatory Plan or Arrangement
† Filed herewith
‡ Prologis has omitted certain schedules and exhibits pursuant to Item 601(b)(2) of Regulation S-K and shall furnish supplementally to the SEC copies of any of the omitted
schedules and exhibits upon request by the SEC.
113
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Index to Item 15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PROLOGIS, INC.
By:
/s/ Hamid R. Moghadam
Hamid R. Moghadam
Chief Executive Officer
Date: February 13, 2024
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that we, the undersigned officers and directors of Prologis, Inc., hereby severally constitute Hamid R. Moghadam, Timothy
D. Arndt and Edward S. Nekritz, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the
capacities indicated below, the Form 10-K filed herewith and any and all amendments to said Form 10-K, and generally to do all such things in our names and in our
capacities as officers and directors to enable Prologis, Inc. to comply with the provisions of the Securities Exchange Act of 1934, and all requirements of the U.S. Securities
and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Form 10-K and any and all
amendments thereto.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Signature
Title
Date
/s/ Hamid R. Moghadam
Hamid R. Moghadam
/s/ Timothy D. Arndt
Timothy D. Arndt
/s/ Lori A. Palazzolo
Lori A. Palazzolo
/s/ Cristina G. Bita
Cristina G. Bita
/s/ James B. Connor
James B. Connor
/s/ George L. Fotiades
George L. Fotiades
/s/ Lydia H. Kennard
Lydia H. Kennard
/s/ Irving F. Lyons III
Irving F. Lyons III
/s/ Avid Modjtabai
Avid Modjtabai
/s/ David P. O’Connor
David P. O’Connor
/s/ Olivier Piani
Olivier Piani
/s/ Jeffrey L. Skelton
Jeffrey L. Skelton
/s/ Carl B. Webb
Carl B. Webb
Chairman of the Board and Chief Executive Officer
February 13, 2024
Chief Financial Officer
February 13, 2024
Managing Director and Chief Accounting Officer
February 13, 2024
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
114
February 13, 2024
February 13, 2024
February 13, 2024
February 13, 2024
February 13, 2024
February 13, 2024
February 13, 2024
February 13, 2024
February 13, 2024
February 13, 2024
Table of Contents
Index to Item 15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PROLOGIS, L.P.
By:
Prologis, Inc., its general partner
By:
/s/ Hamid R. Moghadam
Hamid R. Moghadam
Chief Executive Officer
Date: February 13, 2024
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that we, the undersigned officers and directors of Prologis, L.P., hereby severally constitute Hamid R. Moghadam, Timothy
D. Arndt and Edward S. Nekritz, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the
capacities indicated below, the Form 10-K filed herewith and any and all amendments to said Form 10-K, and generally to do all such things in our names and in our
capacities as officers and directors to enable Prologis, L.P. to comply with the provisions of the Securities Exchange Act of 1934, and all requirements of the U.S. Securities
and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Form 10-K and any and all
amendments thereto.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Signature
Title
Date
/s/ Hamid R. Moghadam
Hamid R. Moghadam
/s/ Timothy D. Arndt
Timothy D. Arndt
/s/ Lori A. Palazzolo
Lori A. Palazzolo
/s/ Cristina G. Bita
Cristina G. Bita
/s/ James B. Connor
James B. Connor
/s/ George L. Fotiades
George L. Fotiades
/s/ Lydia H. Kennard
Lydia H. Kennard
/s/ Irving F. Lyons III
Irving F. Lyons III
/s/ Avid Modjtabai
Avid Modjtabai
/s/ David P. O’Connor
David P. O’Connor
/s/ Olivier Piani
Olivier Piani
/s/ Jeffrey L. Skelton
Jeffrey L. Skelton
/s/ Carl B. Webb
Carl B. Webb
Chairman of the Board and Chief Executive Officer
February 13, 2024
Chief Financial Officer
February 13, 2024
Managing Director and Chief Accounting Officer
February 13, 2024
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
115
February 13, 2024
February 13, 2024
February 13, 2024
February 13, 2024
February 13, 2024
February 13, 2024
February 13, 2024
February 13, 2024
February 13, 2024
February 13, 2024
EXHIBIT 4.1
Prologis, Inc.
Prologis, L.P.
Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
At December 31, 2023, Prologis, Inc. (the “Parent”) and Prologis, L.P., meaning Prologis, L.P. and its consolidated subsidiaries (the “Operating Partnership” or “OP”), had
three outstanding classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (“Exchange Act”): common stock, 3.000% Notes due
2026 and 2.250% Notes due 2029.
Additionally, the OP holds a 100% indirect ownership in three finance subsidiaries, Prologis Euro Finance LLC, Prologis Yen Finance LLC and Prologis Sterling Finance
LLC, which had fourteen outstanding classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended: Floating Rate Notes due 2024,
0.250% Notes due 2027, 0.375% Notes due 2028, 1.000% Notes due 2029, 1.875% Notes due 2029, 3.875% Notes due 2030, 0.625% Notes due 2031, 0.500% Notes due
2032, 4.625% Notes due 2033, 1.500% Notes due 2034, 1.000% Notes due 2035, 1.000% Notes due 2041, 4.250% Notes due 2043 and 1.500% Notes due 2049.
The terms “the Company,” “Prologis,” “we,” “our” or “us” means the Parent and OP collectively.
Description of Capital Stock
The following description of our common stock and Series Q preferred stock (“preferred stock”) is a summary and does not purport to be complete. It is subject to and
qualified in its entirety by reference to our Articles of Incorporation of Prologis and related Articles of Amendment (both “Articles of Incorporation”), our Articles
Supplementary, establishing and fixing the rights and preferences of the Series Q Cumulative Redeemable Preferred Stock of Prologis and related Articles Supplementary
and Articles of Amendment (both “Articles Supplementary”) and Ninth Amended and Restated Bylaws of Prologis, Inc. (“Bylaws”), each of which are incorporated by
reference herein and as an exhibit to our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”). We encourage you to read
our Articles of Incorporation, Articles Supplementary, Bylaws and the applicable provisions of the Maryland General Corporation Law (“MGCL”) and Delaware General
Corporation Law (“DGCL”) for additional information.
Authorized Capital Stock
General. Our authorized capital stock consists of 2,000,000,000 shares of common stock at a par value of $0.01 per share and 100,000,000 shares of preferred stock at a par
value of $0.01 per share.
Common Stock
Shares Outstanding. The outstanding shares of our common stock are duly authorized, validly issued, fully paid and nonassessable. Our common stock is listed under the
New York Stock Exchange under the symbol “PLD.” The transfer agent and securities registrar for our common stock is Computershare Trust Company, N.A.
Unissued Common Stock. The Articles of Incorporation authorize the board of directors (the “Board”) to reclassify any unissued shares of common stock into other classes or
series of classes of stock and to establish the number of shares in each class or series and to set the preferences, conversion and other rights, voting powers, restrictions,
limitations and restrictions on ownership, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each such class or series.
The issuance of any shares of common stock in future financings, acquisitions or otherwise may result in dilution of voting power and relative equity interest of the holders of
shares of our common stock and will subject our common stock to prior dividend and liquidation rights of the outstanding shares of the series of preferred stock.
Restrictions on Ownership. Prologis generally will prohibit ownership by a single stockholder to no more than 9.8% (by value or number of shares, whichever is more
restrictive) of the issued and outstanding shares of common stock.
Dividend Rights. The Board may declare and pay dividends on our common stock out of funds legally available for that purpose, subject to the rights of holders of preferred
stock, as described below.
Voting Rights. Each outstanding share of common stock will entitle the holder to one vote for all matters submitted to stockholders for a vote at every meeting of the
stockholders, including the election of directors. The holders of such shares will possess the exclusive voting power, subject to any resolution adopted by the Board with
respect to any other class or series of stock establishing the designation, powers, preferences and relative, participating, optional or other special rights and powers of such
series.
Holders may vote in person, authorize another person or persons to act by proxy. A majority of the stock issued and outstanding and entitled to vote at any meeting of
stockholders, shall constitute a quorum. A quorum, once established, shall be sufficient to approve any matter which may properly come before the meeting. Additionally,
under MGCL, we generally cannot dissolve, amend our Articles of Incorporation or Bylaws, merge, sell all or substantially all of our assets, engage in a share exchange or
similar transaction in the ordinary course of business unless approved by the affirmative vote of the stockholders holding at least two-thirds of the shares entitled to vote on
the matter and our Articles of Incorporation do not provide for a lesser percentage in any situation.
Voting for the Election of Directors. Each director is to be elected by the vote of the majority of votes cast with respect to that director’s election; provided, if the number of
persons properly nominated to serve as directors exceeds the number of directors to be elected, then each director will be elected by the vote of a plurality of the shares
present in person or by proxy at the meeting and entitled to vote on the election of directors.
Rights and Preferences. Holders of shares of common stock will not have any conversion, exchange, sinking or retirement fund, redemption or appraisal rights or any
preemptive rights to subscribe for any securities of the Company or cumulative voting rights in the election of directors.
Rights Upon Liquidation. Upon liquidation, the holders of our common stock are entitled to share ratably in assets available for distribution to stockholders after satisfaction of
any liquidation preferences of any outstanding preferred stock.
Preferred Stock
Shares Outstanding. The outstanding shares of our preferred stock are duly authorized, validly issued, fully paid and nonassessable. Under our Articles of Incorporation,
without further stockholder action, the Board is authorized, subject to any limitations prescribed by MGCL and DGCL, to provide for the issuance of the shares of preferred
stock in one or more series, to establish from time to time the number of shares to be included in such series, to fix the designation, powers, preferences and rights of the
shares of each such series and any qualifications, limitations and restrictions thereof.
Restriction on Ownership. No person or persons acting as a group at any time may directly or indirectly acquire ownership of more than 25% of the outstanding preferred
stock or Prologis may redeem such shares from the holder or holders within 10 days of becoming aware of such activity.
Redemption Provisions. Prior to November 13, 2026, preferred stock will not be redeemable by Prologis, however, after this date at the option of Prologis, we may redeem
the shares in whole at a redemption price of $50 per share. If full cumulative dividends on the preferred stock have not been declared and paid or declared and set apart for
payment, they may not be redeemed at the option of Prologis except to enforce the ownership restrictions described above as well as to preserve its tax status.
Dividend Rights. The annual dividend rate is 8.54% per share and dividends are payable in arrears. Pursuant to the terms of our preferred stock, we are restricted from
declaring or paying any dividend with respect to our common stock unless and until all cumulative dividends with respect to the preferred stock have been paid and sufficient
funds have been set aside for dividends that have been declared for the relevant dividend period with respect to the preferred stock.
Voting Rights. The voting rights of preferred stock are limited. If and whenever six quarterly dividends payable on the preferred stock is in arrears, whether or not earned or
declared, the number of directors then constituting the Board will be increased by two and the holders of preferred stock, together with the holders of shares of every other
class, voting as a single class, regardless of class or series will be entitled to elect two additional directors to serve at annual meeting of stockholders or special meeting held
in place thereof. The affirmative vote of at least 66 2/3% of the votes entitled to be case by the holders of the preferred stock is required to approve: (i) any changes to the
Articles of Incorporation or Articles Supplementary that materially and adversely affects the voting powers, rights or preferences of the preferred stock; (ii) any share
exchange, consolidation, or merger that materially and adversely affects the holders of the preferred stock and; (iii) the authorization, reclassification or creation of, or the
increase in the authorized amount of, any security ranking senior to the preferred stock in the distribution of assets on any liquidation, dissolution or winding up of the
Company or in the payment of dividends.
Rights and Preferences. The preferred stock is not entitled to the benefits of any retirement of sinking fund and the holders have no conversion, redemption or preemption
rights.
Rights Upon Liquidation. Preferred stockholders receive a liquidation preference of $50 per share.
Anti-takeover Effects of Certain Provisions of the Articles of Incorporation and Bylaws
General. Our Articles of Incorporation and Bylaws contain certain provisions, including our ability to limit the actual or constructive ownership of shares of capital stock that
may be deemed to have an anti-takeover effect and may delay, deter or prevent a tender offer or take-over attempt that a stockholder might consider in its best interest,
including those attempts that might result in premium over the market price for the shares held by the stockholders.
Business Combinations and Control Share Acquisitions Statues. In the Prologis’ Bylaws we have elected not to be governed by the "business combination" provision of the
MGCL or the "control share acquisition" provisions of the MGCL, which could have the effect of delaying or preventing a change of control of the Company. The Bylaws
provide that the Company cannot at a future date determine to be governed by either such provision without the approval of a majority of the outstanding shares entitled to
vote. In addition, such
irrevocable resolution adopted by the Board may only be changed by the approval of a majority of the outstanding shares entitled to vote.
Description of Debt Securities of Prologis, Inc. and Prologis, L.P.
The following description of our debt securities is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to the Indenture,
dated as of June 8, 2011 by and among the Operating Partnership, as issuer, Prologis, as guarantor, and U.S. Bank National Association, as trustee (“Base Indenture” and
as supplemented by the First, Second, Third, Fourth, Fifth, Six, Seventh and Eighth Supplemental Indentures thereto, which are referred to herein as the “Indenture”) and
Officers’ Certificates and Forms of Notes incorporated by reference herein and as exhibits to our most recent Annual Report on Form 10-K filed with the SEC.
General
The following listing summarizes our two classes of notes (“Notes”) registered under Section 12 of the Exchange Act and are denominated in euro and British pound sterling
and their related documents comprising their respective terms as filed with the SEC:
3.000% Notes due 2026
On June 2, 2014, we issued debt of €500,000,000 aggregate principal amount bearing an interest rate of 3.000% per annum and maturing on June 2, 2026. The notes
are listed under the New York Stock Exchange under the symbol “PLD/26.”
Related Documents Incorporated by Reference
Form of Officers’ Certificate related to the 3.000% Notes due 2026
Form of 3.000% Notes due 2026
2.250% Notes due 2029
On June 7, 2017, we issued debt of £500,000,000 aggregate principal amount bearing an interest rate of 2.250% per annum and maturing on June 30, 2029. The notes
are listed under the New York Stock Exchange under the symbol “PLD/29.”
Related Documents Incorporated by Reference
Form of Eighth Supplemental Indenture among Prologis, Inc., Prologis, L.P., U.S. Bank National Association and Elavon Financial Services DAC, UK Branch.
Form of Officers’ Certificate related to the 2.250% Notes due 2029
Form of 2.250% Notes due 2029
The Indenture
General. All Notes are unsecured and unsubordinated obligations of Prologis underneath the Indenture, as defined above. The Notes are issuable in registered form in the
form set out in the Indenture with coupons in denominations of $100,000 and any integral multiple of $1,000 in excess thereof for U.S. dollar-denominated notes, €100,000
and any integral multiple of €1,000 in excess thereof for euro-denominated notes and £100,000 and any integral multiple of £1,000 in excess thereof for British pound
sterling-denominated notes. None of the Notes are redeemable or convertible at the option of the holders. The Notes do not provide for any sinking fund or analogous
provision and are not to be issued upon the exercise of debt warrants.
Issuance of Additional Notes. The aggregate principal amount of the Notes which may be authenticated and delivered under the Indenture is unlimited. The Notes may be
issued in one or more series. The additional series would be established pursuant to one or more Board Resolutions or supplemental indentures.
Trustee. The U.S. Bank National Association is the trustee for all securities issued under the Indenture, including the Notes, and is referred to herein as the Trustee.
Paying Agent, Transfer Agent and Security Registrar. The U.S. dollar-denominated notes define the paying agent as any person authorized by Prologis to pay the principal of
or any interest on any securities on behalf of Prologis or if no such person is authorized, the paying agent is Prologis. The U.S. dollar-denominated notes also define the
transfer agent and security registrar as the Trustee. The euro-denominated notes define the European paying agent and transfer agent as Elavon Financial Services Limited,
UK Branch and the European security registrar as Elavon Financial Services Limited. The British pound sterling-denominated notes define U.S. Bank National Association as
the transfer agent and security registrar and Elavon Financial Services DAC, UK Branch as the paying agent.
Voting Rights. To be entitled to vote at any meeting of the holders of the Notes, a person must be a holder of one or more series of Notes or a person appointed by an
instrument in writing as a proxy for a holder or holders of one or more such series. At any meeting each holder will be entitled to one vote for each $1,000 principal amount of
the Notes.
Purposes for Which Meetings May Be Called. A meeting of holders may be called at any time to make, give or take any request, demand, authorization, direction, notice,
consent, waiver or other action. A quorum for a meeting is defined when there is a majority of persons entitled to vote in principal amount of the total Notes. In the absence of
a quorum within thirty minutes of the appointed
meeting, the meeting will be dissolved or adjourned for a period of 10 days or less. Any resolution presented to a meeting or an adjourned meeting for which a quorum is
present may be adopted by the affirmative vote of the holders of a majority in principal amount of the Notes and may become binding for all holders, whether present, not
present or represented at the meeting.
The Trustee may make reasonable regulations as it may deem advisable at any meetings in regard to proof of the holding of the Notes, the appointment or proxies, the duties
of inspectors of the votes, other evidence of the right to vote and other such matters concerning conduct, including the appointment of a temporary chairman.
Execution of Supplemental Indentures. The Trustee may enter into a supplemental indenture for the purpose of adding, changing or eliminating any provisions to the Base
Indenture or related supplemental indentures or to modify the rights of the holders and any related guarantees provided. To do so, the Trustee receives the consent of the
holders of not less than a majority in principal amount of all Notes.
Redemption Provisions. The Notes are redeemable in whole at any time at the option of Prologis at a redemption price of equal to the greater of 100% of the principal amount
(“Make-Whole Amount’) or the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed discounted to the date
of the redemption on an annual basis at the applicable comparable governmental bond rate plus 20 basis points (“Redemption Price”). If the notes are redeemed on or after a
certain time frame as defined in each note, the price is 100% of the principal amount.
Payment of Additional Amounts Upon Redemption. All repayments of the Notes will be made by or on behalf of the Company without withholding or deduction for any present
or future taxes, duties, assessments or governmental charges of whatever nature, imposed or levied by the United States (“U.S.”) or any taxing authority thereof or therein,
unless such withholding or deduction is required by law. If such withholding or deduction is required by law, Prologis will pay to a holder who is not a U.S. person such
additional amounts (the “Additional Amounts”) on the Notes as are necessary in order that the net payment by the Company or the paying agent of the principal of, and
premium (“Tax Redemption Price”), if any, and interest on, the Notes to such holder, after such withholding or deduction, will not be less than the amount provided in the
Notes to be then due and payable; provided, however, that the foregoing obligation to pay the Additional Amounts will not apply to certain items as defined in the Indenture.
Issuance in Euro and British Pound Sterling. Excluding the U.S. dollar-denominated notes, the principal, interest and related Additional Amounts on the euro-denominated
and British pound sterling-denominated notes (or Make-Whole Amount, Redemption Price or Tax Redemption Price) is payable in euro or British pound sterling, as
applicable in each note’s terms. If the euro or British pound sterling is unavailable due to the imposition of exchange controls or other circumstances beyond the Company’s
control, then all payments in respect of the notes will be made in U.S. dollars until the euro or British pound sterling is again available to Prologis. The amount payable on
any date in euros or British pound sterling will be converted to U.S. dollars on the second business day, which is not weekend day or a day on which banking institutions in
The City of New York or London are authorized or required by law, regulation or executive order to close and on which the Trans-European Automated Real-Time Gross
Settlement Express Transfer system is open. The rate used would be:
(1) the Market Exchange Rate for euro, which is the noon buying rate in The City of New York for cable transfers of euros as certified for customs; or the most recently
available Market Exchange Rate on or before payment is due; or
(2) the rate mandated by the Board of Governors of the Federal Reserve system for British pound sterling, which is based on the most recent U.S. dollar/British pound
sterling exchange rate published in The Wall Street Journal. If there is no published exchange rate, the rate is determined at Prologis’ sole discretion for British pound
sterling.
Any payment in respect of the euro-denominated and British pound sterling-denominated notes made in U.S. dollars will not constitute an Event of Default, as defined below,
under the Indenture. Neither the Trustee nor the paying agent is responsible for obtaining exchange rates, effecting conversions or otherwise handling redenomination’s.
Covenants. Under the Indenture, Prologis must maintain specific covenants on a quarterly basis to incur additional debt and continue to perform under the Indenture and not
create an Event of Default, including:
(1) all outstanding debt of Prologis on a consolidated basis in accordance with U.S. generally accepted accounting principles must be less than 60% of the sum of total
assets as of the quarter covered by the Annual Report on Form 10-K or Quarterly Report on Form 10-Q;
(2) the consolidated income available for debt service, as defined in the Indenture, to the annual debt service charge for four consecutive fiscal quarters as of the most
recently ended period must be greater than 1.5, on a pro forma basis after giving effect to the application of proceeds from the incurrence or refinance of additional debt
had it occurred at the beginning of such period;
(3) the total unencumbered assets may not at any time be equal to or less than 150% of the aggregate outstanding principal amount of the unsecured debt;
(4) total debt secured by any mortgage, lien, charge, pledge, encumbrance or security interest of any kind upon any of the property to total assets cannot be equal to or
greater than 40% of all outstanding debt; and
(5) debt will be deemed to be incurred by the Company or subsidiary whenever the Company or subsidiary will create, assume, guarantee or otherwise become liable.
Events of Default. As described in the Indenture, there are many reasons for events of default, including but not limited to default in payment of principal and any premium
when a series of Notes is due and payable at maturity, default in the payment of interest or any Additional Amounts payable, default in performance or breach of any
covenant or warranty of the Company in the Indenture, default of other indebtedness of the Company, the court entering into a final judgment or decree in an aggregate
amount, excluding insurance, in excess of $50,000,000 and such charges remaining for 60 days and the court entering into an order or decree of bankruptcy law.
If an event of default under the Indenture with respect to a series of debt securities occurs and is continuing, then in every such case, unless the principal of the debt
securities of such series shall already have become due and payable, the trustee or the holders of not less than 25% in principal amount of such series of debt securities may
declare the principal and the make-whole amount on the debt securities of such series to be due and payable immediately by written notice to the Operating Partnership that
payment of the debt securities is due, and to the trustee if given by the holders.
Subject to provisions in the Indenture relating to its duties in case of default, the trustee is under no obligation to exercise any of its rights or powers under the Indenture at
the request or direction of any holders of any series of debt securities then outstanding under the Indenture, unless such holders shall have offered to the trustee reasonable
security or indemnity. The holders of not less than a majority in principal amount of the debt securities of a series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the trustee, or of exercising any trust or power conferred upon the trustee with respect to that series. However, the
trustee may refuse to follow any direction which is in conflict with any law or the Indenture, which may involve the trustee in personal liability or which may be unduly
prejudicial to the holders of the debt securities not joining in the proceeding.
Description of Debt Securities of Prologis Euro Finance LLC, Prologis Yen Finance LLC and Prologis Sterling Finance LLC
In 2018, we formed finance subsidiaries as part of our operations in Europe (Prologis Euro Finance LLC), Japan (Prologis Yen Finance LLC) and the United Kingdom
(Prologis Sterling Finance LLC). 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 3-10
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 in our
Annual Report on Form 10-K and Quarterly Report on Form 10-Q as the finance subsidiaries are entities bearing no assets, operations, revenues or cash flows other than
those related to the issuance, administration and repayment of the securities being registered and any securities guaranteed by the OP. As the debt securities of Prologis
Euro Finance LLC listed in this exhibit are unconditionally guaranteed and 100% indirectly owned by the OP we consider them other securities of the OP for purposes of this
exhibit. At December 31, 2023, there were no securities issued by either Prologis Yen Finance LLC or Prologis Sterling Finance LLC that have been registered under Section
12 of the Exchange Act.
The following description of our debt securities issued by Prologis Euro Finance LLC is a summary and does not purport to be complete. It is subject to and qualified in its
entirety by reference to the Indenture, dated as of August 1, 2018 by and among Prologis Euro Finance LLC, as issuer, the OP, as guarantor, and U.S. Bank National
Association, as trustee (“Finance Subsidiary Base Indenture” and as supplemented by the First and Second Supplemental Indentures thereto, which are collectively referred
to herein as the “Finance Subsidiary Indenture”) and Officers’ Certificates and Forms of Notes incorporated by reference herein and as exhibits to our most recent Annual
Report on Form 10-K filed with the SEC.
General
The following listing summarizes all notes issued by Prologis Euro Finance LLC (“Finance Subsidiary Notes”) registered under Section 12 of the Exchange Act and are
denominated in euros and related documents comprising their respective terms as filed with the SEC:
Prologis Euro Finance LLC
Floating Rate Notes due 2024 (“2024 Notes”)
On February 8, 2022, we issued debt of €300,000,000 aggregate principal amount bearing an applicable rate + 0.200% per annum and maturing on February 8, 2024.
The notes are listed under the New York Stock Exchange under the symbol “PLD/24”.
Related Documents Incorporated by Reference
Form of Officers’ Certificate related to the Floating Rate Notes due 2024
Form of Floating Notes due 2024
0.250% Notes due 2027 (“2027 Notes”)
On September 10, 2019, we issued debt of €600,000,000 aggregate principal amount bearing an interest rate of Euribor + 0.250% per annum and maturing on
September 10, 2027. The notes are listed under the New York Stock Exchange under the symbol “PLD/27”.
Related Documents Incorporated by Reference
Form of Officers’ Certificate related to the 0.250% Notes due 2027
Form of 0.250% Notes due 2027
0.375% Notes due 2028 (“2028 Notes”)
On February 6, 2020, we issued debt of €550,000,000 aggregate principal amount bearing an interest rate of 0.375% per annum and maturing on February 6, 2028. The
notes are listed under the New York Stock Exchange under the symbol “PLD/28”.
Related Documents Incorporated by Reference
Form of Officers’ Certificate related to the 0.375% Notes due 2028
Form of 0.375% Notes due 2028
1.000% Notes due 2029 (“2029 Notes”)
On February 8, 2022, we issued debt of €500,000,000 aggregate principal amount bearing an interest rate of 1.000% per annum and maturing on February 8, 2029. The
notes are listed under the New York Stock Exchange under the symbol “PLD/29C”.
Related Documents Incorporated by Reference
Form of Officers’ Certificate related to the 1.000% Notes due 2029.
Form of 1.000% Notes due 2029.
1.875% Notes due 2029 (“2029 Notes”)
On August 1, 2018, we issued debt of €700,000,000 aggregate principal amount bearing an interest rate of 1.875% per annum and maturing on January 5, 2029. The
notes are listed under the New York Stock Exchange under the symbol “PLD/29A”.
Related Documents Incorporated by Reference
First Supplemental Indenture, dated as of August 1, 2018, among Prologis Euro Finance LLC, Prologis, L.P., U.S. Bank National Association and Elavon Financial
Services DAC, UK Branch.
Form of Officers’ Certificate related to the 1.875% Notes due 2029
Form of 1.875% Notes due 2029
3.875% Notes due 2030 (“2030 Notes”)
On January 31, 2023, we issued debt of €600,000,000 aggregate principal amount bearing an interest rate of 3.875% per annum and maturing on January 31, 2030. The
notes are listed under the New York Stock Exchange under the symbol “PLD/30A”.
Related Documents Incorporated by Reference
Form of Officers’ Certificate related to the 3.875% due 2030
Form of 3.875% Notes due 2030
0.625% Notes due 2031 (“2031 Notes”)
On September 10, 2019, we issued debt of €700,000,000 aggregate principal amount bearing an interest rate of 0.625% per annum and maturing on September 10,
2031. The notes are listed under the New York Stock Exchange under the symbol “PLD/31”.
Related Documents Incorporated by Reference
Form of Officers’ Certificate related to the 0.625% Notes due 2031
Form of 0.625% Notes due 2031
0.500% Notes due 2032 (“2032 Notes”)
On February 16, 2021, we issued debt of €850,000,000 aggregate principal amount bearing an interest rate of 0.500% per annum and maturing on February 16, 2032.
The notes are listed under the New York Stock Exchange under the symbol “PLD/32”.
Related Documents Incorporated by Reference
Form of Officers’ Certificate related to the 0.500% Notes due 2032
Form of 0.500% Notes due 2032
4.625% Notes due 2033 (“2033 Notes”)
On May 23, 2023, we issued debt of €750,000,000 aggregate principal amount bearing an interest rate of 4.625% per annum and maturing on May 30, 2033. The notes
are listed under the New York Stock Exchange under the symbol “PLD/33A”.
Related Documents Incorporated by Reference
Form of Officers’ Certificate related to the 4.625% Notes due 2033
Form of 4.625% Notes due 2033
1.500% Notes due 2034 (“2034 Notes”)
On February 8, 2022, we issued debt of €750,000,000 aggregate principal amount bearing an interest rate of 1.500% per annum and maturing on February 8, 2034. The
notes are listed under the New York Stock Exchange under the symbol “PLD/34”.
Related Documents Incorporated by Reference
Form of Officers’ Certificate related to the 1.500% Notes due 2034.
Form of 1.500% Notes due 2034.
1.000% Notes due 2035 (“2035 Notes”)
On February 6, 2020, we issued debt of €650,000,000 aggregate principal amount bearing an interest rate of 1.000% per annum and maturing on February 6, 2035. The
notes are listed under the New York Stock Exchange under the symbol “PLD/35”.
Related Documents Incorporated by Reference
Form of Officers’ Certificate related to the 1.000% Notes due 2035
Form of 1.000% Notes due 2035
1.000% Notes due 2041 (“2041 Notes”)
On February 16, 2021, we issued debt of €500,000,000 aggregate principal amount bearing an interest rate of 1.000% per annum and maturing on February 16, 2041.
The notes are listed under the New York Stock Exchange under the symbol “PLD/41”.
Related Documents Incorporated by Reference
Form of Officers’ Certificate related to the 1.000% Notes due 2041
Form of 1.000% Notes due 2041
4.250% Notes due 2043 (“2043 Notes”)
On January 31, 2023 we issued debt of €650,000,000 aggregate principal amount bearing an interest rate of 4.250% per annum and maturing on January 31, 2043. The
notes are listed under the New York Stock Exchange under the symbol “PLD/43”.
Related Documents Incorporated by Reference
Form of Officers’ Certificate related to the 4.250% Notes due 2043
Form of 4.250% Notes due 2043
1.500% Notes due 2049 (“2049 Notes”)
On September 10, 2019, we issued debt of €500,000,000 aggregate principal amount bearing an interest rate of 1.500% per annum and maturing on September 10,
2049. The notes are listed under the New York Stock Exchange under the symbol “PLD/49”.
Related Documents Incorporated by Reference
Form of Officers’ Certificate related to the 1.500% Notes due 2049
Form of 1.500% Notes due 2049
The Finance Subsidiary Indenture
General. All Finance Subsidiary Notes are unsecured and unsubordinated obligations of Prologis Euro Finance LLC. They are fully and unconditionally guaranteed by the OP
pursuant to the Finance Subsidiary Indenture, as defined above. The Finance Subsidiary Notes are issuable in registered form in the form set out in the Finance Subsidiary
Indenture with coupons in denominations of €100,000 and any integral multiple of €1,000 in excess thereof. None of the Finance Subsidiary Notes are redeemable or
convertible at the option of the holders. The Finance Subsidiary Notes do not provide for any sinking fund or analogous provision and are not to be issued upon the exercise
of debt warrants.
Issuance of Additional Notes. The aggregate principal amount of the Finance Subsidiary Notes which may be authenticated and delivered under the Finance Subsidiary
Indenture is unlimited. The Finance Subsidiary Notes may be issued in one or more series. The additional series would be established pursuant to one or more Board
Resolutions or supplemental indentures.
Trustee. The U.S. Bank National Association is the trustee for all securities issued under the Finance Subsidiary Indenture, including the Finance Subsidiary Notes, and is
referred to herein as the Trustee.
Paying Agent, Transfer Agent and Security Registrar. The euro-denominated notes define the paying agent as Elavon Financial Services DAC, UK Branch and the transfer
agent and security registrar as U.S. Bank National Association.
Voting Rights. To be entitled to vote at any meeting of the holders of the Finance Subsidiary Notes, a person must be a holder of one or more series of Finance Subsidiary
Notes or a person appointed by a holder in writing as a proxy for a holder or holders of one or more such series. At any meeting each holder will be entitled to one vote for
each $1,000 principal amount of the Finance Subsidiary Notes.
Purposes for Which Meetings May Be Called. A meeting of holders may be called at any time to make, give or take any request, demand, authorization, direction, notice,
consent, waiver or other action. A quorum for a meeting is defined when there is a majority of persons entitled to vote in principal amount of the total Finance Subsidiary
Notes. In the absence of a quorum within thirty minutes of the appointed meeting, the meeting will be dissolved or adjourned for a period of 10 days or less. Any resolution
presented to a meeting or an adjourned meeting for which a quorum is present may be adopted by the affirmative vote of the holders of a majority in principal amount of the
Finance Subsidiary Notes and may become binding for all holders, whether present, not present or represented at the meeting.
The Trustee may make reasonable regulations as it may deem advisable at any meetings in regard to proof of the holding of the Finance Subsidiary Notes, the appointment
or proxies, the duties of inspectors of the votes, other evidence of the right to vote and other such matters concerning conduct, including the appointment of a temporary
chairman.
Execution of Supplemental Indentures. The Trustee may enter into a supplemental indenture for the purpose of adding, changing or eliminating any provisions to the Finance
Subsidiary Indenture or related supplemental indentures or to modify the rights of the holders and any related guarantees provided. To do so, the Trustee receives the
consent of the holders of not less than a majority in principal amount of all Finance Subsidiary Notes affected by the proposed change.
Redemption Provisions. The euro-denominated notes are redeemable in whole at any time at the option of the OP at a redemption price of equal to the greater of 100% of
the principal amount (“Make-Whole Amount’) or the sum of the present values of the remaining scheduled payments of principal and interest on the euro-denominated notes
to be redeemed discounted to the date of the redemption on an annual basis at the applicable comparable governmental bond rate plus 20 basis points, in the case of the
2027 notes, 15 basis points, in the case of the 2028 notes, 20 or 25 basis points, in the case of either of the 2029 notes, 30 basis points, in the case of 2030 notes, 20 basis
points, in the case of the 2031 notes, 20 basis points, in the case of 2032, 35 basis points, in the case of 2033 notes, 25 basis points, in the case of the 2034 notes, 20 basis
points, in the case of the 2035 notes, 20 basis points, in the case of 2041 notes, 35 basis points, in the case of the 2042 notes, and 30 basis points, in the case of the 2049
notes (“Redemption Price”). If the euro-denominated notes are redeemed on or after a certain time frame as defined in each note, the price is 100% of the principal amount.
Payment of Additional Amounts Upon Redemption. All repayments of the Finance Subsidiary Notes will be made by or on behalf of the finance subsidiaries without
withholding or deduction for any present or future taxes, duties, assessments or governmental charges of whatever nature, imposed or levied by the U.S. or any taxing
authority thereof or therein, unless such withholding or deduction is required by law. If such withholding or deduction is required by law, the finance subsidiaries will pay to a
holder who is not a U.S. person such additional amounts (the “Additional Amounts”) on the Finance Subsidiary Notes as are necessary in order that the net payment by the
finance subsidiary or the paying agent of the principal of, and premium (“Tax Redemption Price”), if any, and interest on, the Finance Subsidiary Notes to such holder, after
such withholding or deduction, will not be less than the amount provided in the Finance Subsidiary Notes to be then due and payable; provided, however, that the foregoing
obligation to pay Additional Amounts will not apply to certain items as defined in the Finance Subsidiary Indenture.
Issuance in Euro and Yen. The principal, interest and related Additional Amounts on the Finance Subsidiary Notes (or Make-Whole Amount, Redemption Price or Tax
Redemption Price) is payable in euro. If the euro is unavailable due to the imposition of exchange controls or other circumstances beyond the control of Prologis Euro
Finance LLC, then all payments in respect of the Finance Subsidiary Notes will be made in U.S. Dollars until the euro is again available to Prologis Euro Finance LLC. The
amount payable on any date in euros will be converted to U.S. Dollars on the second business day, which is not weekend day or a day on which banking institutions in the
cities of New York, London are authorized or obligated by law or executive order to close and on which the Trans-European Automated Real-Time Gross Settlement Express
Transfer system is open. The rate used would be:
(1)the rate mandated by the Board of Governors of the Federal Reserve System as of the close of business on the second business day prior to the relevant payment date;
or
(2)the most recent U.S. dollar/euro exchange rate published in The Wall Street Journal on or prior to the second business day prior to the relevant payment date if the Board
of Governors of the Federal Reserve System has not announced a rate of conversion; or
(3)the rate determined at the sole discretion of Prologis Euro Finance LLC on the basis of the most recently available market exchange rate for euro, in the event The Wall
Street Journal has not published such exchange rate.
Any payment in respect of the Finance Subsidiary Notes made in U.S. dollars will not constitute an Event of Default, as defined below, under the Finance Subsidiary
Indenture. Neither the Trustee nor the paying agent is responsible for obtaining exchange rates, effecting conversions or otherwise handling redenomination’s.
Covenants. Under the Finance Subsidiary Indenture, the OP must maintain specific covenants to incur additional debt and continue to perform under the Finance
Subsidiaries Indenture and not create an Event of Default, including:
(1) all outstanding debt of the OP on a consolidated basis in accordance with U.S. generally accepted accounting principles must be less than 60% of the sum of total assets
as of the quarter covered by the Annual Report on Form 10-K or Quarterly Report on Form 10-Q;
(2) the consolidated income available for debt service, as defined in the Finance Subsidiary Indenture, to the annual debt service charge for four consecutive fiscal quarters as
of the most recently ended period must be greater than 1.5, on a pro forma basis after giving effect to the application of proceeds from the incurrence or refinance of
additional debt had it occurred at the beginning of such period;
(3) the total unencumbered assets may not at any time be equal to or less than 150% of the aggregate outstanding principal amount of the unsecured debt of the OP;
(4) total debt secured by any mortgage, lien, charge, pledge, encumbrance or security interest of any kind upon any of the property to total assets cannot be equal to or greater
than 40% of all outstanding debt of the OP; and
(5) debt will be deemed to be incurred by the OP or subsidiary whenever the OP or subsidiary will create, assume, guarantee or otherwise become liable.
Events of Default. As described in the Finance Subsidiary Indenture, there are many reasons for events of default, including but not limited to default in payment of principal
and any premium when a series of Finance Subsidiary Notes is due and payable at maturity, default in the payment of interest or any Additional Amounts payable, default in
performance of any covenant of the Company in the Finance Subsidiary Indenture, default of other indebtedness of the Company, the court entering into a final judgment or
decree in an aggregate amount, excluding insurance, in excess of $50,000,000 and such charges remaining for 60 days and the court entering into an order or decree of
bankruptcy law.
If an event of default under the Finance Subsidiary Indenture with respect to a series of debt securities occurs and is continuing, then in every such case, unless the principal
of the debt securities of such series shall already have become due and payable, the trustee or the holders of not less than 25% in principal amount of such series of debt
securities may declare the principal and the make-whole amount on the debt securities of such series to be due and payable immediately by written notice to the Operating
Partnership that payment of the debt securities is due, and to the trustee if given by the holders.
Subject to provisions in the Finance Subsidiary Indenture relating to its duties in case of default, the trustee is under no obligation to exercise any of its rights or powers under
the Finance Subsidiary Indenture at the request or direction of any holders of any series of debt securities then outstanding under the Finance Subsidiary Indenture, unless
such holders shall have offered to the trustee reasonable security or indemnity. The holders of not less than a majority in principal amount of the debt securities of a series
shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, or of exercising any trust or power conferred
upon the trustee with respect to that series. However, the trustee may refuse to follow any direction which is in conflict with any law or the Finance Subsidiary Indenture,
which may involve the trustee in personal liability or which may be unduly prejudicial to the holders of the debt securities not joining in the proceeding.
Prologis, Inc.
Policy Governing Material, Non-Public Information
and the Prevention of Insider Trading
EXHIBIT 19.1
Policy Overview
The U.S. securities laws contain very strict prohibitions against trading (which is defined as the purchase, sale or transfer of) securities of
publicly held companies while in possession of material, non-public information and while securities offerings are in progress. The selective
disclosure of material, non-public information to others who may trade is also prohibited.
In the course of performing their duties, directors and employees of Prologis, Inc. and its direct and indirect subsidiaries (collectively,
“Prologis” or the “Company”) have access to material, non-public information about Prologis and its business, including information about
other public companies with which Prologis may do business or in which it invests or may invest. To promote compliance with securities laws
and to avoid even the appearance of improper conduct on the part of any of Prologis’ directors and employees, this Policy Governing Material,
Non-Public Information and the Prevention of Insider Trading (“Insider Trading Policy”) has been adopted. In accordance with Securities and
Exchange Commission (“SEC”) rules and regulations, Prologis will also file a copy of this Insider Trading Policy as an exhibit to the
Company’s Annual Report on Form 10-K.
The Insider Trading Policy applies to:
•all Prologis directors and employees (whether located in or outside the United States), their immediate family members, agents and
advisors and to all other Covered Persons (see definition of Covered Persons below);
•all Prologis Securities (see definition of Prologis Securities below); and
•affiliated and unaffiliated companies (including securities of any company about which a Prologis director or employee learns material,
non-public information through their association with Prologis).
Material, non-public information must be held in strict confidence. Covered Persons who are in possession of material, non-public information
relating to Prologis must not:
•trade Prologis Securities while possessing material, non-public information, including material, non-public information obtained in the
course of their employment;
•directly or indirectly communicate material, non-public information relating to Prologis to anyone outside of Prologis or to another person
inside Prologis, other than on a “need-to-know” basis in the ordinary course of business; or
•recommend the purchase or sale of Prologis Securities while they are in the possession of material, non-public information.
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These prohibitions remain in effect until the information has been released to the public and sufficient time has passed for the information to be
absorbed by the market and investors (generally two (2) full trading days).
All Covered Persons should understand the Insider Trading Policy to ensure that they are fully informed about insider trading restrictions.
The Insider Trading Policy applies only to transactions subject to U.S. federal and state securities laws and does not address the securities laws
of any other jurisdiction. It is the ultimate responsibility of the Covered Persons to comply with relevant insider trading and securities laws,
rules and regulations. The Insider Trading Policy and any related approvals or guidance do not constitute legal advice and, as such, Covered
Persons should consult their own legal counsel.
Prohibitions on Insider Trading
The insider trading laws are designed so that all people trading in any company’s securities should have equal access to all material
information about that company.
Material Information: Determining what constitutes material company information involves an analysis of a number of different factors,
including the following:
•whether the information is likely to have a significant effect on the market price of a security;
•whether there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; and
•whether the information would be viewed by the reasonable investor as significantly altering the total mix of information available
regarding the security.
The following types of information may be considered material and, if so, should not be discussed with persons outside of Prologis:
•earnings information, including confirmation of or guidance on individual and consensus earnings estimates or the assumptions underlying
those estimates;
•forecasts of financial results of operations, including on a property-by-property basis;
•pending or potential mergers, acquisitions, dispositions, tender offers, joint ventures or other changes in assets;
•new initiatives (including new lines of business) or developments (including the impact of such matters on Prologis’ financial results);
•changes in control of Prologis or changes in executive management;
•entry into or termination of a material agreement, including the incurrence of additional indebtedness;
•changes in auditors or notification from an auditor that Prologis may no longer rely on an earlier audit report;
•developments regarding companies in which Prologis has made a significant investment or is considering making an investment;
•events regarding Prologis Securities, such as defaults on senior securities, calls of securities for redemption, repurchase plans, stock splits or
changes in dividends, changes to the rights
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of security holders and public or private sales of securities, including any securities issued in any joint venture or partnership transaction;
•significant new litigation or material developments in existing significant litigation; and
•impending bankruptcies or liquidity or cash problems or defaults or potential defaults under loan agreements or other material contracts.
This list is not meant to cover all situations. If the Covered Person would consider the information important in making an investment
decision, the information should be assumed to be material. If there is any question about the materiality of certain information, contact the
Legal Department prior to executing the transaction.
If it is unclear if information is material, assume that it is.
Non-public Information: Information is non-public until it has been made generally available to the general public or investors, usually by
distribution of a press release or the filing of such information on Form 8-K with the SEC. Even after information has been made public,
generally two (2) full trading days must elapse for the news to be absorbed by the market and investors before you may trade or disclose
information to others.
Material, non-public information can only be disclosed on a “need-to-know” basis within Prologis as well as to outside advisors, such as
attorneys, working on the specific matter or transaction.
Tipping Information to Others: Prologis must avoid the selective disclosure of material non-public information. Covered Persons in possession
of material non-public information are prohibited from providing that information to other people (other than pursuant to a legitimate business
purpose) or recommending that other people purchase or sell Prologis Securities based on that information. This practice is referred to as
“tipping” and both the Covered Person and the other person (the “tippee”) can be liable, whether or not the Covered Person profited or
otherwise benefited from the tippee’s transactions. And, just as Covered Persons are liable for the insider trading of their tippees, so are tippees
who pass the information along to others who trade.
Breach of Trust or Confidence: Anyone can be liable for insider trading where material non-public information is misappropriated from
another person or entity to which a duty of trust and confidence is owed. Misappropriation occurs whenever a relationship of trust and
confidence exists, such as between employer and employee, and material non-public information acquired from the relationship is subsequently
traded on to one’s own advantage in abuse of that relationship. Even absent a fiduciary duty to a company’s stockholders, a person can be
liable for insider trading where a relationship of trust and confidence exists, such as between an employer and the employer’s clients or
customers.
Examples of Prohibited Activities: The following are some examples of violations of insider trading laws:
•calling one’s sister to tell her that Prologis is about to buy a major stock position in another company, and the sister buys stock in Prologis or
the other company;
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•being aware that a major lawsuit is about to be filed against Prologis and selling Prologis stock prior to the public disclosure of the lawsuit;
•buying stock in another company after learning that Prologis plans to acquire that company through a merger or tender offer; and
•buying stock in Prologis after learning of a planned increase in the dividend but before the dividend increase is announced.
The insider trading laws apply also to material, non-public information related to any other public company, including customers, partners, and
investees of Prologis, that is obtained in the course of one’s employment or directorship with Prologis.
Penalties for Engaging in Insider Trading
Trading activity is monitored closely by the SEC and also by the stock exchanges in order to detect instances of insider trading. The penalties
for violating the securities laws with respect to insider trading (including trading or “tipping”) can be very serious and can extend significantly
beyond any profits made or losses avoided, both for individuals engaging in such unlawful conduct and their employers. Enforcement remedies
available to the government or private plaintiffs include:
•jail time (up to 20 years in jail);
•criminal fines (up to $5 million);
•disgorgement of all profits;
•civil fines to the violator or its employer of up to three (3) times the amount of profit made or losses avoided;
•sanctions and injunctive actions; and
•punitive damage awards (under applicable state laws).
In addition, other U.S. federal and state civil or criminal laws, such as the laws prohibiting mail and wire fraud and the Racketeer Influenced
and Corrupt Organizations Act, also may be violated upon the occurrence of insider trading. Further, insider trading could result in sanctions
by Prologis, including dismissal from employment with Prologis.
Trading in Prologis Securities
Covered Persons who are in possession of material, non-public information relating to Prologis must not directly or indirectly trade Prologis
Securities. This prohibition remains in effect until the information has been released to the public and sufficient time has passed for the
information to be absorbed by the market and investors (generally two (2) full trading days). The responsibility for determining whether a
Covered Person possesses material, non-public information rests entirely with that Covered Person.
Blackout Period
All Prologis directors, all employees with a title of Senior Vice President and above, persons subject to Prologis’ strategic capital compliance
program, all officers who work in the accounting,
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financial planning and analysis, tax, investor relations, treasury, legal and finance departments and these persons’ respective administrative
assistants (and such other employees in these or other departments as may be designated from time to time by the General Counsel) are
prohibited from trading in Prologis Securities during the period that begins the day after the last day of each fiscal quarter and ends after the
second full trading day following the release of quarterly or year-end earnings (“Blackout Period”). The schedule for earnings releases can be
obtained from the Investor Relations department. Trading must conclude (i.e., settle) no later than the third (3rd) business day following the
start of the Blackout Period.
The Blackout Period applies to transactions in Prologis Securities conducted by the immediate family members and all Controlled Covered
Persons related to persons subject to the Blackout Period. The Legal Department will typically notify relevant Prologis personnel indicating the
commencement and ending of each Blackout Period.
During a Blackout Period, these transactions are not permitted:
1)the purchase of Prologis Securities,
2)the sale of Prologis Securities, including the sale of Prologis Securities acquired through any of the following transactions:
•the exercise of stock options;
•the conversion of convertible securities;
•the exercise of warrants; or
•the exercise of rights in a rights offering,
3)the transfer of Prologis Securities, including the transfer of Prologis Securities to a trust or a gift of Prologis Securities to a charitable
organization, and
4)making or changing an election to invest in Prologis Securities through a 401(k) plan.
The exercise of stock options through a transaction that involves the sale of any portion of the underlying stock, such as a cashless exercise of
options through a program that Prologis may have established with a securities broker, involves the sale of Prologis Securities and is, therefore,
subject to the Blackout Period restrictions.
Trading or transferring Prologis Securities may be permitted during a Blackout Period for personal hardships if approved in advance by the
Prologis Legal Department. Further, notwithstanding the prohibition on trading during the Blackout Period, the following actions are
permitted:
1)the automatic reinvestment of dividends in Prologis Securities pursuant to a dividend reinvestment and stock purchase plan or regular
contributions to an employee share purchase plan pursuant to an election made at the time of enrollment;
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2)the acquisition of Prologis Securities upon the exercise of stock options (however a “cashless” exercise (as described above) is
prohibited during the Blackout Period); and
3)the conversion of convertible securities, the exercise of warrants or the exercise of rights in a rights offering.
In circumstances not covered above, or where you have any question as to the propriety of a transaction, you should address these questions
with the Legal Department.
Trading Prologis Securities is never permitted if you are in possession of material, non-public information. The Legal Department
may, from time to time, notify Prologis personnel that trading in a particular Security will not be permitted during a specified period,
which may be outside the quarterly Blackout Period.
Pre-Clearance
All Prologis employees with titles of Senior Vice President and above, persons subject to Prologis’ strategic capital compliance program, and
all of the aforementioned persons’ respective assistants (and such other employees as may be designated from time to time by the General
Counsel), must clear all transactions in Prologis Securities with the Prologis Legal Department before initiating the transaction. Pre-clearance
by these individuals must be obtained for all transactions, even if the transaction will occur outside a Blackout Period. Further, these
individuals must also obtain pre-clearance for any transactions in Prologis Securities by any of their immediate family members or Controlled
Covered Persons. Transactions in Prologis Securities requiring preclearance include transfers of Prologis Securities such as a transfer of
Prologis Securities into a trust or a gift of Prologis Securities to a charitable organization.
All transactions for which pre-clearance was obtained must be conducted within the parameters of the trading authorization received (e.g.,
maximum number of shares authorized and the authorized time period in which to trade). Even if a Covered Person is given clearance by the
Prologis Legal Department to trade, it is the sole responsibility of the Covered Person to (1) finally determine whether he or she possesses or
comes into the possession of material non-public information, (2) to refrain from transacting in Prologis Securities if he or she possesses such
information, and (3) to notify the Prologis Legal Department immediately of such determination. Pre-clearance of a transaction does not
constitute legal advice and does not in any way insulate a Covered Person from liability.
10b5-1 Plans
The prohibition on trading during the Blackout Period does not apply to trading pursuant to a 10b5-1 Plan approved by the Legal Department.
All such plans, including any modification or termination of a plan, must be approved by the Legal Department. A 10b5-1 Plan must also
satisfy the following conditions:
1)the trading plan is in writing and is adopted outside a Blackout Period;
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2)the director or employee adopting the plan (a) must not possess material, non-public information as of the date the plan is adopted
and (b) must enter into the plan in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5 (directors and
officers must include a representation in the plan certifying these conditions);
3)the plan must be irrevocable – i.e., there must be no ability to modify or revoke the plan, except outside a Blackout Period and at a
time when the director or employee adopting the plan does not possess material, non-public information;
4)the plan must provide that no trade can take place until:
a)for directors and officers, the later of (i) 90 days following adoption of the plan and (ii) two business days following
disclosure of the Company’s financial results for the fiscal quarter in which the plan was adopted (but in no event
later than 120 days following adoption of the plan); and
b)for non-officer employees, 30 days following adoption of the plan;
5)the plan must specify the amount of securities to be purchased or sold or specify or set an objective formula for determining the
amount of securities to be purchased sold;
6)the director or employee may have only one 10b5-1 Plan in effect at any time;
7)the director or employee may only adopt a 10b5-1 Plan that is designed to effect the purchase or sale of all of the securities under the
plan in a single transaction if the director/employee has not adopted another such “single-trade” plan in the preceding 12 months; and
8)a copy of the plan must be provided to the Legal Department.
Any modification or change to the amount, price or timing of the purchase or sale of securities, or any cancellation of a trade, under a 10b5-1
trading plan will be deemed to be a termination of such plan and will require compliance with these conditions as if the employee or director
were adopting a new 10b5-1 Plan.
In addition, SEC rules and regulations require Prologis to provide quarterly disclosure of the adoption or termination of a 10b5-1 Plan or a non-
Rule 10b5-1 trading arrangement by officers and directors.
Section 16 Individuals and Short Swing Profits
Directors and officers (within the meaning of Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934) (“Section 16 Individuals”)
are subject to certain additional restrictions on trading in Prologis Securities. Section 16 of the Securities Exchange Act of 1934 requires that
Section 16 Individuals report all changes in beneficial ownership of Prologis equity Securities to Prologis, the SEC and the New York Stock
Exchange. Further, any profit resulting from a purchase and sale, or sale and purchase, of Prologis’ equity Securities within any period of less
than six months, known as “short swing” profits, is recoverable from the Section 16 Individual. These rules apply to purchases and sales of
Prologis common and preferred stock and any Securities convertible into Prologis common or preferred stock. Section 16 also prohibits all
short sales in Prologis equity Securities by Section 16 Individuals.
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The rules on recovery of short swing profits are absolute and do not depend on whether a person has material, non-public information at the
time of the transaction and do not depend on whether a person actually realized a profit on the transaction.
Generally, all transactions in Prologis equity Securities by Section 16 Individuals, including transactions under the Prologis 401(k) Plan or any
other Prologis plan or any gifts or other transfers, must be reported to the SEC within two business days and may be subject to the short swing
profits rule. To prevent a violation of the Section 16 rules, Section 16 Individuals should advise the Legal Department when they, or any of
their “Covered Persons”, are contemplating a transaction in Prologis equity Securities. All Section 16 Individuals should consult their own
personal legal adviser regarding such matters.
Section 16 Individuals are precluded from trading outside the Blackout Period if there is a trading blackout for the Prologis 401(k)
Plan or any other Prologis pension plan if the trading blackout for the plan (i) exceeds three (3) business days in length and (ii)
restricts the ability of at least 50% of the participants in such plan from buying, selling or otherwise acquiring or transferring Prologis
Securities through their account.
Additional Prohibited Transactions and Activities
Short Sales: In a short sale, the seller will sell securities that he or she does not own in the hopes of buying the securities in the future at a lower
price in order to earn a profit. A short sale of Prologis Securities by any Covered Persons is prohibited at all times.
Publicly Traded Options: A transaction in options is, in effect, a bet on the short-term movement of the underlying security and can create the
appearance that the Covered Person is trading based on inside information. Accordingly, transactions in puts, calls or other derivative securities
associated with Prologis Securities, on an exchange or in any other organized market, are prohibited at all times.
Margin Accounts: Securities held in a margin account may be sold by the broker, without the customer’s consent, if the customer fails to meet
a margin call. Because a margin sale may occur at a time when the Covered Person is in possession of material, non-public information or
during a Blackout Period, Covered Persons are prohibited from purchasing Prologis Securities on margin or holding Prologis Securities in a
margin account.
Pledging Securities: Covered Persons are prohibited from pledging Prologis Securities as security or collateral for loans or other obligations.
Guidelines to Prevent Insider Trading
To ensure compliance with insider trading laws and the Insider Trading Policy, Covered Persons should:
1)Identify Material Non-Public Information – Prior to directly or indirectly transacting in any security of Prologis (including entering into a
contract to trade a security), every Covered Person must personally determine if he or she possesses material, non-public information.
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2)Limit Access to Company Information – Access to material, non-public information about Prologis should be limited to directors and
employees of Prologis on a “need-to-know” basis. Such information shall not be communicated to anyone outside Prologis under any
circumstances or to anyone within Prologis on other than a “need-to-know” basis as is customary in the ordinary course of business.
Disclosure of such information should be in accordance with the Prologis Disclosure Policy. Covered Persons should take all necessary
steps and precautions necessary to restrict access to, and secure, material, non-public information. Third party inquiries about Prologis
should be directed to the Investor Relations and Corporate Communications Department or otherwise in accordance with the Prologis
Disclosure Policy.
3)Avoid Certain Aggressive or Speculative Trading – Covered Persons should not directly or indirectly participate in transactions involving
trading activities related to Prologis Securities that by their aggressive nature may give rise to an appearance of impropriety Such activities
include hedging of Prologis Securities and other similar transactions, which are prohibited under the Insider Trading Policy.
4)Do Not Have Standing Sell or Purchase Orders – Covered Persons should not have any standing orders to sell or purchase Prologis
Securities at a particular price (including any “stop loss” orders or other “limit order”) because these can be triggered when the Covered
Person is in possession of material, non-public information or during a Blackout Period. Standing orders executed in compliance with a
properly adopted 10b5-1 Plan are allowed (see “10b5-1 Plans” above).
5)Consider 20-20 Hindsight – If securities transactions become the subject of scrutiny, they will be viewed after-the-fact with the benefit of
hindsight. As a result, before engaging in any transaction Covered Persons should carefully consider how regulators and others might view
the transaction in hindsight.
Trading in Securities of Other Companies
The Insider Trading Policy does not regulate the trading by Prologis personnel in the securities of any public company other than Prologis and
public companies in which Prologis has a significant interest, except where you are in possession of material, non-public information regarding
that public company. Anyone in possession of material, non-public information about another public company should not trade or recommend
that another person trade in those securities. For example, securities laws are violated if a director or employee of Prologis learns through their
Prologis sources that Prologis intends to purchase assets from another public company, and then buys or sells stock in that other company
because of the likely increase or decrease in the value of its securities.
If Prologis becomes a principal shareholder of another public company or is involved in a material transaction with another public company,
that company will be added to the list of companies whose securities are subject to the Insider Trading Policy.
Definitions
1)Covered Persons – Directors and employees of Prologis (whether located in or outside the United States) and their immediate family
members, agents and advisors. Covered Persons
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also include: (i) any family members who reside in the same household with the director or employee and any family members of the
director or employee who do not live in the same household but whose transactions in Prologis Securities are directed by, or subject to the
influence or control of, the director or employee; (ii) corporations or other business entities controlled by the Covered Persons; and (iii)
trusts in which the Covered Persons act as a trustee or otherwise have investment control (collectively, “Controlled Covered Persons”). The
term “immediate family” for purposes of this section shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, and shall include adoptive relationships.
2)Prologis Securities or Securities – Prologis stocks (common and preferred), bonds, notes and debentures, but also options, warrants and
similar instruments which are exercisable, exchangeable or convertible into Prologis Securities. Prologis Securities also include the
partnership units of Prologis, L.P., which are exchangeable into shares of Prologis common stock, and LTIP units of Prologis, L.P. Prologis
Securities shall also include the securities of any of Prologis’ direct or indirect subsidiaries or affiliates that may be identified by us from
time to time, which may include any publicly traded companies in which Prologis owns an interest and/or manages.
3)10b5-1 Plan – Pre-arranged trading plan adopted in accordance with Rule 10b5-1 of the U.S. Securities Exchange Act of 1934 that has
been pre-approved by the Legal Department.
4)Legal Department – The Prologis Legal Department is located in the Denver Operations Headquarters.
Questions
Any person who has a question about the Insider Trading Policy or its application to any proposed transaction may obtain additional guidance
from the Prologis Legal Department (Mike Blair at (303) 567-5115 or Deborah Briones at (415) 733-9562). Ultimately, however, the
responsibility for adhering to the Insider Trading Policy and avoiding unlawful transactions rests with the individual director or employee.
Execution and Return of Certification of Compliance
From time to time, Covered Persons will be asked to execute and return to the Human Resources Department a Certification of Compliance
form.
December 6, 2023
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SUBSIDIARIES OF PROLOGIS, INC. AND PROLOGIS L.P.
Prologis, L.P. is a direct subsidiary of Prologis, Inc. Prologis, L.P. and its 342 domestic and 217 foreign subsidiaries are in the real estate operations, development and
strategic capital business. The following is a list of additional subsidiaries of Prologis, L.P. at December 31, 2023:
EXHIBIT 21.1
Name of Entity
Entities that engage in real estate operations, development and strategic capital:
AMB Asia LLC and seventy-six foreign subsidiaries
DCT Industrial TRS Inc. and four subsidiaries
DCT Industrial Value Fund I, Inc. and fourteen subsidiaries
Liberty L.P. and its fifty-nine domestic subsidiaries and eighteen foreign subsidiaries are direct subsidiaries of
Liberty Property Trust
Duke Realty Limited Partnership and one hundred one subsidiaries
Duke Realty Construction Inc. and eight subsidiaries
Palmtree Acquisition Corporation and forty-three subsidiaries
PLD-TRS Holding LLC and one subsidiary
PLD GBP Finance LP
PLD International Finance, LP and two domestic and three foreign subsidiaries
PLD International Holding L.P. and one hundred ninety foreign subsidiaries
Prologis 2, L.P. and six subsidiaries
Prologis Brazil Logistics Partners Fund I, L.P. and six foreign subsidiaries
Prologis USLV Operating Partnership, L.P. and one hundred five subsidiaries
Prologis Logistics Services Incorporated and eighty-four domestic and thirty-one foreign subsidiaries
Prologis UK Holdings S.A. and eighty-four foreign subsidiaries
Entities that engage in providing management services:
Liberty Property Trust UK Ltd
Prologis California Inc.
Prologis Management LLC
Prologis de Mexico S.A. de C.V.
Prologis Japan Management LLC and three foreign subsidiaries
Prologis Management Services Sarl and two foreign subsidiaries
Prologis Directorship BV
Prologis Directorship II BV
Prologis Directorship Sarl
Prologis B.V. and eleven foreign subsidiaries
Prologis Management B.V. and one foreign subsidiary
Prologis Norway Management AS
Prologis UK Financial Services Limited
Prologis UK Limited and one foreign subsidiary
PLD Finance Management LLC
PLD Finance Management BV
Other entities:
Solutions Insurance Ltd.
Jurisdiction of
Organization
Delaware
Delaware
Maryland
Pennsylvania
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Luxembourg
United Kingdom
Delaware
Delaware
Mexico
Delaware
Luxembourg
Netherlands
Netherlands
Luxembourg
Netherlands
Netherlands
Norway
United Kingdom
United Kingdom
Delaware
Netherlands
Bermuda
Prologis, Inc. has fully and unconditionally guaranteed the following securities identified in the table below:
GUARANTORS AND SUBSIDIARY ISSUERS OF GUARANTEED SECURITIES
Subsidiary Issuer
Prologis, L.P.
Guaranteed Securities
3.000% Notes due 2026
3.875% Notes due 2028
2.250% Notes due 2029
4.375% Notes due 2048
Prologis, L.P. has fully and unconditionally guaranteed the following securities identified in the table below:
EXHIBIT 22.1
Subsidiary Issuer
Prologis Euro Finance LLC
Prologis Yen Finance LLC
Guaranteed Securities
Floating Rate Notes due 2024
0.250% Notes due 2027
0.375% Notes due 2028
1.000% Notes due 2029
1.875% Notes due 2029
3.875% Notes due 2030
0.625% Notes due 2031
0.500% Notes due 2032
4.625% Notes due 2033
1.500% Notes due 2034
1.000% Notes due 2035
1.000% Notes due 2041
4.250% Notes due 2043
1.500% Notes due 2049
0.652% Notes due 2025
0.589% Notes due 2027
1.003% Notes due 2027
0.448% Notes due 2028
0.972% Notes due 2028
1.323% Notes due 2029
0.850% Notes due 2030
1.077% Notes due 2030
0.564% Notes due 2031
1.003% Notes due 2032
1.222% Notes due 2035
0.885% Notes due 2036
1.903% Notes due 2037
1.470% Notes due 2038
1.134% Notes due 2041
1.600% Notes due 2050
1.550% Notes due 2061
Consent of Independent Registered Public Accounting Firm
EXHIBIT 23.1
We consent to the incorporation by reference in the registration statements (Nos. 333-237366 and 333-267431) on Form S-3, registration statement (No. 333-266200) on
Form S-4, and registration statements (Nos. 333-42015, 333-78779, 333-90042, 333-100214, 333-144489, 333-177378, 333-178955, 333-181529, and 333-238012) on Form
S-8 of our reports dated February 13, 2024, with respect to the consolidated financial statements of Prologis, Inc. and the effectiveness of internal control over financial
reporting.
Denver, Colorado
February 13, 2024
/s/ KPMG LLP
Consent of Independent Registered Public Accounting Firm
EXHIBIT 23.2
We consent to the incorporation by reference in the registration statements (Nos. 333-237366 and 333-267431) on Form S-3, registration statement (No. 333-267174) on
Form S-4 and registration statement (No. 333-100214) on Form S-8 of our report dated February 13, 2024, with respect to the consolidated financial statements of Prologis,
L.P..
Denver, Colorado
February 13, 2024
/s/ KPMG LLP
CERTIFICATION
EXHIBIT 31.1
I, Hamid R. Moghadam, certify that:
1.I have reviewed this annual report on Form 10-K of Prologis, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures, (as defined in Exchange Act Rules 13a-
15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
a)Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and
the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: February 13, 2024
By:
/s/ Hamid R. Moghadam
Name: Hamid R. Moghadam
Title: Chief Executive Officer
CERTIFICATION
EXHIBIT 31.2
I, Timothy D. Arndt, certify that:
1.I have reviewed this annual report on Form 10-K of Prologis, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures, (as defined in Exchange Act Rules 13a-
15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
a)Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and
the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: February 13, 2024
By:
/s/ Timothy D. Arndt
Name: Timothy D. Arndt
Title: Chief Financial Officer
CERTIFICATION
EXHIBIT 31.3
I, Hamid R. Moghadam, certify that:
1.I have reviewed this annual report on Form 10-K of Prologis, L.P.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures, (as defined in Exchange Act Rules 13a-
15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
a)Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and
the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: February 13, 2024
By:
/s/ Hamid R. Moghadam
Name: Hamid R. Moghadam
Title: Chief Executive Officer
CERTIFICATION
EXHIBIT 31.4
I, Timothy D. Arndt, certify that:
1.I have reviewed this annual report on Form 10-K of Prologis, L.P.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures, (as defined in Exchange Act Rules 13a-
15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
a)Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and
the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: February 13, 2024
By:
/s/ Timothy D. Arndt
Name: Timothy D. Arndt
Title: Chief Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Prologis, Inc. (the “Company”), hereby certifies, to such officer’s knowledge,
that the Company’s Annual Report on Form 10-K for the annual period ended December 31, 2023 (the “Report”), which accompanies these certifications, fully complies with
the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended and that the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
CERTIFICATION
EXHIBIT 32.1
Dated: February 13, 2024
Dated: February 13, 2024
By:
/s/ Hamid R. Moghadam
Name: Hamid R. Moghadam
Title: Chief Executive Officer
By:
/s/ Timothy D. Arndt
Name: Timothy D. Arndt
Title: Chief Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Prologis, L.P. (the “Company”), hereby certifies, to such officer’s knowledge,
that the Company’s Annual Report on Form 10-K for the annual period ended December 31, 2023 (the “Report”), which accompanies these certifications, fully complies with
the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended and that the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
CERTIFICATION
EXHIBIT 32.2
Dated: February 13, 2024
Dated: February 13, 2024
By:
/s/ Hamid R. Moghadam
Name: Hamid R. Moghadam
Title: Chief Executive Officer
By:
/s/ Timothy D. Arndt
Name: Timothy D. Arndt
Title: Chief Financial Officer
PROLOGIS, INC.
Incentive Compensation Recovery Policy
EXHIBIT 97.1
1.Purpose
The purpose of the Incentive Compensation Recovery Policy (this “Policy”) of Prologis, Inc. (together with its affiliates, the “Company”) is to
provide for the recovery of certain Incentive-Based Compensation in the event of an Accounting Restatement. This Policy is intended to
comply with, and to be administered and interpreted consistent with, Section 10D of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), Rule 10D-1 promulgated under the Exchange Act (“Rule 10D-1”) and Listing Standard 303A.14 adopted by the New York
Stock Exchange (“NYSE”) (the “Listing Standards”). Unless otherwise defined in this Policy, capitalized terms shall have the meanings set
forth in Section 10 below.
2.Policy for Recovery of Erroneously Awarded Compensation
In the event of an Accounting Restatement, the Company will recover reasonably promptly the amount of any Erroneously Awarded
Compensation Received by an Executive Officer during the Recovery Period.
3.Administration
3.1.This Policy shall be administered by the Talent and Compensation Committee (the “Committee”) of the Board of Directors of Prologis,
Inc. (the “Board”), except that the Board may determine to act as the administrator or designate another committee of the Board to act as
the administrator with respect to any portion of this Policy other than Section 3.3 (the “Administrator”). The Administrator is authorized to
interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for the administration of this Policy.
3.2.The Administrator is authorized to take appropriate steps to implement this Policy and may effect recovery hereunder by, among other
things: (i) requiring payment to the Company, (ii) set-off, (iii) reducing or suspending compensation, or (iv) such other means or
combination of means as the Administrator determines to be appropriate in its sole discretion.
3.3.The Company need not recover Erroneously Awarded Compensation if and to the extent the Committee determines that such recovery is
impracticable and not required under Rule 10D-1 and the Listing Standards because: (i) the direct expense paid to a third party to assist in
enforcing this Policy would exceed the amount to be recovered after making a reasonable attempt to recover; (ii) recovery would violate
home country law adopted prior to November 28, 2022, after obtaining the opinion of home country counsel acceptable to NYSE; or (iii)
recovery would likely cause an otherwise tax-qualified broad-based retirement plan to fail the requirements of Section 401(a)(13) or Section
411(a) of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder.
3.4.Any determinations made by the Administrator under this Policy shall be final and binding on all affected individuals and need not be
uniform with respect to each individual covered by this Policy.
4.Other Recovery Rights; Company Claims
Any right of recovery pursuant to this Policy is in addition to, and not in lieu of, any other remedies or rights of recovery that may be available
to the Company under applicable law or pursuant to the terms of any other compensation recovery policy of the Company that may be in effect
from time to time, including in any employment agreement, plan or award agreement, or similar agreement and any other legal remedies
available to the Company. Nothing contained in this Policy and no recovery hereunder shall limit any claims, damages, or other legal remedies
the Company may have against an individual arising out of or resulting from any actions or omissions by such individual.
5.Reporting and Disclosure
The Company shall file all disclosures with respect to this Policy in accordance with the requirements of federal securities laws.
6.Indemnification Prohibition
Notwithstanding the terms of any indemnification or insurance policy or any contractual arrangement that may be interpreted to the contrary,
the Company shall not indemnify any individual with respect to amount(s) recovered under this Policy or claims relating to the enforcement of
this Policy, including any payment or reimbursement for the cost of third-party insurance purchased by such individual to fund potential
clawback obligations hereunder.
7.Amendment; Termination
The Board or the Committee may amend or terminate this Policy from time to time in its discretion as it deems appropriate and shall amend
this Policy as it deems necessary to comply with applicable law or any rules or standards adopted by a national securities exchange or
association on which the Company’s securities are listed; provided, however, that no amendment or termination of this Policy shall be effective
to the extent it would cause the Company to violate any federal securities laws, Securities and Exchange Commission rule or the rules or
standards of any national securities exchange or association on which the Company’s securities are listed.
8.Successors
This Policy shall be binding and enforceable against all individuals who are or were Executive Officers and their beneficiaries, heirs, executors,
administrators, or other legal representatives.
9.Effective Date
- 2 -
This Policy is effective only for Incentive-Based Compensation Received by an Executive Officer on or after the Effective Date.
10.Definitions. For purposes of this Policy, the following terms shall have the meanings set forth below:
10.1.“Accounting Restatement” means an accounting restatement of the Company’s financial statements due to the Company’s material
noncompliance with any financial reporting requirement under the securities laws, including any accounting restatement required to correct
an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a
material misstatement if the error were corrected in the current period or left uncorrected in the current period.
10.2.“Effective Date” means October 2, 2023.
10.3.“Erroneously Awarded Compensation” means the amount, as determined by the Administrator, of Incentive-Based Compensation
received by an Executive Officer that exceeds the amount of Incentive-Based Compensation that would have been received by the
Executive Officer had it been determined based on the restated amounts. For Incentive-Based Compensation based on stock price or total
shareholder return (“TSR”) the Administrator will determine the amount based on a reasonable estimate of the effect of the Accounting
Restatement on the stock price or TSR upon which the Incentive-Based Compensation was received, and the Company will maintain
documentation of the determination of that reasonable estimate and provide the documentation to NYSE. In all cases, the amount to be
recovered will be calculated without regard to any taxes paid by the Executive Officer with respect of the Erroneously Awarded
Compensation.
10.4.“Executive Officers” means the Company’s current and former executive officers as determined by the Administrator in accordance
with Rule 10D-1 and the Listing Standards. Generally, Executive Officers include any executive officer designated by the Board as an
“officer” under Rule 16a-1(f) under the Exchange Act.
10.5.“Financial Reporting Measure” means (i) any measure that is determined and presented in accordance with the accounting principles
used in preparing the Company’s financial statements and any measure derived wholly or in part from such a measure, and (ii) any measure
based wholly or in part on the Company’s stock price or total shareholder return. A Financial Reporting Measure need not be presented
within the Company’s financial statements or included in a filing with the Securities and Exchange Commission.
10.6.“Incentive-Based Compensation” means any compensation granted, earned, or vested based in whole or in part on the Company’s
attainment of a Financial Reporting Measure that was Received by an individual (i) on or after the Effective Date and after such individual
began service as an Executive Officer, (ii) who served as an Executive Officer at any time during the performance period for the Incentive-
Based Compensation and
- 3 -
(iii) while the Company had a listed class of securities on a national securities exchange or association.
10.7. Incentive-Based Compensation is deemed to be “Received” in the Company’s fiscal period during which the Financial Reporting
Measure specified in the Incentive-Based Compensation award is attained, even if the payment or grant of such Incentive-Based
Compensation occurs after the end of that period.
10.8.“Recovery Period” means the three completed fiscal years immediately preceding the date that the Company is required to prepare
the applicable Accounting Restatement and any “transition period” as described under Rule 10D-1 and the Listing Standards. For purposes
of this Policy, the “date that the Company is required to prepare the applicable Accounting Restatement” is the earlier to occur of (i)
the date the Board, a committee of the Board, or the officer or officers of the Company authorized to take such action if Board action is not
required, concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement, or (ii) the
date a court, regulator, or other legally authorized body directs the Company to prepare an Accounting Restatement.
- 4 -
PROLOGIS, INC.
Incentive Compensation Recovery Policy
ACKNOWLEDGEMENT FORM
I, the undersigned, acknowledge and affirm that I have received and reviewed a copy of the Prologis, Inc. Incentive Compensation Recovery
Policy, and agree that: (i) I am and will continue to be subject to the Prologis, Inc. Incentive Compensation Recovery Policy, as amended from
time to time (the “Policy”), (ii) the Policy will apply to me both during and after my employment with the Company, and (iii) I will abide by
the terms of the Policy, including, without limitation, by promptly returning any Erroneously Awarded Compensation to the Company to the
extent required by, and in a manner determined by the Administrator and permitted by, the Policy. In the event of any inconsistency between
the Policy and the terms of any employment agreement or offer letter to which I am a party, or the terms of any compensation plan, program,
or agreement under which any compensation has been granted, awarded, earned or paid, the terms of the Policy shall govern.
Capitalized terms used but not otherwise defined in this Acknowledgement Form shall have the meanings ascribed to such terms in the Policy.
________________________________
Signature
________________________________
Print Name
________________________________
Date
WRITTEN CONSENT OF THE GENERAL PARTNER
OF
PROLOGIS, L.P.
November 28, 2023
The undersigned, Prologis, Inc., a Maryland corporation (the “General Partner”), being the general partner of Prologis, L.P., a Delaware
limited partnership (“Prologis LP”), pursuant to the Delaware Revised Uniform Limited Partnership Act and the Thirteenth Amended and
Restated Agreement of Limited Partnership of Prologis LP, as amended, does hereby consent to, and approve, the following actions:
WHEREAS, the General Partner has determined that it is in the best interests of Prologis LP to adopt the Incentive Compensation Recovery
Policy, substantially in the form attached hereto in Exhibit A but with all references to the “Company” to refer to Prologis LP (the “Incentive
Compensation Recovery Policy”), to comply with certain rules and regulations of the Securities and Exchange Commission and the New York
Stock Exchange;
NOW, THEREFORE, BE IT RESOLVED, that the Incentive Compensation Recovery Policy be, and hereby is adopted and
approved;
FURTHER RESOLVED, that, notwithstanding anything to the contrary in the Incentive Compensation Recovery Policy, Prologis
LP shall have the ability to amend or terminate the Incentive Compensation Recovery Policy;
FURTHER RESOLVED, the Incentive Compensation Recovery Policy shall be effective to the extent Prologis LP has securities
listed on a national securities exchange;
RESOLVED, that each of the Authorized Officers of the General Partner (as defined below) be, and each hereby is, authorized and
empowered to certify from time to time until amendment, modification, repeal or other alteration of the Incentive Compensation Recovery
Policy, that such policy as approved by these resolutions, is in effect as of the effective date specified therein;
RESOLVED, that each of the Authorized Officers be, and each of them hereby is, authorized to take such further actions and to
execute such other instruments or documents as such Authorized Officer may deem necessary or advisable to carry out the purposes of the
foregoing resolutions, the taking of such actions or the execution of such instruments or documents to be conclusive evidence of the necessity
or desirability thereof; and
RESOLVED, that for the purposes of these resolutions, the “Authorized Officers” shall mean and include, the Chief Executive
Officer, the Chief Financial Officer, the Chief Legal Officer, the General Counsel, the President, the Vice Chairman, the Chief Operating
Officer, the Chief Customer Officer, the Chief Human Resources Officer, any President of a region, any Managing Director, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or an Assistant Secretary of the General Partner of Prologis LP.
IN WITNESS WHEREOF, the undersigned General Partner has executed this Written Consent as of the date first written above.
PROLOGIS, INC.
a Maryland corporation
By: /s/ Deborah K. Briones
Name: Deborah K. Briones
Title: Managing Director and Deputy General Counsel
WRITTEN CONSENT OF THE SOLE MEMBER
OF
PROLOGIS EURO FINANCE LLC
November 28, 2023
The undersigned, Prologis, a Maryland real estate investment trust, being the sole member (the “Sole Member”) of Prologis Euro Finance
LLC, a Delaware limited liability company (the “Company”), pursuant to the provisions of the Delaware Limited Liability Company Act and
the Limited Liability Company Agreement of the Company, does hereby consent to, and approve, the following actions:
WHEREAS, the Sole Member has determined that it is in the best interests of the Company to adopt the Incentive Compensation Recovery
Policy, substantially in the form attached hereto in Exhibit A but with all references to the “Company” to refer to Prologis Euro Finance LLC
(the “Incentive Compensation Recovery Policy”), to comply with certain rules and regulations of the Securities and Exchange Commission and
the New York Stock Exchange;
NOW, THEREFORE, BE IT RESOLVED, that the Incentive Compensation Recovery Policy be, and hereby is adopted and
approved;
FURTHER RESOLVED, that, notwithstanding anything to the contrary in the Incentive Compensation Recovery Policy, the
Company shall have the ability to amend or terminate the Incentive Compensation Recovery Policy;
FURTHER RESOLVED, the Incentive Compensation Recovery Policy shall be effective to the extent the Company has securities
listed on a national securities exchange;
RESOLVED, that each of the Authorized Officers of the Sole Member, or the Company, (as defined below) be, and each hereby is,
authorized and empowered to certify from time to time until amendment, modification, repeal or other alteration of the Incentive Compensation
Recovery Policy, that such policy as approved by these resolutions, is in effect as of the effective date specified therein;
RESOLVED, that each of the Authorized Officers be, and each of them hereby is, authorized to take such further actions and to
execute such other instruments or documents as such Authorized Officer may deem necessary or advisable to carry out the purposes of the
foregoing resolutions, the taking of such actions or the execution of such instruments or documents to be conclusive evidence of the necessity
or desirability thereof; and
RESOLVED, that for the purposes of these resolutions, the “Authorized Officers” shall mean and include, the Chief Executive
Officer, the Chief Financial Officer, the Chief Legal Officer, the General Counsel, the President, the Vice Chairman, the Chief Operating
Officer, the Chief Customer Officer, the Chief Human Resources Officer, any President of a region, any Managing Director, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or an Assistant Secretary of the Sole Member or the Company.
IN WITNESS WHEREOF, the undersigned Sole Member has executed this Written Consent as of the date first written above.
PROLOGIS
a Maryland real estate investment trust
By: /s/ Deborah K. Briones
Name: Deborah K. Briones
Title: Managing Director and Deputy General Counsel