Prologis, Inc.

Prologis is the global leader in logistics real estate, operating in high-barrier, high-growth markets across 20 countries on four continents. The company's portfolio is concentrated in key commercial hubs, strategically located near end consumers to enable the efficient flow of goods. Logistics real estate demand is driven by the essential role supply chains play in the global economy and heightened by several long-term structural factors, including customers repositioning their supply chains to meet rising e-commerce penetration and service expectations, growth in global consumption, an increased focus on supply chain efficiency and resiliency, and the need for modern, well-located facilities to support evolving distribution and fulfillment requirements. The company believes these factors will continue to support demand for logistics space and relatively low vacancy rates over the long term.

Prologis faces competition from many owners and operators in a highly fragmented real estate ownership market, as well as from regional, national and global operators and developers in its capital deployment business, and from investment and asset managers in its strategic capital business. Despite this competitive environment, the company cites distinct competitive advantages including a portfolio of properties strategically located in markets with high barriers to entry, a global reach and local market knowledge developed over the years, the quality and scale of its portfolio, its ability to add value creation through development, its strategic capital business, the depth of its customer relationships, and the strength of its balance sheet. The company's common stock is a component of the Standard & Poor's (S&P) 500.

Prologis generates revenue through two reportable segments: Real Estate (Rental Operations and Development) and Strategic Capital. Rental operations comprise the largest component, generally contributing 90% to 95% of consolidated revenues, earnings and FFO, with revenue collected from customers through operating leases including reimbursements for the majority of property operating costs. The Strategic Capital segment generates durable, long-term cash flows and generally contributes 5% to 10% of consolidated revenues, earnings and FFO, excluding promotes, through asset management and property management services provided to unconsolidated co-investment ventures. The company also earns additional revenues by providing leasing, acquisition, construction management, development and disposition services, and has the ability to earn revenues through incentive fees (promotes) based on the total return of investments over certain financial hurdles.

The Real Estate Segment's Rental Operations component collects rent from customers through operating leases, including reimbursements for the majority of property operating costs. For leases commenced in 2025, the weighted average lease term in the consolidated operating portfolio was 70 months ¹. The primary driver of revenue growth is the rolling of in-place leases to current market rents upon lease expiration. Substantially all of the consolidated rental revenue, NOI and cash flows from rental operations are generated in the U.S. The Development component provides the opportunity to profitably build modern logistics facilities while deepening presence in target markets, and the company is selectively expanding development activities to include data centers in certain markets by focusing on procuring power and securing build-to-suit lease transactions. The company measures the estimated value creation of a development project as the stabilized value above its total expected investment (TEI).

The Strategic Capital Segment partners with many of the world's largest institutional investors through co-investment ventures, capitalized through private and public equity and comprised of 94% ² open-ended ventures, long-term ventures and three publicly traded vehicles: Nippon Prologis REIT, Inc. in Japan; China AMC Prologis Logistics REIT in China; and FIBRA Prologis in Mexico (which controls and owns more than 99% of Terrafina, also a publicly traded FIBRA). Ten of the co-investment ventures are unconsolidated entities, and one is consolidated, with the company's ownership in the co-investment ventures ranging from 15% to 55% ³. At December 31, 2025, the gross book value of the operating portfolio held by the ten unconsolidated co-investment ventures was $62.4 billion ⁴ across an aggregate of 562 million square feet ⁵. This segment generates revenue principally through asset management and property management services, with the majority of strategic capital revenues generated outside the U.S.

Significant operational developments include the company's strategy to leverage its development capabilities, energy solutions and strategic locations to deliver digital infrastructure requirements through selective development of data centers. The company has more than 1 gigawatt ⁶ of solar generation and storage capacity on its O&M portfolio, including Prologis and third-party owned projects. The company's Prologis Essentials platform delivers solutions to support customers' operational, energy and sustainability needs. The company also makes investments in early and growth-stage companies focused on emerging technologies for the logistics sector through Prologis Ventures, its corporate venture capital group. At December 31, 2025, the weighted average remaining term of consolidated debt was 9 years ⁷ and the weighted average interest rate was 3.2% ⁸, with total available liquidity of $7.6 billion ⁹.

For the fiscal year ended December 31, 2025, total consolidated revenues were $8.486 billion ¹⁰, compared to $7.960 billion ¹¹ in 2024. Net earnings attributable to common stockholders/unitholders were $2.636 billion ¹² in 2025, compared to $3.064 billion ¹³ in 2024. Diluted earnings per share for Prologis, Inc. common stockholders was $2.83 ¹⁴ in 2025, compared to $3.30 ¹⁵ in 2024. Net earnings attributable to common stockholders/unitholders in 2025 included a net promote expense primarily from amortization of stock compensation related to promote income recognized in prior periods.

A primary growth vector is the company's global development program, which serves as a profitable way to expand the portfolio, build scale, serve customers and create value for investors. Based on current estimates, the company's consolidated land and other real estate investments, including options and Covered Land Plays (CLPs), have the potential to support the development of $37.3 billion ¹⁶ ($42.6 billion ¹⁷ on an O&M basis) of TEI of newly developed buildings. The company expects its development activities to increase in the coming year. A key enabler of this growth is the energy procurement strategy, which by leveraging scale and relationships with utilities and energy providers, is advancing on securing reliable access to power to convert select logistics sites into energy-ready data center developments.

Another growth vector is the Strategic Capital business, where the company plans to grow and increase revenues by increasing its assets under management in existing and new ventures. The company raises capital to support the long-term growth of these ventures while maintaining significant investments of its own. The company also expects to generate earnings growth by increasing rents, maintaining high occupancy rates and controlling expenses. For lease rollovers during 2025, the increases to market on the company's share of the O&M portfolio resulted in increases of approximately 50% ¹⁸ on net effective rents. The company estimates that its share of the remaining lease mark-to-market is approximately 18% ¹⁹ (on an NER basis), representing the amount by which current market rents exceed in-place rents based on the company's share of the O&M portfolio at December 31, 2025.

The company expects to generate earnings growth by increasing rents, maintaining high occupancy rates and controlling expenses. The company has scalable systems and infrastructure in place to grow both its consolidated and O&M portfolios with limited incremental G&A expenses, allowing it to focus additions to its workforce in growth areas of the business. Over time, the company believes it can continue to grow NOI and strategic capital revenues organically and through accretive development and acquisition activity while further reducing G&A as a percentage of its investments in real estate.

The company has scalable systems and infrastructure in place to grow both its consolidated and O&M portfolios with limited incremental G&A expenses, allowing it to focus additions to its workforce in growth areas of the business. The company's customer experience teams, proprietary technology and strategic partnerships are central to every aspect of the Prologis Essentials platform, providing customers with differentiated insights and infrastructure solutions to help them advance sustainability goals and improve operational efficiency.

The company has a long-standing strategy to build and maintain a strong, flexible balance sheet by using conservative levels of financial leverage. At December 31, 2025, the weighted average remaining term of consolidated debt was 9 years ²⁰ and the weighted average interest rate was 3.2% ²¹. At December 31, 2025, the company had total available liquidity of $7.6 billion ²². The company's low leverage, available liquidity and investment capacity in the co-investment ventures position it to capitalize on opportunistic value-added investments as they arise.

In the near term, economic uncertainty related to trade tensions and shifting policies has increased, though the company's proprietary metrics and customer dialogue indicate that customers are engaged and moving forward with real estate decisions. The company faces risks associated with acquisitions, dispositions and development of properties, including the integration of the operations of significant real estate portfolios. Risks of doing business internationally, including currency risks, are also flagged, though the company mitigates exposure to foreign currency fluctuations by investing outside the U.S. through co-investment ventures, borrowing in the functional currency of its subsidiaries and utilizing derivative financial instruments.

The company faces competition from many owners and operators, and competitively priced logistics space could impact occupancy rates and limit the rents the company can charge, which in turn could affect operating results, particularly during periods of economic uncertainty or elevated new supply. The company also faces competition in its capital deployment business from regional, national and global operators and developers, and in its strategic capital business from investment and asset managers seeking institutional capital.

The company faces material risks from its significant international operations, with investments denominated in foreign currencies principally the British pound sterling, Canadian dollar, euro and Japanese yen, which are impacted by fluctuations in exchange rates when translated to U.S. dollars. The company's development activities, including the selective expansion into data centers, carry risks related to procuring power and securing build-to-suit lease transactions. The company faces competition from many owners and operators in a highly fragmented real estate ownership market, and competitively priced logistics space could impact occupancy rates and limit rents, particularly during periods of economic uncertainty or elevated new supply. The company's strategic capital business faces competition from investment and asset managers seeking institutional capital. The company's ability to maintain its REIT status and the impact of changes in income tax laws and rates represent a specific regulatory risk. The company's debt levels and credit ratings are also identified as risk factors, with the company maintaining a weighted average interest rate of 3.2% ²³ on its consolidated debt at December 31, 2025.

Management's message emphasizes that Prologis is the global leader in logistics real estate, operating in high-barrier, high-growth markets across 20 countries on four continents. The tone is forward-looking and confident, highlighting that the company's scale, development capabilities, strategic capital business, customer relationships, and balance sheet strength are differentiators that allow it to drive growth in revenues, NOI, earnings, FFO and cash flows. Management emphasizes that even without further market rent increases, lease renewals are expected to drive higher rental income over the coming years, as the remaining lease mark-to-market is approximately 18% ²⁴ (on an NER basis) at December 31, 2025. The strategic priorities emphasized for the period ahead include expanding the development program, particularly through selective data center developments enabled by the energy procurement strategy, growing the Strategic Capital business by increasing assets under management, and maintaining a strong, flexible balance sheet with conservative leverage.