UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number:  001-13545 (Prologis, Inc.)  001-14245 (Prologis, L.P.)

Prologis, Inc.

Prologis, L.P.

(Exact name of registrant as specified in its charter)

Maryland (Prologis, Inc.) Delaware (Prologis, L.P.)	94-3281941 (Prologis, Inc.) 94-3285362 (Prologis, L.P.)
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Pier 1, Bay 1, San Francisco, California	94111
(Address or principal executive offices)	(Zip Code)

(415) 394-9000

(Registrants’ telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

	Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Prologis, Inc.	Common Stock, $0.01 par value	PLD	New York Stock Exchange
Prologis, L.P.	3.000% Notes due 2026	PLD/26	New York Stock Exchange
Prologis, L.P.	2.250% Notes due 2029	PLD/29	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing for the past 90 days.

Prologis, Inc.	Yes	☒	No	☐
Prologis, L.P.	Yes	☒	No	☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter periods that the registrant was required to submit such files).

Prologis, Inc.	Yes	☒	No	☐
Prologis, L.P.	Yes	☒	No	☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Prologis, Inc.:
Large accelerated filer   ☒	Accelerated filer   ☐	Non-accelerated filer   ☐	Smaller reporting company   ☐	Emerging growth company    ☐

Prologis, L.P.:
Large accelerated filer   ☐	Accelerated filer   ☐	Non-accelerated filer   ☒	Smaller reporting company   ☐	Emerging growth company    ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).

Prologis, Inc.	Yes	☐	No	☒
Prologis, L.P.	Yes	☐	No	☒

The number of shares of Prologis, Inc.’s common stock outstanding at October 24, 2022, was approximately 923,076,000.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended September 30, 2022, of Prologis, Inc. and Prologis, L.P. Unless stated otherwise or the context otherwise requires, references to “Prologis, Inc.” or the “Parent” mean Prologis, Inc. and its consolidated subsidiaries; and references to “Prologis, L.P.” or the “Operating Partnership” or the “OP” mean Prologis, L.P., and its consolidated subsidiaries. The terms “the Company,” “Prologis,” “we,” “our” or “us” means the Parent and the OP collectively.

The Parent is a real estate investment trust (a “REIT”) and the general partner of the OP. At September 30, 2022, the Parent owned 97.27% common general partnership interest in the OP and substantially all of the preferred units in the OP. The remaining 2.73% common limited partnership interests are owned by unaffiliated investors and certain current and former directors and officers of the Parent.

We operate the Parent and the OP as one enterprise. The management of the Parent consists of the same members as the management of the OP. These members are officers of the Parent and employees of the OP or one of its subsidiaries. As sole general partner, the Parent has control of the OP through complete responsibility and discretion in the day-to-day management and therefore, consolidates the OP for financial reporting purposes. Because the only significant asset of the Parent is its investment in the OP, the assets and liabilities of the Parent and the OP are the same on their respective financial statements.

We believe combining the quarterly reports on Form 10-Q of the Parent and the OP into this single report results in the following benefits:

• enhances investors’ understanding of the Parent and the OP by enabling investors to view the business as a whole in the same manner as management views and operates the business;

• eliminates duplicative disclosure and provides a more streamlined and readable presentation as a substantial portion of the Company’s disclosure applies to both the Parent and the OP; and

• creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

It is important to understand the few differences between the Parent and the OP in the context of how we operate the Company. The Parent does not conduct business itself, other than acting as the sole general partner of the OP and issuing public equity from time to time. The OP holds substantially all the assets of the business, directly or indirectly. The OP conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for net proceeds from equity issuances by the Parent, which are contributed to the OP in exchange for partnership units, the OP generates capital required by the business through the OP’s operations, incurrence of indebtedness and issuance of partnership units to third parties.

The presentation of noncontrolling interests, stockholders’ equity and partners’ capital are the main areas of difference between the consolidated financial statements of the Parent and those of the OP. The differences in the presentations between stockholders’ equity and partners’ capital result from the differences in the equity and capital issuances in the Parent and in the OP.

The preferred stock, common stock, additional paid-in capital, accumulated other comprehensive income (loss) and distributions in excess of net earnings of the Parent are presented as stockholders’ equity in the Parent’s consolidated financial statements. These items represent the common and preferred general partnership interests held by the Parent in the OP and are presented as general partner’s capital within partners’ capital in the OP’s consolidated financial statements. The common limited partnership interests held by the limited partners in the OP are presented as noncontrolling interest within equity in the Parent’s consolidated financial statements and as limited partners’ capital within partners’ capital in the OP’s consolidated financial statements.

To highlight the differences between the Parent and the OP, separate sections in this report, as applicable, individually discuss the Parent and the OP, including separate financial statements and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure of the Parent and the OP, this report refers to actions or holdings as being actions or holdings of Prologis.

PROLOGIS

INDEX

			Page Number
PART I.	Financial Information
	Item 1.	Financial Statements		1
	Prologis, Inc.:
		Consolidated Balance Sheets – September 30, 2022 and December 31, 2021		1
		Consolidated Statements of Income – Three and Nine Months Ended September 30, 2022 and 2021		2
		Consolidated Statements of Comprehensive Income – Three and Nine Months Ended September 30, 2022 and 2021		3
		Consolidated Statements of Equity – Three and Nine Months Ended September 30, 2022 and 2021		4
		Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2022 and 2021		5
	Prologis, L.P.:
		Consolidated Balance Sheets – September 30, 2022 and December 31, 2021		6
		Consolidated Statements of Income – Three and Nine Months Ended September 30, 2022 and 2021		7
		Consolidated Statements of Comprehensive Income – Three and Nine Months Ended September 30, 2022 and 2021		8
		Consolidated Statements of Capital – Three and Nine Months Ended September 30, 2022 and 2021		9
		Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2022 and 2021		10
	Prologis, Inc. and Prologis, L.P.:
		Notes to the Consolidated Financial Statements		11
		Note 1. General		11
		Note 2. Real Estate		12
		Note 3. Unconsolidated Entities		13
		Note 4. Assets Held for Sale or Contribution		15
		Note 5. Debt		15
		Note 6. Noncontrolling Interests		18
		Note 7. Long-Term Compensation		18
		Note 8. Earnings Per Common Share or Unit		19
		Note 9. Financial Instruments and Fair Value Measurements		21
		Note 10. Business Segments		24
		Note 11. Supplemental Cash Flow Information		26
		Note 12. Acquisition of Duke		26
		Reports of Independent Registered Public Accounting Firm		28
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		30
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		50
	Item 4.	Controls and Procedures		51
PART II.	Other Information
	Item 1.	Legal Proceedings		51
	Item 1A.	Risk Factors		51
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		51
	Item 3.	Defaults Upon Senior Securities		51
	Item 4.	Mine Safety Disclosures		52
	Item 5.	Other Information		52
	Item 6.	Exhibits		52

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

PROLOGIS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share data)

	September 30, 2022			December 31, 2021
ASSETS
Investments in real estate properties	$	55,954,870		$	53,005,190
Less accumulated depreciation		8,558,576			7,668,187
Net investments in real estate properties		47,396,294			45,337,003
Investments in and advances to unconsolidated entities		8,659,129			8,610,958
Assets held for sale or contribution		614,356			669,688
Net investments in real estate		56,669,779			54,617,649
Cash and cash equivalents		636,282			556,117
Other assets		3,639,468			3,312,454
Total assets	$	60,945,529		$	58,486,220
LIABILITIES AND EQUITY
Liabilities:
Debt	$	18,139,299		$	17,715,054
Accounts payable and accrued expenses		1,318,378			1,252,767
Other liabilities		1,881,531			1,776,189
Total liabilities		21,339,208			20,744,010
Equity:
Prologis, Inc. stockholders’ equity:
Series Q preferred stock at stated liquidation preference of $50 per share; $0.01 par value;      1,279 shares issued and outstanding and 100,000 preferred shares authorized at           September 30, 2022 and December 31, 2021		63,948			63,948
Common stock; $0.01 par value; 740,411 shares and 739,827 shares issued and outstanding at      September 30, 2022 and December 31, 2021, respectively		7,404			7,398
Additional paid-in capital		35,606,319			35,561,608
Accumulated other comprehensive loss		(71,626	)		(878,253	)
Distributions in excess of net earnings		(312,945	)		(1,327,828	)
Total Prologis, Inc. stockholders’ equity		35,293,100			33,426,873
Noncontrolling interests		4,313,221			4,315,337
Total equity		39,606,321			37,742,210
Total liabilities and equity	$	60,945,529		$	58,486,220

The accompanying notes are an integral part of these Consolidated Financial Statements.

1

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Revenues:
Rental	$	1,151,846		$	1,037,281		$	3,322,159		$	3,073,700
Strategic capital		594,752			141,448			884,916			390,796
Development management and other		4,294			4,320			15,025			17,711
Total revenues		1,750,892			1,183,049			4,222,100			3,482,207
Expenses:
Rental		284,707			256,607			830,846			779,624
Strategic capital		130,555			52,389			239,418			146,938
General and administrative		87,903			66,970			245,663			219,344
Depreciation and amortization		401,450			390,806			1,200,410			1,181,117
Other		7,004			4,413			28,214			15,051
Total expenses		911,619			771,185			2,544,551			2,342,074
Operating income before gains on real estate transactions, net		839,273			411,864			1,677,549			1,140,133
Gains on dispositions of development properties and land, net		74,678			139,406			390,686			500,410
Gains on other dispositions of investments in real estate, net		1,019			214,390			585,854			358,180
Operating income		914,970			765,660			2,654,089			1,998,723
Other income (expense):
Earnings from unconsolidated entities, net		84,925			91,818			241,481			231,286
Interest expense		(63,884	)		(63,638	)		(188,241	)		(203,331	)
Foreign currency and derivative gains and interest and other income, net		171,832			63,326			364,623			142,859
Losses on early extinguishment of debt, net		-			-			(18,895	)		(187,453	)
Total other income (expense)		192,873			91,506			398,968			(16,639	)
Earnings before income taxes		1,107,843			857,166			3,053,057			1,982,084
Income tax expense		(38,669	)		(59,435	)		(117,725	)		(134,347	)
Consolidated net earnings		1,069,174			797,731			2,935,332			1,847,737
Less net earnings attributable to noncontrolling interests		53,710			74,193			157,690			156,676
Net earnings attributable to controlling interests		1,015,464			723,538			2,777,642			1,691,061
Less preferred stock dividends		1,531			1,531			4,600			4,614
Net earnings attributable to common stockholders	$	1,013,933		$	722,007		$	2,773,042		$	1,686,447
Weighted average common shares outstanding – Basic		740,719			739,439			740,585			739,217
Weighted average common shares outstanding – Diluted		766,372			764,945			766,019			764,644
Net earnings per share attributable to common stockholders – Basic	$	1.37		$	0.98		$	3.74		$	2.28
Net earnings per share attributable to common stockholders – Diluted	$	1.36		$	0.97		$	3.72		$	2.27

The accompanying notes are an integral part of these Consolidated Financial Statements.

2

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Consolidated net earnings	$	1,069,174		$	797,731		$	2,935,332		$	1,847,737
Other comprehensive income:
Foreign currency translation gains, net		239,062			48,708			761,102			201,881
Unrealized gains on derivative contracts, net		24,902			3,748			67,230			13,379
Comprehensive income		1,333,138			850,187			3,763,664			2,062,997
Net earnings attributable to noncontrolling interests		(53,710	)		(74,193	)		(157,690	)		(156,676	)
Other comprehensive income attributable to noncontrolling interests		(6,829	)		(1,242	)		(21,705	)		(5,427	)
Comprehensive income attributable to common stockholders	$	1,272,599		$	774,752		$	3,584,269		$	1,900,894

The accompanying notes are an integral part of these Consolidated Financial Statements.

3

 PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)