Core Insights - The industrial real-estate owner's revenue increased by 9% year-over-year in the third quarter [1] Group 1 - The revenue growth indicates a positive trend in the industrial real estate sector [1]

Core Insights - Prologis, a real estate investment trust, experienced a significant increase in its share price following the announcement of better-than-expected earnings and plans to pursue data center opportunities [1] - Incoming CEO Dan Letter indicated that the marketplace is currently undergoing a "classic real estate cycle," with large, well-capitalized customers driving the market [1] - Dan Letter participated in a discussion on 'Bloomberg Businessweek Daily' to elaborate on the company's strategic direction and the prevailing macroeconomic trends [1]

Core Insights - Prologis Inc. shares rose over 4% intra-day following strong third-quarter results that surpassed analyst expectations and an upward revision of its full-year forecast, driven by record leasing activity and increased investments in data centers [1] Financial Performance - The company reported earnings per share of $0.82, exceeding analyst projections of $0.67, while core funds from operations increased 4.2% year-over-year to $1.49 per share [2] Leasing Activity - Prologis signed a record 62 million square feet of leases during the quarter, reflecting the ongoing demand for warehouse space [3] - The firm is expanding its power capacity to meet data center demand, with 5.2 gigawatts of utility-fed capacity either secured or in advanced development [3] Future Outlook - The company raised its 2025 net earnings outlook to a range of $3.40 to $3.50 per share, up from the previous forecast of $3.00 to $3.15 [3] - Executives indicated that strong operational performance, increasing demand for logistics and digital infrastructure, and disciplined development activity position Prologis for continued earnings momentum into the next year [4]

Core Insights - Prologis is experiencing a significant uptick in leasing activity, indicating a potential market inflection point with strengthening customer sentiment and long-term commitments from tenants [1][3] - The company reported consolidated revenue of $2.21 billion for Q3, a 9% year-over-year increase, surpassing the consensus estimate of $2.03 billion [3] - Prologis anticipates that occupancy rates are stabilizing, with a projected improvement in the market through 2026 as supply tightens [3][4] Financial Performance - Core funds from operations (FFO) for Prologis were reported at $1.49 per share, exceeding expectations by 5 cents [3] - The company slightly raised its full-year FFO guidance to a range of $5.78 to $5.81 per share, ahead of the consensus estimate of $5.77 [7] - Average occupancy fell by 110 basis points year-over-year to 94.8%, but is expected to have bottomed out [4] Market Trends - New leases commenced during the period totaled 65.6 million square feet, reflecting a 29% year-over-year increase [4] - Market rent declines have slowed to 1%, with a net effective rent change of 49% on Prologis' multiyear leases [5] - Lease mark to market indicates a 19% reset, equating to $900 million in future net operating income [5] Leadership Transition - Hamid Moghadam, co-founder and CEO of Prologis, will retire at the end of the year but will continue as executive chairman, with Dan Letter set to succeed him as CEO [6]

Group 1: Stellantis and Canadian Backlash - Stellantis N.V. is facing significant opposition from Canada due to its decision to shift Jeep Compass production from Brampton, Ontario, to Illinois, threatening approximately 3,000 jobs [2][6] - Canadian Prime Minister Mark Carney stated that the production move is a "direct consequence" of existing U.S. tariffs, impacting the auto sector until a new North American trade agreement is reached [2][6] - Ontario Premier Doug Ford expressed disappointment and confirmed that no provincial funding would be allocated to Stellantis until assurances regarding the Brampton plant's future operations are provided [2] Group 2: Federal Reserve Insights - Federal Reserve Governor Stephen Miran projects a "material decline" in services inflation in the coming quarters, primarily driven by easing housing costs [3][6] - Miran believes that two more interest rate cuts this year are "realistic" and emphasized the urgency of reaching a neutral interest rate quickly, estimating it at approximately 0.5% [3][6] - Miran dissented at the recent FOMC meeting, advocating for a larger 50 basis point rate cut instead of the adopted 25 basis point reduction [3] Group 3: Oracle and TikTok - A ByteDance executive acknowledged Oracle's "vital role" in TikTok's expansion, with Oracle leading a proposed deal to control approximately 80% of TikTok's U.S. business [4][6] - The arrangement aims to address U.S. national security concerns regarding potential Chinese government access to user data [4][6] - Under the proposed deal, Oracle would manage and safeguard U.S. user data under its existing "Project Texas" initiative [4] Group 4: Prologis Market Activity - Prologis Inc. CEO Hamid R. Moghadam announced discussions for nearly 30 million square feet of new deals, following a strong third quarter with record lease signings totaling 62 million square feet [5][6] - The company reported a period-end occupancy rate of 95.3% and is expanding its strategic focus into data centers [5] Group 5: Turkey's Rare Earth Element Development - Turkey is in advanced talks with the United States to jointly develop its substantial rare earth reserves in Beylikova, Eskişehir province, which are considered the world's second-largest after China's [8] - This strategic pivot towards the U.S. follows stalled negotiations with China and Russia over technology transfer demands [8] - Ankara is prioritizing local refining capacity and technology transfer in any new agreement [8] Group 6: Ukraine's Energy Needs - Ukraine is seeking U.S. gas supplies via Greece, with discussions between Ukrainian President Volodymyr Zelensky and Greek Prime Minister Kyriakos Mitsotakis [9] - Ukraine's state-owned Naftogaz reported recent Russian attacks on its gas production infrastructure, necessitating a need for at least 13.2 billion cubic meters in gas storage for the upcoming winter [9] - Greece aims to replace Russian gas imports with American LNG and facilitate its onward transmission to Ukraine through the North-South corridor [9]

Financial Data and Key Metrics Changes - The third quarter marked a record leasing quarter with nearly 62 million square feet signed, an increase in portfolio occupancy to 95.3%, up 20 basis points [5][8] - Core FFO was $1.49 per share, exceeding forecasts, with net effective rent change at 49% and cash rent change at 29% [7][8] - Same-store growth for net effective and cash was 3.9% and 5.2% respectively [9] Business Line Data and Key Metrics Changes - The data center business saw an additional 1.5 GW of capacity moved to advanced stages, totaling 5.2 GW secured or in advanced stages [6] - The energy business delivered 28 MW of solar generation and storage, with a goal of reaching one gigawatt by year-end [10] Market Data and Key Metrics Changes - U.S. market absorption was estimated at 47 million square feet for the third quarter, with market vacancy steady at 7.5% [12][15] - E-commerce penetration in U.S. retail sales reached 24%, continuing to drive demand [11] Company Strategy and Development Direction - The company is focused on disciplined growth, operational excellence, and capitalizing on long-term trends in logistics and data centers [17] - There is an exploration of additional capitalization strategies to fully capture opportunities in the data center business [7][24] Management's Comments on Operating Environment and Future Outlook - Management noted improved customer sentiment and decision-making, with larger occupiers pursuing reconfiguration strategies [11][64] - The outlook for global logistics and demand for data centers remains strong, with expectations for occupancy and rent to improve [15][17] Other Important Information - The company is increasing its G&A guidance to $460 million-$470 million and strategic capital revenue guidance to $580 million-$590 million [16] - The company closed on $2.3 billion in financing activity, maintaining a strong balance sheet with a cost of debt at 3.2% [10] Q&A Session Summary Question: Data center capitalization strategies - Management is exploring various capitalization strategies for data centers, including potential funds for property acquisition upon completion [22][24] Question: Net absorption and demand sustainability - Net absorption of 47 million square feet reflects a catch-up from previous quarters, with a normal quarterly demand expected to be around 60 million square feet [29][30] Question: Supply and demand equilibrium - Demand is strengthening, and supply remains low, indicating a potential recovery in occupancy and rents [34][35] Question: Tenant categories and market performance - Demand has turned a corner, with strength noted in larger tenant categories and e-commerce, while cyclical spending categories show some softness [40][41] Question: Growth rate for data centers versus industrial - The growth rate for data centers is expected to be significant, with ongoing discussions about the best strategies for value creation [44][73] Question: Customer sentiment and long-term decisions - Customers are becoming desensitized to short-term volatility and are making long-term decisions, indicating a positive trend for occupancy [63][64] Question: Credit risk and portfolio health - The overall credit health of the portfolio has improved, with bad debt expense expected to remain below levels seen in past crises [68][69] Question: Transaction market and acquisition opportunities - The transaction market remains resilient, with increased volumes and stable pricing, indicating healthy market conditions [77] Question: Spec development leasing pace - The pace of spec development leasing is improving, returning to historical norms after a period of extension [80] Question: Rent change dynamics - Rent change has decreased slightly, but the potential for significant rent change remains due to upcoming lease expirations [84][86] Question: Customer categories and leasing strength - E-commerce and stable growth businesses are showing strength, while cyclical categories like automotive are subdued [90][91]

Financial Data and Key Metrics Changes - The third quarter marked a record leasing quarter with nearly 62 million square feet signed, an increase in portfolio occupancy to 95.3%, and a rent change of 49% on a net effective basis and 29% on cash [4][6][11] - Core FFO was reported at $1.49 per share, exceeding forecasts, with net effective and cash same-store growth at 3.9% and 5.2% respectively [5][6] - The lease mark-to-market ended at 19%, capturing an additional $75 million of NOI during the quarter [6][12] Business Line Data and Key Metrics Changes - The data center business saw an increase in capacity with 1.5 gigawatts moved to advanced stages, totaling 5.2 gigawatts secured or in advanced stages [4][5] - Build-to-suit activity was strong, with nine additional projects signed, bringing the total to 21 for the year, amounting to $1.6 billion in expected investment [8][9] Market Data and Key Metrics Changes - In the U.S. markets, net absorption was 47 million square feet, with market vacancy steady at 7.5% [11][12] - E-commerce penetration in U.S. retail sales reached 24%, continuing to drive demand [10][11] Company Strategy and Development Direction - The company is focused on disciplined growth, operational excellence, and capitalizing on long-term trends in logistics and data centers [16] - There is an exploration of additional capitalization strategies to fully capture opportunities in the data center business [5][20] Management's Comments on Operating Environment and Future Outlook - Management noted improved customer sentiment and decision-making, with larger occupiers pursuing reconfiguration strategies [10][11] - The outlook for global logistics remains strong, with expectations for same-store NOI growth increasing to 4.25% to 4.75% on a net effective basis [13][14] Other Important Information - The company closed on $2.3 billion in financing activity, maintaining a strong balance sheet with a cost of debt at 3.2% [9] - The strategic capital business saw modest net inflows as investors began to re-engage [10] Q&A Session Summary Question: Data center capitalization strategies - Management is exploring various options for data center capitalization, including potential funds for property acquisition and development [20][21] Question: Net absorption and demand sustainability - Net absorption of 47 million square feet reflects a clear turning point in demand, with expectations for a normal quarterly velocity of around 60 million square feet [28][29] Question: Supply and demand equilibrium - The market is in a classic real estate cycle with strengthening demand and low supply, indicating a potential for rent growth [32][33] Question: Tenant categories and market performance - Demand has turned a corner, with strength noted in larger tenant categories and e-commerce, while cyclical spending categories show some softness [38][40] Question: Same-store NOI guidance - Guidance for same-store NOI growth implies a slowdown to about 3.5% in the fourth quarter, influenced by high prior year occupancy [92]

Financial Data and Key Metrics Changes - Core FFO, including net promote expense, was $1.49 per share, and excluding net promotes was $1.50 per share, both exceeding forecasts [7] - Occupancy increased to 95.3%, up 20 basis points from the previous quarter [7] - Rent change was 49% on a net effective basis and 29% on cash, indicating strong lease mark-to-market durability [8] - Same store growth for net effective and cash was 3.9% and 5.2% respectively [8] Business Line Data and Key Metrics Changes - Record leasing quarter with nearly 62 million square feet signed, indicating a positive trend in leasing velocity and customer sentiment [5] - Data center business saw an additional 1.5 gigawatts of capacity moved to advanced stages, totaling 5.2 gigawatts secured or in advanced stages [6] - Nine build-to-suit projects signed this quarter, totaling 21 for the year, with expected investment of $1.6 billion [9] Market Data and Key Metrics Changes - U.S. market absorption was estimated at 47 million square feet for the third quarter, maintaining market vacancy at 7.5% [13] - Construction pipeline is depleting, with starts below pre-COVID levels, leading to a slowdown in market rent declines [14] - Strongest markets in the U.S. include the Southeast and Texas, with notable absorption in Houston, Dallas, and Atlanta [14] Company Strategy and Development Direction - The company is focused on disciplined growth and operational excellence, with a strong emphasis on build-to-suit projects and data centers [20] - Exploration of additional capitalization strategies for the data center business to fully capture growth opportunities [6] - The company aims to integrate solar storage and off-grid energy solutions with real estate, enhancing value creation [10] Management's Comments on Operating Environment and Future Outlook - Management noted improved customer sentiment and decision-making, with larger occupiers pursuing reconfiguration strategies [12] - The company expects market conditions to improve, with occupancy and rents bottoming out, leading to a potential recovery [19] - Guidance for same store NOI growth has increased to a range of 4.25% to 4.75% on a net effective basis [19] Other Important Information - The company closed on $2.3 billion in financing activity, maintaining a strong balance sheet with an in-place cost of debt at 3.2% [11] - The CEO's last earnings call was acknowledged, highlighting his significant contributions to the company [22][23] Q&A Session Summary Question: Can you elaborate on the additional capitalization strategies for data centers? - Management is exploring various opportunities in the data center business, including building a dedicated team and leveraging operational synergies [28][30] Question: What is the outlook for net absorption and sustainable demand? - Net absorption of 47 million square feet indicates a clear turning point in demand, with expectations for a normal quarterly velocity of around 60 million square feet [35][38] Question: How do you view the supply-demand balance in the market? - The company believes demand is strengthening while supply remains low, indicating a potential equilibrium in the near future [41][42] Question: What are the expectations for market rent growth? - Management anticipates that market vacancy rates will stabilize and improve over time, leading to potential rent growth [72] Question: How is customer sentiment evolving in the current environment? - Customers are becoming more desensitized to short-term volatility and are making long-term decisions, indicating a positive shift in sentiment [80] Question: What is the company's approach to credit risk and portfolio health? - The company has improved the overall credit health of its portfolio, with bad debt expense remaining below historical crisis levels [84] Question: Can you discuss the transaction market and acquisition opportunities? - The transaction market has shown resilience, with a 25% year-over-year increase in activity, and cap rates remain stable [95] Question: What is the pace of spec development leasing? - Spec development leasing is improving, with lease-up times returning to historical norms [99]

Core Insights - Prologis, Inc. reported a third-quarter 2025 core funds from operations (FFO) per share of $1.49, surpassing the Zacks Consensus Estimate of $1.44 and showing an increase from $1.43 in the same quarter last year [1][11] - The company's shares rose over 4.5% in early trading, reflecting positive investor sentiment driven by increased rental revenues and strong leasing activity, despite high interest expenses [2] Financial Performance - Prologis generated rental revenues of $2.05 billion, which was below the Zacks Consensus Estimate of $2.10 billion but up from $1.90 billion year-over-year [3] - Total revenues reached $2.21 billion, an increase from $2.04 billion in the previous year [3] - The average occupancy level in Prologis' portfolio was 94.8%, slightly down from 94.9% in the previous quarter and 95.9% a year ago [5] Leasing and Market Activity - The company commenced 65.6 million square feet of leases in its owned and managed portfolio, with a retention level of 77.2% [4] - Prologis' share of net effective rent change was 49.4%, with a cash rent change of 29.4% [5] Capital and Liquidity - Prologis ended the quarter with cash and cash equivalents of $1.19 billion, up from $1.07 billion at the end of the previous quarter, and total liquidity of $7.5 billion [8] - The company issued $2.3 billion of debt at a weighted average interest rate of 4.2% during the quarter [9] Guidance and Outlook - Prologis raised its 2025 core FFO per share guidance to a range of $5.78-$5.81 from the previous $5.75-$5.80 [12] - The outlook for capital deployment on development starts was increased to $2.75-$3.25 billion, and spending on acquisitions was revised to $1.25-$1.50 billion [13]

Company Overview - Prologis owns or has investments in properties and development projects expected to total approximately 13 billion square feet[9] - The company leases logistics facilities to approximately 6,500 customers[9] - Build out of land is $423 billion[10] Financial Highlights - Q3 2025 rental and other revenues reached $2064 million[25] - Q3 2025 strategic capital revenues were $150 million[25] - Annual NOI is $66 billion[13] - Strategic capital fees and promotes total $454 million[15] - Gross AUM is $215 billion[18] - Prologis Share AUM is $149 billion[24] - Value creation from stabilizations is $771 million[24] Geographic Distribution - The U S accounts for 85% of NOI[10] - Europe represents 9% of NOI[10] - Asia contributes 1% of NOI[10] - Other Americas account for 5% of NOI[10] - The U S constitutes 74% of gross AUM, while regions outside the U S account for 26%[19]