Prologis, Inc. (PLD) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

July 18, 2023 12:00 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the Prologis Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded.

I will now turn the conference over to our host, Jill Sawyer, Vice President of Investor Relations. Thank you. You may begin.

Jill Sawyer

Thanks you, Adel. Good morning, everyone. Welcome to our second quarter 2023 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 second quarter results, press release and supplemental do contain financial measures such as FFO and EBITDA that are non-GAAP measures 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 and our entire executive team are also with us today.

With that I’ll hand the call over to Tim.

Tim Arndt

Thanks, Jill. Good morning, everybody, and welcome to our second quarter earnings call. We had a very good quarter with outstanding results across our uniquely diversified business. It was highlighted by record rent change, a ramp up in development starts roughly half of which were build-to-suit and the acquisition of over $3 billion of real estate at accretive returns deepening our scale in key markets.

We also earned record strategic capital income and raised $1.2 billion in new equity across the vehicles. We are watching markets closely and we’ve been clear that we expect vacancies to arise over the course of the year from a normalization of demand and elevated development deliveries.

We’ve indeed seen vacancy build and expected to reach the mid-fours in the US by year end but continue to believe that fundamentals will regain momentum in 2024 with the outlook for new supply declining as development starts continue to fall this year. In short, our outlook is completely unchanged and we feel great about our business.