Prologis(US:PLD)2025-07-29 21:42Business Operations - Prologis operates in high-barrier, high-growth logistics real estate markets across 20 countries, with a portfolio totaling approximately 1.3 billion square feet[154]. - Rental operations contribute 90% to 95% of consolidated revenues, earnings, and funds from operations (FFO), with a weighted average lease term of 70 months for leases commenced in the operating portfolio[164]. - The company expects to generate earnings growth by increasing rents and maintaining high occupancy rates, driven by rolling in-place leases to current market rents upon expiration[164]. - Prologis has the potential to support the development of $36.4 billion of total expected investment (TEI) in newly developed buildings, with an estimated value creation captured through gains upon contributing properties to co-investment ventures[172]. - The strategic capital segment generates 5% to 10% of consolidated revenues and earnings, primarily through asset management and property management services from unconsolidated co-investment ventures[167]. - Prologis actively manages its portfolio through acquisitions and development, recycling capital from property dispositions back into investment activities[157]. - The company maintains a diversified lease portfolio with contractual revenues and fixed or inflation-linked escalations, supporting stable cash flows[164]. - Prologis aims to grow its strategic capital business by increasing assets under management in existing and new ventures, enhancing revenue generation[169]. - The company is well-positioned to support customers amid economic uncertainties, driven by long-term trends in e-commerce and supply chain modernization[155]. Financial Performance - The occupancy rate of the operating portfolio was 95.0% as of June 30, 2025, with a net effective rent change of 53.6% on leases that commenced during the first half of 2025[175]. - The company experienced consolidated development starts totaling $867 million in the second quarter of 2025, with 63.4% of these being build-to-suit projects[176]. - The gross book value of the operating portfolio held by the company's nine unconsolidated co-investment ventures was $61.0 billion across 553 million square feet as of June 30, 2025[173]. - The Real Estate Segment's NOI for the six months ended June 30, 2025, was $3,038 million, an increase from $2,758 million in the same period of 2024[182]. - The total available liquidity as of June 30, 2025, was approximately $7 billion, including $6.0 billion in credit facilities and $1.1 billion in unrestricted cash[181]. - The consolidated development portfolio was expected to be completed before September 2027 with a total estimated investment (TEI) of $5.2 billion and was 36.5% leased[192]. - The company issued $1.8 billion of senior notes with a weighted average interest rate of 4.8% and a weighted average maturity of 8 years[181]. - The weighted average remaining maturity of consolidated debt was 9 years with a weighted average interest rate of 3.2% as of June 30, 2025[173]. - The company maintained a long-standing strategy of conservative financial leverage, resulting in low leverage as a percentage of real estate investments and market capitalization[173]. - Strategic Capital Segment NOI for the six months ended June 30, 2025, was $162 million, an increase of 21% from $134 million in 2024[198]. - Total strategic capital revenues increased to $288 million in 2025 from $283 million in 2024, driven by a rise in recurring fees from $232 million to $256 million[198]. - Strategic capital expenses decreased from $149 million in 2024 to $126 million in 2025, reflecting improved cost management[198]. - G&A expenses rose slightly to $222 million in 2025 from $218 million in 2024, with capitalized G&A expenses decreasing from $101 million to $84 million[200][201]. - Gains on real estate transactions decreased significantly to $38 million in 2025 from $128 million in 2024, primarily due to fewer property contributions to co-investment ventures[205]. - Net interest expense increased to $484 million in 2025 from $402 million in 2024, attributed to higher interest rates and the issuance of $1.8 billion in senior notes[220]. - The weighted average effective interest rate during the period was 3.2% in 2025, up from 3.0% in 2024[220]. - The company reported net cash provided by operating activities of $2.402 billion for the six months ended June 30, 2025, an increase from $2.142 billion in 2024[242]. Debt and Liquidity - The company had a total debt of $34.67 billion as of June 30, 2025, with a weighted average interest rate of 3.2%[236]. - The company had available unrestricted cash balances of $1.1 billion at June 30, 2025[237]. - The company plans to repay $460 million in scheduled principal payments in 2025 and $2.1 billion in 2026[237]. - The company’s credit ratings were A and A2 from Standard & Poor's and Moody's, respectively, both with a stable outlook[238]. - Cash paid for interest rose to $513 million in 2025 compared to $408 million in 2024[248]. - Total debt repurchase and payments were $72 million in 2025, a decrease from $916 million in 2024[250]. - Proceeds from the issuance of debt totaled $1.778 billion in 2025, down from $3.017 billion in 2024[250]. - At June 30, 2025, total third-party debt for unconsolidated co-investment ventures was $18.6 billion, with a weighted average interest rate of 3.4%[251]. - The company had $1.6 billion in variable rate debt, with a weighted average effective interest rate of 2.9%[273]. - The scheduled principal payments for fixed rate debt total $33.624 billion, with significant repayments in 2026 ($1.538 billion) and 2027 ($2.042 billion)[272]. - The company uses derivative instruments to mitigate interest rate risk on variable rate debt[272]. Foreign Currency and Derivatives - 7.6% of total consolidated revenue, amounting to $328 million, was denominated in foreign currencies for the six months ended June 30, 2025[271]. - For the six months ended June 30, 2025, the company recognized $154 million in losses and $101 million in gains related to foreign currency and derivative transactions[223]. - Total foreign currency and derivative gains (losses), net for the six months ended June 30, 2025, amounted to $(180) million, compared to $80 million in 2024[223]. - The sensitivity analysis indicates a change of 29 basis points on average outstanding variable rate debt balances due to interest rate fluctuations[273].