Prologis, Inc.

Greetings and welcome to the ProLogic's third quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Justin Meng, Senior Vice President, Head of Investor Relations. Thank you. You may begin.

Thanks, Jamali. And good morning, everyone. Welcome to our third quarter 2025 earnings conference call. The supplemental document is available on our website at ProLogis.com under investor relations. I'd like to state that this conference call will contain forward-looking statements under federal securities laws. These statements are based on current expectations, estimates, and projections about the market and the industry in which ProLogis operates, as well as management's beliefs and assumptions. Forward-looking statements are not guarantees of performance, and actual operating results may be affected by a variety of factors. For a list of those factors, please refer to the forward-looking statement notice in our 10-K or other SEC filings. Additionally, our third quarter earnings press release and supplemental do contain financial measures such as FFO and EBITDA that are non-GAAP. And in accordance with Reg G, we have provided a reconciliation to those measures. I'd like to welcome Tim Arndt, our CFO, who will cover results, real-time market conditions, and guidance. Hamid Moghadam, our CEO, Dan Letter, President, and Chris Caden, Managing Director, are also with us today. With that, I will hand the call over to Tim.

Thanks, Justin. Good morning, and thank you for joining our call. The third quarter marked another period of solid execution with many encouraging signs across our business. We had a record quarter for leasing with signings of nearly 62 million square feet, an uptick in portfolio occupancy, and another very strong quarter in rent change. We see a more positive tone across the platform with strengthening customer sentiment, improved leasing velocity, and continued success in build-to-suit activity, which taken together suggests the market has found its footing and the stage is set for an inflection in occupancy and rent. Momentum also extended to our data center business. This quarter, we moved another 1.5 gigawatts of additional capacity to our advanced stages. Now, with 5.2 gigawatts of power either secured or in this advanced stage, Prologis is one of the largest owners of utility-fed power available for data centers. Translating this to dollars would amount to $15 billion of investment as powered shell, and as much as four times that if delivered in a turnkey format. For this reason, we have begun the exploration of additional capitalization strategies to fully capture the opportunity. Our ability to combine real estate, power access, customer relationships, and capital provides the foundation for one of the most significant value creation opportunities in our history, and we are well positioned and laser focused on its execution. With that as a backdrop, let's turn to our results. Core FFO, including net promote expense, was $1.49 per share, and excluding net promotes was $1.50 per share, each ahead of our forecast. As noted, we had a record leasing quarter supported by a clear pickup in new leasing, which had been below historical levels for some time but is now rounding out the picture together with healthy renewal activity and heightened build-to-suit demand. As a result, occupancy grew over the quarter to 95.3%, an increase of 20 basis points. And flights of quality persist to our curated portfolio and platform, evidenced by our 290 basis points of outperformance in the U.S., Rent change during the quarter was 49% on a net effective basis and 29% on cash, highlighting the durability of our lease mark-to-market, which will provide meaningful rent change over the coming years, even at spot rents. The lease mark-to-market ended September at 19%, which reflects the capture of another $75 million of NOI during the quarter and a further $900 million of NOI as leases roll. Putting it all together, net effective and cash same-store growth during the quarter were 3.9% and 5.2% respectively. In terms of capital deployment, we had a lighter quarter of development starts with expectations for a strong fourth quarter due to the specific timing of transactions. Two-thirds of our volume in the third quarter was in build-a-suits with large global customers, many of whom rank in our top 25. We signed an additional nine build-to-suits this quarter, driving the total to 21 so far for the year and amounting to $1.6 billion of total expected investment. Beyond that, this pipeline continues to grow with dozens of viable deals on PLD-owned land and outcome of our close customer relationships and strategic land bank. We expect build-to-suits will represent over half of our development volume for the full year. Finally, our energy business delivered 28 megawatts of solar generation and storage in the quarter. With 825 megawatts of current capacity, we are on track to deliver on our one gigawatt goal by year end. Interest from customers remains robust against the backdrop of increasing energy prices and forecasted shortages in power. We continue to integrate our solar storage and off-grid energy solutions with our real estate, another example of how Prologis continues to evolve with and four, our customers. On the balance sheet, we closed on $2.3 billion in financing activity across the REIT and funds, which included a very successful €1 billion raise at 3.5%. Our global access to capital remains one of the defining strengths of our franchise, with an in-place cost of debt at just 3.2% and more than eight years of average remaining life. In our strategic capital business, we have modest net inflows for the quarter across our open-ended funds as investors begin to re-engage following several uneven quarters. But at the same time, we're excited by our progress on new vehicles that are drawing strong interest and position us well for the next phase of growth in this business. We look forward to sharing more on this in the fourth quarter. Turning to our customers, sentiment is clearly better as informed by our day-to-day discussions across the globe. as well as in focused strategic dialogue like that in our customer advisory board held late last month. Beyond improved decision-making, larger occupiers are pursuing reconfiguration consolidation strategies with a shift toward network optimization rather than contraction. In keeping with the typical real estate cycle, we'd expect smaller and medium-sized enterprises to follow suit. And out of interest, e-commerce penetration, now 24% of U.S. retail sales has expanded since COVID and continues this March higher as meaningful and secular driver of demand with 52 unique names transacting this quarter. In terms of operating conditions, overall, we see demand improving, occupancy has formed a base, and rents are progressing through their bottoming process. In our U.S. markets, we estimate 47 million square feet of absorption for the third quarter and holding market vacancy steady at 7.5%, where we expect it to top out. Meanwhile, the supply picture remains favorable as the construction pipeline depletes and starts are below pre-COVID levels. Market rent declines have been slowing just over 1% this quarter, also evidencing the market shift. Our strongest markets in the U.S. continue to be across the Southeast and Texas, with solid absorption in Houston, Dallas, and Atlanta. The tone in Southern California is also improving. Although rents remain soft, leasing activity has turned up both in L.A. and the Inland Empire. Consistent with our prior view, we expect SoCal to lag the broader inflection in operating conditions in the near term but outperform over the long term. Our platforms outside of the U.S. are certainly a bright spot. Latin America, again, delivered excellent results, where Brazil and Mexico together have been providing the highest same-store growth in our portfolio. Europe has maintained higher occupancy and more moderate rent decline relative to the U.S., and our Japan portfolio maintains its track record of exceptional occupancy, overcoming the higher market supply of recent years. With real estate in 20 countries across the world's most dynamic markets, our global scale continues to serve customers, and the benefits of this diversification is evident in our performance. Finally, on data centers, demand for our product has been exceptional. Every megawatt we can deliver over the next three years is already in dialogue with customers. We're taking a deliberate and disciplined approach consistent with our build-the-suit strategy, and by staying close to customers and their evolving needs, we have strong conviction in the depth of our pipeline and look forward to announcing on a handful of starts in the coming quarters. Turning to guidance as we move into year end, average occupancy at our share is unchanged at the midpoint of 95%. and rent change will average in the low 50s for the full year. The range for same-store NOI growth is increasing to 4.25% to 4.75% on a net effective basis and 4.75% to 5.25% on a cash basis. We are increasing our G&A guidance to a range of $460 to $470 million and also increasing our strategic capital revenue guidance to a range of $580 to $590 million. In capital deployment, we are increasing development starts at our share to a new range of $2.75 to $3.25 billion. And as a reminder, only previously announced data center starts are included in this guidance. We are also increasing our combined disposition and contribution guidance by $500 million to a range of $1.5 to $2.25 billion at our share. In total, our guidance is for GAAP earnings to range between $340 and $350 per share. Core FFO, including net promote expense, will range between $578 and $581 per share, while Core FFO excluding net promote expense will range between $583 and $586 per share, a two-cent increase from our prior guidance. To close, the outlook for global logistics is strong, and the demand for data centers and distributed energy systems is robust, all of which underpins our confidence in the long-term and absolutely unique opportunity for our business. our focus remains on discipline growth, operational excellence, and leaning in on these long-term trends. These priorities have been central to Prologis since its founding and continue to shape every decision we make. And as we reflect on the leadership that built this company and the enduring culture that Hamid has created, we do so with a deep sense of commitment and continuity. The foundation of excellence is strong, the strategy is clear, and the opportunities ahead are significant and unmatched. Thank you, and I'm going to pass the call over to Dan to close out our prepared remarks before turning to Q&A.