Prologis, Inc.

Q2 Core FFO was $1.63 per share including net promote income, or $1.60 per share excluding promote income, both ahead of expectations. The company reported 95.5% occupancy, same-store NOI growth of 6.4% on a net effective basis and 8.5% on a cash basis, rent change on rollover above 36% net effective and 22% on a cash basis, and a 17% net effective lease mark-to-market. Promote revenue was $83 million, and Prologis said it generated $60 million of incremental NOI from rollover. For the full year, management raised average occupancy guidance to 95.25%-95.75%, net effective same-store growth to 5.25%-5.75%, cash same-store growth to 6.75%-7.25%, net earnings to $4.40-$4.55 per share, and Core FFO to $6.22-$6.30 per share. Development starts guidance was raised to $5.5 billion-$6.5 billion, acquisitions to $1.5 billion-$2 billion, and contributions/dispositions to $4.25 billion-$5.25 billion; strategic capital revenue excluding promotes stays at $660 million-$680 million and net promote income is now expected to be flat.

Dan Letter framed the quarter as evidence that Prologis is entering the next phase of growth, with logistics, data centers, and energy reinforcing one another. He emphasized disciplined investment, record leasing, and the company’s ability to use its land bank, customer relationships, and operating platform to expand beyond warehouse development. His tone was confident and upbeat, especially on the long runway in data centers and on the company’s continued strategic capital execution.

Tim Arndt highlighted an excellent quarter across operations and capital deployment, starting with Core FFO of $1.63 per share including promote income and $1.60 excluding it. He pointed to 95.5% occupancy, 17% lease mark-to-market, $83 million of promote revenue, $1.6 billion of new development starts, $1.8 billion of acquisitions at an estimated 20% discount to replacement cost, and $800 million of dispositions. He also noted $3.4 billion of financing activity, a 4.7x debt-to-EBITDA ratio, and guided to full-year Core FFO of $6.22-$6.30 per share and net earnings of $4.40-$4.55 per share.

Analysts pressed on whether market rent growth is enough to expand the embedded mark-to-market again, and management said it would expand when market rent growth outpaces rent change on rollover; Tim also said the mark-to-market could normalize to a low-double-digit run rate over time. Questions also focused on the data center opportunity, including the mix of turnkey versus powered shell and how Prologis will fund the buildout; management said the customer will ultimately drive the mix, but the company plans to sell assets at completion and has also built relationships with capital partners while retaining balance-sheet capacity. On development starts, management clarified that the higher full-year guidance mainly reflects logistics starts now that the earlier $2 billion data center start target has already been achieved.