Prologis, Inc. (PLD)
SIC breadcrumb: Finance, Insurance, And Real Estate > Holding And Other Investment Offices > SIC 6798 Real Estate Investment Trusts
SEC company page: https://www.sec.gov/edgar/browse/?CIK=1045609. Latest filing source: 0001193125-26-051453.
Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
|---|---|---|---|---|
| Revenue | 2,252,712,000 | USD | 2025 | 2026-02-13 |
| Net income | 3,328,231,000 | USD | 2025 | 2026-02-13 |
| Assets | 98,724,256,000 | USD | 2025 | 2026-02-13 |
Macro Cross-References
- CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- UNRATE - Unemployment Rate
- FEDFUNDS - Federal Funds Effective Rate
- CES0500000003 - Average Hourly Earnings of All Employees, Total Private
- DFEDTARU - Federal Funds Target Range - Upper Limit
- DFEDTARL - Federal Funds Target Range - Lower Limit
- DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
- CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
- CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
- PCEPI - Personal Consumption Expenditures: Chain-type Price Index
- PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- PPIACO - Producer Price Index by Commodity: All Commodities
- T10YIE - 10-Year Breakeven Inflation Rate
- U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- PAYEMS - All Employees, Total Nonfarm
- CIVPART - Labor Force Participation Rate
- EMRATIO - Employment-Population Ratio
- UNEMPLOY - Unemployed
- CE16OV - Employment Level
- ICSA - Initial Claims
- JTSJOL - Job Openings: Total Nonfarm
- JTSQUR - Quits: Total Nonfarm
- GDPC1 - Real Gross Domestic Product
- A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
- INDPRO - Industrial Production: Total Index
- TCU - Capacity Utilization: Total Index
- HOUST - New Privately-Owned Housing Units Started: Total Units
- PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- RSAFS - Advance Retail Sales: Retail Trade
- PCE - Personal Consumption Expenditures
- DSPIC96 - Real Disposable Personal Income
- PSAVERT - Personal Saving Rate
- M2SL - M2
- BOPGSTB - U.S. International Trade in Goods and Services: Balance
Latest 10-K MD&A
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data of this report and the matters described under Item 1A. Risk Factors.
A discussion regarding our financial condition and results of operations for 2025 compared to 2024 is presented below. Information on 2023 is included in graphs only to show year over year trends in our results of operations and operating metrics. Our financial condition for 2023, results of operations for 2023, and 2024 compared to 2023 are referenced throughout this document and can be found under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, which is incorporated by reference herein to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 14, 2025, and is available on the SEC’s website at www.sec.gov and our Investor Relations website at ir.prologis.com.
MANAGEMENT’S OVERVIEW
Summary of 2025
Our operating results and leasing activity remained resilient in 2025, with performance strengthening as the year progressed, despite economic disruption related to tariff policy proposals announced in April. Leasing activity in our consolidated portfolio remained healthy, supported by improved customer sentiment and market conditions, with 112 million square feet of new leases signed during the year (228 million square feet on an O&M basis).
Our results during 2025 continued to reflect the favorable mark-to-market of our existing leases, reflecting increases in market rents over the past several years. As a result, rent change on rollover and same-store growth in our O&M portfolio remained strong. This lease mark-to-market remained meaningfully positive at 18% (on an NER and our share basis), despite recent quarters of lower, or in some cases negative, market rental growth, reflecting the accumulated rent growth embedded in our in-place leases that remains to be realized.
These factors contributed to occupancy in our operating portfolio of 95.6% at December 31, 2025, and rent change on leases that commenced during the year of 50.1% on a net effective basis, both metrics based on our ownership share.
Demand conditions were also evident in our development activity. We focused on starting build-to-suit projects during 2025 and commenced $2.9 billion of consolidated development projects, of which 60.9% were build-to-suit projects.
While we believe we are well-positioned for long-term revenue growth, supported by embedded rent growth in our in-place portfolio and our development pipeline, the potential impact of ongoing economic uncertainty on our business, future financial condition and operating results remains difficult to predict.
We completed the following significant activities in 2025, as described in the Notes to the Consolidated Financial Statements:
•
We generated net proceeds of $2.7 billion and realized net gains on real estate transactions of $944 million, principally from the contribution of properties we developed to our unconsolidated co-investment ventures in the U.S. and Europe and sales to third parties in the U.S., including a data center.
•
In December, we listed China AMC Prologis Logistics REIT ("Prologis C-REIT") on the Shenzhen Stock Exchange. The Prologis C-REIT purchased properties from our open-ended venture in China. At December 31, 2025, we owned 20.7% of the venture.
•
At December 31, 2025, we had total available liquidity of $7.6 billion, including available capacity on our credit facilities of $6.5 billion and unrestricted cash balances of $1.1 billion.
29
Table of Contents
•
At December 31, 2025, our total debt was $35.0 billion with a weighted average term of 9 years and an effective interest rate of 3.2%. Our financing activities during the year included the following:
•
In May 2025, we amended and restated one of our global credit facilities while maintaining its existing borrowing capacity of $3.0 billion and extending the maturity date to June 2029, with an option to extend to June 2030.
•
In June 2025, we established an additional commercial paper program, under which we may issue, repay and re-issue short-term unsecured commercial paper notes (“CPNs”) denominated in British pound sterling, euros or U.S. dollars in an aggregate amount of up to €1.0 billion (or its equivalent in other currencies). At any point in time, we are required to maintain available commitments under our credit facilities in an amount at least equal to the amount of the CPNs outstanding.
•
We issued $3.4 billion of senior notes with an issuance date weighted average interest rate of 4.2% and weighted average term of 8 years (principal in millions):
Aggregate Principal
Issuance Date Weighted Average
Issuance Date
Borrowing Currency
USD (1)
Interest Rate
Term (Years)
Maturity Dates
February
C$
750
$
520
4.2%
8.0
February 2033
May
$
1,250
$
1,250
5.1%
8.3
January 2031 – May 2035
September
€
1,000
$
1,178
3.6%
9.5
September 2032 – 2037
October
C$
700
$
501
3.6%
6.3
February 2032
Total
$
3,449
4.2%
8.4
(1) The exchange rate used to calculate into U.S. dollars was the spot rate at the settlement date.
RESULTS OF OPERATIONS
We evaluate our business operations based on the NOI of our two reportable segments: Real Estate (Rental Operations and Development) and Strategic Capital. NOI by segment is a non-GAAP performance measure that is calculated using revenues and expenses directly from our financial statements. We consider NOI by segment to be an appropriate supplemental measure of our performance because it helps management and investors understand our operating results.
Below is our NOI by segment per the Consolidated Financial Statements and a reconciliation of NOI by segment to Operating Income per the Consolidated Financial Statements (in millions):
2025
2024
Real estate segment:
Rental revenues
$
8,159
$
7,515
Development management and other revenues
39
14
Rental expenses
(1,964
)
(1,765
)
Other expenses
(46
)
(47
)
Real Estate Segment – NOI
6,188
5,717
Strategic capital segment:
Strategic capital revenues
592
672
Strategic capital expenses
(271
)
(292
)
Strategic Capital Segment – NOI
321
380
General and administrative expenses
(469
)
(419
)
Depreciation and amortization expenses
(2,626
)
(2,580
)
Operating income before gains on real estate transactions, net
3,414
3,098
Gains on dispositions of development properties and land, net
258
414
Gains on other dispositions of investments in real estate, net
686
904
Operating income
$
4,358
$
4,416
See Note 16 to the Consolidated Financial Statements for more information on our segments and a reconciliation of each reportable segment’s NOI to Operating Income and Earnings Before Income Taxes.
Real Estate Segment
This reportable segment principally includes rental revenue and rental expenses recognized from our consolidated properties. This segment also includes the operating results of our renewable energy assets. We allocate the costs of our property management and leasing functions to the Real Estate Segment through Rental Expenses and the Strategic Capital Segment through Strategic Capital
30
Table of Contents
Expenses, both in the Consolidated Financial Statements, based on the square footage of the relative portfolios. In addition, this segment is impacted by our development, acquisition and disposition activities.
Below are the components of Real Estate Segment NOI, derived directly from line items in the Consolidated Financial Statements (in millions):
2025
2024
Rental revenues
$
8,159
$
7,515
Development management and other revenues
39
14
Rental expenses
(1,964
)
(1,765
)
Other expenses
(46
)
(47
)
Real Estate Segment – NOI
$
6,188
$
5,717
The $471 million change in Real Estate Segment (“RES”) NOI in 2025 compared to 2024, was impacted by the following activities (in millions):
(1)
Significant rent change due to higher rental rates on the rollover of leases during both periods continues to be a key driver of increasing rental income. See below for key metrics on rent change on rollover and occupancy.
(2)
We calculate changes in NOI from development completions period over period by comparing the change in NOI generated on the pool of developments that completed on or after January 1, 2024 through December 31, 2025.
Below are key operating metrics of our consolidated operating portfolio:
(1) Consolidated square feet of leases commenced and weighted average net effective rent change were calculated for leases with initial terms of one year or greater.
31
Table of Contents
Development Activity
The following table summarizes consolidated development activity (dollars and square feet in millions):
2025
2024
Starts:
Number of new development buildings started during the period
41
26
Square feet
15
7
TEI
$
2,943
$
1,235
Percentage of build-to-suits based on TEI
60.9
%
28.6
%
Stabilizations:
Number of development buildings stabilized during the period
40
72
Square feet
11
24
TEI
$
2,271
$
4,130
Percentage of build-to-suits based on TEI
43.8
%
32.7
%
Weighted average stabilized yield (1)
6.7
%
6.2
%
Estimated value at completion
$
2,848
$
4,923
Estimated weighted average margin (2)
25.4
%
19.2
%
Estimated value creation
$
577
$
793
(1)
We calculate the weighted average stabilized yield as estimated NOI assuming stabilized occupancy divided by TEI.
(2)
Estimated weighted average margin is calculated on development properties as estimated value creation, less estimated closing costs and taxes, if any, on properties expected to be sold or contributed, divided by TEI. Development margins fluctuate depending on several factors including cost of capital, changes in capitalization rates that are used to estimate value at completion and location and type of development, such as build-to-suit or speculative.
At December 31, 2025, the consolidated development portfolio, including properties under development and pre-stabilized properties, was expected to be completed before September 2027 with a TEI of $5.1 billion and was 53.5% leased, including $686 million of TEI for data centers. Our investment in the development portfolio was $3.0 billion at December 31, 2025. For additional information on our development portfolio at December 31, 2025, see Item 2. Properties.
Capital Expenditures
We capitalize costs incurred in improving and leasing our consolidated operating properties and other real estate investments as part of the investment basis or within Other Assets in the Consolidated Balance Sheets. The following graph summarizes capitalized expenditures and leasing costs during each year and excludes development costs and spend subsequent to stabilization that is structural in nature:
Strategic Capital Segment
This reportable segment includes revenues from asset management and property management services, transactional services for acquisition, disposition and leasing activity and promote revenue earned from the unconsolidated co-investment ventures. Revenues associated with the Strategic Capital Segment fluctuate because of changes in the size of the portfolios through acquisitions and dispositions, the fair value of the properties, timing of promotes, foreign currency exchange rates and other transactional activity. These revenues are reduced by the direct costs associated with the asset and property-level management expenses for the properties owned by these ventures. We allocate the costs of our property management and leasing functions to the Strategic Capital Segment through
32
Table of Contents
Strategic Capital Expenses and to the Real Estate Segment through Rental Expenses both in the Consolidated Financial Statements, based on the square footage of the relative portfolios. For further details regarding the key property information and summarized financial condition and operating results of our unconsolidated co-investment ventures, refer to Note 4 to the Consolidated Financial Statements.
Below are the components of Strategic Capital Segment NOI derived directly from the line items in the Consolidated Financial Statements (in millions):
2025
2024
Strategic capital revenues
$
592
$
672
Strategic capital expenses
(271
)
(292
)
Strategic Capital Segment – NOI
$
321
$
380
Below is additional detail of our Strategic Capital Segment revenues, expenses and NOI (in millions):
U.S. (1)
Other Americas
Europe
Asia
Total
2025
2024
2025
2024
2025
2024
2025
2024
2025
2024
Strategic capital revenues ($)
Recurring fees (2)
178
168
82
60
190
170
71
74
521
472
Transactional fees (3)
21
17
8
7
28
24
12
13
69
61
Promote revenue (4)
-
112
-
25
1
1
1
1
2
139
Total strategic capital revenues ($)
199
297
90
92
219
195
84
88
592
672
Strategic capital expenses ($) (4)
(132
)
(155
)
(22
)
(21
)
(73
)
(76
)
(44
)
(40
)
(271
)
(292
)
Strategic Capital Segment – NOI ($)
67
142
68
71
146
119
40
48
321
380
(1)
The U.S. expenses include compensation and personnel costs for employees who are based in the U.S. but also support other geographies.
(2)
Recurring fees include asset management and property management fees.
(3)
Transactional fees include leasing commissions, acquisition, disposition, development and other fees.
(4)
We generally earn promote revenue directly from third-party investors in the co-investment ventures based on the cumulative returns of the venture over a three-year period or the stabilization of individual development projects owned by the venture. Changes in asset valuations within the co-investment ventures during the promote period is one of the significant inputs to the calculation of promote revenues.
The Prologis Promote Plan ("PPP") awards up to 25% of the third-party portion of the promotes earned by us from the co-investment ventures to our employees. This award is issued as a combination of cash and equity-based awards, pursuant to the terms of the PPP and expensed through Strategic Capital Expenses in the Consolidated Statements of Income, as vested. As a result, expenses recognized in the current period may relate to promote revenues recognized in prior periods.
G&A Expenses
G&A expenses were $469 million and $419 million for 2025 and 2024, respectively. G&A expenses increased in 2025 compared to 2024, principally due to inflationary increases and higher compensation expenses including additions in our workforce in growth areas of the business. We capitalize certain internal costs that are incremental and directly related to our development and building improvement activities.
The following table summarizes capitalized G&A expenses (dollars in millions):
2025
2024
Building and land development activities
$
116
$
133
Operating building improvements and other
59
56
Total capitalized G&A expenses
$
175
$
189
Capitalized compensation and related costs as a percentage of total
21.0
%
24.4
%
Depreciation and Amortization Expenses
Depreciation and amortization expenses were $2.6 billion in both 2025 and 2024.
33
Table of Contents
The $46 million change in depreciation and amortization expenses in 2025 compared to 2024, was impacted by the following items (in millions):
Gains on Real Estate Transactions, Net
Gains on the disposition of development properties and land were $258 million and $414 million for 2025 and 2024, respectively, principally from the contribution of properties we developed to unconsolidated co-investment ventures in Europe and the U.S. in 2025 and the U.S., Mexico and Europe in 2024, and from sales to third parties in the U.S. in 2025.
Gains on other dispositions of investments in real estate were $686 million and $904 million for 2025 and 2024, respectively, principally from the sales of properties to third parties and the contribution of operating properties to our unconsolidated co-investment venture in the U.S. during both years.
Historically, we have utilized the proceeds from these dispositions primarily to fund our acquisition and development activities. See Note 3 to the Consolidated Financial Statements for further information on these transactions.
Our Owned and Managed (“O&M”) Operating Portfolio
We manage our business and evaluate operating performance on an O&M basis, which includes our consolidated properties and properties owned by our unconsolidated co-investment ventures. We believe reviewing the results on this basis enables management to assess performance more comprehensively as we manage the properties without regard to their ownership. We do not control the unconsolidated co-investment ventures for purposes of GAAP and the presentation of the ventures’ operating information does not represent a legal claim.
Our O&M operating portfolio excludes our development portfolio, value-added properties, non-industrial properties and properties we consider non-strategic that we do not intend to hold for the long term, including those classified as held for sale or within other real estate investments. Value-added properties are properties we have either acquired at a discount and believe we could provide greater returns post-stabilization or properties we expect to repurpose to higher uses. See below for information on our O&M operating portfolio at December 31 (square feet in millions):
2025
2024
Number of Properties
Square
Feet
Percentage Occupied
Number of Properties
Square
Feet
Percentage Occupied
Consolidated
2,968
645
95.4%
2,981
644
95.4%
Unconsolidated
2,472
562
96.3%
2,423
548
96.6%
Total
5,440
1,207
95.8%
5,404
1,192
95.9%
34
Table of Contents
Below are the key leasing metrics of our O&M operating portfolio.
(1)
Square feet of leases commenced and weighted average net effective rent change were calculated for leases with initial terms of one year or greater. We retained approximately 70% or more of our customers, based on the total square feet of leases commenced, for each year.
(2)
Turnover costs include external leasing commissions and tenant improvements and represent the estimated obligations incurred in connection with the lease commencement for leases greater than one year.
Same Store Analysis
Our same store metrics are non-GAAP financial measures, which are commonly used in the real estate industry and expected from the financial community, on both a net effective and cash basis. We evaluate the performance of the operating properties we own and manage using a “same store” analysis because the population of properties in this analysis is consistent from period to period, which allows us and investors to analyze our ongoing business operations. We determine our same store metrics on property NOI, which is calculated as rental revenue less rental expense for the applicable properties in the same store population for both consolidated and unconsolidated properties based on our ownership interest, as further defined below.
We define our same store population for the three months ended December 31, 2025 as the properties in our O&M operating portfolio, including the property NOI for both consolidated properties and properties owned by the unconsolidated co-investment ventures, at January 1, 2024 and owned throughout the same three-month period in both 2024 and 2025. We believe the drivers of property NOI for the consolidated portfolio are generally the same for the properties owned by the ventures in which we invest and therefore we evaluate the same store metrics of the O&M portfolio based on Prologis’ ownership in the properties (“Prologis Share”). The same store population excludes properties held for sale to third parties, along with development properties that were not stabilized at the beginning of the period (January 1, 2024) and properties acquired or disposed of to third parties during the period. To derive an appropriate measure of period-to-period operating performance, we remove the effects of foreign currency exchange rate movements by using the reported period-end exchange rate to translate from local currency into the U.S. dollar, for both periods.
35
Table of Contents
As non-GAAP financial measures, the same store metrics have certain limitations as an analytical tool and may vary among real estate companies. As a result, we provide a reconciliation of Rental Revenues less Rental Expenses (“Property NOI”) (from our Consolidated Financial Statements prepared in accordance with U.S. GAAP) to our Same Store Property NOI measures.
We evaluate the results of our same store portfolio on a quarterly basis. The following is a reconciliation of our consolidated rental revenues, rental expenses and property NOI for each quarter in 2025 and 2024 to the full year, as included in the Consolidated Statements of Income and within Note 18 to the Consolidated Financial Statements and to the respective amounts in our same store portfolio analysis for the three months ended December 31 (dollars in millions):
Three Months Ended
March 31,
June 30,
September 30,
December 31,
Full Year
2025
Rental revenues
$
1,987
$
2,026
$
2,054
$
2,092
$
8,159
Rental expenses
(488
)
(488
)
(485
)
(503
)
(1,964
)
Property NOI
$
1,499
$
1,538
$
1,569
$
1,589
$
6,195
2024
Rental revenues
$
1,828
$
1,852
$
1,897
$
1,938
$
7,515
Rental expenses
(454
)
(445
)
(427
)
(439
)
(1,765
)
Property NOI
$
1,374
$
1,407
$
1,470
$
1,499
$
5,750
Three Months Ended
December 31,
2025
2024
% Change
Reconciliation of Consolidated Property NOI to Same Store Property NOI measures:
Rental revenues
$
2,092
$
1,938
Rental expenses
(503
)
(439
)
Consolidated Property NOI
$
1,589
$
1,499
Adjustments to derive same store results:
Property NOI from consolidated properties not included in same store portfolio and
other adjustments (1)
(228
)
(188
)
Property NOI from unconsolidated co-investment ventures included in same store
portfolio (1)(2)
924
871
Third parties' share of Property NOI from properties included in same store
portfolio (1)(2)
(731
)
(698
)
Prologis Share of Same Store Property NOI – Net Effective (2)
$
1,554
$
1,484
4.7
%
Consolidated properties straight-line rent and fair value lease amortization
included in same store portfolio (3)
(117
)
(124
)
Unconsolidated co-investment ventures straight-line rent and fair value lease
amortization included in same store portfolio (3)
(37
)
(23
)
Third parties' share of straight-line rent and fair value lease amortization included
in same store portfolio (2)(3)
27
13
Prologis Share of Same Store Property NOI – Cash (2)(3)
$
1,427
$
1,350
5.7
%
(1)
We exclude properties held for sale to third parties, along with development properties that were not stabilized at the beginning of the periods and properties acquired or disposed of to third parties during the periods. We also exclude one-time items due to early lease terminations, including termination fees received from customers and the write-off of related lease assets and liabilities, that are not indicative of the property’s recurring operating performance in order to evaluate the growth or decline in each property's rental revenues. Same Store Property NOI is adjusted to include an allocation of property management expenses for our consolidated properties based on the property management services provided to each property (generally, based on a percentage of revenues). On consolidation, these amounts are eliminated and the actual costs of providing property management and leasing services are recognized as part of our consolidated rental expense.
(2)
We include the Property NOI for the same store portfolio for both consolidated properties and properties owned by the co-investment ventures based on our investment in the underlying properties. In order to calculate our share of Same Store Property NOI from the co-investment ventures in which we own less than 100%, we use the co-investment ventures’ underlying Property NOI for the same store portfolio and apply our ownership percentage at December 31, 2025 to the Property NOI for both periods, including the properties contributed during the periods. We adjust the total Property NOI from the same store portfolio of the co-investment ventures by subtracting the third parties’ share of both consolidated and unconsolidated co-investment ventures.
During the periods presented, certain wholly owned properties were contributed to a co-investment venture and are included in the same store portfolio. Neither our consolidated results nor those of the co-investment ventures, when viewed individually,
36
Table of Contents
would be comparable on a same store basis because of the changes in composition of the respective portfolios from period to period (e.g. the results of a contributed property are included in our consolidated results through the contribution date and in the results of the venture subsequent to the contribution date based on our ownership interest at the end of the period). As a result, only line items labeled “Prologis Share of Same Store Property NOI” are comparable period over period.
(3)
We further remove certain noncash items (straight-line rent and fair value lease amortization) included in the financial statements prepared in accordance with U.S. GAAP to reflect a Same Store Property NOI – Cash measure.
We manage our business and compensate our executives based on the same store results of our O&M portfolio at 100% as we manage our portfolio on an ownership blind basis. We calculate those results by including 100% of the properties included in our same store portfolio.
Other Components of Income (Expense)
Earnings from Unconsolidated Entities, Net
We recognized net earnings from unconsolidated entities, which are primarily accounted for using the equity method, of $403 million and $354 million during 2025 and 2024, respectively.
The earnings we recognize from unconsolidated entities can be impacted by: (i) the size, rental rates and occupancy of the portfolio of properties owned by each venture; (ii) interest expense based on the size and terms of the debt; (iii) gains or losses from dispositions of properties, impairments and extinguishments of debt; (iv) our ownership interest in each venture; (v) other variances in revenues and expenses of each venture; and (vi) fluctuations in foreign currency exchange rates used to translate our share of net earnings to U.S. dollars.
See the discussion of our unconsolidated entities above in the Strategic Capital Segment discussion and in Note 4 to the Consolidated Financial Statements for a further breakdown of our share of net earnings recognized.
Interest Expense
The following table details our net interest expense (dollars in millions):
2025
2024
Gross interest expense
$
1,024
$
893
Amortization of debt discount and debt issuance costs, net
85
79
Capitalized amounts
(107
)
(108
)
Net interest expense
$
1,002
$
864
Weighted average effective interest rate during the year
3.2
%
3.1
%
Interest expense increased in 2025, as compared to 2024, principally due to the issuance of senior notes to finance acquisition and development activities with higher interest rates on new issuances. We issued $3.4 billion of senior notes during 2025 and $4.2 billion during 2024, with a weighted average interest rate of 4.2% and 4.8%, respectively, at the issuance date.
See Note 7 to the Consolidated Financial Statements and the Liquidity and Capital Resources section below, for further discussion of our debt and borrowing costs.
Foreign Currency, Derivative and Other Gains (Losses) and Other Income (Expense), Net
We recognized foreign currency, derivative and other gains (losses) and other income (expense), net, of $15 million and $209 million for 2025 and 2024, respectively. This activity resulted principally from three types of transactions during 2025 and 2024: (i) interest income earned on short-term investments and other income ($130 million and $88 million, respectively); (ii) realized gains on the settlement of undesignated derivatives ($11 million and $53 million, respectively); and (iii) unrealized changes in the fair value of undesignated derivatives and the remeasurement of the unhedged foreign debt that was designated as a nonderivative net investment hedge ($138 million of losses and $87 million of gains, respectively).
Given the global nature of our operations, we are exposed to foreign currency exchange risk related to investments in and earnings from our foreign investments. We primarily hedge our foreign currency risk related to our investments by borrowing in the currencies in which we invest thereby providing a natural hedge. We have issued debt in a currency that is not the same functional currency of the borrowing entity and have designated a portion of the debt as a nonderivative net investment hedge. We recognize the remeasurement and settlement of the translation adjustment on the unhedged portion of the debt and accrued interest in unrealized gains or losses. We may use derivative financial instruments to manage foreign currency exchange rate risk related to our earnings. We recognize the change in fair value of the undesignated derivative contracts in unrealized gains and losses. Upon settlement of these transactions, we recognize realized gains or losses.
37
Table of Contents
See Note 2 to the Consolidated Financial Statements for more information about our foreign currency and derivative financial instrument policies and Note 14 to the Consolidated Financial Statements for more information about our derivative and nonderivative transactions.
Income Tax Expense
We recognize income tax expense related to our taxable REIT subsidiaries and in the local, state and foreign jurisdictions in which we operate. Our current income tax expense (benefit) fluctuates from period to period based primarily on the timing of our taxable income, including gains on the disposition of properties, fees earned from the co-investment ventures and taxable earnings from unconsolidated co-investment ventures. Deferred income tax expense (benefit) is generally a function of the period’s temporary differences and the utilization of net operating losses generated in prior years that had been previously recognized as deferred income tax assets in taxable subsidiaries.
The following table summarizes our income tax expense (benefit) (in millions):
2025
2024
Current income tax expense (benefit):
Income tax expense (benefit)
$
173
$
116
Income tax expense (benefit) on dispositions
27
30
Total current income tax expense (benefit)
200
146
Deferred income tax expense (benefit):
Income tax expense (benefit)
4
21
Total deferred income tax expense (benefit)
4
21
Total income tax expense
$
204
$
167
Our income taxes are discussed in more detail in Note 12 to the Consolidated Financial Statements.
Net Earnings Attributable to Noncontrolling Interests
Net earnings attributable to noncontrolling interests represents the third-party investors’ share of the earnings generated in consolidated entities in which we do not own 100% of the equity, reduced by the third-party share of fees or promotes we earned during the period. We had net earnings attributable to noncontrolling interests of $237 million and $216 million in 2025 and 2024, respectively. Included in these amounts were $81 million and $93 million in 2025 and 2024, respectively, of net earnings attributable to the common limited partnership unitholders of Prologis, L.P.
See Note 10 to the Consolidated Financial Statements for further information on our noncontrolling interests.
Other Comprehensive Income (Loss)
The key driver of changes in Accumulated Other Comprehensive Income (Loss) (“AOCI/L”) in the Consolidated Financial Statements in 2025 and 2024, was the currency translation adjustment derived from changes in exchange rates during both periods principally on our net investments in real estate outside the U.S. and the borrowings we issue in the functional currencies of the countries where we invest. These borrowings serve as a natural hedge of our foreign investments. In addition, we use derivative financial instruments, such as foreign currency contracts to manage foreign currency exchange rate risk related to our foreign investments and interest rate contracts to manage interest rate risk, that when designated the change in fair value is included in AOCI/L.
See Note 2 to the Consolidated Financial Statements for more information about our foreign currency and derivative financial instrument policies and Note 14 to the Consolidated Financial Statements for more information about our derivative and nonderivative transactions and other comprehensive income (loss).
ENVIRONMENTAL MATTERS
See Note 15 in the Consolidated Financial Statements for further information about environmental liabilities.
LIQUIDITY AND CAPITAL RESOURCES
Overview
We believe our ability to generate cash from operating activities, distributions from our co-investment ventures, contributions and dispositions of properties and available financing sources provides sufficient capacity to meet our anticipated future development, acquisition, operating, debt service, dividend and distribution requirements.
38
Table of Contents
Near-Term Principal Cash Sources and Uses
In addition to dividends and distributions, we expect our primary cash needs will consist of the following:
•
completion of the development and leasing of the properties in our consolidated development portfolio (at December 31, 2025, 77 properties in our development portfolio were 53.5% leased with a current investment of $3.0 billion and a TEI of $5.1 billion when completed and leased, leaving $2.1 billion of estimated additional required investment);
•
development of new industrial properties that we may hold for long-term investment or subsequently contribute to unconsolidated co-investment ventures or sell to third parties, including the acquisition of land;
•
development of data centers, including capital for the acquisition of land, site preparation, power procurement activities to secure long-term energy capacity and turnkey data center infrastructure and equipment;
•
the acquisition of other real estate investments that we acquire with the intention of redeveloping into industrial properties and data centers;
•
capital expenditures and leasing costs on properties in our operating portfolio;
•
investments in renewable energy, energy storage and mobility infrastructure to serve our customers and achieve our sustainability goals;
•
repayment of debt and scheduled principal payments of $1.9 billion in 2026;
•
additional investments in current and future co-investment ventures and other ventures; and
•
the acquisition of operating properties or portfolios of operating properties (depending on market and other conditions), for direct, long-term investment in our consolidated portfolio (this might include acquisitions from our unconsolidated entities).
We expect to fund our cash needs principally from the following sources (subject to market conditions):
•
net cash flow from property operations;
•
fees earned for services performed on behalf of co-investment ventures;
•
distributions received from co-investment ventures;
•
proceeds from the contribution of properties to current or future co-investment ventures;
•
proceeds from the disposition of properties or other investments to third parties;
•
available unrestricted cash balances ($1.1 billion at December 31, 2025);
•
available capacity under our current credit facility arrangements that allows us to borrow on a short-term basis, with maturities generally ranging from overnight to three months ($6.5 billion available at December 31, 2025), including our commercial paper programs; and
•
proceeds from the issuance of debt.
In the long term, we may also voluntarily repurchase our outstanding debt or equity securities (depending on prevailing market conditions, our liquidity, contractual restrictions and other factors) through cash purchases, open-market purchases, privately negotiated transactions, tender offers or otherwise. We may also fund our cash needs from the issuance of equity securities, subject to market conditions, and through the sale of a portion of our investments in co-investment ventures.
39
Table of Contents
Debt
The following table summarizes information about our consolidated debt by currency at December 31 (dollars in millions):
2025
2024
Weighted Average
Interest Rate
Amount
Outstanding
% of Total
Weighted Average
Interest Rate
Amount
Outstanding
% of Total
British pound sterling
3.0%
$
1,844
5.3
%
3.1%
$
1,715
5.6
%
Canadian dollar
4.4%
2,005
5.7
%
4.7%
1,262
4.1
%
Euro
2.2%
12,302
35.1
%
2.1%
9,900
32.1
%
Japanese yen
1.2%
2,930
8.4
%
1.1%
2,911
9.4
%
U.S. dollar
4.1%
15,386
43.9
%
4.1%
14,458
46.8
%
Other
3.8%
570
1.6
%
3.6%
633
2.0
%
Total debt (1)
3.2%
$
35,037
100.0
%
3.1%
$
30,879
100.0
%
(1)
The weighted average remaining term for total debt outstanding at both December 31, 2025 and 2024 was 9 years.
At December 31, 2025, our credit ratings were A from Standard and Poor's and A2 from Moody's, both with stable outlooks. These ratings support our ability to access capital at favorable interest rates. Adverse changes to our credit ratings could negatively affect our business and our future growth, particularly our refinancing and capital markets activities, our ability to manage debt maturities and our development and acquisition plans. A securities rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn at any time by the issuing agency.
At December 31, 2025, we were in compliance with all of our financial debt covenants. These covenants include customary financial covenants, such as maintaining debt service coverage, leverage and fixed charge coverage ratios.
See Note 7 to the Consolidated Financial Statements for further discussion on our debt.
Equity Commitments Related to Certain Co-Investment Ventures
Certain co-investment ventures have equity commitments from us and our venture partners. Our venture partners fulfill their equity commitment with cash. We may fulfill our equity commitment through contributions of properties or cash.
The following table summarizes the remaining equity commitments at December 31, 2025 (dollars in millions):
Equity Commitments (1)
Prologis
Venture Partners
Total
Expiration Date
Prologis Brazil Logistics Venture
$
33
$
133
$
166
2028
Prologis European Logistics Fund
-
60
60
2028 (2)
Prologis Japan Core Logistics Fund
78
402
480
2033
Prologis China Logistics Venture
49
278
327
2027 – 2028
Total
$
160
$
873
$
1,033
(1)
The equity commitments for the co-investment ventures that operate in a different functional currency than the U.S. dollar were calculated using the foreign currency exchange rate at December 31, 2025.
(2)
Venture partners generally have the option to cancel their equity commitment starting 18 months after the initial commitment date.
See the Cash Flow Summary below for more information about our investment activity in our co-investment ventures.
Cash Flow Summary
The following table summarizes our cash flow activity (in millions):
2025
2024
Net cash provided by (used in) operating activities
$
5,008
$
4,912
Net cash provided by (used in) investing activities
$
(3,630
)
$
(3,099
)
Net cash provided by (used in) financing activities
$
(1,564
)
$
(1,000
)
Net increase (decrease) in cash and cash equivalents, including the effect of foreign currency
exchange rates on cash
$
(173
)
$
788
40
Table of Contents
Operating Activities
Cash provided by and used in operating activities, exclusive of changes in receivables and payables, was impacted by the following significant activities:
•
Real Estate Segment. We generate the majority of our operating cash through the net revenues of our Real Estate Segment, including the recovery of our operating costs. Cash flows generated by the Real Estate Segment are impacted by our acquisition, development and disposition activities, which are among the drivers of NOI recognized during each period. See the Results of Operations section above for further explanation of our Real Estate Segment. The revenues from this segment include noncash adjustments for straight-lined rents and amortization of above and below market leases of $691 million and $645 million in 2025 and 2024, respectively.
•
Strategic Capital Segment. We also generate operating cash through the fee revenue from our Strategic Capital Segment by providing asset management and property management and other services to our unconsolidated co-investment ventures. See the Results of Operations section above for the key drivers of the net revenues from our Strategic Capital Segment. Included in Strategic Capital Revenues in the Consolidated Statements of Income are the promotes we earn from the third-party investors in our co-investment ventures, which are recognized in operating activities in the period the cash is received, generally the quarter after the revenue is recognized.
•
G&A expenses and equity-based compensation awards. We incurred $469 million and $419 million of G&A expenses in 2025 and 2024, respectively. We recognized equity-based, noncash compensation expenses of $185 million and $232 million in 2025 and 2024, respectively, which were recorded to Rental Expenses in the Real Estate Segment, Strategic Capital Expenses in the Strategic Capital Segment and G&A Expenses in the Consolidated Statements of Income.
•
Operating distributions from unconsolidated entities. We received $645 million and $562 million of distributions as a return on our investment from the cash flows generated from the operations of our unconsolidated entities in 2025 and 2024, respectively.
•
Cash paid for interest, net of amounts capitalized. We paid interest, net of amounts capitalized, of $842 million and $711 million in 2025 and 2024, respectively. See Note 7 to the Consolidated Financial Statements for further information on this activity.
•
Cash paid for income taxes, net of refunds. We paid income taxes, net of refunds, of $143 million and $130 million in 2025 and 2024, respectively. See Note 12 to the Consolidated Financial Statements for further information on this activity.
Investing Activities
Cash provided by investing activities is driven by proceeds from the sale of real estate assets that include the contribution of properties we developed to our unconsolidated co-investment ventures as well as the sale of data centers and non-strategic operating properties. Cash used in investing activities is principally driven by our capital deployment activities of investing in the development of operating properties and data centers, acquisitions and capital expenditures as discussed above. Acquisition activity includes operating properties, real estate portfolios, land for future development and other real estate assets that we acquired with the intent to redevelop in the future. See Note 3 to the Consolidated Financial Statements for further information on these activities. In addition, the following significant transactions also impacted our cash used in and provided by investing activities:
•
Investments in and advances to our unconsolidated entities. We invested cash in our unconsolidated entities of $312 million and $541 million in 2025 and 2024, respectively, representing our proportionate share, for the acquisition of properties, development and repayment of debt by the ventures. See Note 4 to the Consolidated Financial Statements for more detail on our unconsolidated co-investment ventures.
•
Return of investment from unconsolidated entities. We received distributions from unconsolidated entities as a return of investment of $104 million and $58 million in 2025 and 2024, respectively, representing our proportionate share. Included in these amounts were distributions from venture activities, including proceeds from property sales, debt refinancing and the redemption of our investment in certain unconsolidated entities.
•
Net proceeds from (payments on) the settlement of net investment hedges. We made net payments of $21 million and received net proceeds of $13 million for the settlement of net investment hedges in 2025 and 2024, respectively. See Note 14 to the Consolidated Financial Statements for further information on our derivative transactions.
•
Purchase of short-term investments. We invested €150 million ($177 million at December 31, 2025) of cash into a short-term money market with a maturity of four months.
41
Table of Contents
Financing Activities
Cash provided by and used in financing activities is principally driven by proceeds from and payments on credit facilities, commercial paper and other debt, along with dividends paid on common and preferred stock and noncontrolling interest contributions and distributions. Our credit facilities and our commercial paper support our cash needs for general corporate purposes on a short-term basis. The maturities of the borrowings under the credit facilities and the notes under the commercial paper programs generally range from overnight to three months.
Our repurchase of and payments on debt and proceeds from the issuance of debt consisted of the following activity (in millions):
2025
2024
Repurchase of and payments on debt (including extinguishment costs)
Regularly scheduled debt principal payments and payments at maturity
$
337
$
330
Secured mortgage debt
-
89
Senior notes
365
-
Term loans
-
500
Total
$
702
$
919
Proceeds from the issuance of debt
Secured mortgage debt
$
4
$
7
Senior notes
3,431
4,149
Term loans
26
350
Total
$
3,461
$
4,506
Unconsolidated Co-Investment Venture Debt
We had investments in and advances to our unconsolidated co-investment ventures of $10.3 billion at December 31, 2025. These ventures had total third-party debt of $19.7 billion at December 31, 2025 with a weighted average remaining term of 6 years and weighted average interest rate of 3.5%. Certain of our ventures do not have third-party debt and are therefore excluded. This debt is non-recourse to Prologis and other investors in the co-investment ventures and bears interest as follows at December 31, 2025 (dollars in millions):
Total Debt (1)
Weighted Average
Interest Rate
Gross Book Value of Real Estate (1)
Ownership %
Prologis Targeted U.S. Logistics Fund
$
6,386
4.3%
$
16,761
31.9%
FIBRA Prologis
2,429
5.1%
6,710
34.6%
Prologis European Logistics Fund
7,101
3.1%
22,284
26.4%
Nippon Prologis REIT
2,302
0.9%
6,282
15.3%
Prologis Japan Core Logistics Fund
334
1.3%
614
16.3%
Prologis China Core Logistics Fund
809
4.1%
1,964
15.5%
Prologis China Logistics Venture
313
3.9%
806
15.0%
Total
$
19,674
$
55,421
(1)
The weighted average loan-to-value ratio for all unconsolidated co-investment ventures was 30.1% at December 31, 2025 based on gross book value. Loan-to-value, a non-GAAP measure, was calculated as the percentage of total third-party debt to the gross book value of real estate for each venture and weighted based on the cumulative gross book value of all unconsolidated co-investment ventures.
At December 31, 2025, we did not guarantee any third-party debt of the unconsolidated co-investment ventures. In our role as the manager or sponsor, we work with the co-investment ventures to maintain sufficient liquidity and refinance their maturing debt. There can be no assurance that the co-investment ventures will be able to refinance any maturing indebtedness on terms as favorable as the maturing debt, or at all. If the ventures are unable to refinance the maturing indebtedness with newly issued debt, they may be able to obtain funds by voluntary capital contributions from us and our partners or by selling assets. Certain of our ventures also have credit facilities, or unencumbered properties, both of which may be used to obtain funds.
Dividend and Distribution Requirements
Our dividend policy on our common stock is to distribute a percentage of our cash flow to ensure that we will meet the dividend requirements of the Internal Revenue Code ("IRC"), relative to maintaining our REIT status, while still allowing us to retain cash to fund our capital deployment and other investment activities.
Under the IRC, REITs may be subject to certain federal income and excise taxes on undistributed taxable income.
42
Table of Contents
Outstanding Common Shares and Units Eligible for Dividends and Distributions
At December 31, 2025 the total outstanding shares of the Parent's common stock and common limited partnership units in the OP eligible for dividends and distributions were as follows (in thousands):
Shares/Units
Common shares outstanding
929,153
Common limited partnership units outstanding
21,758
Total outstanding common shares and units eligible for dividends and distributions
950,911
We paid quarterly cash dividends of $1.01 and $0.96 per common share in 2025 and 2024, respectively. Our future common stock dividends, if and as declared, may vary and will be determined by the Board based upon the circumstances prevailing at the time, including our financial condition, operating results and REIT distribution requirements, and may be adjusted at the discretion of the Board during the year.
We make distributions on the common limited partnership units outstanding at the same per unit amount as our common stock dividend.
Class A common limited partnership units ("Class A Units") Distributions
The Class A Units in the OP were entitled to a quarterly distribution equal to $0.64665 per unit so long as the common units received a quarterly distribution of at least $0.40 per unit. We paid a quarterly cash distribution of $0.64665 per Class A Unit in both 2025 and 2024, totaling $1.93995 per unit during the year ended December 31, 2025, and $2.58660 per unit during the year ended December 31, 2024. During the year ended December 31, 2025, all Class A Units were converted into common limited partnership units, leaving none outstanding to be converted at December 31, 2025.
Preferred Stock Dividends
At December 31, 2025, our Series Q preferred stock had an annual dividend rate of 8.54% per share and the dividends are payable quarterly in arrears.
Pursuant to the terms of our preferred stock, we are restricted from declaring or paying any dividend with respect to our common stock unless and until all cumulative dividends with respect to the preferred stock have been paid and sufficient funds have been set aside for dividends that have been declared for the relevant dividend period with respect to the preferred stock.
Other Commitments
On an ongoing basis, we are engaged in various stages of negotiations for the acquisition or disposition of individual properties or portfolios of properties.
CRITICAL ACCOUNTING POLICIES
A critical accounting policy is one that involves an estimate or assumption that is subjective and requires management judgment about the effect of a matter that is inherently uncertain and material to an entity’s financial condition and results of operations. Management’s judgment considers historical and current economic conditions and expectations for the future. Changes in estimates could affect our financial position and specific items in our results of operations that are used by stockholders, potential investors, industry analysts and lenders in their evaluation of our performance. Of the significant accounting policies discussed in Note 2 to the Consolidated Financial Statements, those presented below have been identified by us as meeting the criteria to be considered critical accounting policies for our financial condition at December 31, 2025, and 2024 and our operating results for the three-year period ended December 31, 2025. Refer to Note 2 for more information on these critical accounting policies.
Asset Acquisitions
We generally account for an acquisition of a single property or portfolio of properties as an asset acquisition. We measure the real estate assets acquired through an asset acquisition based on their cost or total consideration exchanged. The difference between the cost and the estimated fair value (excess or bargain consideration) is allocated to the real estate properties and related lease intangibles on a relative fair value basis. Assets we do not intend to hold long-term are recorded at fair value. At a property level, we allocate the fair value to the components, which include buildings, land, improvements, and intangible assets or liabilities related to acquired leases. The most significant portion of the allocation is to building and land and requires the use of market based estimates and assumptions.
The fair value of real estate properties subject to purchase price allocation is based on the expected future cash flows of the property and various characteristics of the markets where the property is located utilizing an income approach methodology, which may be a
43
Table of Contents
discounted cash flow analysis or applying a capitalization rate to the estimated net operating income of a property. Key assumptions may include market rents and capitalization rates. Estimates of future cash flows are based on a number of factors including historical operating results, known trends and market and economic conditions. We determine capitalization rates by market based on recent transactions and other market data and adjust if necessary, based on the property characteristics. The fair value of land is generally based on relevant market data, such as a comparison of the subject site to similar parcels that have recently been sold or are currently being offered on the market for sale. For acquisitions of a significant portfolio of properties, the use of different assumptions to value the acquired properties and allocate the most significant portion of the property value between the building and land could affect the depreciation expense we recognize over the estimated remaining useful life.
Recoverability of Real Estate Assets
We assess the carrying values of our respective long-lived assets whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. This assessment is primarily triggered based on the shortening of the expected hold period due to a change in our intent to sell a property in the near term. We have processes to monitor our intent with regard to our investments and the estimated disposition value in comparison to the current carrying value. If our assessment of potential triggering events indicates that the carrying value of a property that we expect to sell in the near term is not recoverable, we recognize an impairment charge for the amount by which the carrying value exceeds the current estimated fair value of the property. We determine the fair value of the property based on the estimated proceeds from disposition that are based on quoted market values, third-party appraisals or discounted cash flow models that utilize the future net operating income of the property and expected market capitalization rates. Changes in economic and operating conditions could impact our intent and the assumptions used in determining the fair value that could result in future impairment.
NEW ACCOUNTING PRONOUNCEMENTS
See Note 2 to the Consolidated Financial Statements.
FUNDS FROM OPERATIONS ATTRIBUTABLE TO COMMON STOCKHOLDERS/UNITHOLDERS (“FFO”)
FFO is a non-GAAP financial measure that is commonly used in the real estate industry, with net earnings as the most directly comparable GAAP measure.
The National Association of Real Estate Investment Trusts ("NAREIT") defines FFO as earnings computed under GAAP to exclude depreciation and gains and losses from sales net of any related tax, along with impairment charges, of previously depreciated properties. We exclude the gains on revaluation of equity investments upon acquisition of a controlling interest and the gain recognized from a partial sale of our investment, as these are similar to gains from the sales of previously depreciated properties. This measure excludes similar adjustments from our unconsolidated entities and the third parties' share of our consolidated ventures.
Our FFO Measures
Our FFO measures begin with NAREIT’s definition, with certain adjustments to calculate FFO, as modified by Prologis, and Core FFO, both as defined below, to reflect our business and execution of our management strategy. While these adjustments are subject to significant fluctuations from period to period, with both positive and negative short-term impacts, the removal of the effects of these items enhances our understanding of the core operating performance of our properties over the long term.
We use FFO, as modified by Prologis, so that management, analysts and investors are able to evaluate our performance against other REITs that do not have similar operations or operations in jurisdictions outside the U.S. We use Core FFO to (i) assess our operating performance as compared to other real estate companies; (ii) evaluate our performance and the performance of our properties in comparison with expected results and results of previous periods; (iii) evaluate the performance of our management; (iv) budget and forecast future results to assist in the allocation of resources; (v) provide guidance to the financial markets to understand our expected operating performance; and (vi) evaluate how a specific potential investment will impact our future results.
We calculate our FFO measures based on our proportionate ownership share of both our unconsolidated entities and consolidated ventures. We reflect our share of our FFO measures for unconsolidated entities by applying our average ownership percentage for the period to the applicable adjustments on an entity-by-entity basis. We reflect our share for consolidated ventures in which we do not own 100% of the equity by removing the noncontrolling interests share of the applicable adjustments based on our average ownership percentage for the applicable periods.
FFO, as modified by Prologis attributable to common stockholders/unitholders (“FFO, as modified by Prologis”)
To arrive at FFO, as modified by Prologis, we adjust the NAREIT defined FFO measure to exclude:
•
deferred income tax benefits and deferred income tax expenses recognized by our subsidiaries;
44
Table of Contents
•
current income tax expense related to acquired tax liabilities that were recorded as deferred tax liabilities in an acquisition, to the extent the expense is offset with a deferred income tax benefit in earnings that is excluded from our defined FFO measure; and
•
foreign currency exchange gains and losses resulting from: (i) debt transactions between us and our foreign entities; (ii) third-party debt that is used to hedge our investment in foreign entities; (iii) derivative financial instruments related to any such debt transactions; and (iv) mark-to-market adjustments associated with derivative and other financial instruments.
Core FFO attributable to common stockholders/unitholders (“Core FFO”)
To arrive at Core FFO, we adjust FFO, as modified by Prologis, to exclude the following:
•
gains or losses from the disposition of land and development properties that were developed with the intent to contribute or sell;
•
income tax expense related to the sale of investments in real estate;
•
impairment charges recognized related to our investments in real estate generally as a result of our change in intent to contribute or sell these properties; and
•
gains or losses from the early extinguishment of debt and redemption and repurchase of preferred stock.
Limitations on the use of our FFO measures
While we believe our modified FFO measures are important supplemental measures, neither NAREIT's nor our measures of FFO should be used alone because they exclude significant components of net earnings computed under GAAP and are, therefore, limited as an analytical tool. Some of these limitations arise from excluding income tax expense that may be payable or depreciation and amortization expenses that reflect costs necessary to maintain operating performance. In addition, our FFO measure does not reflect changes in asset values resulting from fluctuations in market conditions or foreign currency exchange rates nor costs or benefits from settlement of deferred income taxes or the extinguishment of debt. We do not use NAREIT's nor our measures of FFO as alternatives to net earnings computed under GAAP or as alternatives to cash from operating activities computed under GAAP or as indicators of our ability to fund our cash needs. We compensate for the limitations by using our FFO measures only in conjunction with net earnings computed under GAAP when making our decisions. This information should be read with our complete Consolidated Financial Statements prepared under GAAP. To assist investors in compensating for these limitations, we reconcile our modified FFO measures from consolidated net earnings attributable to common stockholders computed under GAAP as follows (in millions):
2025
2024
Reconciliation of net earnings attributable to common stockholders to FFO measures:
Net earnings attributable to common stockholders
$
3,322
$
3,726
Add (deduct) NAREIT defined adjustments:
Real estate related depreciation and amortization
2,539
2,504
Gains on other dispositions of investments in real estate, net of taxes (excluding development
properties and land)
(685
)
(899
)
Adjustments related to noncontrolling interests
(47
)
(31
)
Our proportionate share of adjustments related to unconsolidated entities
551
495
NAREIT defined FFO attributable to common stockholders/unitholders
$
5,680
$
5,795
Add (deduct) our modified adjustments:
Unrealized foreign currency, derivative and other losses (gains), net
125
(68
)
Deferred income tax expense (benefit)
4
21
Reconciling items related to noncontrolling interests
(1
)
-
Our proportionate share of adjustments related to unconsolidated entities
(29
)
(7
)
FFO, as modified by Prologis attributable to common stockholders/unitholders
$
5,779
$
5,741
Adjustments to arrive at Core FFO:
Gains on dispositions of development properties and land, net
(258
)
(414
)
Current income tax expense (benefit) on dispositions
26
25
Losses (gains) on early extinguishment of debt, net
3
(1
)
Adjustments related to noncontrolling interests
15
6
Our proportionate share of adjustments related to unconsolidated entities
(4
)
(52
)
Core FFO attributable to common stockholders/unitholders
$
5,561
$
5,305
45
Table of Contents