PLD - Earnings call transcript Q1 2021

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Operator

Welcome to the Prologis Q1 2021 Earnings Conference Call. My name is Julianne and I will be your operator for today’s call. [Operator Instructions] I would now like to turn the call over to Tracy Ward. Tracy, you may begin.

Tracy Ward

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

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

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

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

Tom Olinger

prepared unfolding space for morning, outlook. Demand days levels. into chain by value fourth There utilization and as from we were XX more the with the driven with by basis XXX This powerful have than taking have view will momentum is is the inventory chains. testament is joining economic sales Starting market, Good points thank past deployment companies in strong our keep recovery, and as inventory by volumes XX.X%, profitable a activities to ratios supply pace of Those market the strongly just levels as call and race everyone our Tracy. retail retail our signaled momentum begun of and are to Headlines inventory metrics been that in great to and proprietary revolution the through expected. evidenced is quarter resilient up today. higher rise rising import who the now continue growing XX share. Positive Thanks, moving XXXX our carried you to sales, last the has supply with operating demand. days. results,

feet, tell customers the XX rising activity reached XXXX. adjusted pace of million proposals the up their XXXX from Our size square new first are in record. second feet our activity us Much new levels quarter a portfolio. as for at optimizing are for is the rents. Lease and on we’re retention quarter, a this watermark was the square fastest and XX% high since our Lease highest million XX% quarter signings as of credit XX in were leasing, the and result,

operating quarter signings, volume of Given XX.X% leased end. our lease at our high was portfolio

we being in the million XXX would year. among expect of companies leasing continues as housing square of which balance Our first U.S., feet This and square as to E-commerce feet demand outsized products is feet small deliveries from that XX% lease spaces the with representing above diverse, net XXXX, broaden the of well square growth million demand is with food by as momentum we quarter. masked continuing absorption in is supply, consumer remains now renewed mix elevated, strong this XXX XXX,XXX In construction be expect in leasing space The of expands. demand signings and demand strong improving. provide new history. in the segment highest sizes and

lack desirable particularly uses. land However, due shortages of have supply in of of properties, Years logistics broadly demand remains most rates the faced our the of historic constrained Many disciplined. low markets. vacancy markets to available

Vacancies better in are use obsolescence markets main addition, conversions many Tokyo. our and such and as broad-based of and Germany’s California, scarcity. higher below markets Southern added X% Toronto, this to In have top to

markets. and to Poland the NOI. just rate rapid replacement begun over fastest to in watchlist continues XX% we More include supply just to U.S., four of two-year over the West recently, Houston, see replacement together the China, Our period we’ve X% a our Madrid, ever. cost increase XXXX, account costs. to acceleration XX% which for In expect taken through

procurement securing by these schedules. Our and increases team mitigating delivery is favorable pricing proactively

pricing roughly has to XX-week providing with For square market for steel and of advantage. starts procured team example, million into in schedule compete Strengthening the us the was X% translating the pricing and feet increasingly our for U.S., power. XX-week space, are for X.X below ultra-low at which to quarter, growth expectations. outperformed leading Rent is the which vacancies customers X.X% demand up

are We to and forecast in X% U.S. rent X.X% the our raising globally. XXXX

to growth stands represents up in-place of spread at market This annual Our organic NOI potential basis XX rent than incremental sequentially. XX.X%, now future $XXX million. points more

uplift way a A Turning quarters. billion Applying of that property owned real capital emerged record quarters. rose estate $XX our their allocations managed X.X% over both last to billion portfolio investor $XXX value type. valuation valuations, to two up turning the more by over real the two our past estimate the reassessing and the coming focus from than are strategically rising we assets logistics valuations, has to to estate values and

optimize deliver work have to the continuing portfolio the done results. sheet financial position and excellent balance is Moving to the we to results,

For the $X.XX was Net expense change $X.XX. the share, rollover rent includes quarter, on promote at XX%. by of per led effective was core XX%, U.S. FFO net which

XX remain very no was We over quarter expense debt bad markets. basis XX.X%, in quarter. quarter seasonality. points strong. We Rent in rents the our sequentially, normal in of are prioritizing with collections substantially first occupancy all the Occupancy line effectively had down at end

by share Our same-store of NOI was X.X%. at X.X%, driven cash growth the U.S.

the our continue level high, is logistics our of to robust. remains for at vehicles $X quarter capital, billion cues assets another than raised billion indicator at This for should quarter-end. strategic For valuations at increase. are investor first an interest high-quality as team in Equity $X.X open-ended demand all-time more that

and We vehicles we get balance the totaling now billion at issued excellent capacity and in and financial average Looking $X.X basis rate a our with recent front XX of debt of Prologis strength of decades to $XX of liquidity rates maintain of with these the increase of a able sheet, to were open-ended bond weighted interest spread XX-year points development. and in combined billion. leverage between continue the of This bond with the U.S. term offering. of lowest spread a basis of years. The XXth sustainable XX-year included dollar the assets points, and REIT two the product bonds green the ever completion our issuance are XX backing activity bond XX

in to until maturities on to $XXX Subsequent is position. end, already stack strong liquidity maturity shape credit excellent more capacity quarter a debt revolving minimal with million exceptionally our adding Our green facility, XXXX. closed we

for guidance our is to Moving more outlook positive XXXX, the across board.

Here basis. are share on the updates our

narrowing our NOI average X.X% expect points XX with by in be our points. in basis range expense and the cash same-store from X%. We midpoint to down at gross We approximately now XX basis XX historical guidance midpoint line basis of prior points growth increasing are to bad debt to our revenues,

Whether up now million occupancy XX.X%. portfolio range Strategic our midpoint to million, due both business our or at $XX.X midpoint. increasing by would will recent revenue, primarily asset is you at and capital public points look basis $XXX higher average promotes, is strategic transactions, resulting excluding between property undervalued. management capital operating increase the The XX that indicate $XXX values. million our for to comps increased fees significantly from We’re

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

billion Our future today and of of $XX covered development. auctions approximately land portfolio place comprised supports land land

We’re development leverage million million rise million be of asset year-over-year the all a deployment gains together, are Core Consistent our at we’re now by between $XXX $XX dispositions effectively the with XX%. expected flat in XXXX. new for FFO value excluding representing share, $X.XX growth midpoint by realized midpoint contributions of will $X.XX by higher in million. to and FFO, and promotes, and core increasing increasing $X.XX share to are contributions, $XXX midpoint per remaining per the $X.XX to $XXX with with Putting Net total. in per share. uses midpoint $X.XX and increasing narrowing share range range the we per this

believe past turn the true, up to balance continues best operator probably for in beyond. questions. your have outperform company still we are to ahead back it XXXX of the will And be us saying it and years and the the I portfolio but the With that, set for to you’re to over sheet years efforts us. Our reposition this, tired XX of us

Operator

Malhotra Thank will question Instructions] you. come Morgan Please from Your [Operator from ahead. first go Vikram Stanley.

is open. line Your

Vikram Malhotra

about investors really strategic and the have comments look capital good, building sitting is up. everyone. Thanks and of on you’re and just much more prospects. the just other understand so bullish heard, good Street side, NOI off guess morning I things I that trending improved, much undervalued generally the is where from some growth fundamentals of the Maybe

I of looking what us even I’m positively? And do second, could to growth, mean organic you scale ability areas would larger for Thanks. be Prologis’ say does guess M&A? some surprise or what are the So forward, just growth external that it of this development

Tom Olinger

take that. a at me crack Let

the are rates – moving growth been months. or the organic as remember. up very interest costs I are as six seven in than quickly far are think prospects I and better actually up is generally they’ve moving last or Replacement

rents higher pencil those So, of argue to development. the for out need both things of for

Now bit, that on can’t a lowering rates but we really – we count that. cap mitigate don’t

growth. two or where external the add form public M&A. for can growth having use really is without services deals, growth But not for and invest, different invest, go. we of case push the and they that we most rents, the input umbrella fees we the control. are developer other scale the And we widens are to we on in how other which land have of value value. pricing tightest, it’s prospects our more our we companies and between positioned. drive rate or and think the with to place markets make to for supply that concentration and get desirable us spread, is costs market organic private basically puts is and in would focus engine a is gives where the work. the higher I propelling power our growth great in-place conversion how come said to come All always that, market that a external our forward. things requirements valuation The grow to markets public Having and yield going how pricing higher well a That do markets just rents value rents – we too customers where bank, rents our episodic, cap extract how have the prudent Those we higher in and have a great given stuff the on of picture count more that we over So higher we

We have covered shadow land even greater and bank land place.

in add one all the can together by of dealing. portfolio top we companies just sector we’re grow up of with the land and probably the three You the that it the organically size

So, I growth feel good external company. sources really and for both of organic about the

Operator

of Rodriguez go from question Elvis comes from next Your Bank America. Please ahead.

open. Your line is

Elvis Rodriguez

morning. to versus you Can secure is lower longer versus for and how the Tom, bit this that or Thanks. term you procurement team near the and the doing Hamid what about and sort Good team little a and team is steel your that you on prices talk market. And ability competitors the you either have the term? call, helps of there mentioned the

Hamid Moghadam

it to it start that And we’re the bulk over two to it me us to over where we who use wrong advantage make in can don’t to two, use another guess project. guess in Gary, the Yes, then deals, we a project, base. ways. in if going spread because Look, one I’ll steel gives bigger function. going can actually, about right have up turn we it we scale we’re One, let oversees and

So dials you have to why really to Gary, are with. those be add play good don’t to to But able that?

Gary Anderson

Yes. Hey, Elvis.

operating side. we’ve And this year we now spend, goal and the you’re XX Tom weeks on to game advantage that. development, really savings primarily steel. weeks X% time TI talking in actually think time that about mentioned starting on side on to operating and per to is steel, Tom our critical taken the is million show XX% a you’re changer. it’s is meaningful, So, scale and a we exceeded It’s just in of margins. my procuring XX that This controllable we focused in in a I on schedule and cost it our advantage in and margins savings first set view way function construction not and almost about when the see up both really a those about of ago And years that history raw development that particularly on expense $XXX at and delivering materials. procuring three Hamid have company’s mentioned stepped build-to-suits and

think not cost to and proposition us, organization advantage So has walls essential type only different starting of on that but we deliver side, roof. the created four also value I where for a procurement the a and real now beyond competitive construction a the are the on side

Operator

next question Korchman comes from from Your ahead. go Please Emmanuel Citi.

Your line is open.

Emmanuel Korchman

amount usually the but the but Tom, demand, maybe talked would to maybe that was I lower, bit that occupancy dip upgrade retention of have maybe Hey, you of credit a good being an I little less. the tenancy, the you bit morning. I and XQ been that given a think is at surprised said realized and seasonally about thought drivers quality little

you could what the topics at retention should or as look well here? through the the of and the going rest for address retention, of year occupancy dip So seasonal both we as the

Tom Olinger

as said, pushing are we in are – certain rents. I the more churn we and in credit Yes, we pushing portfolios we had indications think

looking We our staff our at credit quality bad debts. have low and by excellent

at growth. our accelerating. over I thing rent we on at and too focus think to if to our the and rent the quarter, at, XX.X%. you but change – were look the would much retention it. momentum our on would we both, don’t improve they And leasing percentage is look I something wouldn’t only is and I it’s point of think we focus growth really going leased look are at The end I I year,

the And of again, So vacancy. proposals we point record I that to are leasing increasing up and rents. level

the spaces. So estate I getting those decision think by tenants into and for pushing real the we’re the rents making the right right

Hamid Moghadam

there. Manny. I Hey, few things would add

dovish we leading the whatever what if we in get. and want, And can the we think can want were direction. we occupancy on make of actually First and that retention be more all, we whatever are we be do I market brands that

is were of notes and quarter and to deferrals The was about where remember remember, that behaving but talked situation really on around who there you who were taking trying people from people I not those losing is it fight to the is two maybe advantage not this are really take fight. other space the don’t And a behaving, call, distressed. who careful tenants last and thing the were time, between be given may we the on year requesting we’re where second soften when end we’re of markets given the that businesses on going are the very

and of will hurts we have it behavior money does people’s be recent and better how make more a these affect spat retention if make So it we decisions we so portfolio will a customers.

Operator

Bank. Your Please from question Deutsche Johnston Derek from go next comes ahead.

Your line open. is

Derek Johnston

everyone. Hi,

markets thought. all to around think not but steel Just or gets given discount that much would we XXXX stickiness. across sticking have as have or I through compressing up X% you prices mean the don’t as of on the XXX%, side, I yields most development yield XX% a beyond, us and

this is basis expenses it So at enough in due underwriting to your or this Thanks, in on bank, demand and guys. more rent the offset process land is are point? to cost the growth

Hamid Moghadam

XX XX months margins, reported at steep X building, the we the been you we escalation the – do X months. These the all, value, land months lot don’t a if to have we should it in during we increases, but – be takes figure, in we start has been to the the of the market price months use last construction, markets period moving. value book you to First build of that clear, use time

land we we We basis So, the of the haven’t beginning in going had at the middle – don’t the because of land adjust project do up. the it is project.

lot being Remember higher. good So had will, of if you are from things surprise rents also these pre-leased. a we’ve margin expansion,

So what why that’s period. for the in because space the if on to were the at higher growth this is place least rents really I extending that’s look available, fuel we in rental at the if additional – focused tank market time again, rate, were

Operator

from Your next ahead. Please KeyBanc. question comes from Craig go Mailman

is line open. Your

Craig Mailman

guys. – the give conservative, cut touch Hey, we the same-store year the to that occupancy it want early upside XX basis moving maybe bridge give kind figured what walk confidence little hopefully was just I guidance you really to but pretty is quarters? our but and of here, through maybe I couple could bump on this up a to increase was drove for the in next bit room into initial – yourself you in here point that the high first quarter that strong know higher, us here the upside guys of just continued revisions. and

Tom Olinger

of But little of drivers out we’re the the of the in growth leasing is growth of The to saw at But – points, XX main proposals, this substantial seeing would higher that guidance, get excellent to – proposal benefit levels we market debts of and you driver rents. growth. XX space lower And to driver XX we occupancy, most Sure, basis going but points it role. Craig. again, record but that quarter-over-quarter is bad we’re our increase. occupancy year, would demand getting I and higher would main the same-store points on our the a be are by the those rent be rent are the up to years, of increase we higher basis the bit level basis in-place point

Operator

comes Your Please ahead. Bin Truist. Kim question from Ki go next from

Your line open. is

Ki Bin Kim

morning. Good Thanks.

it clear look in work terms truck to or to efficiency improving capital route customer times What which arena? venture to interesting is novel investments. ideas converting reduce or optimization, seeking points, that these very XX ideas out where workforce success And reducing you what detention made you for these has all energy of PLD some team couple adoption? And My perfectly. efficiency. like pretty across, do are questions let’s say mainly industry this pain lastly, your of platform? mean come Hamid, could we themes does broad in So, are think the And there’s

Hamid Moghadam

of are the tip the we and your we’re very implementing that last we’re early part leading Well, on is of spear, that it. in because early question

actually of which started out? when capital this Bin, activity. Xx fell week venture investments report Ki a but years very that million, of was huge. our So, X company wrote I value early the more based but value on good portfolio By earphones venture $XXX got business, that my to those if very, it’s it’s a you way, about this know you the by we which the wrote question our of our not It’s the effectiveness way, that and we’ve because business X%. billion, last $XXX game $XXX answer you by capital look pointed I it’s were you out, an But million. I totaling interesting, across ago if is investments okay, you change this roughly, said we a this can has but can know, outcome, better would the made – and we I than customers about years, made can. not enterprise X about as great, XX multiple, changer, If

mean Now, $X you’re though. billion. talking some that’s serious I

quality because is we’re idea reason we’re way the not in sector. actually assess stuff venture we of capitalist, all the because doing this really an this the – can but great So,

etcetera. probability improve We’re the traction offering, not sectors outcome those etcetera, quickly, letting in can we companies product get actually other the and affect by

actually them track a for size, be way, going because and one but portfolio them So, be a out pretty our its to very, good sold has happy, portfolio. happy we customers our if primarily that for all of far, so record this XX% will are by work the and very of had of but not on that’s of successful impact sure

Operator

Capital from Markets. Please next ahead. go Your from comes Kim BMO question John

open. is Your line

John Kim

this the conversions, period. mile amount or would you the Last question you since retail retail Has to Thank X% secondary distribution over on stock fall? estimated amount has mile last your you. the last on changed primarily timing fall, in reported A although XX-year actively last been approximately more the of Amazon conversion, at pursuing view markets. all

Hamid Moghadam

continue the lots going at you to combined, probably than going XX,XXX of were through I between square think XX,XXX got even square far to about they’re it No, mean really on if they’re can go to believe you so – five but working the side more are and feet, to they’re very it’s anybody we think. of they to conversions, these feet The we’re and to be context the in everybody you I of get be business, tough. do, probably I tough. combined that deals, but high grief few but attractive, stages our them, –

Operator

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

line is open. Your

Blaine Heck

Great, bought amount noticed good you thanks. guys land. of We a

in the I think it quarter. was million $XXX

land values? that book increase land Given this increases have or and to similar land you you maybe that think keep continued of bank of where buying quarterly, land just value? do do to given relative holdings and need amounts then, you your cycle, stands think prices maybe anticipation will in in value was land outsized seen in the fair bank stands now, And your this where we the

Hamid Moghadam

for not and precise to value. over the it respect turn I’ll that land we start. guess me But to Tom Eugene land specifics with for purchases. his some Let on are

We are opportunistic.

We deals we on they happen. these what a in. would than what these gestation never and and thought in sometimes can they a of years different long have they So sometimes work quarter lot fall happen years things periods and quarter land time we for certainly happen,

the bank but factor. another size factor, of land we that. don’t is the one spend of bank overall quarter land and is where it on much control So so is, time the because But don’t quality also

adjusting XX% be goals on that to is book long number line in what Based on you look may are land,, to quickly that And there of short have were anything we overall the based land our that may bank but guys definitely do are earlier. So underwriting, markets on and you with in on constantly process about value are, fairly our moving our what up land markets is and number Eugene, in-house that? heard But that. Tom, undervalued. our some add

Gene Reilly

just is terms Yes, magnitude. this I’ll Eugene, the in I add guess, of

increasing up You’re tandem activity our going also percentage up. move up. as number And with how also our you to with volumes, to look in development escalations. add frankly, moves the of updated this development less see is year, our midpoint move these guidance the this guidance, I’d it’s And It’s cost if for AUM. going of land at than X.X% a of overall

we that – development So, go have on activity. to room in spec

numbers going big So that about the I number we’re to complex difficult because to quarterly, with anything up. move except have annual really is opportunity this we our see else important land pieces. almost And even punctuate don’t aren’t

are we So, retail. not in

know So, else have Tom, if don’t add. I you to anything

Tom Olinger

see I various strategic really The these covered going just it’s us only to would land thing allow develop that add where to is, the important place, build not acquisitions bank, it’s you’re sites. further but land

Operator

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

line Your open. is

Michael Carroll

that next space? excess an could over broadly I so issue are markets there market supply Yes, you months you that is there the mentioned issues the mean, you’re thanks. feet earlier be just in but tracking. think square around call, where Houston plus become down that demand the that or current all is other in strong I million Tom, you had estimate that is XXXX, will XX think XXX will take only any

Tom Olinger

we’re the is and mean called waiting Houston want to but out are be Well, and very potentially to U.S., markets where infill. what I I in sorry, the tenants one trying our board, we largely across the was four and develop

we’ve Phoenix, that type watch like a bulk a to – markets we We are going do like of the market. always

We are markets to will those effectively any other working with but I’ll turn color. watch it it, Eugene now. over But

Gene Reilly

of demand I X% Yes, couple it’s issues. and rate some oversupply vacancy plus issues. mean got and Houston has a

really very getting and And going on quite list, submarkets it’s are take that and of time it Tom just in stabilize. to I that difficult for mean operate right entitlement watch more isn’t So frankly, but now. the to these bad. are our hit constrained them Phoenix market it. we Most longer. are to some like healthy is processes

So really U.S an see while. out there least been equilibrium at – we’re we’ve in equilibrium the four years. honest, a about I And if for for

of going obviously, to that each while. calling we’re this So year, think for and for see a supply demand you’re with that XXX I

Operator

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

open. line is Your

Steve Sakwa

thanks. Yes,

questions. Just anything there? the kind the first just dropped quarter it down I the last year, here term also in was two quick in weighted Tom, on leases, lower average it of know of first the quarter. And to expectation I as like inventories, Canal Hamid, better and low sort then demand dislocation and secondly, it forward? things relates inventory in higher of guess what the your Suez systems transportation and blockage going is structurally for

Tom Olinger

was where mix. in you’ve first all particularly have longer Hey Steve, one. on higher was we in Southern mix. France, term three-year leases, where China operating leasing for take a got It this shorter UK the lower the the Tom. I’ll is The example, Europe,

leases, it’s increasing. when So you all if not stable mix, markets, of are length look the across

Hamid Moghadam

Yes, Steve.

things are sure, inventory are they for estimation driving for that be In are to foreseeable the three there future. going And it up up. terms structural my of levels, in

carrying first The thing carrying of inventory are safety is much inventory. carry Canal-induced need greater and structural that cost people more more stock additional everything than the just just Suez to to because

board, So X% across environment. inventory XX% a in to more we the quantified as steady state that

on higher end pick think number, range, it XX%. you’ve Chris’ if that to be to the And a of would closer that. more paper going on seen were I the I

So that’s a big driver.

regular where is that Secondly, the very inventory as third transition stretched has starting the to its percentage to and that sales ratios point goes to normalize drive will have to up up. inventories of been I really are number it the And mean is then that stretched. just thing e-commerce level.

the to have there inventories XX%. way, but By is thought are I XX% haven’t a system. we’re yes, across utilization to going more rates I So think, first, thing fourth have the that about you

will space inventory rates. so in for So, are to of demand lot is more translate a mechanism for there the high it’s those the not slack quickly because more system, having very pretty utilization that – like demand for

Operator

Your from Green ahead. Tibone next go from question comes Vince Street. Please

is line Your open.

Vince Tibone

growth Could on how your market some rent non-coastal U.S. morning. rent you particularly growth good forecast, additional Hi, markets? provide color compares coastal to market

Chris Caton

Chris be It’s Thanks you widening out suggesting. actually I question. Dave, Indeed, think the Caton. might Yes, for it’s as

So Baltimore, Seattle. for obviously with California Southern markets X growth, U.S., better X% Top in or the and Jersey, Canada, X.X% New it’s the Toronto,

markets in think to are running Houston, I your contrast, there, exclude By kind X% that’s see the of can pattern markets. a coastal you for X% we sure if that range low-end the or the range. broader of

for So that bracketed you.

Operator

Your Tom BTIG. go next comes Catherwood from question Please ahead. from

Your open. line is

Tom Catherwood

much. very in in if so central look kind of growth way any on Can term? you be that the of given Chris’ an In this to seeing guys back coastal Actually, feet started roughly and more could what long some just it’s and over focus you on comments on that’s less on rent up three does comments, expectation we your especially million you square accelerated to And ‘XX, you million investment investment feet. acceleration Chris’ Thank the markets of that than you started U.S., these markets bifurcation in kind are of weaker that provide reflect driving X.X X.X square detail central in feet. quarters, and the want XXX,XXX starts then at following XXXX, two square previous the Excellent. question quarters developments. development first in last the

Hamid Moghadam

Well, we’re you smart. guys really think

smart. that not We’re

Let’s business lend itself doesn’t just and quarter-by-quarter to that our analysis. start with

the talking lands, it the roughly rough We development million move those a in we percentages are million to development range number you’re when percentages the overall put of could square build-to-suit. have pretty foot about around you facts what it’s the sense can depending a really quarter, you on exactly going is of in and roughly much together, no by it going how two to of that going But that affect So numbers. per where really can be of region built-to-suit in numbers U.S., X.X of where forward. be, good feet one starts quarter give clue

fact I the companies that for mean we answer, these must But are would really of not lot those they have So, region them, the and be Dallas, in given development the Houston. systemic large I other have a hate be nothing there because in than of obviously it we’re of answering has to a not honestly, benefit I of the don’t to And question position large to numbers. stronger in stayed the than tough – questions, central by some there that smaller do say would is going we expected.

in So quarter-by-quarter things have would the numbers, terms our but tell I two I of you clue. no strategy, those are

Operator

Baird. Please next from David Your ahead. from question go Rodgers comes

is Your line open.

David Rodgers

the the lease been trend and term first maybe lease the the earlier? or I is hoping door then the proposals and making ask talk wanted concessions leases maybe you have was that’s of the lease turnover what there? of about maybe and Yes, that to proposals more to addressed on that And bit I you leases of – Gene is a couple smaller the obviously out percentage a up, about quarters, going little could question Thanks. small cost Tom, your in last maybe recent function up

Tom Olinger

to in a increasing turnover Concessions more relative higher issue renewal really by leasing is turnover new I’ll What bit all. across at leasing. are you’re mix on concessions are and Dave, typically driven a Sure seeing renewal costs leasing concessions. on really

quarter certainly segment, spaces, highest segments. performing was believe this I levels, growth the were turnover certainly at among lease costs The it turnover you where with when short-term levels driver So again, we’re the look and highest. improving that smaller seeing commissions about or mix. higher by that particularly sorry, leasing or a in seeing costs, and quarter as well. the be When the leasing I’m think you’re proposal rents all will is Also including – a we

and rent So proposal good activity is change is accelerating.

So I balance of the pretty to spaces think see we’re going the smaller next – well year. over the improve

Operator

question Your from from go Brent UBS. next Please comes Dilts ahead.

open. is Your line

Brent Dilts

alleviate then how how community read warehouse think Hey, couple shortages help automation thanks. doing, that? to about next you you just years the Could talk your may you press? over initiative And workforce and the in advance it’s Thanks. labor the of given

Hamid Moghadam

to more around place There themselves that than being more automation. there and aspects ago warehouse demand cases. X take would are that – are think the many And labor our they service aspects do X But their sooner warehouse about of are simply shortage. are it’s thesis lend them. exist, have to ROIs it activities out the of they unproven going that of if a the lend Chris than they automation automation are them automation pretty aspects the companies those because [indiscernible] But used – to lays the and meet wrote in didn’t because of easily that. that much is fulfill pushed into in I There or to use otherwise months those labor shortage the levels automate wouldn’t expensive customers so

oversees Ed me us. community comments? some initiative, that let it don’t make why for the turn activity who On to Ed, over Nekritz, you workforce

Ed Nekritz

Great. Thanks for question. the

of of individuals to trained we So at in excess we our of are the way goal the end X,XXX XX,XXX on XXXX, trained are globe. well our and throughout

U.S. of under we programs the the way UK. CWA nine have program and the We expansion in just in announced

employees, hit one. two, development our They we’re in known from are I’ll are that we industry be employees. they to we employees, showing for we acquiring thing in – labor is us that certifications for their to as our to will front but of customers also help in The trials And to just our their terms on for connectivity expect them mention, trial last be have also local those the delivering goals, So programs. initiatives excited fully municipalities enhance our order also and we train is negotiating say vibrant. and not certifications very are with us number Number them I retaining significant in looking of significant very it’s will demonstrating with to communities about. the focused of keep that that final

Operator

Your Mike question from JPMorgan. Please go comes ahead. next from Mueller

open. is line Your

Mike Mueller

Yes, Are the increase few see number increase about to next $X for that billion hi. to we meaningfully years? over XXXX. starts to Development likely

Gene Reilly

is to market speculative one. take the our we’re to going obviously the what after Gene. Yes, at us. But it’s environment hard year I’ll said It Mike as starts. and say guide development this point, is that year I Mike, going earlier, because next to do

business X.X% as now growing build-to-suit of and speculative relatively very as that our do at is obviously but will much right well AUM do than low. can We less now, we is activity

to market to looks environment now, the will years really right we come, So it. when we good the cross come that bridge

Hamid Moghadam

time, coming in in with actually would XXXX-XXXX, because no, our you was that And development of decade, when between to and merger development $X expect. it were we next downturn Meeting kind that the be it Prologis that before Mike, reasonable the XXXX billion, of was for actually $X a is guidance of and Analyst debacle. remember, scared going numbers remember Hey think to that’s everybody out the was we around Prologis our of XXXX, I at of billion $X this said billion whole amount

XX number big. square $X that’s Xx our is $X So XXX about feet, new as literally Today, from which billion. was ago billion with the at that Prologis the And square X years was to was AMB, time billion million feet.

differences company that billion particularly that much in that be you today, of doing figured historical you number much really for for the are that the want old their used quite to small Liberty billion those billion, DCT in the of guidance, context, them so given markets late-XXs. billion development $X do to have old now. add things the that in much, old they number the numbers context So same the tougher guidance, would is is the that events the At the didn’t mid they would to together. between couple quality to see AMB Prologis’ old reason to get we’re in size the And and guidance, than to the between that But to appreciation take of and so out fact do, or to and the – have $X.X $XX normalize people they I to smaller time, be. that whatever people have markets is to of the $X equivalent, the is to up that all mean guidance the private historical size have be base in numbers.

get where the upside potential think opportunity, that’s is there a good [indiscernible], on pressure think if could our I we much I going on And rents hand that is so forward. why So is there land.

Operator

Your Burrows comes Please from Goldman next Caitlin Sachs. go question ahead. from

open. is line Your

Caitlin Burrows

demand are tenants, weaker? recent shifts and possibly any you’re wondering noticed type you’ve really what of if maybe they could you obviously, you from broad Hi, I through was strong. it is talk Could just volumes, or about stronger most go the either how that leasing who seeing

Hamid Moghadam

any much Yes, jump early CPG every to stepped Obviously I the in do sector those companies healthy particularly activity. that companies, of beverage and food the COVID and more really and use pretty growth the days, think e-com are companies, during up opportunity, sectors. form, in

that can in pretty is do accelerate low to or housing going to Chris the care is accelerating that? housing But think for I add you want imagine. has reasons the been because to Health Mike, you all operating level.

Chris Caton

and Obviously, Certainly of flavor. add the but we’re just Walmarts, Depots they from Yes, all Home their don’t well. very as lot the players active not making about U.S. way some of little then but and I now, conventional transportation a customer, beverage a are most fact of the Chinese Europe right did a build-to-suits. of e-commerce give the can forget players Amazon. the of activity about active, just really more it, are certainly just food we the lots – is and component that seeing evidence big two to active And Targets,

demand we’re seeing. in that FedEx, This continued durability, to of with Kellogg’s strength Amazon customer broad the quarter that Canada, addition this the and represent

Operator

Please Your next question from from James. ahead. Crow comes go Raymond Bill

line is open. Your

Bill Crow

Thanks. morning. good Yes,

replacement follow cost that on should we to the construction think into and discussion inflation. CapEx? How about growth wanted translated maintenance Just cost inflation, up AFFO the

Hamid Moghadam

and think X, growth compared terms you I but that and just kind to for more X, add all rent in have think without are what land. know have a that estate with rent we years costs compounded anywhere something guys analysis space the of on foreseeable aspects Long-term tailwinds those inventory getting prove I would I compare day, getting up it end as demographic of shared to. how chain to buyers people the to cost save the cost it’s locate. what the Thanks. is it’s the together term, just increase between NOI. their to about logisticians future. smarter going well-located extensively supply and that think would do costs, with meaning to hard are to pulling growth chain rate burn ago, actually But they to to who replacement back it of where the to want they and the that supply going people years you because real X% X challenge will of in of thing a going to into been be never been at and same-store of it that the longer think are longer the I their of use set of are X% other people costs would And couple and

what rental have for that going to translate longer to is into of been. So I compared all runway think a would growth

be a I is Of way which course, to to don’t like the but of the look are in rents, because rents by costs that out factors – I space, steel up because percentage going the think same turnover them, affected too. they go to going we going rents are and that all at change as think building as are to well much

Operator

Rodriguez Bank go from of next comes Elvis Your from ahead. Please question America.

is Your open. line

Elvis Rodriguez

you’re you one is noted about Thanks. their in for shift chains? that them just from for particular, for if in the they increased just this in or Amazon expectation demand interest and generically Can [indiscernible] sort to your boxes maybe and talk is seeing their more an there question, Hamid, last the Gene one want Hi, call you comment. supply week, their that medium-sized year in in quarter, what of so the tenant.

Hamid Moghadam

built it’s it. behind they the far filling by gone type getting is best to have them locations touch and actually the Mike the out out and Well, buildings trench infrastructure last probably big in of that, now a but base of and more answer warfare person

are per else but anything? is terms foot of terms a now Mike, of touch. and pretty last the much infrastructure impressive to race for to higher going dollar those that’s be. backbone in In they numbers, it’s it add the investments you, much and of focus would footage, same up won’t I everybody the square ahead the are tell where

Mike Curless

Yes.

on. add in year year historic of Last was further terms to footage Amazon’s square a leasing. Just

and take to I velocity, to there spent well if same advantage Mexico think places the Europe as going we’re is going incrementally forward positioned transaction But has focus like point, see the in of already more certainly account. that kind well. in Hamid’s smaller not you’ll of seen and more to terms of be and there those evidence facilities of opportunities

Hamid Moghadam

last That Okay. was Mike. question. the Thank you,

So, we forward Take care. interest dialog. really look to appreciate your company the and our in continuing

Operator

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

may now disconnect. You

Prologis (PLD) 19 Apr 212021 Q1 Earnings call transcript