Published
# Prologis, Inc. (NYSE: PLD) — Business, Risks and Management's Discussion
Prologis, Inc. is a Maryland-incorporated REIT and the sole general partner of Prologis, L.P.,
the operating partnership through which it holds substantially all of its assets. The two
entities report as one enterprise. Fiscal year ends December 31.
Sources: Annual Report on Form 10-K for the fiscal year ended December 31, 2025
(accession 0001193125-26-051453, filed February 13, 2026); Quarterly Report on Form 10-Q for
the quarter ended June 30, 2026 (accession 0001193125-26-323746, filed July 29, 2026); and the
Current Reports on Form 8-K cited inline.
---
## Business
*From the FY2025 Form 10-K, accession 0001193125-26-051453.*
Prologis owns, develops and manages logistics real estate — warehouses and distribution
facilities — and leases them to companies that move and store goods. It describes itself as the
global leader in logistics real estate, operating in high-barrier, high-growth markets across 20
countries on four continents, with a portfolio concentrated in commercial hubs near end
consumers. Revenue comes from two reportable segments:
- **Real Estate (Rental Operations and Development).** Rent collected under operating leases,
including reimbursement of most property operating costs, plus the development and sale or
contribution of newly built facilities. Rental operations are the largest component of the
business and generally contribute 90% to 95% of consolidated revenues, earnings and funds from
operations (FFO). Leases carry fixed or inflation-linked escalations; for leases commenced in
2025 the weighted average lease term in the consolidated operating portfolio was 70 months.
Substantially all consolidated rental revenue, net operating income (NOI) and cash flow from
rental operations are generated in the U.S.
- **Strategic Capital.** Fees for managing the properties owned by unconsolidated co-investment
ventures — principally asset management and property management, with additional revenue from
leasing, acquisition, construction management, development and disposition services. This
segment generally contributes 5% to 10% of consolidated revenues, earnings and FFO, excluding
promotes, and the majority of its revenue is generated outside the U.S. In certain ventures
Prologis can also earn incentive fees ("promotes") based on total return over financial
hurdles, recognized when earned.
Total revenues were $8,790.1 million in 2025, $8,201.6 million in 2024 and $8,023.5 million in
2023.
**Owned and managed basis.** Prologis manages and measures performance on an "owned and managed"
(O&M) basis — its consolidated properties plus properties owned by the unconsolidated
co-investment ventures it manages — because it runs the portfolio without regard to ownership. It
separately evaluates results on its proportionate economic ownership ("our share"). At
December 31, 2025 the O&M portfolio totalled approximately 1.3 billion square feet, of which
649 million square feet of operating properties were consolidated (gross book value $80.7
billion) against 1,213 million square feet O&M (gross book value $143.4 billion).
**Geography.** Of consolidated operating property gross book value at December 31, 2025, $76.9
billion of $80.7 billion was in the U.S.; the balance was Other Americas ($1.7 billion), Europe
($1.1 billion) and Asia ($0.4 billion). The O&M figures are far more international — Europe
$31.2 billion, Asia $10.3 billion, Other Americas $8.0 billion — because non-U.S. investment is
held largely through ventures. The largest single market is Southern California, the only market
that generated 10% or more of consolidated total revenues in 2025. Foreign operations produced
approximately $788 million, or 9.0%, of consolidated revenues in 2025.
**Co-investment ventures.** Prologis partners with large institutional investors, holding
significant ownership interests alongside them. At December 31, 2025 the business was comprised
of 94% open-ended ventures, long-term ventures and three publicly traded vehicles: Nippon
Prologis REIT, Inc. (Japan); China AMC Prologis Logistics REIT (China); and FIBRA Prologis
(Mexico, which controls and owns more than 99% of Terrafina, also a publicly traded FIBRA). Ten
ventures were unconsolidated and one consolidated, with ownership ranging from 15% to 55%. The
gross book value of the operating portfolio held by the ten unconsolidated ventures was $62.4
billion across 562 million square feet, and Prologis had investments in and advances to them of
$10.3 billion. Including public and private vehicles, ventures owned real estate with a gross
book value of approximately $73.8 billion. There were 159 investors in the private equity
ventures. The structure both supplies third-party capital and reduces Prologis' direct exposure
to foreign currency movements.
**Development and data centers.** Development is intended both to expand the portfolio and to
generate gains on contribution to ventures or sale to third parties. Prologis sources land
through direct ownership, options and "Covered Land Plays" held for future redevelopment. It is
selectively expanding into data centers by procuring power and securing build-to-suit leases,
converting logistics sites into energy-ready data center developments. At December 31, 2025
consolidated land and other real estate investments, including options and Covered Land Plays,
could support $37.3 billion of total expected investment (TEI) of new buildings ($42.6 billion
O&M). The consolidated development portfolio — 77 properties, expected completion before
September 2027 — carried TEI of $5.1 billion and was 53.5% leased, including $686 million of TEI
for data centers, against $3.0 billion invested to date.
**Rent mark-to-market.** Prologis has recorded positive rent change in every quarter since 2013.
Lease rollovers during 2025 repriced to market at increases of approximately 50% on net effective
rents, and the company estimated remaining lease mark-to-market at approximately 18% on a net
effective rent basis at December 31, 2025 — the margin by which market rents exceeded in-place
rents on its share of the O&M portfolio. Management's position is that renewals drive higher
rental income over coming years even without further market rent growth.
**Customers.** At December 31, 2025 the Real Estate Segment had more than 4,000 customers
occupying 649 million square feet (6,500 customers across 1.3 billion square feet O&M). Top-10
customers accounted for 16.3% of consolidated net effective rent and 15.2% of O&M net effective
rent; the top 25 accounted for 23.7% and 21.6%. Amazon is the largest at 6.3% of consolidated net
effective rent (35 million square feet) and 5.3% O&M (48 million square feet), followed by Home
Depot, FedEx, UPS, Walmart, GXO, Geodis, DHL, Pepsi and Lululemon on a consolidated basis.
Properties are positioned at supply-chain pressure points, including infill and Last Touch
facilities inside and adjacent to major cities.
**Balance sheet and other.** At December 31, 2025 total debt was $35.0 billion with a weighted
average remaining term of 9 years and a weighted average interest rate of 3.2%; total available
liquidity was $7.6 billion ($6.5 billion of credit facility capacity plus $1.1 billion of
unrestricted cash). Credit ratings were A (S&P) and A2 (Moody's), both stable. Other platform
elements include Prologis Essentials (customer operational, energy and sustainability services),
Prologis Ventures (corporate venture capital in logistics technology), and more than 1 gigawatt
of solar generation and storage capacity on the O&M portfolio. Headquarters is in San Francisco,
with principal offices in Amsterdam, Denver, Mexico City, Sao Paulo, Shanghai, Singapore and
Tokyo. The company had 2,802 employees at December 31, 2025 (1,649 U.S., 657 Europe, 286 Asia,
210 Other Americas). Prologis began operating as a fully integrated real estate company in 1997
and elected REIT status for the taxable year ended December 31, 1997; Prologis, L.P. was also
formed in 1997.
---
## Risk factors
*From the FY2025 Form 10-K, accession 0001193125-26-051453, plus the risk factor supplement in
the Form 8-K dated August 4, 2026, accession 0001104659-26-089980.*
### Global operations
Prologis conducts a significant part of its business and employs a substantial number of people
outside the U.S. Named exposures include currency volatility and currency restrictions that can
block the transfer of profits to the U.S.; changes in regulatory and environmental requirements,
taxes, tariffs and trade wars; compliance with multiple and potentially conflicting legal
regimes, including the Foreign Corrupt Practices Act and the U.K. Bribery Act; political
instability, territorial disputes and military conflict; foreign ownership restrictions;
restricted access to capital in certain locations; and the increasing adoption of AI. The
knock-on effects management identifies are customers impaired by reduced economic activity or
supply chain disruption and therefore less able to lease or pay rent, government or labor
restrictions that block completion or leasing of development, impaired recoverability of real
estate investments, and higher material costs from labor shortages and supply chain disruption.
At December 31, 2025 approximately $13.7 billion, or 13.8%, of total consolidated assets were
invested in a currency other than the U.S. dollar — principally sterling, Canadian dollar, euro
and yen — and $432.8 million, or 6.6%, of total consolidated segment NOI was denominated in a
non-U.S. currency. Prologis hedges mainly by borrowing in the currencies in which it invests, a
natural hedge, supplemented by net investment hedges and undesignated forwards; it states there
can be no assurance hedging will be effective, and that settling such arrangements can require
significant funds.
### Business and portfolio
- **Geographic concentration.** At December 31, 2025, 30.6% of consolidated operating properties
by gross book value — $24.7 billion — were in California (Central Valley, San Francisco Bay
Area and Southern California), representing 23.6% of operating square footage and 31.9% of
consolidated operating property NOI. A downturn in California's economy, real estate conditions
or state income and property tax law could adversely affect the business. Other significant
holdings (more than 3% of total consolidated investment before depreciation) are in Atlanta,
Chicago, Dallas/Fort Worth, Houston, Lehigh Valley, New Jersey/New York City, Seattle and South
Florida, none above 10% individually. The O&M portfolio adds concentrations in Germany, Japan,
Mexico and the U.K.
- **Single-sector concentration.** Investments are concentrated in the logistics sector, exposing
the company to a sector downturn more than a diversified owner.
- **Illiquidity and disposition dependence.** Real estate is less liquid than other assets, and
significant costs — mortgage payments, property taxes, maintenance — do not fall when income
does. Prologis funds capital deployment partly by selling or contributing properties; its
ability to do so depends on competing sellers, capitalization rates and buyers' own access to
debt and equity. As a REIT it can only hold property for sale in the ordinary course through
taxable REIT subsidiaries without punitive tax, and may forgo sales where safe harbors are not
met. If cash is short it may have to divest at less than optimal terms, incur debt, or lease at
lower rates — potentially affecting distributable cash flow and debt covenants.
- **Customer credit and releasing.** Default by a significant number of customers, or
non-renewal, re-leasing delay or less favorable renewal terms, would hurt operating results and
distributable cash flow. Competitors may undercut market rates, pressuring Prologis to reduce
rents to retain customers. Rising inflation or costs can compress NOI on leases with fixed
contractual base rent and charges.
- **Development and redevelopment.** The pipeline carries risks of unavailable financing,
abandoned and impaired projects, delays or failure in obtaining zoning, land-use, building and
occupancy permits, higher construction costs from inflation and from the more power-intensive
technical demands of data centers, inability to attract third-party venture investment or
sufficient customer demand, properties performing below budget, land that cannot be sold at
recoverable prices, and public or government opposition. Specific to data centers: Prologis may
fail to obtain sufficient or reliable power, and even where power is secured, delivery delays or
cost increases from local regulatory change, fuel availability or natural disasters could
impair its ability to lease or sell the assets as intended.
- **Co-investment ventures.** Partners may hold approval rights over major decisions, may seek to
redeem simultaneously, may fail to fund capital contributions, or may hold goals inconsistent
with Prologis'; venture agreements may restrict transfers; managerial relationships are
contractual and may be terminated, reducing assets under management and fee revenue and possibly
forcing Prologis to buy the properties to retain exposure; and disputes may lead to litigation.
There is no assurance Prologis can form new ventures, attract third-party investment, or realize
value from existing investments.
- **Acquisitions and integration.** Acquired properties may underperform or carry unknown
liabilities; entering new markets brings unfamiliarity with local economies, government and
permitting. For acquired companies, Prologis identifies the inability to dispose of non-industrial
or out-of-expertise assets, unknown liabilities and unforeseen expenses, delays or regulatory
conditions, and performance shortfalls from the diversion of management attention.
- **Environmental, climate, insurance, cyber.** Owners can be liable for remediation of hazardous
substances without regard to fault; some properties are known to contain asbestos-containing
building materials, and some are on or near sites with petroleum or other hazardous substances.
Physical climate risk includes severe weather and floods; transition risk includes stricter
regulation and required investment in low-carbon technology. Certain losses — earthquakes, acts
of war, terrorism, riots, pandemics — are generally not insured or not fully insured; Prologis
has elected not to carry earthquake insurance on its Japanese assets, and holds U.S. seismic
exposure in California and Washington plus international exposure in Japan and Mexico. Systems
are vulnerable to blackouts, natural disasters, terrorism, war, telecommunication failures and
cybersecurity attacks; phishing and business email compromise are rising and AI tools may add
disruption. Security incidents have had an insignificant financial impact to date, but rising
attempt frequency is raising protection costs and remediation may not be insured.
- **Key personnel and controls.** The company depends on its executive officers and other key
employees. Disclosure controls and internal control over financial reporting may not prevent all
errors; deficiencies could cause misstatements, restatements or a decline in security prices.
### Financing and capital
To qualify as a REIT, Prologis must distribute at least 90% of REIT taxable income each year, so
it cannot fund all capital needs from retained cash and must rely on third-party capital; it may
need to borrow short-term to meet distribution requirements even when market conditions are
unfavorable. Credit agreements, indentures and note agreements require compliance with customary
financial covenants (debt service coverage, leverage, fixed charge coverage) that limit
flexibility and whose breach could trigger defaults. A downgrade from the A/A2 ratings held at
December 31, 2025 would likely raise borrowing costs, may trigger additional payments under debt
instruments, and could impair refinancing, maturity management and development and acquisition
plans. There is no assurance maturing indebtedness can be refinanced, or refinanced on comparable
terms; credit facilities and certain other debt bear variable rates, so rising rates increase
interest expense. Additional issuance of common stock or OP units dilutes existing holders in
percentage terms and may dilute book and fair value, and holders generally have no vote on
whether such issuances occur.
### Income tax
Failure of Prologis, Inc. to qualify as a REIT would subject taxable income to regular corporate
rates, disqualify REIT treatment for four following taxable years absent statutory relief, and
expose built-in gains on re-election for five years (potentially ten in certain states),
significantly reducing net earnings and funds available for investment and distributions.
Qualification requires satisfying numerous highly technical tests, including deriving at least 95%
of gross income from qualifying sources and distributing at least 90% of taxable income, and is
more complicated because assets are held through the operating partnership. Prologis also holds
interests in subsidiary REITs whose own failure to qualify would impair the parent's compliance
with the REIT income and asset tests. Property transfers — including contributions to
co-investment ventures — could be recharacterized by the IRS as prohibited transactions carrying
a 100% penalty tax on gain, and could affect satisfaction of the REIT income tests. Legislative or
regulatory change could increase tax liability substantially. The 20% cap on the value of a REIT's
assets represented by taxable REIT subsidiary securities and other non-qualifying assets limits
non-REIT-qualifying investment and expansion.
### Combination with SEGRO plc (risk factors added August 4, 2026)
In the Form 8-K dated August 4, 2026 (accession 0001104659-26-089980), Prologis supplemented the
FY2025 10-K risk factors for the proposed combination with SEGRO plc:
- **Delay or non-completion.** Completion, anticipated in the first half of 2027, remains subject
to satisfaction or waiver of conditions, a number of which are outside Prologis' control, with
no assurance as to when or whether they will be satisfied. Delay or failure could bring less
favorable reactions from financial markets or from tenants, vendors, employees, co-investors and
strategic capital partners.
- **Integration and benefit realization.** Integrating SEGRO's personnel, operations and systems
will require meaningful resources and management attention; the combination may give rise to
currently unknown liabilities or to greater-than-anticipated expenses, delays or regulatory
conditions. Regulators granting required approvals may impose requirements, limitations, costs,
divestitures or restrictions on how Prologis conducts its business, which could reduce
anticipated benefits. There is no assurance the anticipated benefits and cost savings will be
achieved within the expected timeframe or at all.
- **Dilution.** Based on fully diluted shares outstanding as of August 3, 2026, continuing
Prologis stockholders are estimated to hold approximately 91.1% of the combined company's
outstanding common stock assuming full take-up of the partial cash alternative, or approximately
88.5% assuming no take-up.
At June 30, 2026 Prologis reported no material changes to the FY2025 10-K risk factors
(Form 10-Q, accession 0001193125-26-323746).
---
## Management's discussion — fiscal year 2025
*From the FY2025 Form 10-K, accession 0001193125-26-051453.*
Management characterized 2025 leasing in the consolidated portfolio as healthy, supported by
improved customer sentiment and market conditions, with 112 million square feet of new leases
signed during the year (228 million square feet O&M). Results continued to reflect the favorable
mark-to-market of in-place leases built up over several prior years of market rent increases, so
rent change on rollover and O&M same-store growth remained strong. Lease mark-to-market remained
meaningfully positive at 18% (net effective, Prologis share) despite recent quarters of lower and
in some cases negative market rental growth. Operating portfolio occupancy was 95.6% at
December 31, 2025 and rent change on leases commenced during the year was 50.1% on a net effective
basis, both at ownership share. Development activity tilted toward build-to-suit: Prologis
commenced $2.9 billion of consolidated development projects, 60.9% of which were build-to-suit.
Management stated it was well-positioned for long-term revenue growth but that the impact of
ongoing economic uncertainty remained difficult to predict.
Total revenues rose to $8,790.1 million from $8,201.6 million. Net earnings attributable to
common stockholders were $3,322.3 million, or $3.56 per diluted share, against $3,725.8 million
and $4.01 in 2024 — the decline driven by lower gains on real estate transactions rather than
operations.
**Segments and expenses.** Real Estate Segment NOI rose $471 million year over year, with
management attributing the increase principally to rent change on rollover. G&A expenses were
$469 million versus $419 million, up on inflationary increases and higher compensation including
workforce additions in growth areas. Depreciation and amortization was $2.6 billion in both
years. The Strategic Capital Segment recorded net promote expense in 2025, primarily from
amortization of stock compensation issued to employees for promote income recognized in prior
periods; the Prologis Promote Plan awards up to 25% of the third-party portion of promotes earned
to employees, so expense recognized in one period can relate to revenue recognized in another.
**Gains and capital recycling.** Prologis generated net proceeds of $2.7 billion and realized net
gains on real estate transactions of $944 million, principally from contributing developed
properties to unconsolidated ventures in the U.S. and Europe and from third-party sales in the
U.S. including a data center. Gains on disposition of development properties and land were $258
million (2024: $414 million); gains on other dispositions of investments in real estate were $686
million (2024: $904 million). Net earnings from unconsolidated entities were $403 million
(2024: $354 million).
**Other income and expense.** Interest expense rose, principally on senior notes issued to finance
acquisition and development activity at higher rates: $3.4 billion issued in 2025 at a weighted
average 4.2%, against $4.2 billion in 2024 at 4.8%. Foreign currency, derivative and other gains
and other income, net, were $15 million versus $209 million, comprising interest income and other
income of $130 million (2024: $88 million), realized gains on undesignated derivative settlements
of $11 million (2024: $53 million), and unrealized fair value and remeasurement effects of $138
million of losses (2024: $87 million of gains). Net earnings attributable to noncontrolling
interests were $237 million (2024: $216 million), including $81 million (2024: $93 million)
attributable to common limited partnership unitholders of Prologis, L.P.
**Significant 2025 activity.** In December, Prologis listed China AMC Prologis Logistics REIT
("Prologis C-REIT") on the Shenzhen Stock Exchange; the C-REIT purchased properties from the
company's open-ended China venture, and Prologis owned 20.7% of the vehicle at year end. In May it
amended and restated one of its global credit facilities, holding borrowing capacity at $3.0
billion and extending maturity to June 2029 with an option to June 2030. In June it established an
additional commercial paper program for notes in sterling, euros or U.S. dollars up to €1.0
billion equivalent, with a requirement to maintain credit facility commitments at least equal to
outstanding notes.
**Liquidity and cash flow.** Operating cash flow included non-cash straight-line rent and above/
below-market lease amortization of $691 million (2024: $645 million) within Real Estate Segment
revenue; equity-based non-cash compensation of $185 million (2024: $232 million); operating
distributions from unconsolidated entities of $645 million (2024: $562 million); interest paid net
of capitalization of $842 million (2024: $711 million); and income taxes paid net of refunds of
$143 million (2024: $130 million). Investing activity included $312 million invested in
unconsolidated entities (2024: $541 million), $104 million returned as return of investment
(2024: $58 million), net payments of $21 million on net investment hedge settlements (2024: $13
million received), and €150 million ($177 million) placed in a four-month money market. Scheduled
2026 debt principal payments were $1.9 billion. Unconsolidated venture third-party debt totalled
$19.7 billion at a weighted average 6-year term and 3.5% rate, with a weighted average
loan-to-value of 30.1% on gross book value; Prologis guaranteed none of it. The company was in
compliance with all financial debt covenants.
**Distributions.** Quarterly common dividends were $1.01 per share in 2025 (2024: $0.96). Class A
units in the operating partnership received $0.64665 per unit quarterly and were all converted
into common limited partnership units during 2025, leaving none outstanding at year end. Series Q
preferred stock carried an 8.54% annual dividend rate.
**Market risk.** For 2025, $697 million or 7.9% of total consolidated revenue was denominated in
foreign currencies; undesignated foreign currency contracts had an aggregate notional of $1.4
billion, and a 10% weakening of the dollar against those currencies could require a $140 million
cash payment on settlement. At December 31, 2025, $34.5 billion of debt was fixed-rate and $1.1
billion variable at a weighted average effective 3.0%; a 10% increase in rates on average variable
balances would add $4 million of annual interest expense.
---
## Current quarter — three and six months ended June 30, 2026
*From the Form 10-Q for the quarter ended June 30, 2026, accession 0001193125-26-323746, and the
second quarter 2026 results release furnished as Exhibit 99.2 to the Form 8-K dated July 16, 2026,
accession 0001193125-26-305416.*
**The quarter in brief.** Prologis described second quarter results as showing momentum building
across the business, raised 2026 guidance for the second time in the year, and signed over 67
million square feet of leases, which it called a record level. Net earnings per diluted share
were $1.13 against $0.61 a year earlier, and Core FFO per diluted share $1.63 against $1.46. For
the three months, total revenues were $2,425.5 million against $2,183.9 million, net earnings
attributable to common stockholders $1,060.8 million against $569.7 million, and operating income
before gains on real estate transactions, net, $959.7 million against $855.2 million; the balance
of the earnings increase came from higher realized gains on dispositions and from foreign
currency, derivative and other results swinging to gains. For the six months, net earnings
attributable to common stockholders were $2,041.3 million ($2.18 per diluted share) on total
revenues of $4,723.2 million, against $1,161.2 million ($1.25) on $4,323.5 million in the
prior-year half.
**Operations.** O&M period-end occupancy rose to 95.5%, a 20-basis-point increase from March 31,
2026; occupancy in the operating portfolio was 95.4% at June 30, 2026 on an ownership-share basis.
Same-store NOI at Prologis share grew 6.4% year over year on a net effective basis and 8.5% on a
cash basis. Rent change at Prologis share was 36.9% net effective and 22.3% cash for the quarter;
rent change on leases commenced across the six months was 34.2% net effective. Retention was
72.7%. Estimated remaining lease mark-to-market was approximately 17% (net effective, Prologis
share) at June 30, 2026, down from 18% at year end, and management noted rent change has moderated
from peak levels while remaining strong. The weighted average lease term for leases commenced over
the trailing twelve months was 68 months, down from 70 for leases commenced in 2025. The O&M
portfolio totalled approximately 1.3 billion square feet across 20 countries, leased to
approximately 6,500 customers.
**Development, acquisitions and dispositions.** Development activity accelerated in the first
half, and management expects opportunities to continue accelerating through the remainder of the
year. Prologis commenced $3.0 billion of TEI of consolidated development projects in 2026,
including $2.1 billion of data center developments. At June 30, 2026 the consolidated development
portfolio — 70 properties, expected completion before May 2028 — carried TEI of $5.7 billion and
was 43.2% leased, including $2.5 billion of TEI for data centers with 680 megawatts of power
capacity, against $2.7 billion invested and $3.0 billion of estimated additional investment
required. The data center power pipeline was expanded to 5.8 gigawatts secured or in advanced
stage. Land and other real estate investments could support $35.6 billion of TEI ($40.6 billion
O&M), down from $37.3 billion ($42.6 billion) at year end.
Prologis acquired $1.9 billion of net investments in real estate in the first half, including, in
April 2026, its partner's interest in an unconsolidated co-investment venture in Asia, which
brought 74 operating properties aggregating 23 million square feet onto the consolidated balance
sheet. It generated net proceeds of $2.0 billion and realized net gains on real estate
transactions of $676 million — gains on dispositions of development properties and land of $372
million (prior-year half: $38 million) and gains on other dispositions of $303 million
(prior-year half: $84 million) — principally from contributions to ventures in the U.S. and
Europe and third-party sales in the U.S.
**Strategic Capital.** Prologis formed four new co-investment ventures with third-party investors
in 2026: two development vehicles in the U.S., one stabilized vehicle in Europe and one
acquisition vehicle in Asia. The count of unconsolidated co-investment ventures rose to thirteen
from ten at year end, with one consolidated and ownership still ranging from 15% to 55%; the
business is now described as approximately 92% open-ended ventures, long-term ventures and three
publicly traded vehicles. Gross book value of the operating portfolio held by all unconsolidated
ventures was $62.4 billion across 548 million square feet (year end: $62.4 billion across 562
million square feet), and investments in and advances to them were $10.7 billion. Promotes of $83
million were earned in the first half ($49 million net of related strategic capital expenses
including stock compensation amortization for prior-period promotes), primarily in the second
quarter from a venture in the Other Americas; the second quarter alone included $62 million of
promote revenue net of related expenses. Strategic capital revenues were $402.4 million for the
half against $288.3 million.
**Costs and other items.** G&A expenses were $256 million for the half against $222 million, up on
inflationary increases and higher compensation; equity-based non-cash compensation was $116
million against $97 million. Earnings from unconsolidated entities, net, were $241 million against
$176 million. Foreign currency, derivative and other gains and other income, net, swung to $154
million of gains from $154 million of losses, driven by interest income of $115 million (prior
year: $26 million) and a move to $14 million of unrealized gains from $202 million of unrealized
losses. Net earnings attributable to noncontrolling interests were $125 million against $98
million, including $46 million (prior year: $29 million) attributable to common limited
partnership unitholders.
**Balance sheet.** At June 30, 2026 weighted average remaining term of consolidated debt was 8
years (year end: 9) at a weighted average 3.3% (3.2%). Total available liquidity was $7.6
billion, comprising $5.8 billion of credit facility capacity and $1.8 billion of unrestricted
cash. Prologis issued $2.2 billion of senior notes in the half at a weighted average 4.3% and
weighted average maturity of 8 years. In March 2026 it amended and restated one of its global
credit facilities, holding $3.0 billion of capacity and extending maturity to 2030 with an option
to 2031; in May 2026 it established a Canadian dollar commercial paper program of up to C$1.0
billion ($702 million at June 30, 2026). Scheduled debt principal payments are $1.1 billion for
the remainder of 2026 and $2.0 billion in 2027. Debt-to-Adjusted EBITDA was 4.7x and debt was
23.9% of total market capitalization. Credit ratings remained A and A2, both stable, and the
company was in compliance with all financial debt covenants. Unconsolidated venture third-party
debt was $19.7 billion at a 6-year weighted average term and 3.5% rate, with a 29.9% weighted
average loan-to-value; Prologis guaranteed none of it. Quarterly common dividends were $1.07 per
share in each of the first two quarters of 2026, against $1.01 in 2025. For 2026, 2027 and 2028,
forecasted earnings were 99%, 98% and 97% respectively in U.S. dollars or hedged, and 96% of
equity was in U.S. dollars.
**Guidance.** Prologis raised full-year 2026 guidance for net earnings attributable to common
stockholders to $4.40–$4.55 per diluted share from $3.80–$4.05, and Core FFO per diluted share to
$6.22–$6.30 from $6.07–$6.23. Prologis-share operating guidance was raised to average occupancy of
95.25%–95.75%, cash same-store NOI growth of 6.75%–7.25% and net effective same-store NOI growth
of 5.25%–5.75%. Capital deployment guidance at Prologis share was raised for development starts
(to $4.5–$5.5 billion from $3.5–$4.5 billion), acquisitions (to $1.5–$2.0 billion), contributions
(to $2.0–$2.5 billion), dispositions (to $2.25–$2.75 billion) and realized development gains (to
$600–$700 million); development stabilizations were held at $2.25–$2.75 billion. Strategic capital
revenue excluding promotes was held at $660–$680 million, with net promote income/expense revised
to zero from $(50) million, and G&A at $510–$525 million. Because of the SEGRO situation, the
per-share earnings guidance constitutes a profit forecast under Rule 28 of the U.K. City Code on
Takeovers and Mergers; the U.K. Takeover Panel granted Prologis a dispensation from the
requirement for a reporting accountant's and financial advisers' report, with SEGRO's agreement,
on the basis that the forecast is presented consistently with ordinary-course quarterly guidance
and that the Prologis board confirms it is valid and properly compiled.
**Other.** Legal proceedings are described as a variety of matters arising in the ordinary course
of business whose ultimate disposition will not have a material adverse effect. Prologis issued
0.6 million shares during the quarter on redemption of operating partnership common units, in
reliance on the Section 4(a)(2) exemption. At June 30, 2026 the Parent owned a 98.01% common
general partnership interest in the operating partnership. The company continued implementing a
new financial system to further automate its global close and consolidation processes during the
quarter, and reported disclosure controls effective with no other material changes to internal
control over financial reporting. On June 3, 2026, Chief Executive Officer Daniel S. Letter
terminated a Rule 10b5-1 trading arrangement adopted December 30, 2025 for the sale of up to
60,000 shares through March 31, 2027.
---
## Subsequent events
*From Item 5 of the Form 10-Q for the quarter ended June 30, 2026, accession
0001193125-26-323746, and the Forms 8-K cited below.*
**Possible combination with SEGRO plc — as disclosed in the 10-Q.** On July 22, 2026, Prologis
announced its Best and Final Proposal to acquire the entire issued and to be issued share capital
of SEGRO plc. The proposal consisted of 0.0920 shares of Prologis common stock for each SEGRO
share plus a partial cash alternative of up to approximately £3.5 billion, representing 25% of the
total consideration at a fixed price of 1,031.7 pence per SEGRO share, subject to pro-rata
scale-back. Later the same day the SEGRO board announced it had unanimously concluded that the
financial terms were "at a level that it would be minded to recommend to SEGRO shareholders"
should a firm intention to make an offer be announced on such terms, subject to satisfactory
confirmatory due diligence and agreement on all other terms and definitive documentation. The
SEGRO board also announced that it had requested, and the U.K. Takeover Panel had consented to, an
extension of the deadline for Prologis to announce either a firm intention to make an offer or that
it did not intend to make one, to no later than 5.00 pm BST on August 12, 2026. The 10-Q stated
there could be no certainty that an offer would be made.
The approach had begun before quarter end: in the Form 8-K dated June 16, 2026 (accession
0001193125-26-280195, filed June 24, 2026), Prologis disclosed that it had sent the SEGRO board a
letter on June 16, 2026 setting out an indicative all-share proposal to acquire SEGRO's entire
issued and to be issued share capital, that the SEGRO board unequivocally rejected the proposal on
June 23, 2026, and that under Rule 2.6(a) of the U.K. City Code Prologis was required to announce
by 5:00 pm London time on July 22, 2026 either a firm intention to make an offer under Rule 2.7 or
that it did not intend to make one.
**Firm recommended offer for SEGRO plc, August 4, 2026** (Form 8-K dated August 4, 2026,
accession 0001104659-26-089980). Prologis issued a Rule 2.7 Announcement disclosing the terms of a
recommended offer to acquire the entire issued and to be issued share capital of SEGRO plc, and
entered into a Co-operation Agreement with SEGRO the same day. SEGRO shareholders will receive
0.0920 new Prologis shares per SEGRO ordinary share, and may elect cash in lieu under a partial
cash alternative capped in aggregate at approximately £3.5 billion. Each shareholder's basic
entitlement equals 25% of the fixed price of 1,031.7 pence per SEGRO share, so a holder electing
only its basic entitlement receives 258 pence in cash and 0.0690 new Prologis shares per SEGRO
share; elections above the basic entitlement are scaled back pro rata if aggregate elections
exceed the cap. Based on a Prologis closing price of $149.94 and a GBP:USD rate of 1.3371 on
July 21, 2026, and assuming the cash alternative is fully taken up, the combination values each
SEGRO share at 1,031.7 pence and SEGRO's entire issued and to be issued ordinary share capital at
approximately £14.0 billion. On that assumption SEGRO shareholders would hold approximately 8.9%
of the combined group, or approximately 11.5% if no cash elections are made. SEGRO shareholders
remain entitled to receive and retain a 2026 interim dividend of up to 10.14 pence and a 2026 final
dividend of up to 22.56 pence per share, and, if the timetable extends past the anticipated close,
2027 interim and final dividends of up to 10.55 pence and 23.52 pence, without reduction of the
consideration. Prologis will also seek a secondary listing of its common stock on the London Stock
Exchange.
The combination will be implemented by a court-sanctioned scheme of arrangement under the U.K.
Companies Act 2006, with Prologis reserving the right to switch to a takeover offer subject to
Panel consent and the Co-operation Agreement. Conditions include approval by a majority in number
of voting SEGRO shareholders representing at least 75% in value of shares voted, approval at the
general meeting, sanction by the High Court of Justice in England and Wales, the scheme becoming
effective by the Long Stop Date, required antitrust and other regulatory approvals, NYSE listing
approval for the new Prologis shares, and admission of Prologis common stock to the London Stock
Exchange Main Market. Completion is expected in the first half of 2027. The Co-operation Agreement
may be terminated by mutual agreement; by Prologis if the SEGRO directors withdraw or adversely
modify their recommendation; or by either party if a competing offer becomes effective or
unconditional, the combination lapses or is withdrawn, Prologis invokes a condition with Panel
permission, the scheme or general-meeting resolutions fail or the Court refuses sanction, or the
Effective Date has not occurred by the Long Stop Date. The new Prologis shares issued under the
scheme will rely on the Section 3(a)(10) exemption from registration under the Securities Act.
**Term loan facility, August 4, 2026** (same Form 8-K, accession 0001104659-26-089980). In
connection with the combination, Prologis, L.P. entered into a Term Loan Credit Agreement with
various lenders and JPMorgan Chase Bank, N.A. as administrative agent, under which the operating
partnership and affiliated borrowers may obtain loans in pounds sterling or euros not exceeding
£3,575,000,000 in connection with consummation of the combination. The facility matures one year
after initial borrowing, extendable at the operating partnership's option for one year on two
occasions subject to an extension fee. Pricing varies with the operating partnership's public debt
ratings; the spread was 70 basis points as of the effective date. Covenants include financial
tests applicable to the operating partnership and a cross-acceleration to other recourse
indebtedness of more than $150,000,000. The operating partnership has unconditionally guaranteed
the obligations of each other borrower; Prologis, Inc. is not required to guarantee unless it
incurs or guarantees indebtedness not in existence or guaranteed at the facility's date. The cash
consideration under the partial cash alternative is to be funded through this facility together
with existing liquidity and other available sources.
**Common stock offering, August 4–7, 2026.** On August 4, 2026, Prologis entered into an
underwriting agreement with J.P. Morgan Securities LLC and BofA Securities, Inc. for an
underwritten public offering of 15,000,000 shares of common stock, resulting in net proceeds of
approximately $2.1 billion (approximately $2.4 billion if the underwriters' option were exercised
in full), after deducting estimated expenses; the offering closed on August 5, 2026. The company
granted the underwriters a 30-day option for an additional 2,250,000 shares to cover
over-allotments, and agreed to a 30-day lock-up on further common stock issuance without the
underwriters' consent, subject to exceptions. Proceeds are to be contributed to the operating
partnership in exchange for units, and the operating partnership intends to use them for general
corporate purposes including to fund potential acquisitions such as SEGRO plc, with no assurance
the SEGRO combination will complete on the proposed terms, timeline, or at all (Form 8-K dated
August 4, 2026, accession 0001104659-26-090724). On August 5, 2026, Prologis received notice that
the underwriters had exercised the over-allotment option in full for the additional 2,250,000
shares, for aggregate net proceeds of approximately $312.2 million after the underwriting discount
and before estimated transaction expenses, with closing set for August 7, 2026 (Form 8-K dated
August 5, 2026, accession 0001104659-26-092072).
**Board appointment.** On June 29, 2026, the board appointed Alfred F. Kelly, Jr. as a director
and determined that he is independent under applicable New York Stock Exchange and SEC rules
(Form 8-K dated June 29, 2026, accession 0001193125-26-291634).