PLD - Earnings call transcript Q1 2020

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Operator

Welcome to the Prologis Q1 Earnings Conference Call. My name is Mariana, and I will be your 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]. conference recorded. this that note is being Also

I'd Tracy Ward. to turn over to the call Tracy, now like you may begin.

Tracy Ward

good conference document that this operates and quarter Investor about will as Relations. website in Mariana, morning, call to to under Welcome Thanks, state current expectations, on like our contain are at XXXX prologis.com earnings available statements based call. is supplemental industry conference I'd beliefs The on our management's statements everyone. forward-looking as the and well under the projections and These which and federal Prologis securities laws. market estimates assumptions. first

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

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

first G, and measures. a are have that contain results supplemental and as Reg our non-GAAP reconciliation such those quarter release with do we FFO accordance press measures financial measures. EBITDA to provided And in Additionally,

we'll Arndt hear time market This Caton, Ed real with McKeown Chief who our Anderson, Tom Olinger, Moghadam, guidance. who and today. will here Tim Gary Nekritz, on from CFO, Officer Curless, Hamid our morning, and Chris results comment condition; are and will Gene also Mike Reilly, cover us Colleen Investment

With you that, Gene. please to I'll will turn the And begin? Gene, call over

Eugene Reilly

and well. Thanks, on Tracy. productively all report you glad We're We are working are appreciate basis. everyone yours to healthy joining our us hope today and a and we that remote teams

our seeing strong going and outlook focus Tom cover I'm will first now in to the types year. and business we're what these quarter all for Our was of very the on details. right

our across days seeing very effects short-term play are COVID we of sectors. time, customers we economy, differently just industry the are growing While XX% into shrinking. customer this and XX% XX At XX roughly out are to our are

conversely, spectrum issuing topic At categories of are extreme ends COVID specifically customer his the Caton and Next white have of the goods beverage home consumer sales and and sharply. be fourth and paper segmentation. significantly; sporting demand week furnishings staples Chris cloth and like down will food on this all up

contraction a through will others survive. pandemic for will time, has e-commerce significant led transition and continue customers short-term serving to economy. growth to unfortunately elevated Our pre-crisis. we At shock, recover the industries the going businesses certain the normalcy, fairly at longer a the XX% not to in some demand, face mentioned, of share I a And same quickly, stay XX% leasing versus experience are new home

arrive research, and of factored benefit applied dialogue XXXX tailwinds the customer headwinds in revised we earnings and With to at guidance. our

and assets non-strategic customer dispose that Our paying strength disciplined are over off balance the to headwinds portfolio today. dividends quality, several $XX sheet composition is the our mitigating billion past and efforts years, of

on long-term some likely the a impacts, very Turning from brought to retail. changes of e-commerce share the we to accelerate pandemic the durable. by brick will be mortar believe to is and shift COVID

we're in higher These increase fundamentals the the market for on year real believe logistics long-term, logistics of following growing stock for and time. for global now Chris to and the have XXXX full already also our and forecast estate team over will inventory a will positive effect will lead We real trends safety have his activity estate seeing expect updated this. XXXX. demand also but levels importance

geographies X.X%. will point demand XX% and from XX% resulting net to year but X.X%. have levels rate in square In to level a record U.S. of the also XXX healthy points will a similar at feet, supply square the very vacancy all historically. feet, an in decline. absorption U.S. increase basis XXX low year reductions driving up increase over XXXX XXX decline vacancy X.X% total a year will since vacancy to the basis million end decline total a in the rate year-over-year In rate X.X%. lowest will will summary, and million Europe the occupancies supply Japan's XX

spike and couple shows of we Our talked leasing witnessed that about proprietary has in a March, all in the you weeks down. activities settled leasing data ago,

are in with We historical trends. generally now seeing volumes line

Forward-looking encouraging. to be continues data

flat we During and that's portfolio leases the XX% signed million last up XX size. amounting days to year-over-year XX.X XXX square feet, for roughly adjusted

year-over-year for generations proposal over a was just gestation year-over-year. leases periods basis about up XX periods. lease comparable Our declined higher points new negotiation hundred XX%, XX% couple days Lease by and have than historical are retention

clear at several ways, see different point. After we themes slicing in this data three the

sectors essential demand. are product consumer the driving First,

driving our third, environment. customers Second, fairing demand smaller this are customers better And e-commerce is larger in across much industry than sectors.

rent annual on remain requests, X.X% under And slowed these update representing received have annual to-date, X% has XX% granted rent. were and been we points an days per here. customer. average Of XX of about gross of Now XX% relief deferral gross have of review loans rent growth basis not requests, an and form requests in of granted, rent representing of XX rent the

release our of gross rent our with not remainder XX these from As smaller opportunistic amount to the basis for We requests. rent through call, with loans deferral annual scheduled legitimate at and last this over is points COVID the believe loans repayment mentioned eventually about targeted will stemming customers XXXX. granted of on total need

to remain business, capital strategic positive investors sector. very estate on the logistics our Turning the real

seen on we to-date COVID-XX progress our good and on some be of redemptions but portion call, to no of the were market prior interest market. redemption majority trades noted secondary vast secondary to for the As in appears to-date there have the last activity,

guidance with accomplished active multiple to detail dispositions, to like This are remains acquisitions, activity Rather end volumes post-COVID now capital assumes Tom we leases volume is of where to for a or signed the the the Most moment. market and have development that between been guiding guidance the activity predicted in actually. speculate deployment conditions, context largely contributions. already. pipeline no year build-to-suit virtually future updated incremental some provide in speculative on would I than Next

work with halted projects at And XX the eight We projects continue yet Construction and local have ongoing been authorities. municipalities a to on markets. continues stop of request project with of to-date to customer. customers a having XX these XX closely in we on by

While our extremely well and trends we with through is very planning up the data holding e-commerce see leasing current reduced XXXX. we’re encouraging environment demand a end on of leasing,

to to opportunities have need customer mode will so expansion and will We serve others segments in our support fortunate. not we

prudently reliable environment. build-to-suit a as serve emerge opportunistically in of opportunities to advantage manage vehicles expect as and for customers, take capital investment alternative our and this strategic they We

that, turn with I'll And to it over Tom.

Thomas Olinger

Gene. Thanks,

to quarter and families your Starting comments of the results, first times. an QX did wish you FFO $X.XX these was want I'll for our a less expense challenging the or take quarter in I with our guidance. relief with discuss health foremost, $X.XX which then per $X for related Gene’s than share COVID-XX you introductory and to updated and recognize million the in a efforts. pre-COVID expectations. through the share was Prologis line and best Foundation First during of We core our echo little briefly donation to

sequentially the expectations. XX.X performing with for our synergy leased portfolios million at led U.S. and and completed hit rollover portfolios. Rent We XX% remains basis with we well XX.X%, as and the quarter are in integration our change expected. the at IPT the by strong quarter targets both feet the ending We of and both was in During acquisition occupancy down square on points XX%. and Liberty a XXX line

Our above basis XX share our forecast. NOI growth points which was cash X.X% of same-store was about

basis was lower quarter average points occupancy expectations. our XX for the Same-store again, consistent year-over-year,

X% in of the we've which rent the of Rent month. half our As country pace. collected vary X% until due yesterday, by XX% April is dates about of of our of due and back normal rent, isn't

we've in relates $XX structured All repaid million] of in rent be As granted granted XXXX. deferrals noted, million Gene [$X to to April. are deferrals, which

in million were For pre-leased. of deployment, million. were an XX% million creation projects value which XX% $XXX of we Stabilizations new $XXX margin development started estimated with and $XXX

early in than realized $XXX million development more gains through April. we Additionally,

Liquidity with and open-ended is $X.X The quarter enter have and and vehicles to position our line in at balance $XX we levels of at strength Prologis was end leverage the crisis with well Looking cleared over ratings of in billion. liquidity XXXX. until billion maturities sheet, borrowing capacity significant this debt current our capacity. combined out a we

for guidance to XXXX. Turning

outcomes approach first, to twofold; the is uncertainty. of prudence; Our given exercise range and use a broader second,

While economic with assumes quarter difficult our full guidance the operating quantify, recover towards the is to the impact into of to year. reduced the third beginning the end environment demand

basis. of components guidance key share are our Here our on the

and XX.X%. a Our cash the expect decrease will now growth be XXX decreasing midpoint in store The XXX range and same the points basis by X.XX% in occupancy points down midpoint XX.X% X.XX%. to between and range basis between average NOI, assumes we’re

range. We about basis in mid expect the retention to and increase points XXX be XX%

It's we've remaining our trends range basis much The the prior to if means and are based XXXX collection reserved basis, XX a debt percentage XXX continue. to debt midpoint We particularly points guide. expense estimating XXX basis our compares an note points midpoint annual of between which in to this basis expense is on basis important debt bad points points of of embedded positive on bad revenues. bad higher gross XXX revenue, cash

almost than guidance in discussed is peaked X that times during debt annualized historical upper for At the level an earlier basis. points the bad XX high our this call the GFC. that our double the debt we end on and annual As again, our range, at more basis month, expense at midpoint, of bad

deferrals mentioned, Gene about will granted basis XX As we believe amount to points. rent

credit the deferrals repaid, these for as expect to we the the in we be in for deferrals as loss have While potential well factored portfolio. elsewhere

have potential the the for our resulting rents months this We're assigned basis two year Rents our first growth XXX March points from since points basis assuming the in forecast. included for about of better. remainder of expectations, signed about been XXX rent impact in no while have of ahead debt for downtime a of We the leases occupancy year. bad were Xst lease

in to currently range market in change rent be mind in place XX%. is expect keep rent spread mid the our We XX% to and approximately

and expect the due we $XXX revenue capital, $X lower to promotes between million deployment our strategic down For forecasted funds. million, million excluding $XXX by range

our valuations. the for maintaining on revenue XXXX second income the of quarter quarter. The majority promote per of net share vast promote be are will end the year in We full based recognized $X.XX

$XXX $XXX at million million range we're forecasting midpoint. and G&A between million, net the $X down a For

Our over by $X our about lower million a From three the due the G&A dollar down next to million to through continue from years and we standpoint, net be currency is equity is well movements Foundation. $XX insulated XX%. primarily foreign contribution T&E, to FX for U.S. the year the offset extremely

between new started. $X.X starts million $XXX million projects that expect is billion. spec our all many construction stopped we recently to than for development mentioned of range Gene active development to speculate the complete more had year development XX% comprising on now have $XXX this halted build-to-suits and pipeline currently As cost volume. the with and We The

For not acquisitions under simply incremental than dispositions guidance, activity expectation, while contract. our we and forecasting a and no contributions few currently transactions other are

million deployment The timing uses now the midpoint, of minimal projecting down that changes we're deployment earnings a on at the million $XXX had For given prior net our net guidance. $XXX impact from activity.

lowering per guidance reasonably approached account, now $X.XX more no believe share, we conservatively XXXX Taking are income. we've $X.XX. $X.XX between which midpoint and the We today. severe We made promote by given with know $X.XX these includes a we what assumption into of expect net quite FFO assumptions range core forecast our

for roll, excluding bad at of year-over-year limited reserve at and dramatically growth promotes keeping and over leverage midpoint GFC. have flat. strong the the with XX%, remained while reduced all We that debt even deployment And multiples

at implies business the significant in ratio of emergence maintain the a structural Longer we dividend coverage to more range. payout continue term, mid two drivers. guidance about demand X.X our our feel new times XXXX We positive XX% given and

supply need over a First, as second, emphasize e-commerce resiliency be there efficiency; and of inventory chains an will for acceleration adoption. more

a In many. year closing, XXXX will be for tough

and Prologis a However, well in healthiest on market a positioned is this to extremely fundamentals well significant prepared. with time strong despite portfolio, rent balance the very an sheet. unprecedented place the record, uncertainty, spread We enter

that, with your the questions. for turn And back operator I'll it to

Operator

Instructions]. [Operator

question with BMO. from Your comes first Jeremy Metz

Your line is open.

Jeremy Metz

you break any you Gene in region at impact color or some start. a here seeing further gave foresee down particular here I or or level could was box what the little you're good small the if terms in you outside from you're same-store And big what maybe or just it if any city, are? high infill occupancy little those then what your markets, box, recent your a channels, and secondary Liberty just color to particular? a closed, seeing you pool, question debt follow-up similar are portfolios as Thanks. bad outside expectations assumptions across wondering the

Eugene Reilly

Tom in really Obviously question. segment on COVID prices. composition the the -- geography. of last have what's than front, both But the of any I segment sort Okay. size on comment is of more particular operation from demand terms happening and the mean industry it's may our facing I’ll Houston Jeremy, probably oil I headwinds plummeting and

So that's tougher this market are environment, our having segments industry time now. otherwise, than clearly But mentioned larger. are strongest. in And a toughest right the smaller customers I

the And actually with smaller -- have of I'd is percentage throw our which, in Atlanta respect high customers to of well. in market as one the there a we probably fairly Atlanta,

the... So to want I don’t Tom, take know if you

Thomas Olinger

at looked entire portfolio. consistently death We looked Yes, looked From stack. the by the perspective, a bad across Jeremy. composition across portfolio entire the we the industry, customer we it and at

about our unique of anything any see portfolios. don't we recently acquired So

Operator

comes Korchman with from Citi. Your next Manny question

is line open. Your

Manny Korchman

too just trajectory slow we given It sort slowdown XXXX. And or might today? maybe in about we rebound do growth? sort or as asking of be XXXX But your quicker to be pace how ‘XX, think sit how about early of that's either the going in to

Eugene Reilly

vaccine going business to before the slower vaccine. higher our is after think much somewhat and I be the

you which how you me going come when tell work going makes through, tell that to vaccine the year. us is and solution a permanent real So to the for I'll is

Operator

of question from next Your Feldman comes America. with Jamie Bank

Your line is open.

Jamie Feldman

able would can you actually how bad color watching hoping much was going help in the some terms in you they're government versus large help are really what smaller discussion. get and help not of as bit is those small it to focus I color the just they or I what more mean, provide stimulus you you. terms great? being tenants? as of, maybe could have Thank out Just get tenant on little to see factors for guys a can are if more to be you or seen

Eugene Reilly

distinction. a let necessarily me smaller Jamie, mean first So companies those don't that occupy make Smaller tenants spaces.

for you the locations and mom So to creditworthy distinguish got company. smaller between and pops

small So not tenants all are pressure. under

the Secondly, or to be kind the down residential sure construction environment. is your deferred far, -- in soon it you're support you, during think of at use, to talked But tell supplier lost government this about an auto margins is for a contractor least for can But how to that revenue a demand that their or Too some on of the and the help. this a related you're period. they've we've business don't a struggling the levels I if to going products so I the and support going demand. fully replaces is tell lot of

think can if back, through of be spring the on make the of they'll this And crisis, other this. I they it side the beneficiary

fiscal that the on that's stimulus for The tell. two stimulus been say a the would So, a in tough I than little in. of place monetary is But to weeks. also has less stimulus, of top there thing other ton is come

It's time problem. you better the because in not that them. people seem more are I because the in would a work that's their the funds. government, realizes the way, customers -- system -- distributing see change differently. the well, certainly guys of This monetary, the this is with cooperative terms than banks definite and happened oftentimes with everybody lot that banks something this anybody's to much accommodating the a -- banking with Because the banking fiscal, is they're of by system are and be would with attitude working that and I better around banks, and for capitalized know attitude by So but you

but the smaller won't ones, it. work I to think unfortunately with they're of them make their customers, So some including going

Operator

Stanley. Malhotra comes question from Morgan next Your Vikram with

Your line is open.

Vikram Malhotra

question bad rent ones quick bad first just really, second you talk clarify, on you've any have just debt you you the one Two on in quarter? the just that in. Can the and market can quarter debt second then baked about growth. And seen

by rent give bit referring are in clarify, little regions? rent just You XXXX? major you in us just color referenced to no market growth maybe growth. baking a more to want And I

Eugene Reilly

growth first on pick Tom the your me question over pitch of part I'll then question on up to Let the for and loss. it rent credit

give the growth. Rent spaces. basis points growth a higher spaces. XXX facts points you what specific February in those was for higher than projected we rent what Rent were those January on Let growth for me had surprisingly and had for March than basis XXX projected we

or in seen we decline far rental growth. haven't So, deceleration so evidence of

in be that respect that to forecast shared Tom absent to rental perfect got assumed with we've with you However, growth information, you, conservative the forecast. because

data two points. are those specific So

certain you over the last rolled had to portfolios, late The range third we IPT for that and cases both than in is on higher point year X% been underwrote we've give projected X% I'll them. that acquired data the of LPT. those for spaces two And we have rents we grants have when the forecast portfolios

you Tom, talk credit loss? about to want the

Thomas Olinger

Ys.

as points. on quarter, I at experienced write-offs cover we you trending a as bad in we of saw are we've did And look AR conservative really collections appropriately side. and almost measure XX we're on as March. bad And April severe can mentioned, any basis April, are to unusual, our the about the first on talked by downside nothing the normally, seen debt I reserved in So debt here

Operator

Our next comes Heck with from question Blaine Wells Fargo.

open. is line Your

Blaine Heck

the plan build-to-suits to guys rent XX the as the if forward you kind talk start so, been with on planned of mentioned those whether the other to as And this and are there side renegotiations any of that are well respect you equation? probability might've continuing about those later can construction, that happening of the build-to-suits you construction moving guys under are with So in there year.

Mike Curless

well underway. build-to-suits It’s Mike Blaine. are Curless. Hey, The XX

say from customers We to any anything haven't differently. heard

sign. very a in terms ever. is of prospect number, And people in E-commerce list, a that the are good active list as is the bit those. of would say I but as it's a that driver So shorter on big

You've lot In leases board. magnitude year. weeks. those, in this last order Amazon's mentioned, across XX read year. the this this seen a last about as leases came year to We've of activity And we signed several of Gene signed the three seven time compared

have for underpinning bunch that renegotiations it’s in build-to- with really There's to So marketplace. see the e-commerce -- lack good a spec seeing signs opportunities you're to going and to suit. of good any not I'm given the relative we the respect of of tailwind here, underway

So is robust. And I'd bit say shorter, activity build-to-suit this optimistic the prospect a but year. the list pretty about naturally we're

Operator

next comes question Your Evercore. from Green Jason with

Your line is open.

Jason Green

Good morning.

in on guidance Just question mentioned on these bad at the incorporates estimate now debt you call trend as that update guidance, trend saw points curious basis I could high points if but basis few bad and similar debt the last midpoint. that that made as higher? are know the business anything XXX weeks XXX just a you figures,

Thomas Olinger

write that that good fully deferral. No, We guide is just any guidance. ones be The on same call XX me equivalent to bad the Gene talked that that deferral. about. careful kind were of number expect the very and obviously we way the forecast let to financial rent to but actually we basis distinction basis That subject and have points to debt draw of about is XXX concept clarify. deferred on in performance off, total related That operating that between on talked did the as make of the any we because not the at points is that is we going the amount not

ones of of a didn't a default. Now portion default. could ask deferment will And a portion for them probably the that

very points loss. So different of average the credit XX than of points basis basis on XXX is the deferral

XXX point make The know understand the the we is certainly I sure the basis first other quarter heard points basis you what want is thing applied across from you that Tom, XX and year. was was. And to that as

basis start quarters, to future points quarter room whole points from of So across XXX first into year. basis we're carrying the the and XXX with got we've another

significantly is have on So amount that than the default surface. for anything what that could higher appears we reserved the

default even specific. April are more all the likely Xst. the to are they're tenants to course during that going default be of default Let default, going Not to to me default on going If are year. they

on default So they're to in July. average, going

the means times another get way X default If that ratably it, default at global quarters the alone around financial that remaining, And on you which higher. for is just XX debt number time off is the averaged can almost points the and basis the and more basis XXX significantly total crisis, midpoint you remaining than risk for written it we’re outcomes. basis divide in actual basis this XXX for the annually three points covered points

crisis a got multiples the scenario factored financial we've of of global times So in.

Operator

comes Capital Your KeyBanc Craig Mailman next question from with Markets.

Your is line open.

Craig Mailman

you referral the of but being requests out absorption net put about just figures are May. or pay Just from for hundred, out curious, and tenants of rent you year. And able to that maybe put April, worried kind your separately construction any paid this figures Chris, then a

giving guidance. in about the deliveries could in as Just we in snap in know with ’XX? in result I you're do backs and ’XX, ‘XX expected you absorption, the think better slowdown But than rebound think

Eugene Reilly

don't if don't Speakers] the until these country of will Everybody are back health up and talks the to going Even the lot of a place to people they work business nothing and the business, people won’t. but people with know snapbacks clear have that's go on who what, demonstrations open open have put go all do for they to that up for to work it. we signal will, to going work see, the government, front. got lot to back I to not to when I happen all and [Multiple about everybody's thinks. But is got Chris, again, the do,

So to for that. action the trigger government is think going I the don't be

come going all the health is clear the front. to I from to have think

Chris Caton

me answer seeing on and a the material we on in not important projects a I up outlook just the the he's way were supply. view here, but me a Right to that's started for And or view on now also impact the XXXX. demand, kind of already think, marketplace, finish which is remember let in given it's to the me delivery

Operator

Tom Catherwood BTIG. Your with next comes question from

line open. Your is now

Tom Catherwood

you your assist Tom, or and out that the to investments portfolio suit resiliency activity with you now. what shift it in efficiency customers this and focusing either how do you take are or this playing to mentioned see over are on How positioning part shift? built

Thomas Olinger

And So as to e-commerce is our activity, the to inventory given time. clear capture think already versus comment, delivery will that and on protect that. of efficiency one, portfolio against we to more I and to the meet base We'll I the they're carry then acceleration, that consumption for see positioned think shocks. capture see there base the portfolio consumption consumer number that to going resiliency its to to just customers proximity further the right future close demands of are themselves trends, want acceleration we long-term inventories

portfolio. bank to So out solidify our I land going and we're positioned continue our think and further is to our portfolio build today

Operator

Your next John question Peterson from comes Jefferies. with

Your line is open.

John Peterson

so, weeks six ago announced the you I guys about think program. or buyback share

think very some a question, stock second some space. time, one of social I'm industries people what the facilities Obviously, distancing few even mean any public curious makes unrelated to just your for And given in users buybacks have different does while at maybe sneak [Technical you around curious might Just in Difficulty]. substantially? it in Do and sense could share that matter. if for I buyback landlords fall price if perception the the

Thomas Olinger

continue think On distancing, off, airlines, but our the think the I will think I will question. your there categories the suffer hospitality, I of -- businesses convention servicing think are suffer. social that gist or and get of customers people trade I those like I you their businesses to certain continue to cut

it this those I what but is controversy have the actually people's companies the of I e-commerce a not employment testing, e-commerce understand The are you But people think the about buildings, of players, a things you mean and in responsible of very terms checking Amazon have also actual serology have of other only have there. work testing. the some most terms going people read our we in that's controls of same terms now lot some operations having of players time, I and pretty intensive they're that our occupants And during out If and mean the building. been been to lot in of regular providing in temperatures. go to difficult who

the they business. best can back they're think I get to people actually to doing So,

So very to felt it perception And doing that significant not you, the to and with be that then was And And changed I a we other million mind after I of know discount groceries XXs. got we things. respect actually program, into very, that the the and a can NAV that. $XX was you you thought commend to share to when buyback get them compelling I honest opportunity. of that buyback our and for and stock actually is the my stock going did be With great.

profits and profit. Prologis profits pretty of intention is those amount put foundation, all and it So all we we back substantial the there to the that our was took made a into

do I we of perception for I through and some So good and a think made cause. we're spend we haven't, going it But fully the actually but -- going to forward. good money going with to haven't some it thought we're it

Operator

Your Yulico next question with Nick comes from Scotiabank.

Your line is open.

Unidentified Analyst

This is [Sumit] Nick. for

Just a and actually. quick question term on lease leasing terminationss short

QX So versus of last too small as year doubled while versus revenue that XXXX. of almost is and lease this quarter QX terminations quarter a last have the percent

tenants markets what that to are of understand in trying you're to that, of color terminations? and seeing from just debt terms Any trying seeing useful. just understand the besides levels all bad elevated So would be

Thomas Olinger

This is Tom, Sumit.

we out to well. was and in It just we episodic. they’re there's not saw nothing them terminations, as was related unusual. in another And lease space were There the couples tenant’s On like that. what QX particularly needs unique, a helped

foreshadowing other There's don't just being episodic. we no any type it’s that fees with So of it. I activity. see termination trending see

Eugene Reilly

lot to So unlike the not that foot lease our it's the there's thing termination in add a fee business square And business, I Tom's would anyway. of office portfolio. only answer is a billion

very things around to a have decision. small we number and So very expanded there it's those a specific and maybe spread, in number, increased percentage it's spread and still things a little those large if could XX% bit. small that a very market anything, and by by where mind we moved as one of still have Keep is

sometimes terminations actually opportunity money and by us for make some lease make space. on money an So tenant some buying the to a the out re-leasing more are

we So minuscule of in terminations don't bad them. our business not scale apologize in every one And portfolio. and the are I lease necessarily the if they're of remember single

over X,XXX have leases. We

Operator

comes Bin Kim from question Ki next with Your SunTrust.

now Your line open. is

Ki Bin Kim

So taking you all to your talk the industry? bit put putting it being the just together. a spreads back, and flat, given seems risk macro a fund. first on I if can tenancy rent kind going or optimistic rent what's It of your about exposure question, step about just little second, comments market And at

So, it Is views? confidence your something tenant tenant in leasing that you by what gives really you're am I missing the or that doing from that else?

Thomas Olinger

which be Well, expectations growth. out as out, tell our was think that rents has in me of next I careful was in for result but that going a February, was gave year we to don't And snap forecast I I you, pushed going what up year to market going between issued a compared for we else guidance basically the rent tell to for do very our don't activity first back happened. you versus all, balance you of And year. to haven't pointed March next I rent. let forecast up there's X% But January X%. we up, the that's incorporate think and this actually someone distinguish

were not a fully now, you ask idea. If right baked me going it's

is growth view rent official on writing year for that So and we're it's the rent out growth. flat some our

think can forecast it or The as to very something, a market has near not we're decline precision. our do slight to you smart that rent So be enough numbers news growth little the with future. is things in of but able to with good those

ones and X% the space a only We roll market we of mark have year. have the to amount greater and rolls on XX% that over this over that

rollover. of is the results really and what percentage the drives mark-to-market rent So and operating small

think be deal. a don't going to it's I big So

Operator

Your Green next from Street comes question Advisors. Frankel Eric with

open. is line Your

Eric Frankel

that or that have Do of underlies safety Just assumptions this and of with year? industries inventory have team, your two specific you. just based kind questions. up, is on just you and then resilience have guidance this or this talked stock an kind you any Thank experience regarding operating And brought customers data? internal your forecast economic quick the your your

Thomas Olinger

really question. really your I'm Have to away. with honestly, any customers? blows just surprised we talked me That Eric,

very centric. are customer We

dedicated team facing to Officer, team, his our part major And who who XXX constant a have people over our and in the executive Customer field We in customers. addition, in have spends talking with a of Chief customer that we customers. dialog all time as the are

our quite bit. to speak a do customers we yes, So

I've forecast, I to because As down forecasts economic some seen at down smarter year. have much are that that people forecasts, a XX% economic don't year and than looking spend of have time lot X% Prologis a this

dynamics e-commerce, decline. short business. correlated correlated kinds economic inventory carry of And behavior we the growth our I completely longer when term, at So considerations. which is to forecast the and I stay highly term look consumption, more the don't our in the term, economy just of long what with yes, home those in it But at with business is need or overwhelm customer know the is.

Operator

Markets. comes Your with Carroll from next question Michael RBC Capital

Your open. is line

Michael Carroll

type tenants. provide of them to deferred the turmoil? done deferments, I rent of could color some rent average days you've for you on hoping this was that the XX mean, more Is being on those is that assuming enough think that market survive I I'm the stimulus tenants that be you're confidence qualify able going package? part. by smaller more And the these of give for type deferments And end collect percentage second to that the does of these to of year? the What as analysis. you specific I

Mike Curless

Yes, only we there's call high kicked qualify of us evidence in to We've contacted two a interacting where of for examples hey, the will we're been U. us in. and customers weeks stimulus that stimulus this and and percentage seeing with that look, that our the customers already later S. several say, had initially think we've

their know, we see wait but days, as of those XX mentioned, know And activity. May that with little to looked Hamid what's very they financials, at We've very opportunity going best again customers will that's percentage well. bit them you the to to our out high process. the next estimate a be thorough them. been necessary bridge a respect customers receiving of a We've we filled the then So had our And to be that, of and questionnaires. expect for

So that's where we are.

Eugene Reilly

last of of you a rent it. small some customer XX% we've a very those our you with call update think kind at to base to the just heard of of deferral. XX% I on today point about respect discussion as somewhere kind our heard has And had some course granted to portion in as and And question,

We more XX% today expect ultimately it’s like to and X%. maybe grant

XX% means base. So had direct we've square billion that customer with foot that's a million XXX discussion square portfolio on the feet. Well, of alone

in multiple sector during of we've So big companies our that of customers, topic period conversations, had the time. about sizes many many, just this with

time. really we're yes, the customers So talking to all

Operator

John Guinee with Your Stifel. next from question comes

Your line is open.

John Guinee

bit if don't anything I I or effect me. mentioned me as Tom, looks second, like accounting pretty think did, back $X.XX. strong tell deferrals? talk guidance of $X.XX, you then it might've And plays Could envelope just you midpoint on how a a to to to missed your about of about business. shoring $X.XX near this and rent your into I ramp, GAAP little is on your But the shoring

Eugene Reilly

on Yes, on shoring. the

going production. small part from of are shifting you European the change. focused because to the about China is business learnt And be very to totally strategy, very It's secondly, get very, it's It's X.X% to that know, our the I portfolio. of probably to in warehouse. a is Chinese of doesn't of the at China S. Europe, with and least most respect much with respect stuff S. to possibly from And going Mexico of U. So onshore to U. going to think don't as the that is and export our generate our consumption. We it's first income containers demand, industrial lot China. all, a domestic quickly towards

that So consumption the incremental and demand. the not consumption to in definition, there's on on I'm the counting U. shoring more that's but extent of top S. demand the it by markets, on Europe,

it And real factored those the market. help So lower are in reason really positioned estate is large well should really locations is labor where it and to that is the likely to really for we're on haven't we and and cheap, cheap go margin. urban cost the infill

shore LA, a not going going a to cheaper you're or plant go on Francisco that, likely environment. or to to So like in San to you're any place downtown put

and positive it I'm not our to beneficiaries going sure for So of biggest S. of important But will I demand. the European that. think U. be are geography, because we, be

you question? benefit will I remote think that. people of take from who are Tom, the want the other part probably in to more locations

Thomas Olinger

deferrals your accounting of other rent and analysis the the Yes, question on that.

and way just mentioned, term. the that the rent them revenue paid, XXXX. the be we're the the gain payment you due are that's collectible you dates expect assessment. to collectability We structuring is extending term, So whole deferrals on as our the within payment And we that when be but analysis certainly revenue, to book

reserve, collectability revenue assessment revenue on of revenue you that's to to book being that So collectability. reserve this portion that make April April is against book that in you assessment the or based your of you as and either a or relating the and deferred

that's will then debt regarding function bulk what of quarterly perspective, land. of we QX it's influenced experience. quite from like heavily a And look will then from bad by the the the see, And what a clearly, be ramping is earnings frankly, that when or a really promote, because

we debt that's going As bad think relative to what sitting lot a And of rest there we've year. move to happens I for there. got reserve the are our results of the said,

Eugene Reilly

our the The XX% I was year-over-year big these John XX%, adjustments, of on XX% that that to a And prior think growth, only actually. thing order that FFO add growth growth, I FFO would that's is to downward number. adjustments,

come So down X%. it's

of maybe are that and just years way lot now is coming prior on, high. suits so those we're in built asking a still guidance for another in that fully now that having there your capitalized income volume of how development of and come So producing. is and the primarily previously was are question your starts in reason is And high the of are them those interest

denominator capital as as where So extra leased expenditures had stabilized are those they're coming whole them earning a on online. we lot weren’t and earnings they them. in And the we

year-over-year changed So that environments I because nothing I with the environment. It in pretty with high strongest just of growth it do leverage. and was remains to XX% even without has this start mean, healthy. to increasing think

Operator

with Dave comes question Your Baird. from next Rodgers

is open. line Your

Dave Rodgers

and the in higher. first taken that to square idea Maybe the on stance in Tom, asset just a just maybe drill then guess the neutral being I time end that of you’d something wanted guys market flat and to for a the Hamid, rents guess of why Thank I that said doing, Tom follow you've taken values. wouldn't for if about on and just of the ones? you quarter. Gene smaller up assets sit could outlook valuation would I this you and there a you guidance was give Any more impact the portfolio in the as earlier I and why or point there larger that, deals the size number I market that the they are footage you consistent you. talked Did have to a very is vacancy be about I year, here maybe know you the color And the adjusted in promote of reason at pipeline, is pricing promote? any well? leases think basis. to helpful those that as risk that were

Thomas Olinger

up we promotes. are three that and can and that And feel and what downside appraisals, cons X% turmoil is room there the little with guiding But projecting a are And conservative around very value, these we've appraiser a real And promotes. value sufficient we've have the is basically such the normally generally cetera. appraisals numbers stickered there. are terminal talk year around absorb quarter like the generally the is that the promotes answer the they calculation a to because markets on or kind bit terminal to if the sensitive slightly promotes move got we're of very you are no move any appraisers first do like cetera, X% seen On quarterly. et generally about as but appraisals in the et that that

thing from years I of and back that promote is other three a will and of amount number would and of projected the which determined more not is the is known ago, The say was that than change. and hold half promote calculated

we exactly what number more a know portion So of it than big that XX%. is

say of would extent is to variabilities the XX% backed. I that it, So last it XX% on there's of

Eugene Reilly

last the Well, question, leasing. the part which the in second the answer of is days let me of XX experience just

more seen for we'll bigger customers. leasing that segments clarify to but so happy you in later on size definitely have bigger the We

Operator

next Bank. with Your question comes Johnston Deutsche from Derek

Your line is open.

Derek Johnston

You've covered lot, this. a so let's do

accretively So the past Meanwhile, will PLDs acquisitions. had so years additional far has on positive few over remained say investor and XXXX I rapidly large grown and sentiment industrial rates. in

you most portfolio larger probable you uncertain However, in shakeout, and and pause it about times? amid positioning, which tenant this the is these serious what makes know optimistic

Eugene Reilly

X% ago, those a based days of that's activity portfolios Tom, our this already Well, of underwriting two were couple talked we've last up experience had on half acquisitions. place. on on the of about taking about we And we time latest

Pennsylvania a big of Houston, reason, square lot and for space foot lot feel better thought previously, of Oh, So about we demand good really energy again because a thought we the pretty sure, lot and done in a but taking some Houston worse is have, did than we a the other a on strange it. up the than has Pennsylvania. boxes adjacent portfolio. had And presence billion it is in we too hand, York significant New and Liberty

a that's portfolio. bigger better that's So and actually looking

know articulated continue for reasons good they've before we we the X% all but investments years, the question? game Does again, answer a him to that, which give expected, ask better XX your so will next did on than performed don't really whether better we was that of question. net to net, you're than opportunity top behind because just it for a it's stand. the that block. those when Let's of complicated So start. be the I that's the that game off an it getting And ahead

if So

we again. didn't it answer it, ask

Operator

Korchman Manny Citi. Your with next question from comes

open. is line Your

Michael Bilerman

is in your Michael side you've and had a you've if side of volumes release, I not address and to second development more? and not well your Manny. billion quarter. obviously got to It's things, disposition the you the made and out sort you've the why great. changed a address And development. a capital brought by can you and commensurately, connected, if So press at then terms of you would What from looking of capital in and topics with down as approach industry acquisition you wondering what a down you've terms two a volumes, big where separate the somewhat cut seeing as here as deployment ramped which more are be large well conservative that of one, can know continue the little improve years why obviously that of taken the to development? you've And to liquidities and in location? on continue number to part its bit a on down take of the the and your the starts, development So building commitments advantage I land which marketplace was both done in at And sell sell build Bilerman two reshape quality future. want portfolio, know, you’ve much

Thomas Olinger

this assessment we'll saying forecast. that's a and got them going and see time. to is talking them going cliff everybody's give guys developments, they're We our in they’re we are GDP off down world the is we And and of of this the quarter two you you quarter chickens when go. ready about spec some front whatever. start entitled anytime, saying can going demand, that turbulent if the We try later. we've not chickens every We're to I very to falling or longer. think happen. we some had XX% get And or months We're is what mean, live

capital we If have starts conservative of going to out any not the saying that we our use and at we've accordingly. we our what got we're buy out. sort going even the advantage discretionary figuring projects, guidance the anything we're stick prices. going different, new of way, to our and have on to to think they're given out put people We're sure a first range. not we're for by prices to tailor we we've taken looking and doing But yesterday's become fact I a speculative deploy resources. message going And a and of neck all an other that at and don't approach, back have

to billion we start developments waiting. is $XX We waiting, we going only predict is the upside balance have once we over there's But the comfortable cost will no of really can't and there $XX in forward. certainly there about and leasing capacity sheet, between that, those billion, funds feel that

thing So we're We're we'll And get But to well not we've going not closer that be to have still it's forecast. a upside. I positioned prudent downside. covered It's on intended do a for we what to wrong over to the the before. And do. skis. planned about and just we're doing our hope

Operator

Feldman Jamie Your next of with from question comes America. Bank

line open. Your is

Jamie Feldman

But picture things a risk occupancy see think, you something see I'm trajectory towards thinking up said Where same lines you seeing bottoming about a among when as what just for more through, things just the you've are that But competitors distress is obviously, you One how the get think along where's kind in about people detailed follow of a year maybe downturns and cracks, quick if aren't seen? you talk improved. then question. bigger I we is, that you the lot versus do there's then portfolio? you know it could or end And just prior occupancy? curious I the cracks. most guys potential about?

Eugene Reilly

significant it Yes, or based after quarter it's likely increase get even coming, the it's of is in occupancy we definite coming. will when that maybe the on I the it's anticipation and announced vaccine quarter think a available, the

in we happening of got developments next and even tell been that them. hearing that medical I you centers there's And constant dialog some hear about to I've there's really from going couple August, I'll here really I'm on community. the stuff mean, timeframe. positive September when be. tell the everything again that about scientific good big therapeutic with more may the be So hear, really we've in me like the and a it's you side, some although, date From summer-ish, will I

So think will turn around. I occupancies that's the when

I There Buffett well tide been the throughout In the there find some the the the way, around say of I ‘XX think is that the people the disciplined the recedes. all out being we'll of cracks, dot mostly by as brethren particularly naked everybody's sector. Eastern of private there and in But says been, skiers. really I'm in parts cycles. SNL guess it's their or cycles proud terms would that whether that gotten I are public private Europe, crisis those of by less kind one of what Warren who's I the Maybe a say as they've example players, seen, or of I've swimming cycle. the side, would than GSV, of happens. on pretty less see around pretty good on Europe really they're behaved And are couple enlarge my and really have say of Central good there out collapse or have much, skis of I com we'll that would any But

time quarter are think way with our much I time this calls. two allotment, taken we too your and over we've of

next interest you environment. optimistic hopefully, me company your healthy. more are thank in everyone call. invite for let the much And Take stay this than we and So quarterly And be our you to we'll care. all in

Operator

concludes your Thank today's for Ladies call. and gentlemen, this you conference participation.

now may You disconnect.

Prologis (PLD) 21 Apr 202020 Q1 Earnings call transcript