Prologis Inc

Strong operational momentum (occupancy, rents, NOI) - Occupancy: 95.6% at Q3 (up 10 bps QoQ); average occupancy 95.1% (also +10 bps). - Leasing & rent growth: Net effective rent change on rollover +38% (adds $85m incremental NOI); cash basis rollover +23%. - Mark-to-market: Lease mark-to-market 16% (implies ~$780m embedded NOI at spot rents), with additional upside expected as inflation and higher replacement-cost rents flow through over coming years. - Same-store NOI growth: +5.7% net effective and +5.9% cash.

Demand resilience + “higher-for-longer supply constraint” narrative supports pricing power - U.S. demand: Net absorption 63m sq ft in Q3; aligns with normalized annual absorption of ~230–240m sq ft (suggesting recovery persists). - Vacancy/rents: U.S. market vacancy 7.1% (-10 bps QoQ) and rents +50 bps in the quarter (third consecutive quarter of positive rent growth). - Key demand buckets: Strength led by e-commerce, advanced manufacturing, and data-center supply chain customers (customer segment = ~10% of global new leasing and 17% in the U.S. in the quarter). - Supply tightness: Prologis argues the “bar” for new development is rising (financing cost, construction escalation, higher return requirements), so fewer starts should support rents. - Surprising / important investor takeaway: Replacement cost rents needed to justify new construction are ~27% above current market levels, implying meaningful room for rent growth before new supply pencils in.

Capital deployment & pipeline: large logistics development runway; data center expansion continues - Development starts: Started $1B of development in Q3; YTD starts nearly $5B. Land strategy supports value creation. - Owned/controlled land runway: Sites to develop the next $40B of logistics development. - Acquisitions/dispositions: Acquired $950m real estate at an estimated ~20% discount to replacement cost; disposed $310m. - IRR spread: Acquisition vs disposition positive spread ~150 bps YTD. - Data centers: Pipeline 5.8 GW total (incl. 1.7 GW secured power, 4.1 GW advanced stages). LOIs ~1 GW, with much expected to start in 2027. - Moratorium risk (directly addressed): Management said the pipeline has not been impacted by data-center moratoriums; any effects would more likely be months/quarters of delay vs cancellation. They also stated 85% of the 5.8 GW should be startable by 2030. - Opportunity: Data-center underwriting benefits from customer demand strength and scarcity of power/entitlements; management also noted it executes without needing JVs.