10-KPeriod: FY2022

Prologis, Inc. Annual Report, Year Ended Dec 31, 2022

Filed February 14, 2023For Securities:PLDPLDGP

Summary

Prologis, Inc. (PLD) reported robust operating results for the fiscal year ended December 31, 2022, driven by strong demand and low vacancy in global logistics markets, leading to significant rent growth on lease rollovers. The company completed the transformative $23.2 billion acquisition of Duke Realty Corporation, which significantly expanded its U.S. portfolio and is expected to be accretive to earnings. Despite broader economic headwinds, including inflation and rising interest rates, Prologis maintained a solid financial position with strong liquidity and a well-laddered debt maturity profile, extending its weighted average debt maturity to 9 years at a low weighted average interest rate of 2.5%. The company's strategic focus on expanding its Prologis Essentials services, developing its land bank, and leveraging its global scale positions it for continued growth in revenue, Net Operating Income (NOI), and Funds From Operations (FFO). The reported lease mark-to-market of approximately 67% indicates substantial potential for future organic NOI growth through rent increases on existing leases. Prologis remains committed to its ESG initiatives, including a goal of net-zero emissions across its value chain by 2040.

Financial Highlights

39 data points
Beta

Revenue

$5.97B

Net Income

$3.36B

56.2% Net Margin

EPS (Diluted)

$4.25

Total Assets

$87.90B

Cash & Equivalents

$278.00M

Free Cash Flow

$4.13B

Financial Statements
Beta
Revenue$5.97B
Operating Expenses-$1.55B
Operating Income$3.47B
Interest Expense$309.04M
Net Income$3.36B
EPS (Basic)$4.28
EPS (Diluted)$4.25
Shares Outstanding (Basic)785.67M
Shares Outstanding (Diluted)811.61M

Key Highlights

  • 1Completed the significant $23.2 billion acquisition of Duke Realty Corporation, bolstering its U.S. logistics real estate portfolio.
  • 2Achieved strong rent growth on lease rollovers, with a weighted average net effective rent change of 48.0% on leases commenced in 2022.
  • 3Maintained a strong liquidity position with $4.1 billion in total available liquidity as of December 31, 2022.
  • 4Extended the weighted average remaining maturity of its consolidated debt to 9 years with a weighted average interest rate of 2.5%.
  • 5Reported a significant lease mark-to-market of approximately 67%, indicating substantial upside for future rental income growth.
  • 6Invested $4.2 billion in its development portfolio, with a total estimated build-out potential of $7.5 billion.
  • 7Focused on ESG initiatives, including a commitment to achieve net-zero emissions across its value chain by 2040.

Frequently Asked Questions

The acquisition of Duke Realty, completed on October 3, 2022, for $23.2 billion, significantly expanded Prologis' U.S. portfolio with 144 million square feet of logistics real estate. The transaction was financed through equity issuance and the assumption of $4.2 billion in debt. This acquisition is expected to be accretive and complementary to Prologis' existing operations.

Prologis maintains a strong balance sheet with a weighted average remaining maturity of its consolidated debt at 9 years and a weighted average interest rate of 2.5% as of December 31, 2022. The company has proactively refinanced debt, addressing maturities through 2026, and utilizes a mix of fixed and variable rate debt, with a focus on fixed-rate instruments to mitigate interest rate risk. At year-end 2022, approximately $21.1 billion of its debt bore fixed rates.

Prologis anticipates continued rent growth due to healthy demand and low vacancy in logistics markets. The company reported a significant lease mark-to-market of approximately 67% on a net effective basis, indicating substantial potential to increase rental income as existing leases expire and are renewed at market rates. This, combined with its development pipeline and Prologis Essentials business, positions the company for organic growth in revenues and NOI.

Prologis is committed to ESG practices, with specific goals including installing 100% LED lighting in facilities by 2025, achieving 1 gigawatt of solar generation capacity by 2025, and obtaining green building certifications for all eligible new developments. Notably, Prologis has committed to achieving net-zero emissions across its entire value chain by 2040, aligning with Science Based Targets initiative standards, and is progressing on social initiatives like its Community Workforce Initiative aimed at training logistics talent.