Nick Tillman

Nick Thillman inquired about the geographic bias for industrial development starts (specifically ex-U.S.) and what percentage of Prologis' overall land bank is considered 'in the money' for new construction, assuming demand is present.

Answer

CFO Tim Arndt addressed the land bank valuation, stating it's evaluated quarterly and currently stands at approximately 110% fair market value to book value, representing a mix of projects. CEO Dan Letter specified that about two-thirds of the assumed logistics starts for 2026 are in the U.S., an increase of 10-15% year-over-year, with strong markets also in Latin America (São Paulo, Mexico City) and Northern Europe (Germany, Netherlands).

Nick Thillman (Baird) inquired about the geographic bias for Prologis' industrial development starts, specifically asking if there's a greater focus outside the U.S. He also asked about the overall land bank, its mark-to-market upside, and what percentage is currently 'in the money' for new construction, assuming demand.

Answer

CEO Dan Letter stated that approximately two-thirds of 2026 logistics starts are projected for the U.S., an increase of 10-15% year-over-year, with strong activity also expected in Latin America (São Paulo, Mexico City) and Northern Europe. CFO Tim Arndt noted that the land bank's aggregate valuation is currently around 110% fair market value to book value, with specific project profitability varying.

Nick Tillman inquired about credit risk and private credit, asking if anything in the portfolio or broader market is causing concern regarding vacancy peaking and building occupancy.

Answer

CFO Tim Arndt stated that there isn't a pause in the way the question was asked. He acknowledged elevated bad debt expense, expecting it to be in the 40s basis points on revenue for the year, which is below past crises, attributing this to improved customer selection and credit health of the portfolio.