Investor Presentation
NAREIT REITweek:
2024 Investor Conference
June 3-6, 2024
INVESTOR RELATIONS
Forward-looking statements
This presentation includes certain terms and non-GAAP financial measures that are not specifically defined herein. These terms and financial measures are defined and, in the case of the non-GAAP financial measures, reconciled to the most directly comparable GAAP measure, in our quarterly Earnings Release and Supplemental Information that is available on our investor relations website at www.ir.prologis.com and on the SEC's website at www.sec.gov.
The statements in this document that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which we operate as well as management's beliefs and assumptions. Such statements involve uncertainties that could significantly impact our financial results. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," and "estimates," including variations of such words and similar expressions, are intended to identify such forward- looking statements, which generally are not historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future - including statements relating to rent and occupancy growth, anticipated growth from embedded lease mark-to-market, development activity, contribution and disposition activity, general conditions in the geographic areas where we operate, our debt, capital structure and financial position, our ability to form new co-investment ventures and the availability of capital in existing or new co-investment ventures - are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained and, therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some of the factors that may affect outcomes and results include, but are not limited to: (i) national, international, regional and local economic and political climates; (ii) changes in global financial markets, interest rates and foreign currency exchange rates; (iii) increased or unanticipated competition for our properties; (iv) risks associated with acquisitions, dispositions and development of properties; (v) maintenance of real estate investment trust status, tax structuring and changes in income tax laws and rates; (vi) availability of financing and capital, the levels of debt that we maintain and our credit ratings; (vii) risks related to our investments in our co- investment ventures, including our ability to establish new co-investment ventures; (viii) risks of doing business internationally, including currency risks; (ix) environmental uncertainties, including risks of natural disasters; (x) risks related to the coronavirus pandemic; and (xi) those additional factors discussed in reports filed with the Securities and Exchange Commission by us under the heading "Risk Factors." We undertake no duty to update any forward-looking statements appearing in this document except as may be required by law.
This document shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.
2
INVESTOR RELATIONS
Global portfolio with a focus on high-barrier,high-growth markets
$216B $105B
PLD 1.2B
EUROPE
U.S.
ASIA
A3/A | $38.5B | OTHER AMERICAS |
6,700 2.8%
Note: Data as of March 31, 2024.
- Source: FactSet as of June 3, 2024.
- A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time.
- Source: Oxford Economics, IMF, Prologis Research as of December 31, 2022.
- Includes land subject to options.
3
INVESTOR RELATIONS
Business indicators support long-term demand
QTD May 2024 | 1Q 2024 | |
Period End Occupancy1 | 96.0% | 97.0% |
Rent Change on Signings1 | 61.3% | 69.5% |
U.S. INDUSTRIAL BUSINESS INDICATOR (IBI) ACTIVITY INDEX2
Diffusion Index, Points
80 | IBI activity index in May 2024 of 58 |
(readings >50 indicative of growth) |
Average 58
60
40
202008 | 2011 | 2014 | 2017 | 2020 | 2023 |
U.S. SPACE UTILIZATION2
%
90Utilization rate in May 2024 of 85% (functional ceiling is 87%)
Average 85%
86
82
782011 | 2013 | 2015 | 2017 | 2019 | 2021 | 2023 |
1. | Source: Prologis share as of May 31, 2024. | 4 |
2. | Source: Prologis Research as of May 31, 2024. Prologis U.S. Space Utilization survey commenced in 2011. Please see Notes and Definitions included in our Q1 2024 Supplemental for further explanation. |
INVESTOR RELATIONS
Logistics real estate has diverse demand drivers
BASIC DAILY NEEDS | POPULATION GROWTH
CYCLICAL SPENDING | | STRUCTURAL TRENDS | |
LIFESTYLE UPGRADES | E-COMMERCE |
Millions
450 ~39%
of our customer base is
400 focused on meeting basic daily needs, which rise alongside population growth
350
300
250
200
150 | ||||
2000 | 2005 | 2010 | 2015 | 2020 |
$B
200
180
160
140
120
100
80
60
40
2000
$B
~31%350
of our customer base
benefits from cyclical300 spending patterns
250 | ||||
200 | ||||
150 | ||||
100 | ||||
50 | ||||
0 | ||||
2005 | 2010 | 2015 | 2020 | 2000 |
~30%
of our customer base grows because of structural trends such as e-commerce
2005 | 2010 | 2015 | 2020 |
Note: Basic daily needs include items like food and beverage, apparel, fast-moving consumer goods, packaging and plastics. Cyclical spending examples include auto, construction, electronics, appliances and home goods. | |
Structural trend examples include general retail, transportation and healthcare. | 5 |
Source: Prologis Research, U.S. Census, BEA, Euromonitor. | |
INVESTOR RELATIONS
Logistics real estate is integral to e-commerce
E-COMMERCE SALES1 | E-COMMERCE EFFICIENCY OF LOGISTICS SPACE2 |
$B | E-Commerce Penetration Rate, % SF per $B of Sales |
2,000 | 35% |
30% | |
1,600 | |
25% | |
1,200 | 20% |
15% |
E-commerce
Brick-and-mortar
1,174k
334k | ±3X |
800 | 10% | |||||||||||||||||||||
400 | ||||||||||||||||||||||
5% | ||||||||||||||||||||||
0 | 0% | |||||||||||||||||||||
2010 | 2012 | 2014 | 2016 | 2018 | 2020 | 2022 | 2024F | 2026F | 2028F |
Why is e-commerce more intensive?
- Individual B2C shipping
- Higher product variety
- Greater inventory
- Reverse logistics
1. | Source: U.S. Census, Euromonitor, Prologis Research. | 6 |
2. | Source: Internet Retailer, company filings, Prologis Research. | |
INVESTOR RELATIONS
Significant drop in completions is coming
SUPPLY INDICATORS, U.S.
MSF | Market Vacancy Rate, % |
700 | Starts | Completions | Vacancy | |||
7%
600
500
-64%
6%
5%
400 | drop in completions |
by 2025 vs 2023 | |
300 |
200
100
0
2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024F | 2025F |
4%
3%
2%
1%
0%
Source: CBRE, JLL, Colliers, Cushman & Wakefield, Prologis Research. | 7 |
INVESTOR RELATIONS
Rent growth drivers beyond embedded lease mark-to-market
VACANCY RATE VS RENT GROWTH, U.S. | REPLACEMENT COST, U.S.1,2 |
%
Market Vacancy Rate
$/SF | |||||||||||
12% | Generally, market | 300 | |||||||||
10% | 2008 | rent growth | 250 | ||||||||
remains positive | |||||||||||
at vacancy rates | |||||||||||
8% | below 7% | 200 | |||||||||
6% | 150 | ||||||||||
4% | 100 | ||||||||||
2021 | |||||||||||
2% | 50 | ||||||||||
0% | 0 | ||||||||||
-30% | -20% | -10% | 0% | 10% | 20% | 30% | 40% | 1998 |
Costs remain elevated
after pandemic spike | Nominal |
Why is e-commerce more intensive? Inflation-
1. | Higher product variety | adjusted | ||
2. | Greater inventory | |||
3. | Individual B2C shipping | |||
4. | Reverse logistics | 2013 | 2018 | 2023 |
2003 | 2008 |
Market Rent Growth
Source: Prologis Research. | ||
1. | Estimates based upon Turner Construction, Engineering News Record, Prologis Research. | 8 |
2. | Inflation-adjusted is in 1998 dollars. | |
INVESTOR RELATIONS
Prologis' unique growth opportunities
LOGISTICS
DEVELOPMENT
Development of new logistics facilities on owned or controlled land
DATA
CENTERS
Higher and better use conversions of existing logistics assets and build-to-suit development
ENERGY
& MOBILITY
Rooftop solar and energy storage systems to generate and store energy for customers
• | $6.9B development | • | $1.4B development | • | 511MW of solar | |
CURRENT | portfolio | portfolio | in-place | |||
• | 46MSF buildout | • | 400MW buildout | • | $40M NOI* in 2023 | |
• | $20B in next | • | 20 opportunities in next | • | 1.4-2GW of solar, |
MEDIUM-TERM | 5 years | 5 years ($7.5B of TEI1) | storage, and charging | ||
• | 15-25% margins | • | 3.1GW of power | • | $150-200M NOI* |
LONG-TERM | • | $39B of TEI1 | • | 100+ opportunities | • | 7GW of power |
• | 226MSF buildout | • | 10GW of power | • | $800M NOI* | |
Note: Prologis Owned and Managed as of March 31, 2024.
* This is a non-GAAP financial measure. Please see Notes and Definitions included in our Q1 2024 Supplemental for further explanation.
1. Total Expected Investment (TEI) represents total estimated cost of development or expansion, including land, development and leasing costs. TEI is based
on current projections and is subject to change. | 9 |
INVESTOR RELATIONS
Logistics development opportunity for $39B of investment
NORTH AMERICA AND LATIN AMERICA | EUROPE | ASIA |
SOUTH | EMBEDDED GROWTH GLOBALLY | |||
AMERICA | 226M SF | With an | ||
CLPs3 are generating | ||||
and potential TEI1 of | overweight | stabilized yield of | ||
$39B2 | to the markets that | ~5% | ||
matter the most | ||||
Note: Data as of March 31, 2024. Land values in above bubble map are in $ millions and represent estimated TEI by market.
- Total Expected Investment (TEI) represents total estimated cost of development or expansion, including land, development and leasing costs. TEI is based on current projections and is subject to change.
- Prologis Owned and Managed as of March 31, 2024.
3. Covered Land Plays (CLPs) are acquisitions of income generating assets with the intention to redevelop for higher and better use. | 10 |
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ProLogis Inc. published this content on 04 June 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 June 2024 11:07:06 UTC.