PLD - Earnings call transcript Q3 2017

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Operator

Welcome to the Prologis Third Quarter Earnings Conference Call. My name is Christine and I will be the operator for today's call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. the to turn Ward. now will call Tracy over I

You may begin.

Tracy Ward

our good and supplemental to on Hamid under Moghadam, morning, Mike who hear Gene our and morning, Christine, Relations. document at This Investor will comment will third available and today’s our The Welcome from call. results Diana everyone. Thanks, we’ll guidance. prologis.com conference and quarter is CEO, strategy are Chairman cover Chris website us call Tom Caton. for Nekritz, and on outlook; the Curless, Gary and Scott Anderson, Also, Reilly, Company’s CFO XXXX Olinger, Ed joining our

we Before operates, on as estimates industry, and and forward-looking prepared contain statements Prologis to like under market beliefs assumptions. in projections federal which about current state expectations, the These I’d and based that begin securities the well conference are will our this management’s call laws. as remarks, statements

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

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

release a third measures. that, non-GAAP supplemental accordance Hamid, to our I’ll started. Reg in get the measures press have that such and and those results quarter measures and do contain are we G call over with reconciliation as FFO, to Additionally, provided financial EBITDA turn With and we’ll

Hamid Moghadam

market up In highlighted an starts of at leading few U.S. would than begin over of the tight year, growing available a with pace which in we beginning the the on remain deliveries has development to to operating everyone. next conditions. At level higher like months. Tracy, and vary good environment. I stock, faster will morning show Thanks, market few elevated comments excellent. the a the been conditions Consumption

further third across and development U.S. our new This is portfolio. that shortfall of leading second to moderated the in market volumes boosting rent fell However, short quarters, demand. starts growth

by construction. my a space. career, labor being acting new net land serious and are time absorption constrained markets of Tight is on first the in For shortage governors as

Market in feedback are operating at customers We find tell quality These in locations. are conditions below them growth In-place for pencil. have which which hearing our driven in well is expanding the Construction is is long our four portfolio. playing right to rate is by labor years to difficult similar cycle. the U.S. rent mark-to-market us muted likely consistent our more now market, Europe future. additional the growth rents to the new on headwind largely cap this by massive development dynamic even are as years making from over out rapidly, the space the due elevated to a escalating several capacity as demand. that XX% period into from are favorable for in A been difficult has in last and than largely that they more continental U.S. costs compression organic

significant between value rate Two you recall, transactions this in the point market recent As we cap the compression portfolio and uplifting heavily invested will XXXX. region in the and to XXXX Europe. anticipated

improving and rental forward, sentiment higher record Going be vacancies. rates given will driven customer low

in been recovery have exclusively possible would with the continent beyond company growth portfolio. what U.S. Continued trajectory for will our the an extend

I points. strategy Looking to highlight our business would to two key like

combination of the now merger reduce from Europe. to efforts First, time combination of Last This closed XX of in our two the complete. night, is number of marks business our funds eight we to today. the the at to open-end initiative co-investment our simplify the on ventures our

each Europe from for the XX% have open-end sector-leading long-life that Over and the a We vehicle X a proportion XX%. in of billion we XX are same over single both fund in to assets. billion management a increased period, to under now over core the assets doubled perpetual U.S. third-party and

Our the profitable current matter grow markets and add allow will the understandable, that I us in is to far structure consumption more and most. might streamlined,

Second, our ability to source and allocate capital unparallel. globally is

Our sourcing opportunities deployment scaling the us world. to global and access around attractive give capital reach

year rate raised in billion in a sterling at the over long-term $X The far was our cap Brazil So X.X%. control majority average weighted of yen to a which in currencies, out rate matched those debt assets. against and we in we've for this at of buy partners and deployed vast million operating assets platforms X.X% and this XXX quarter our the to our interest

up While reducing capital were linked, opportunistic platform not risk explicitly global advantages in all transactions our portfolio. a the test today. great been sourcing terms capital that selection to currency critical. market of Operating feel new and limits while the conditions where investing saying I'll allocation, of of are continue never by and I these illustrate it about has the sum we in more

it streamlined franchise With global us Looking next years opportunistic capital further forward our and the I'd from to over will growth and about strategic all Tom. capital hand The be to quality, portfolio organic few reach like the path. allocation. that, will separate it

Tom Olinger

the updated push need well the located FFO to to reflect logistics maximize quarter Thanks, XXXX $X.XX and our continue occupancy our this share. per our of lease versus Hamid. We economics. facilities. market for In had provide core I'll for we quarter customers with condition Operating overall continued environment, highlights excellent results and be great guidance. rents to intensifying cover in another

reflect of the this Our strategy. success results

quarter increase rollover with the XX.X%, but points share marks by basis XX.X%, lower points a change was on sequentially, of XX.X%. record Our XX an net the end at basis effective U.S. This XX rent year-over-year. XX%. led above of change consecutive of quarter occupancy U.S. seventh was rent Global

from at results of portfolio. their net the X.X% X%. leading levels in we was with share Our same-store drag I in growth basis points a Brazil the U.S. our of our way to that occupancy partner's the effective to same-store want due out point acquisition XX NOI lower in interest had

by have been this our time contributor for by spreads meaningful cycle first years several same-store occupancy growth the and which exclusively driven is quarter third running. gains, was a The not releasing

benefit For results same-store with a occupancy our of no second we XXX had quarter a basis this such pick reference, quarter. in points up

and further rent Given same-store the accelerate will quarter. change, into cumulative effect market rent the of fourth growth

the XX% market globally NOI between spread is now the rents and XX% U.S. for This earnings leases in lengthens and and again our build and our quarter widened in-place potential our addition this runway In embedded growth. further up

both wide stabilizations starts has the buyer been out approximately projects one-time acquisition contribution J-REIT. starts. interest of in Moving the was are large on the is and of of the buyers. non-FFO two The for Dispositions by build-to-suit an transactions to excellent our of We and margins and our quarter of capital asset a we contributions partner's deployment contributing volume activity with sold portfolio. strategic USLF. strong majority since to former NAIF be acquisition our quarter, our XX% interest plan for had gain accounted to in generated quarter of capital this business nearly and in in and both NAIF Brazil our These $XXX portfolio which appreciation of driven a active the closing ahead continue to range from to million, assets attributed

to ventures. we completed the has of liquidity. rating This mentioned, an significant upgraded combination just A has European been Hamid $X.X our minus two billion vehicle As of

of well for created this single a logistics a our for growth. raised that Year-to-date, partners. we was no new event we real poised shortage is profitable not co-investment While from is experienced open-ended and There billion $X demand estate transaction liquidity Prologis, in have management located vehicle have teams. for over capital

and the our with capacity metrics leverage history, the quarter our including balances metrics, are aligned. us Debt-to-adjusted credit with of are cash growth. liquidity basis. no credit $XXX capitalization market below in positioning X.X ended times we in of million These Turning and on billion a strongest significant for $X XX% outstanding EBITDA

same-store We're our Moving to an full-year, occupancy XXXX given will occupancy we for the on guidance focus rents. ultimately our store our Where our basis. year. on share provide pushing end will ranges depend in which for on same range average maintaining guidance and I

these the same-store will Brazil long-term in however, In moderate always have strategies increased in on our bolster addition, also our which drag year; NOI focus. investment both full will our of is a the

range to We due our million from G&A to expenses revenue price. and as our prior range FX up due between compensation prior higher capital fees. transaction our guidance $XXX expect related million from share now up Strategic well between to as will guidance $XXX million $XXX to and $XXX FX our and million higher

range account markets that need for strong demand, robust $X.X to into continued changes our development guidance we contribution of highlight demand pipeline. we're to and no this XX% billion. on healthy pipelines the on the million volume. approximately rely capital by Given fact from conditions, very our will have increasing Based buyers billion in Built-to-suit guidance increasing were and increase visibility and by also disposition $XXX our $XXX These fund million. market our $X.X starts to the between

over end the disposition and point net midpoint the and timing I end million be our In to guidance, the X% it higher we midpoint, have $X long-term our pipeline will selling to into growth growth our future. share. given our in without at self-fund and and remaining targets of at our the out Putting liquidity foreseeable range be capacity on At between sources promote. than $XXX XXXX significant building the this together, that for FFO all of last XXXX $X.XX narrowing we to addition quarter to ventures reinvest our the this include to year. we're capacity with proceeds and assets. to billion development. revised both non-strategic one-time and lag $X.X fourth the of rebalancing of per was These guidance want core Based ownership liquidity, billion the development our represents the of approximately the XXXX will internal contribution back holding leverage $X.XX

to turn Our to that, had more cash wrap and are With higher store will strong track To excellent even the we over questions. with year growth call same NOI driven operator an the X%. continued quarter on by close up, than the I'll for momentum. AFFO growth be of your

Operator

you. Thank

question Instructions] question-and-answer KeyBanc. first will now Mailman go Please session. We Our the Craig ahead. begin from from comes [Operator

Craig Mailman

And run of maybe Maybe dispositions here? differential you maybe if a in know from you of build-to-suit way XX% which little from sense ramp there are we you on of as think terms pulling the pennies, also us much of of sort is thought give and kind a color 'XX was XQ any how forward the you in then redeployment, and and give on on bit rates? a XXXX, just transitioning starts. to of driving second XQ geographies timing about on bit FFO Tom, are you development said the I on start would little what increase maybe just the

Mike Curless

distribution geographic it is the This is couple I of Mike typical shaking XX% and the the this segments. of out when Curless, which of last we first is The good way in part in question. Americas, XX% see seeing XX% on over pretty of we geographic solid demand are kind and in years hit all your year Europe those Asia, three approximately the

Hamid Moghadam

terms Yes, as similar into volume to that of we well. the to and expect range are have next you going think guidance, be I should not from in providing for next term year we a going us the get long to but indicated forward year, doing

So here. in any on I is don’t there going think pulling

Tom Olinger

up guidance Craig in as our this the remarks on based about we development XXX drag, pipeline would I question prepared around talked starts in the then our increase be as million and year-over-year. And your about far my

you you from million year-over-year at XXX are basis. So $X.X yield looking to think if that on about on about impact really you that a and $X.X think that

Operator

you. Thank

Markets. Our Please from go next ahead. comes BMO Jeremy Capital Metz question from

Jeremy Metz

today, mentioned XX. portfolio U.S. and sit Hamid, global around you here we XX% about as is mark-to-market was the the

gap, then about Or more room a but how the there? many as how they when we to us is to this guidance, 'XX market XXXX, that? you opportunity is XXXX you about going slows more years And and Is there? down and that as from there about rents as for think we you less So runway difference accelerates closing mark-to-market you the go maybe in in looking that if here? there provide compare expirations, rent bit do thinking think getting XX Thanks. not in do gap were flat to closing think know, -- from

Hamid Moghadam

has every that Sure, or back basically question find of you rent years coming year day I growth because expectations. our and same giving later I myself the answered answer couple time the last exceeded

the getting the So mark-to-market runway, extended. is

You may mark-to-market. a couple remember quarters had maybe that we year of a ago ago, XX%

our yet lot now lower high. leases, We have of burnt those through mark-to-market early a is

chasing changing are that in And soon. certainly some have surely of will we think it's incredible just growth couple at I change it conservative, So don’t like really been seems rental point although and years. we again last

So, 'XX, the Europe, in is we the from not and say growth out, go this I would is year 'XX even it's year to we'd said will 'XX gradually have if moderate. probably year 'XX, mean flattened X% far the rent now because U.S. and so going

X% growth. then is about just that can see And of portfolio the X% big You time in our multiple same-store years that coming through really a great is news the Europe the NOI or that's way.

term been And can excess I think think longer many-many much the pay entirely growth have one of our quarter-by-quarter this is to years remarkable. I kind too that same-store in absent far those term of I people going on I you of of expectations. So count trends think I don't calamity, opposed think sort longer things -- of the trends as mean attention forward. strong trend. to

Mike Curless

I'll on give you same-store. a little color

we think is So pick no some things pool. to same-store up about first where this we the occupancy our quarter mentioned, as in had

So rent occupancy. by here levels not think you on exclusively are out, from change and rents being We occupancy so you driven should don't as think occupancy pushing levels on from know, any about all. almost at here see upside same-store by roll

your year. quarter was about got that the a XX.X% XX%. number rolling consistently forward, change because you when about what really the our to about what component, in that basis trailing to it's the 'XX fourth rent four going think change next four rolling quarter QX range And at what look rent flow. for about XXXX rent if QX XX% you think change now do in first would that's is is look is, the and quarters, was at you that's quarters. need I And last when you if number expect So itself number all think that to rent you on going grow. be above change XX%, same-store going to And just to by impacts

So we're fourth in have something front of we're rent XX quarter XX% that's got going going in to drop at the quarter, a change it. to off

the 'XX going is is a need of is look think trend XXXX, rent I roll When the the don't to exception anything you So in lower. going -- you XXXX there's on only roll at for increase. little versus with I be change roll think to

Operator

you. Thank

Citi. Our go Please from ahead. next comes Korchman from Manny

Manny Korchman

approach Hamid, as the think look changed? that buying of land the at your development Maybe, of land? you're we sort or growth has land sourcing about and accelerating either where you your pipeline. is How And to type do

Hamid Moghadam

buildings coverage It's getting because way. really. the bigger means buying are difficult which the -- by getting land lower and getting is are also requirements and more Not land the is more getting bigger, the

So is in we're the metro pieces that by. of hard to come need active flat areas where you getting land these major really

balance sheet I'm couple land in have is construction jurisdictions, of good for and everything, just hard things in years, the on some us respect land of tell to next getting land and going the pretty one And more and we're as sourcing getting land and with it's more and and for you of is for good are cost that's and costs of think the and about fair opportunity most very getting business. difficult. tough source. services to exactions our difficult the then the and things but difficult There's so -- very to amount plenty fortunate to So I that, approvals are unions are

more say would just becoming generally topic. So a difficult I land

Operator

you. Thank

comes Please go from America. Jamie question of Bank next Feldman Our ahead. from

Jamie Feldman

large might 'XX, see expect might and scale guidance best the kind global year how the funds of how consolidation thoughts us is consolidation And Where about we I you to 'XX, of this Brazil. expect down what I you're look investment we the doubling your much you business, the to in just much know activity to as guess giving are? you landscape? give ahead not guys Can thinking activity? just investment see, your for on opportunities but think

Hamid Moghadam

where evaluated but than those. that's of our opportunity, so of one of external looked been every of the have And one in. and Yes, proprietary on in big our we've it, We've tend be lot of transacted them, We've because the we and last that planning our disappointed chosen been that we've been development. we've years has our in in pretty portfolios we're at not And opportunistic. looked couple participated better those. capital frankly, not deal dollars that it Jamie, to in deal any pricing. every flow funds all We've

just going acquisition And are. as I opportunities million. it the We the many zero said your do Going year, actually. we're say and we've year in to to time XX next people comes giving million what's forward, and when what to for see I guidance one times, have guidance to not exceeded many say XX

We So, or something it the we price budget depends because predict disciplined which be not on to can we're pricing. it want we if that's not but we various whatever are. be, make that it's

of development lot to So you that and to going can our cetera. Bronx. expertise the acquisition of we're where more value. et is built be would We I added likely our activity customer create in of of be we recently expertise, building would tell just example because this to redevelopment Good franchise our see. and wait a for value Qualitatively, that example that have

kind a that's some competitive We and have those to cap do of kind going us can to on you of not of a on a out into advantage. of see war transactions, IRRs to declining rates where got deal. but us expect zero So rates, our lot kinds getting more

Operator

Thank you.

Please question comes Evercore ahead. from Our ISI. from Steve next go Sakwa

Steve Sakwa

on maybe the you are sort Just follow are guess given kind you your thought about slower and and pace that operating capacity. the of forward? I think spec? out function that your development on mix full leasing kind well tenants of morning. how process going there how build-to-suits of you of of know between the to of up about a good you opportunities comments of that changing mean Thanks, kind the and do I occupied sort the and Are being

Hamid Moghadam

I leasing is slowing down. Steve, think don't pace the of

slowing lease. is absorption think much I because isn't to there space down

would because is say I translating ever tenants we desire space time lease I meeting just because as I it’s month they ago we're advisory don't but time. that need. part high before heard as we had the of as we again, this, a customers message and same price, thought care the would hearing multiple our business So kind can't about time say that lot think space been. the from and customer It's And uniform just the really -- the the we the find interest never on to of it absorption our customers guess much Atlanta. hearing at in into from space and the We've that we're not grow. to never And they board half lease we a needs was, guys, a about and

space significant at a very margin. the volume volume go for is would of because of lease, and is to that readily of can say can't available In people the at we’ve I the that a that's thing the implications been de-risk margin going able terms And build-to-suit. to that they spec find build-to-suit the build-to-suit of business, development surprise

now that a number build-to-suit is kind were if So, It's same our way XX% spec into doing is translating this of that is build-to-suit up. we The are in the volume. surprise the incremental normal anywhere that overtime. and there's that's XX% XX%

Operator

Thank you.

Blaine Heck Our Wells from next ahead. go question from Fargo. Please comes

Blaine Heck

in guys XX about you actually guys a talk or slipped more that's bit pushing wondering can rents. are Gary, Hamid you points I'm more little basis Europe? maybe Occupancy if sequentially, but operations because on

during rents give any quarter and in maybe helpful? that'd that what you be were if can the Europe So color around spreads your

Gary Anderson

was drop occupancy recent handful and real no into about I Gary. XX.X%. anything it's single rollovers the We basis down of fairly UK, There The Belgium too XX in France, to get so I But think quarter that. the in large I a Yes, driver. drop, Poland. had wouldn’t points wouldn't worried the to dig

kick would I quarter. to expect In occupancy up next fact,

if significant or terms in both how both thing rents for compression our remarks. capital should you NOI, trailing of and And were change has In think upward at even is held about rent rents, market quarters of look that about five thinking that in Europe store the have forward. I quarters back four arrow. same that an his indicative going the be talked Hamid that opening But we

Hamid Moghadam

Yes, Mike.

the has more compression in to we've reinforce two factor just cap The Gary U.S. NAV, Just of not quite in created growth been as years Europe saying. three. been lot more rate the And compression Europe been maybe of the NAV, cap what has than is But incredible. in U.S. rate in a rent a there last there has certainly same by

NAV, I might So to not we're point going going go can it -- NAVs to and in that a But rental they're it's then down can into getting go be and certain rates to translate down growth. at level, rent quite to cap getting stop we mean it growth. in

Operator

Thank you.

question Our Please Carroll Markets. Michael RBC from go from next ahead. Capital comes

Michael Carroll

the What limiting that today? trends drop-off up to and and this pick rent us why price happened comments tenants worried on about given less supply activity, the the outlook? And What's XQ? color provide are this in your activity you especially drove the in some Can XQ XQ? the that

Hamid Moghadam

was don't I think it conscious. anything

and are have have I can quarter, starts second first of petered in the you out of high think and I we had don't level good starts it year. a on that. the the all I at quirk third it theory and beginning Maybe is quarter. that weather was the was just it you in tell facts bunch But the related.

are two one magnitude doesn't supply that or that there and think X% pretty are order And of to when pricing we've short going be of way of get number. is torturing is The pretty for numbers is vacancy. another power. lot XXX of discussion tight. much $X know, last is vacancy trying And between in there kind And, you about up or X%. supply under XXX the finally X% million going see supply been exceed to is I rates of ourselves years So demand demand. a what There forward. that's ample power we and pricing matter, too to Whether frankly to $X are million to

Some markets X% vacant. of these are

the So so think on I demand, don't of think to should as how another margin we I I compare the level watch relatively think one absolute and they supply it's are when instructive. the minute, differences --

Operator

you. Thank

from Our go next question Baird. Baird comes from Please Dave ahead.

Dave Baird

Tom, one and rollover? just you store looking your other? internally, versus trying same where or asset talked three, to three rank those non-core seeing capital time to I to partner quarter you pursue fund get it about contributions chasing a about clarification say each helps into Can the a and rebalancing. sense you make sales, you've that business capital of? any the that's on accelerate how might just capital change fourth the rent the Hamid development your or NOI Thanks. Are And with shifts we sense for would you think the talk major of in sources meaningful today, businesses

Tom Olinger

NOI from I'll level. the QX piece store QX will last growth Same take first. to accelerate

Hamid Moghadam

it How of our We we best the opportunities. to decisions we the business to -- how go want Where where have all of and business do a make. Where to around where we that’s first say it. out, much So set the we acquire? figure do We we what to I investors do Then the is That’s we we a customers. don’t would look drives And of approach that customers? place develop? the in see talking that’s run, our go -- lot capital. we our what serve well talk want a starts. need funding to to way

have lowest. cash with place to the place sheet. been the that’s effect, essentially, XX% cost frankly most combined of the on that’s Because balance why is And that also that opportunity nothing to obviously, the we all good just So, on the that which taking capital immediately opportunity sheet is across are the placed it beyond. we development time, capital go sheet, because is balance idle have for in in earnings development of the a we low land balance on there is that’s the

really on high. the incremental return is just is the which investment building So to

the order assets is from end the incremental of which these put And set land then first vehicles these priority where that’s work to these for development. our the investment we of strategy capital sheet to long-term established us for So have ownership balance and our assets. with And up.

capital. those that’s But excess when for When we right capitalize usually market case to public need high our in way the capital when having capital whatever Japan XX% the we market So us doing for vehicles capital you now, us private investments from or and to the see excess go in our have actually that. you percentage. see a places. Mexico The good in and we XX% being or the of deploy find really ventures those is to then ventures like of rebalancing in interest

to is objective those XX% strategic be long-term vehicles. real in Our around

$XX those that is long-term will So, by lot of today come down. capital And investors to capital couple capital. a then there the billion by in ventures billion in of with excess are the even dollars of way, $XX in that capitals, XX% billion totally because our X fine

is worried on nobody not about being So this. focused or

capital. need then permanent our find cost the these business, and capital, we the for go are and that’s strategic So with opportunity homes how that we assets with to customers, starts starts that’s to to creative, approach where we

Operator

John from ahead. question Please Our Stifel. from Guinee next comes go

John Guinee

and about down with rationalizing XXX a noticed cash since the Couple combined are you that Just a on things, by preferred KTR pushback long-time hand we million deal. XXX of debt on Congratulations. quarter-over-quarter seems up comment, Hamid, the is went it one like stock a getting plus lot of the million.

taxable talk earnings. about I share think If is a XXXX combination? share right $X like Can dividend for that your then could dividend is pressure? talk you unusual you about what about earnings second, now. transaction the I and not understand about net major $X.XX a And that’s looks drove

Hamid Moghadam

for John, let me lifting your start you thanking let me that it, about really KTR. by heavy turn comment I on making appreciate that but Tom. to question

Tom Olinger

So, USLF. on largely NAIF the attributable debt transaction drop, to the it's into

as transferred debt well. there we So, in

have you transaction by the So components. look its to at

during the we that reduce And plus, did so debt. proceeds primarily was driver in generate the Japan that used was quarter the So main also of decline to contribution, leverage. through significant the

dividend the we're foresee of I at any taxable Regarding out limit don't the our special sort covering need in tell for but income. -- of you the would a dividend, paying XXXX, I

somewhere So, to would dividend what cover that increases growth TI going AFFO going forward, base we're up the to to -- level of between is. think see I our

Hamid Moghadam

he John, how that. all tell he says I looks you of when can't stressed

Operator

you. Thank

next from Street comes question go Please Advisor. ahead. Frankel from Green Eric Our

Eric Frankel

team Last week, First, I again hosting investor your for it that. want for Europe. so quite was thank to in informative, thank that you tour

trade, well. discussions place? be to traditional going your taking Any It has related seem Second to are on doesn't just which the comments a all global NAFTA business. obviously that been driver that of

the the there U.S. little think trade be higher seems be U.S. that bit -- back is to to odds to going seems out the of I I think agreement.

can or share be thoughts customers appreciated? you would So your what thinking are that any

Hamid Moghadam

one that Caton We'll the speculation. realm let cover Chris in it's because of

Chris Caton

pace lately. the regard and agreements. it's as to seems on how question. the for tenure risk bit symptomatic new negotiations I to news NAFTA more there in the and But seems to it's suggest be a negotiates and it thanks to change U.S. something think of of a agreement. noise Eric, And those if also Yes, indeed,

which we'll next discussions year but think six And NAFTA, so indeed, discussions. slated may look into And a on to direction its continue more on continue is The a to noise. window withdrawal, I month of for initiate implications continue are see business. to U.S. that our important regardless is NAFTA, anyway, the

Gene Reilly

it's Gene. Eric,

effect an that actually other in probably if direction time on weekend, slightly on if fundamentals not And gone seen has we as in go are can to look, currency at now actually which Just off strengthening. as grown note, recently in look you has right to a fall anything and that dialogue back NAFTA and to. period Mexico and have have the of pay conditions does -- good. market half, attention that we one pretty we and But year entire direction, the been demand, a the any demand has Mexico easy during

Hamid Moghadam

commentary it the we've fact. in which to sounds least thing that's to Chris don't see is at late. said else sophistication deliberate U.S. that than quite have And but and add level I that by done everything strategy off more that like I of what only has a clear strategy, makes very that judging it

Operator

you. Thank

Our next from from go Please Morgan Stelzner comes ahead. Stanley. question Nick

Nick Stelzner

the on you across of in and give Can update What's levels your buildings demand area? the warehouse the also multi-storey an pricing different the and building been like to us initiatives other in U.S.? the the relative

Hamid Moghadam

same rent triple location building multi-storey a double expectation, that metro leased space is and higher quality a the acquired. We've has XX% we The been area. in our industrial than what and traditional between about in probably

San be those there do early, not million opportunities until this are years. markets would too know double mid-to-late X on the think square development is, having to next even math from year. is sort triple of Oh, And the is about type completed in for next foot to that buildings that's benefit project as traditional And markets can dialogue XX early. not and it's of the even price call lease of building Francisco five the we it, I think but these yet, million that I it not going it if unusual the six you feet, industrial. of sure to We're so don't are it's don't approved Our prematurely. opportunity Seattle the be

feet XXX XX of roughly feet square it square million million industrial. a to XXX So to it’s call equivalent regular a

markets. if So take growth opportunity time compare that successfully. the you got real estate a feet. portfolio, to if It's so a our can we million we've But in that's probably and we'll find speculation, execute at type those six it deal XX-XX% a XX%, U.S. XXX

Operator

you. Thank

from question Street from Frankel Eric go next Advisors. ahead. Green Our comes Please

Eric Frankel

increasing portfolio, quick activity? is additional where just bottom Is of rung your there of dispositions one the area to a fund generally? development the Just or specific follow-up. you're geographic Or kind market it

Hamid Moghadam

We're and the then very answer joking. regional we markets other want Tampa go three our Yes, and first, product. we we've keep Tampa. sold No, basically question of times out always that Because is markets, I'm only into to regional just done Eric, we're and the it. pretty back getting the own that. to we And the with to markets much selling top-tier

is So we're in X% market. interested of long-term, regional the that pruning the really markets and that of there always all the quality. X% markets we're then selling the time some terms you in in goes global sort of level core portfolio upgrading the on less to the know in high quality the product of And

in don't of a really essentially add And the the pretty billion we go what's -- and you know so our you last we're since of U.S., every real So less when sales the sold even go, million that essentially $XXX done or number. some will with to in outrageous that, I to million the $XX non-strategic calling X do that there the those, the that of of year to of offer estate we get sales And an it's a stuff. up will portfolio there're we Europe, that we hold. significant left. we're opportunistic to always on than we've million $XXX barrel want regular would so after all there's we build-to-suit say terms bottom are that getting be in a merger, the got

are So there be volumes decline. to likely dispositions, some but the will

I'm portfolio any a course, right there company or or could more those things of Of if dispositions now. of not aware that, major in a buy be but we something,

Operator

you. Thank

from go question Vincent from Bank. next comes Chao Please ahead. Deutsche Our

Vincent Chao

inclusive and of the changes of industry mean you the demand, by in this a cost any Just And than question maybe source question past faster construction growth? type three land, point rent six on on demand or but tenant seeing quick to growth months? I in an at costs just are construction then second just

Hamid Moghadam

is be a U.S. are costs the say to in would in than a than U.S. are are and labor anyway maybe that construction construction given Europe, to construction little much way, pretty to-date, In X% cost rent. up a big there by they driven and that, costs X% X% they -- Yes, it going everywhere faster say would costs rental around faster growing hard growth are lot the I going higher are world. up bit but

So, good Europe question? part I think long-term. development really What is tougher of is growth I think was pencil for your second which and rental in the getting out, to tougher the a in

Tom Olinger

a ahead also in picked well quarter residential the the which course as recent and with related in usage sector has packaging been U.S. has in usage that during a the sort we'll quarter. And So think in auto particular weakness related least up highlighted have the the some saw million cyclical reversal that. demand construction of the related we And then of last vehicles to we quarter e-com as X transportation damaged I strong and at of temporary for hurricanes. a these that

Hamid Moghadam

And monetization big then obviously in driver. a chain is of Europe, I'd say supply the the

XX%, and a goods up was XX% One of share quarter. consumer the Interestingly, automotive is XX% quarter. was XX% up it categories within this that sector this

be So, modernizing chain. pretty of terms their strong in the it to continues supply

and would were week, note the -- for was the you Jaguar Within they're be those cars e-commerce Rover preparing of BMW really driver car two. last to Obviously, both home revenues. that cyclical on about classic vehicle JLR's division you saw tour and alternative and special case, a you quarter, electric both it was appliances Land were this across and of significant those unit. XX%. For XX% pretty and share In continues

Operator

you. Thank

Our next ahead. from Petersen Please from comes Jon question Jefferies. go

Jon Petersen

are? the limiter have Hope provide Can you can people. lack think rents longer on a to really are that. ability about more and that the talk as limits But you pay increase that. things the a you Maybe where little you. color about supply? wages to customers to sure I'm not of on Thank labor to higher on And obviously going impacts term think you logically warehouses, find tight

the think trying market? with of Just to implications there longer labor what term are more the

Hamid Moghadam

driving we're replacement to are construction the two is putting there justify you need that kinds the cost. Yes, market. that effects shortage pressure labor One of construction cost. And rents on of is up of really therefore labor

push So that to rents tends up.

retail In pass really that employees buildings the what are actually that over low, terms time the and to the isn't going U.S. the of e-commerce. slowdown remember of that drug But are the terms them going cost customers is lot supply of energy they jumping doing an customers Interest it operating finding are chain actually supply of that. from hard -- skipped the because chain of to business in a I labor, the respective much real we having is there hear what introducing shortage quite so a to component of cost is in supply labor, so rates inventory cost. with are are they're have be. of in what more cost they to through conditions, a is and A carrying the transportation terms of apparently I lower in in paying because they're big being think about get things over which that's Anyway, generally lot labor. test, they're of terms the factor cost. that's actually down bricks-and-mortar working thought hiring I of more a big hadn't that. chain epidemic of But is used very this to estate improving than The is that automation, down they're opioid and warehouse doing being mean

in heard up some price cost, So, before. sensitive it’s total I is they are X% customers the some have supply X% appeared on they have dynamic mix, warehouse lot represents they rent, we in down. But less cases that the chain a which that are are really a which first remarkable openly what my going hearing from cost is us be cost to in never maybe their some I mean time past. than about that. of our for going telling and career

Operator

Please comes last Citi. Manny Thank question at your And Korchman you. go from ahead.

Manny Korchman

might with going your at on? mix looking a specifically largest looks the to quarter-over-quarter. anything here, -- supplemental there like Just else something issue portfolio or the your around dipped be boxes it Was in your there occupancy or

Gene Reilly

the segment as probably of we difference. been that particular. And you goes extremely anything This occupancy There dark, follow, it levels have million high isn’t footer X is about makes Gene.

wouldn’t read I into So, anything that.

Hamid Moghadam

seeing last again, That your soon. the Company many the of thank really and care. Dallas pretty you interest forward I you. We question. in look was in Okay, to appreciate Take guess,

Operator

for concludes Thank ladies This you, participating. you today's and gentlemen. conference. Thank

may disconnect. You now

Prologis (PLD) 17 Oct 172017 Q3 Earnings call transcript