Prologis (PLD) 10-K risk factor changes: FY2020 vs FY2019

These risks relate to Prologis as well as our investments in consolidated and unconsolidated entities and [added: include among others, (i) risks related to our global operations (ii) risks related to our business; (iii) risks related to financing and capital; (iv) risks related to income taxes; and (v) general risks.]

We conduct a significant portion of our business and employ a substantial number of people outside of the U.S. During [removed: 2019,] [added: 2020,] we generated approximately [removed: $599] [added: $484] million or [removed: 18.0%] [added: 10.9%] of our [added: consolidated] revenues from operations outside the U.S. Circumstances and developments related to international operations that could negatively affect us include, but are not limited to, the following factors:

While we believe that we are able to retain our key talent and find suitable employees to meet [added: our needs, the loss of key personnel, any change in their roles or the limitation of their availability could adversely affect our business.]

[removed: While management continually reviews the effectiveness of our disclosure controls and] procedures and internal control over financial reporting, there can be no guarantee that our internal control over financial reporting will be effective in accomplishing all control objectives all of the time.

At December 31, [removed: 2019,] [added: 2020,] approximately [removed: $7.4] [added: $8.6] billion or [removed: 18.5%] [added: 15.3%] of our total consolidated assets were invested in a currency other than the U.S. dollar, principally the British pound sterling, euro and Japanese yen.

Our ability to sell or contribute properties on advantageous terms is affected by: (i) competition from other owners of properties that are trying to dispose of their properties; (ii) [added: economic and] market conditions, including the capitalization rates applicable to our properties; and (iii) other factors beyond our control.

Such alternatives may include, without limitation, divesting [removed: properties, whether or not they otherwise meet our strategic objectives to keep in the long term,] [added: properties] at less than optimal terms, incurring debt, entering into leases with new customers at lower rental rates or less than optimal terms or entering into lease renewals with our existing customers without an increase in rental rates.

We are exposed to [removed: general economic conditions, local, regional, national and international] [added: the] economic conditions and other events and occurrences [removed: that affect] [added: in] the [removed: markets] [added: local, regional, national and international geographies] in which we own properties.

At December 31, [removed: 2019, 35.0%] [added: 2020, 30.9%] of our consolidated operating properties or [removed: $11.2] [added: $13.6] billion (based on consolidated gross book value, or investment before depreciation) were located in California (Central Valley, San Francisco Bay Area and Southern California markets), [removed: which represented 28.6% of the aggregate square footage of our operating properties and 28.4% of our NOI.]

In addition to California, we also have significant holdings (defined as more than 3% of total consolidated investment before depreciation) in operating properties in certain markets located in Atlanta, [removed: Central and Eastern Pennsylvania,] Chicago, Dallas/Fort Worth, Houston, [added: Lehigh Valley,] New Jersey/New York City, Seattle and South Florida.

Our O&M portfolio, which includes our wholly-owned properties and properties included in our co-investment ventures, has concentrations of properties in the same markets mentioned above, as well as in markets in France, [removed: Germany,] Japan, Mexico and the U.K., and are subject to the economic conditions in those markets.

| • | our ability to [removed: rehabilitate and] reposition our properties due to changes in the business and logistics needs of our customers; |

| • | our ability to [removed: control rents] [added: lease the properties at favorable rates] and [added: control] variable operating costs; and |

At December 31, [removed: 2019,] [added: 2020,] our top 10 customers accounted for [removed: 15.2%] [added: 16.3%] of our [added: consolidated] NER.

Our competitors may offer space at rental rates below current market rates or below the rental rates we currently charge our [removed: customers, we may lose potential customers,] [added: customers] and we may be pressured to reduce our rental rates below those we currently charge to retain customers when leases [removed: expire.][added: expire or we may lose potential customers.]

We may acquire properties [added: and companies] that [removed: involve] [added: involves] risks [removed: that] [added: which] could adversely affect our business and financial condition.

We have acquired properties and will continue to acquire [removed: properties,] [added: properties] through the direct acquisition of real [removed: estate and] [added: estate,] the acquisition of entities that own [removed: the] real estate [removed: and] [added: or] through additional investments in co-investment ventures that acquire properties.

As a result, if a liability were asserted against us based on [added: our new] ownership of any of these entities or properties, then we may have to pay substantial sums to settle it.

We may be unable to integrate the [removed: Liberty and IPT] operations [removed: successfully] [added: of newly acquired companies] and realize the anticipated synergies and other benefits or do so within the anticipated timeframe.

[removed: Our] [added: Our] real estate development [added: and redevelopment] strategies may not be [removed: successful.][added: successful.]

Our real estate development [added: and redevelopment] strategy is focused on monetizing land in the future through development of logistics facilities to hold for long-term investment, contribution or sale to a co-investment venture or third party, depending on market conditions, our liquidity needs and other factors.

| • | we may have properties that perform below anticipated levels, producing cash [removed: flow] [added: flows] below budgeted amounts; |

At December 31, [removed: 2019,] [added: 2020,] we had investments in co-investment ventures, both public and private, that owned operating properties with a gross book value of approximately [removed: $41] [added: $49] billion.

Further, there can be no assurance that we are able to realize value from [removed: such] [added: our existing or future] investments.

| • | our relationships with our partners are generally contractual in nature and may be terminated or dissolved under the terms of the agreements, and in such event, we may not continue to manage or invest in the assets underlying such relationships resulting in reduced fee revenues or [removed: obtaining direct ownership of] [added: we may elect to acquire] the properties [removed: through acquisition;] [added: in order to maintain an investment in the portfolio;] and |

Our logistics facilities may be exposed to [removed: rare] catastrophic weather events, such as severe storms, fires or floods.

Our insurance coverage does not [removed: include] [added: cover] all potential losses.

Certain losses, however, including losses from floods, earthquakes, acts of war, acts of terrorism or [removed: riots,] [added: riots and pandemics,] generally are not insured against or not fully insured against because it is not deemed economically feasible or prudent to do so.

[removed: Risks] [added: Risks] Related to Financing and [removed: Capital][added: Capital]

Increases in [added: market] interest rates would increase our interest expense under these agreements.

The terms of our various credit agreements, including our credit facilities, the indentures under which our senior notes and term loans are issued and other note agreements, require us to comply with a number of customary financial covenants, such as maintaining debt service coverage [removed: ratio,] [added: ratios,] leverage ratios, fixed charge coverage ratios and other operating covenants including maintaining insurance [removed: coverage.]

At December 31, [removed: 2019,] [added: 2020,] our credit ratings [removed: were A3] from Moody’s and [removed: A- from S&P,] [added: S&P were A3 and A-, respectively,] both with stable outlook.

As a result, in the U.S., the Federal Reserve Board and the Federal Reserve Bank of New York identified the Secured Overnight Financing Rate [added: (“SOFR”)] as its preferred alternative rate for USD LIBOR [removed: in] [added: for] debt and derivative financial instruments.

Historically, we have satisfied these distribution requirements by making cash distributions to our [added: stockholders, however, we may elect to pay a portion of the distribution in shares of our stock.]

In addition, depending on the terms and pricing of any additional offering of our common stock or [added: OP] units and the [removed: value] [added: utilization] of the [removed: properties,] [added: proceeds,] our stockholders and unitholders may experience dilution in both book value and fair value of their common stock or units.

[added: Risks Related to] Income Tax [removed: Risks]

[removed: Certain] [added: Certain] property transfers may generate prohibited transaction income, resulting in a penalty tax on gain attributable to the [removed: transaction.][added: transaction.]

Risks Related to our Global Operations

For the year ended December 31, 2020, $289 million or 8.9% of our total consolidated segment NOI, as disclosed in Note 17 to the Consolidated Financial Statements in Item 8.

Financial Statements and Supplementary Data, was denominated in a currency other than the U.S. dollar.

which represented 26.2% of the aggregate square footage of our operating properties and 27.1% of our NOI.

These factors may affect our ability to recover our investment in the properties and result in impairment charges.

Potential difficulties we may encounter in the integration process include: (i) the inability to dispose of non-industrial assets or operations that are outside of our area of expertise; (ii) potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with these transactions; and (iii) performance shortfalls as a result of the diversion of management’s attention caused by completing these transactions and integrating the companies’ operations.

The same factors that impact the valuation of our consolidated portfolio, as discussed above, also impact the portfolios held by the co-investment ventures and could result in other than temporary impairment of our investment and a reduction in fee revenues.

These entities bear their own risks related to trading markets, foreign currency exchange rates and market demand.

coverage.

In November 2020, the Federal Reserve Board along with various independent groups announced the potential for certain USD LIBOR tenors to continue to be published until June 2023.

This change would allow most legacy USD LIBOR contracts to mature before disruptions occur in the USD LIBOR market, without the need to transition those contracts to SOFR.

The expected transition of GBP LIBOR and Yen LIBOR at the end of 2021 was not impacted by this announcement.

We refer to these rates collectively as “IBOR-indexed”.

At December 31, 2020 we had variable rate debt of $2.0 billion, excluding borrowings that are hedged through interest rate swap agreements.

See Item 7A.

Quantitative and Qualitative Disclosures About Market Risk for additional discussion regarding our variable rate debt.

Our business may be materially and adversely affected by the impact of the global pandemic of COVID-19.

The World Health Organization and certain national and local governments characterized COVID-19 as a pandemic in March 2020.

The COVID-19 outbreak has disrupted financial markets and global, national and local economies.

There are government restrictions on activities across the globe.

The impact of the COVID-19 outbreak on our business, that of our unconsolidated co-investment ventures, and our customers for the long-term continues to be uncertain.

Given the ongoing and dynamic nature of these circumstances, we cannot predict the extent to which the continuation of the COVID-19 pandemic may impact our business, but its impact may include the following:

| • | Existing customers and potential customers of our logistics facilities may be adversely affected by the decrease in economic activity, which in turn could disrupt their business and their ability to enter into new leasing transactions or satisfy rental payments; |

| • | Government, labor or other restrictions may prevent us from completing the development or leasing of properties currently under development or making our properties ready for our customers to move in; |

| • | Our ability to recover our investments in real estate assets may be impacted by current market conditions; and |

| • | Our workforce, including our executives, may become ill or have difficulty working remotely, caring for our properties and/or customers. |

Any prolonged economic downturn, escalation of the outbreak or disruption in the financial markets may also impact our ability to access capital markets to issue debt or equity securities and to complete real estate transactions at attractive pricing or at all.

These items may materially and adversely affect our financial condition, results of operations, cash flows and real estate values.

While management continually reviews the effectiveness of our disclosure controls and

include among others, (i) general risks; (ii) risks related to our business; (iii) risks related to financing and capital; and (iv) income tax risks.

our needs, the loss of key personnel, any change in their roles or the limitation of their availability could adversely affect our business.

For the year ended December 31, 2019, $413 million or 17.2% of our total consolidated segment NOI was denominated in a currency other than the U.S. dollar.

We will be required to devote significant management attention and resources to integrating the operations of Liberty and IPT.

Potential difficulties we may encounter in the integration process include the following:

| • | the inability to successfully integrate the operations of Liberty and IPT in a manner that permits us to achieve the cost savings anticipated to result from these transactions, which would result in the anticipated benefits not being realized in the timeframe currently anticipated or at all; |

| • | the inability to dispose of non-industrial assets or operations that are outside of our area of expertise; |

| • | potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with these transactions; and |

| • | performance shortfalls as a result of the diversion of management's attention caused by completing these transactions and integrating the companies' operations. |

For all these reasons, it is possible that the integration process could result in the distraction of our management, the disruption of our ongoing business or inconsistencies in our operations, services, standards, controls, procedures and policies, any of which could adversely affect the ability of Prologis to maintain relationships with customers, vendors and employees or to achieve the anticipated benefits of these transactions, or could otherwise adversely affect our business and financial results.

We have variable-rate debt of $2.0 billion at December 31, 2019 that are indexed to LIBOR, CDOR and Yen LIBOR (herein referred to as “IBOR-indexed”).

stockholders, however, we may elect to pay a portion of the distribution in shares of our stock.

A discussion regarding our financial condition and results of operations for [removed: 2019] [added: 2020] compared to [removed: 2018] [added: 2019] is presented below.

Information on [removed: 2017] [added: 2018] is included in graphs only to show year over year trends in our results of [removed: operations.][added: operations and operating metrics.]

Our financial condition for [removed: 2017] [added: 2018] and results of operations for [removed: 2017 and] 2018 [added: and 2019] compared to [removed: 2017] [added: 2018] can be found under Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations] [added: Operations,] which is incorporated by reference herein to our Annual Report on [Form [removed: 10-K](http://www.sec.gov/Archives/edgar/data/1045609/000156459019002872/pld-10k_20181231.htm)] [added: 10-K](https://www.sec.gov/ix?doc=/Archives/edgar/data/1045609/000156459020004096/pld-10k_20191231.htm)] for the fiscal year ended December 31, [removed: 2018,] [added: 2019,] filed with the SEC on February [removed: 13, 2019,] [added: 11, 2020,] and is available on the SEC’s website at www.sec.gov and our Investor Relations website at www.ir.prologis.com.

[removed: MANAGEMENT’S OVERVIEW][added: MANAGEMENT’S OVERVIEW]

[removed: In 2019, we] [added: We] completed the following significant activities [added: in 2020] as described in the Notes to the Consolidated Financial Statements:

| • | [removed: Excluding the contribution to PBLV, we] [added: We] generated net proceeds of [removed: $2.4] [added: $3.0] billion and realized net gains of [removed: $719] [added: $717] million, [removed: primarily] [added: principally] from the contribution of properties to our unconsolidated co-investment ventures in [added: the U.S.,] Europe, [added: Mexico and] Japan and [added: dispositions to third parties in] the U.S. [added: and Europe, including a majority of the U.K. portfolio acquired in the Liberty Transaction.] |

[removed: | | • |] At December 31, [removed: 2019,] [added: 2020,] we had [removed: $3.7 billion of] [added: total] available [removed: borrowing capacity] [added: liquidity of $4.8 billion, principally due to current aggregate availability] under our credit facilities [removed: and total liquidity] of [removed: $4.8 billion, including] [added: $3.9 billion and] unrestricted cash [removed: balances. |][added: balances of $598 million.]

| Real Estate Operations – NOI | | $ | [removed: 2,091] [added: 2,820] | | | $ | [removed: 1,784] [added: 2,091] | |

| Strategic Capital – NOI | | | [removed: 307] [added: 419] | | | | [removed: 249] [added: 307] | |

| General and administrative expenses | | | [removed: (266] [added: (275] | ) | | | [removed: (239] [added: (266] | ) |

| Depreciation and amortization expenses | | | [removed: (1,140] [added: (1,562] | ) | | | [removed: (947] [added: (1,140] | ) |

| Operating income before gains on real estate transactions, net | | | [removed: 992] [added: 1,402] | | | | [removed: 847] [added: 992] | |

| Gains on dispositions of development properties and land, net | | | [removed: 468] [added: 465] | | | | [removed: 470] [added: 468] | |

| Gains on other dispositions of investments in real estate, net | | | [removed: 390] [added: 252] | | | | [removed: 371] [added: 390] | |

| Operating income | | $ | [removed: 1,850] [added: 2,119] | | | $ | [removed: 1,688] [added: 1,850] | |

| Rental revenues [removed: (1)] | | $ | [removed: 2,832] [added: 3,791] | | | $ | [removed: 2,389] [added: 2,832] | |

| Development management and other revenues | | | [removed: 6] [added: 11] | | | | [removed: 9] [added: 6] | |

| Rental expenses | | | [removed: (734] [added: (952] | ) | | | [removed: (601] [added: (734] | ) |

| Other expenses | | | [removed: (13] [added: (30] | ) | | | (13 | ) |

| Real Estate Operations – NOI | | $ | [removed: 2,091] [added: 2,820] | | | $ | [removed: 1,784] [added: 2,091] | |

The change in Real Estate Operations NOI in [removed: 2019] [added: 2020] compared to [removed: 2018] [added: 2019] was impacted by the following items (dollars in millions):

[removed: ][added: ]

| (2) | During both years, we experienced positive rental rate growth. Rental rate growth [removed: (or rent change)] is a combination of [removed: the rollover of existing leases to] higher rental rates [added: on rollover of leases (or rent change)] and contractual rent increases on existing leases. If a lease has a contractual rent increase driven by a metric that is not known at the time the lease commences, such as the consumer price index or a similar metric, the rent increase is not included in rent leveling and therefore, impacts the rental revenue we recognize. [removed: We experienced an increase in NER change from 29.4% in 2018 to 32.8% in 2019, that was marginally reduced by a decrease in average occupancy of 0.6% during the same period.] See below for key metrics on rent change on rollover and occupancy for the consolidated operating portfolio. |

| (3) | 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, [removed: 2018] [added: 2019] through December 31, [removed: 2019 year over year.] [added: 2020.] |

Below are key operating metrics of our consolidated operating [removed: portfolio.][added: portfolio, which excludes non-strategic industrial properties.]

[removed: ][added: ]

| (1) | In August 2018, we completed the [added: acquisition of] DCT [removed: Transaction] [added: Industrial Trust Inc.] and [added: DCT Industrial Operating Partnership LP (collectively “DCT” or the “DCT Transaction”) and] acquired a portfolio of logistics real estate assets aggregating 68 million square feet. [added: In January and February 2020, we completed the IPT Transaction and the Liberty Transaction, respectively.] |

| Number of new development projects during the period | | | [removed: 74] [added: 42] | | | | [removed: 67] [added: 74] | |

| Square feet | | | [removed: 25] [added: 14] | | | | [removed: 26] [added: 25] | |

| TEI | | $ | [removed: 2,741] [added: 1,997] | | | $ | [removed: 2,408] [added: 2,741] | |

| Percentage of build-to-suits based on TEI | | | [removed: 44.0] [added: 40.0] | % | | | [removed: 40.8] [added: 44.0] | % |

| Number of development projects stabilized during the period | | | [removed: 72] [added: 66] | | | | [removed: 60] [added: 72] | |

| Square feet | | | [removed: 26] [added: 23] | | | | [removed: 21] [added: 26] | |

| TEI | | $ | [removed: 2,422] [added: 2,451] | | | $ | [removed: 1,824] [added: 2,422] | |

| Weighted average stabilized yield (1) | | | 6.3 | % | | | [removed: 6.5] [added: 6.3] | % |

| Estimated value at completion | | $ | [removed: 3,313] [added: 3,383] | | | $ | [removed: 2,459] [added: 3,313] | |

| Estimated weighted average margin | | | [removed: 36.8] [added: 38.0] | % | | | [removed: 34.8] [added: 36.8] | % |

[removed: At December 31, 2019, our] [added: The remaining active] consolidated development portfolio, including properties under development and prestabilized [removed: properties] [added: properties, is expected to be completed before August 2022] with a TEI of [removed: $4.0] [added: $3.7] billion, [removed: was 50.0% leased and expected] [added: leaving $1.8 billion remaining] to be [removed: completed before December 2021.][added: spent, and was 61.6% leased.]

For additional information on our development portfolio at December 31, [removed: 2019,] [added: 2020,] see Item 2.

Summary of 2020

Our financial condition and operating results remain strong in the COVID-19 environment and, in combination with the demand we see in our proprietary data, the pace of rent collections and dialogue with our customers, our outlook continues to improve in the first quarter of 2021.

However, with the continued uncertainty across the globe until we put COVID-19 behind us, we cannot predict the impact on our business, future financial condition, and operating results.

We experienced minimal impacts from the current environment on our O&M portfolio operating fundamentals in 2020.

This is the result of the high quality and location of our real estate portfolio, our customer base, favorable market fundamentals in the logistics real estate sector and significant in-place-to-market rent spreads.

E-commerce continues to grow well above its historical average and customers that serve essential daily needs are thriving.

Customers that have been negatively impacted by the current economy represent a minimal percentage of our annual rent.

Leasing activity remained strong for the O&M portfolio throughout 2020 with the commencement of 150 million square feet of leases with an average term of 66 months, including 37 million square feet in the fourth quarter.

Rent change in our O&M portfolio was 21.3% during 2020 and 23.8% in the fourth quarter.

We expect market rents to continue to increase in 2021.

The average number of days from lease proposal to commencement decreased since 2019 as some customers have increased the pace of activity.

We received requests from certain customers for rent concessions during 2020 and for those granted, we deferred the rental payments to a later period in 2020 or 2021.

The deferral of rental payments did not impact revenue recognized from those leases.

During 2020, on an O&M basis we deferred $45 million of rental payments which represented less than 1% of our total O&M annualized rental revenue.

At January 25, 2021, we had collected $33 million, or 98%, of the deferred payments due at December 31st, with the remainder due in 2021.

Although COVID-19 continues to have a minimal impact on our rent collections and bad debt is trending lower than we initially anticipated, we may experience an increase in bad debt.

Our capital deployment and disposition activities have continued throughout this time and we expect the volume of these activities to accelerate in 2021.

By the fourth quarter of 2020, we restarted the majority of the speculative development projects that we suspended in the first quarter.

Our business continuity, communication plans and technology are allowing all functions of our business to work smoothly during this time.

Generally, our employees have continued working remotely or in certain locations in our offices under protocols to keep a safe working environment.

We have not had any lay-offs and we have extended financial assistance to employees in need.

Our local property and leasing teams have continued to maintain our properties and work with our customers to help them navigate the new environment while following established measures to help keep them and our customers safe.

In addition, we are providing assistance across the globe in the form of direct cash grants, supplies and donation of over one million square feet through our Space for Good program.

In 2020, through the Prologis Foundation, we pledged $5 million to COVID-19 relief organizations and $1 million in support of racial equality causes.

| • | In January, our U.S. co-investment ventures, USLV and USLF, acquired the wholly owned real estate assets of IPT for $2.0 billion each, including the assumption and repayment of debt. As USLV is a consolidated co-investment venture, our Results of Operations section includes a discussion of the acquired properties. USLF is an unconsolidated co-investment venture and therefore the acquisition is included in the discussion of our O&M Operating Portfolio. |

| • | In February, we completed the Liberty Transaction for $13.0 billion through the issuance of equity and the assumption of debt. We assumed $2.8 billion of debt with a weighted average stated interest rate of 3.8%. We paid down $1.8 billion of the assumed debt with senior notes we issued at lower rates in February 2020, as detailed below. |

| • | We earned promotes aggregating $241 million ($164 million net of related expenses), primarily in June from our unconsolidated co-investment venture in the U.S. |

| • | Additionally, we completed the following consolidated financing activities that included the issuance of $6.2 billion and redemption of $3.0 billion of senior notes, with aggregate principal in U.S. dollars. This resulted in extending our weighted average remaining maturity to 10 years and lowering our weighted average effective interest rate to approximately 1.9% (principal in millions): |

| | | | Aggregate Principal | | | | | | | | Issuance Date Weighted Average | | | | | | | | |

| | Initial Borrowing Date | | Borrowing Currency | | | | USD (1) | | | | Interest Rate (2) | | | | Term (3) | | | | Maturity Dates |

| | February (4) | | € | 1,350 | | | $ | 1,485 | | | 0.6% | | | | 10.7 | | | | February 2022 – 2035 |

| | February | | $ | 2,200 | | | $ | 2,200 | | | 2.4% | | | | | 15.0 | | | April 2027 – 2050 |

| | February | | £ | 250 | | | $ | 322 | | | 1.9% | | | | | 15.8 | | | February 2035 |

| | June (4) | | ¥ | 41,200 | | | $ | 386 | | | 1.0% | | | | | 12.4 | | | June 2027 – 2050 |

| | August (4) | | $ | 1,250 | | | $ | 1,250 | | | 1.6% | | | | | 18.2 | | | October 2030 – 2050 |

| | September | | ¥ | 19,700 | | | $ | 187 | | | 1.0% | | | | | 14.1 | | | September 2032 – 2040 |

| | December | | € | 300 | | | $ | 365 | | | 0.0% | | | | | 2.0 | | | December 2022 |

| | | | | | | | | | | | | | | | | | | | |

| | | | Aggregate Principal | | | | | | | | Redemption Date Weighted Average | | | | | | | | |

| | Redemption Date | | Borrowing Currency | | | | USD (1) | | | | Interest Rate (2) | | | | Term (3) | | | | Maturity Date |

Summary of 2019

During the year ended December 31, 2019, operating fundamentals remained strong for our O&M portfolio.

Our occupancy decreased to 96.5% at December 31, 2019 as compared to 97.5% at December 31, 2018 due to our focus on rental rate growth as evidenced by our weighted average net effective rent change of 23.7% in our O&M portfolio during 2019.

| • | In January, we formed PBLV, a Brazilian unconsolidated co-investment venture, with one partner. We contributed an initial portfolio of real estate properties to PBLV consisting of 14 operating properties totaling 7 million square feet and 371 acres of land. We received total proceeds of $620 million, including cash and units, which represents a 20% equity interest. |

| --- | --- |

| --- | --- |

| • | In February, we redeemed a portion of our investment in a European unconsolidated co-investment venture for proceeds of €278 million ($313 million). |

| --- | --- |

| • | In December, we formed PCCLF, an unconsolidated co-investment venture investing in properties in China, with eight partners. At that time, we and our existing partner in Prologis China Logistics Venture I, LP received equity interests in PCCLF for the contribution of the existing portfolio of assets consisting of 79 properties totaling 22 million square feet. The seven new partners contributed cash, which was used to redeem a portion of our existing partner’s investment in PCCLF. We maintained our ownership percentage in these assets subsequent to the contribution and therefore did not recognize a gain. |

| --- | --- |

| • | We earned promotes aggregating $181 million ($121 million net of related expenses), of which $166 million was recorded in *Strategic Capital Revenues*, primarily from PELF, and $15 million was recorded in *Net Earnings Attributable to Noncontrolling Interests.* |

| --- | --- |

| • | We completed the following financing activities that resulted in extending our debt maturities to 7.8 years and lowering our effective interest rate to 2.2%, both on a weighted average basis at December 31, 2019. |

| --- | --- |

| | • | In January, we upsized our global senior credit facility to $3.5 billion, maturing in January 2023. |

| --- | --- | --- |

| | • | In January, we also entered into two unsecured Japanese yen term loans for a total of ¥15.0 billion ($137 million) that bear interest of Yen LIBOR plus 0.5% to 0.6% and mature in January 2028 and 2030. |

| --- | --- | --- |

| | • | In March, we entered into an unsecured Japanese yen term loan agreement (the “March 2019 Yen Term Loan”) under which we can draw Japanese yen in an aggregate amount not to exceed ¥85.0 billion ($783 million at December 31, 2019). The March 2019 Yen Term Loan bears interest at Yen LIBOR plus 0.4% and matures in March 2026. We used the proceeds to repay the majority of the outstanding balance of ¥100.0 billion ($897 million) on our 2016 Japanese yen term loan. |

| | • | In March, we also completed a private placement for ¥10.0 billion ($91 million) of senior notes with a stated interest rate of 1.2%, maturing in March 2039. |

| | • | In September, we issued three series of senior notes for a total of €1.8 billion ($2.0 billion), bearing a weighted-average fixed interest rate of 0.7% and maturing in September 2027 through 2049. We utilized the proceeds to pay off senior notes of €600 million ($656 million) bearing an interest rate of 1.4% and maturing in October 2020 and $499 million on our multi-currency term loan. |

Subsequent to year end, we closed the following transactions in 2020:

| • | On January 3rd, we redeemed €400 million ($446 million) of senior notes bearing a floating rate of Euribor plus 0.3%. |

| • | On January 8th, our two U.S. co-investment ventures acquired the wholly-owned real estate assets of IPT for approximately $4 billion (our investment was approximately $1.6 billion). See Notes 5 and 11 to our Consolidated Financial Statements for more information on this transaction. |

| • | On February 4th, we completed the Liberty Transaction for approximately $13 billion through the issuance of equity and the assumption of debt. See Note 20 to our Consolidated Financial Statements for more information on this transaction. |

| | | 2019 | | | | 2018 | | |

The operating fundamentals in the markets in which we operate continue to be strong, which has increased rents and kept occupancies high.

| | | 2019 | | | | 2018 | | |

| (1) | As disclosed in Note 2 to the Consolidated Financial Statements, under the new lease standard, we adopted the practical expedient to present rental revenue and rental recoveries as a single component under *Rental Revenues* in our Consolidated Statements of Income. |

| (1) | Acquisition activity increased NOI in 2019, compared to 2018, primarily due to the acquisition of DCT Industrial Trust Inc. and DCT Industrial Operating Partnership LP (collectively “DCT”), which was completed for $8.5 billion on August 22, 2018 (“DCT Transaction”). |

| (4) | Other activity decreased NOI in 2019, compared to 2018, primarily due to internal costs of $25 million related to leasing activities, partially reduced by lower non-recoverable expenses, both in 2019, and changes in foreign currency exchange rates. Beginning in 2019 with the adoption of the new lease accounting standard, we no longer capitalize internal costs related to our leasing activities. |

| | | 2019 | | | | 2018 | | |

| (1) | In 2019, total capital expenditures increased primarily due to a larger portfolio and leasing our operating properties at higher rental rates and longer lease terms. |

| | | 2019 | | | | 2018 | | |

| | | 2019 | | | | 2018 | | | | 2019 | | | | 2018 | | | | 2019 | | | | 2018 | | | | 2019 | | | | 2018 | | | | 2019 | | | | 2018 | | | |

| | | 2019 | | | | 2018 | | | | 2019 (1) | | | | 2018 | | | | 2019 | | | | 2018 | | | | 2019 (2) | | | | 2018 | | | | 2019 | | | | 2018 | | |

| (2) | In December, we formed PCCLF, an unconsolidated co-investment venture investing in properties in China, with eight partners. At that time, we and our existing partner in Prologis China Logistics Venture I, LP contributed the existing portfolio of assets to PCCLF. |

G&A expenses increased in 2019 as compared to 2018, due to higher compensation expenses based largely on the increase in our share price.

We previously capitalized G&A related to our internal leasing activities, however, beginning January 1, 2019 these costs were expensed and recorded to *Rental Expenses* in the Consolidated Statements of Income.

| | | 2019 | | | | 2018 | | |

Our sensitivity analysis estimates the exposure to market risk sensitive instruments assuming a hypothetical 10% adverse change in foreign currency exchange rates or interest rates at December 31, [removed: 2019.][added: 2020.]

[removed: Additionally, we hedge our foreign currency risk by entering into derivative financial] instruments that we designate as net investment hedges, as these amounts offset the translation adjustments on the underlying net assets of our foreign investments.

At December 31, [removed: 2019,] [added: 2020,] after consideration of our ability to borrow in the foreign currencies in which we invest and also derivative and nonderivative financial instruments as discussed in Note 15 to the Consolidated Financial Statements, we had minimal net equity denominated in a currency other than the U.S. dollar.

For the year ended December 31, [removed: 2019, $545] [added: 2020, $442] million or [removed: 16.4%] [added: 10.0%] of our total consolidated revenue was denominated in foreign currencies.

We have forward contracts that were not designated as hedges, denominated principally in British pound sterling, Canadian dollar, [removed: euro, Japanese yen] [added: euro] and [removed: Swedish krona,] [added: Japanese yen,] and have an aggregate notional amount of [removed: $1.1] [added: $1.2] billion to mitigate risk associated with the translation of the future earnings of our subsidiaries denominated in these currencies.

Although the impact to net earnings is mitigated through higher translated U.S. dollar earnings from these currencies, [added: a weakening of the U.S. dollar against these currencies by 10% could result in a $116 million cash payment on settlement of these contracts.]

At December 31, [removed: 2019, $10.0] [added: 2020, $14.9] billion of our debt bore interest at fixed rates and therefore the fair value of these instruments was affected by changes in market interest rates.

At December 31, [removed: 2019,] [added: 2020,] $2.0 billion of our debt bore interest at variable rates.

The following table summarizes the future repayment of debt and scheduled principal payments at December 31, [removed: 2019] [added: 2020] (dollars in millions):

| | [removed: 2020] [added: 2021] | | | | [removed: 2021] [added: 2022] | | | | [removed: 2022] [added: 2023] | | | | [removed: 2023] [added: 2024] | | | | Thereafter | | | | Total | | | | Fair Value | | |

| Credit facilities | $ | \- | | | $ | [removed: 184] [added: \-] | | | $ | [removed: \-] [added: 172] | | | $ | \- | | | $ | \- | | | $ | [removed: 184] [added: 172] | | | $ | [removed: 184] [added: 172] | |

| Senior notes | | [removed: 449] [added: \-] | | | | [removed: \-] [added: 368] | | | | \- | | | | \- | | | | \- | | | | [removed: 449] [added: 368] | | | | [removed: 449] [added: 370] | |

| [removed: (1)] [added: (2)] | The interest rates represent the effective interest rates (including amortization of the debt issuance costs and the noncash premiums and discounts) at December 31, [removed: 2019] [added: 2020] for the debt outstanding. |

At December 31, [removed: 2019,] [added: 2020,] the weighted average effective interest rate on our variable rate debt was [removed: 0.6%.][added: 0.5%.]

On the basis of our sensitivity analysis, a 10% increase in interest rates on our average outstanding variable rate debt balances would result in additional annual interest expense of $1 million for the year ended December 31, [removed: 2019,] [added: 2020,] which equates to a change in interest rates of [removed: 8] [added: 5] basis points on our average outstanding variable rate debt balances and 1 basis point on our average total debt portfolio balances.

Risk Factors, specifically Risks Related to our Global Operations and Risks Related to Financing and Capital.

See also Notes 2 and 15 in the Consolidated Financial Statements in Item 8.

Additionally, we hedge our foreign currency risk by entering into derivative financial

The gain or loss on settlement of these contracts is included in our earnings and offsets the lower or higher translation of earnings from our investments denominated in currencies other than the U.S. dollar.

| Fixed rate debt (1) | $ | 271 | | | $ | 196 | | | $ | 34 | | | $ | 869 | | | $ | 13,505 | | | $ | 14,875 | | | $ | 16,034 | |

| Weighted average interest rate (2) | | 1.8 | % | | | 0.6 | % | | | 4.5 | % | | | 4.2 | % | | | 2.0 | % | | | 2.1 | % | | | | |

| Secured mortgage debt | | 105 | | | | 63 | | | | \- | | | | 136 | | | | \- | | | | 304 | | | | 304 | |

| Term loans | | \- | | | | \- | | | | 134 | | | | \- | | | | 1,067 | | | | 1,201 | | | | 1,204 | |

| Total variable rate debt | $ | 105 | | | $ | 431 | | | $ | 306 | | | $ | 136 | | | $ | 1,067 | | | $ | 2,045 | | | $ | 2,050 | |

| (1) | At December 31, 2020, we had interest rate swap agreements to fix €150 million ($165 million) of our floating rate euro senior notes and $250 million of our multi-currency term loan, both of which were included in fixed rate debt. |

| --- | --- |

Risk Factors, specifically: *The depreciation in the value of the foreign currency in countries where we have a significant investment may adversely affect our results of operations and financial position* and *we may be unable to refinance our debt or our cash flow may be insufficient to make required debt payments.* See also Notes 2 and 15 in the Consolidated Financial Statements in Item 8.

We may also issue debt in a currency that is not the same functional currency of the borrowing entity and we generally designate the debt as a nonderivative net investment hedge.

a weakening of the U.S. dollar against these currencies by 10% could result in a $111 million cash payment on settlement of these contracts.

| Fixed rate debt | $ | 19 | | | $ | 818 | | | $ | 798 | | | $ | 884 | | | $ | 7,437 | | | $ | 9,956 | | | $ | 10,487 | |

| Weighted average interest rate (1) | | 6.0 | % | | | 1.7 | % | | | 3.2 | % | | | 4.4 | % | | | 2.3 | % | | | 2.6 | % | | | | |

| Term loans | | \- | | | | \- | | | | \- | | | | 131 | | | | 1,013 | | | | 1,144 | | | | 1,147 | |

| Secured mortgage debt | | 68 | | | | 64 | | | | \- | | | | \- | | | | 130 | | | | 262 | | | | 261 | |

| Total variable rate debt | $ | 517 | | | $ | 248 | | | $ | \- | | | $ | 131 | | | $ | 1,143 | | | $ | 2,039 | | | $ | 2,041 | |

We have a significant ownership [added: interest] in the co-investment ventures, which may be consolidated or unconsolidated based on our level of control of the entity.

We operate and manage our business on an owned and managed (“O&M”) basis and therefore evaluate the operating performance of the properties [removed: for] [added: in] our O&M portfolio, which includes our consolidated properties and properties owned by our unconsolidated co-investment [removed: ventures.][added: ventures, which we manage.]

We make operating decisions based on our total O&M portfolio, as we manage the properties [added: similarly] regardless of ownership.

We [removed: also] evaluate our results based on our proportionate economic ownership of each property included in the O&M portfolio (“our share”) [removed: as it represents] [added: to reflect our share of] the financial results of [removed: our share of] the O&M portfolio.

Management’s Discussion and Analysis of Financial Condition and Results of Operations for a reconciliation of *Net Earnings Attributable to Common Stockholders* in the Consolidated Statements of Income to our FFO measures and a reconciliation of NOI to *Operating Income,* the most directly comparable GAAP [removed: measure.][added: measures.]

We own, manage and develop well-located, high-quality logistics [removed: facilities, with a focus on the consumption side of the global supply chain.][added: facilities in 19 countries across four continents.]

Our local teams actively manage our portfolio, which encompasses [removed: leasing and] [added: leasing,] property management, capital deployment and opportunistic [removed: dispositions, generally allowing us to recycle capital to self-fund our development and acquisition activities.][added: dispositions.]

The majority of our properties in the United States (“U.S.”) are wholly owned, while our [added: international] properties [removed: outside the U.S.] are primarily held in [added: our] co-investment [removed: ventures] [added: ventures,] which has the benefit of mitigating our exposure to foreign currency movements.

[added: As service time increasingly moves to the forefront of the global supply chain, it] drives demand for logistics real estate close to the [removed: end consumer.][added: end\-consumer.]

[removed: Over time, we] [added: We] have invested in properties located within infill and urban areas in our largest global markets with [removed: immediate] [added: same day] access [added: (defined as Last Touch®) and next day access (defined as city distribution),] to the consumer [removed: population; these are our Last Touch® facilities.][added: population.]

This positioning gives us the unique ability to provide our customers with the right [added: real estate] solutions [removed: in] [added: for] their supply chains that, in turn, allows them to meet [removed: end consumer] [added: end\-consumer delivery] expectations.

Our customers turn to us because they know that a strategic [removed: relationship] [added: partnership] with Prologis is a competitive advantage.

At December 31, [removed: 2019,] [added: 2020,] we owned or had investments in properties, on a wholly-owned basis or through ventures, in the following geographies (dollars in billions, based on gross book value and total expected investment (as defined below) and square feet in millions):

[removed: ][added: ]

On January 8, 2020, our two U.S. co-investment [removed: ventures] [added: ventures, Prologis U.S. Logistics Venture, LLC (“USLV”) and Prologis Targeted U.S. Logistics Fund (“USLF”),] acquired the wholly-owned real estate assets of Industrial Property Trust Inc. (“IPT”) for approximately [removed: $4] [added: $2.0] billion [removed: (our investment was approximately $1.6 billion).][added: each, which we refer to as the “IPT Transaction” and is detailed in Notes 4, 5, 8 and 11 to the Consolidated Financial Statements.]

On February 4, 2020, we acquired Liberty Property Trust and Liberty Property Limited Partnership (collectively “Liberty”) through a merger transaction [removed: which] [added: that] we refer to as the “Liberty Transaction” and is [removed: fully] detailed in Note [removed: 20] [added: 3] to [removed: our] [added: the] Consolidated Financial Statements.

The Liberty portfolio was primarily comprised of logistics real estate assets, including [removed: 550 industrial] [added: 519] operating properties, aggregating [removed: 108] [added: 100] million square [removed: feet, which] [added: feet and] were highly complementary to our U.S. portfolio in terms of product quality, location and growth potential.

The portfolio also included [removed: development in progress and] [added: properties under development,] land for future [removed: logistics facilities] [added: development] and office properties.

The total acquisition [removed: price] [added: price, including transaction costs,] was approximately $13 billion [added: and was funded] through the issuance of equity [removed: based on the value of the Prologis common stock issued using the closing price on February 3, 2020] and the assumption of debt.

As a result of the closely aligned portfolios and similar business strategy, we [removed: anticipate integrating] [added: integrated] the IPT and Liberty properties while adding minimal property management [removed: expenses] and [added: general and administrative expenses,] further scaling our operations.

We mitigate our exposure to foreign currency fluctuations by investing outside the U.S. through co-investment ventures, borrowing in the functional currency of our [removed: consolidated] subsidiaries and utilizing derivative financial instruments.

[removed: OPERATING SEGMENTS][added: OPERATING SEGMENTS]

[removed: ][added: ]

| (2) | A developed property moves into the operating portfolio when it meets our definition of stabilization, which is the earlier of one year after completion or [removed: reaching] 90% occupancy. Amounts represent our total expected investment (“TEI”), which includes the estimated cost of development, [removed: including] land, construction and leasing costs. |

We collect rent from our customers through [removed: long-term] operating leases, including reimbursements for the majority of our property operating costs.

We expect to generate [removed: long-term] internal growth by increasing rents, maintaining high occupancy rates and controlling expenses.

The primary driver of our revenue growth will be rolling in-place leases to current market [removed: rents, which are increasing in the majority of our markets.][added: rents as leases expire.]

We believe our active portfolio management, combined with the skills of our property, leasing, maintenance, capital, energy, sustainability and risk management [removed: teams,] [added: teams] allow us to maximize NOI across our portfolio.

A [removed: significant amount] [added: majority] of our [added: consolidated] rental revenue, NOI and cash flows are generated in the U.S.

Given the scarcity of modern logistics facilities in [removed: urban centers,] our [added: target markets, our] development business [removed: allows] [added: provides] us [added: the opportunity] to build what our customers need.

We develop properties to meet these needs, deepen our market presence and [removed: refresh our portfolio quality.][added: maintain a modern portfolio.]

We believe we have a competitive advantage due to (i) the strategic locations of our land [removed: bank;] [added: bank and redevelopment sites;] (ii) the development expertise of our local teams; and (iii) the depth of our customer relationships.

Successful development and redevelopment efforts provide significant earnings growth as projects [removed: lease up and] [added: are leased,] generate income and increase the net asset value of our Real Estate Operations segment.

Based on our current estimates, our consolidated land, including options, has the potential to support the development of [removed: $9.4] [added: $11.8] billion of TEI of new logistics space.

Our strategic capital segment allows us to partner with [removed: some] [added: many] of the world’s largest institutional investors [removed: to grow] [added: and capitalize] our business through private [removed: capital.][added: equity, principally perpetual open-ended or long-term ventures.]

We align our interests with [removed: those of] our partners by holding significant ownership interests in all of our [added: 9] unconsolidated co-investment ventures (ranging from 15% to 50%), which [removed: generally] allows us to reduce our exposure to foreign currency movements for investments outside the U.S.

This segment produces stable, long-term cash flows and generally contributes 10% to 15% of our [added: recurring] consolidated revenues, earnings and FFO.

We earn additional revenues by providing leasing, acquisition, construction, [removed: development, legal] [added: development] and disposition services.

[removed: FUTURE GROWTH][added: FUTURE GROWTH]

[removed: ][added: ]

We are the global leader in logistics real estate with a focus on high-barrier, high growth markets.

Our disposition activities allow us to recycle capital and largely self-fund our development and acquisition activities.

There is an emergence of two new structural demand drivers for our real estate: (i) the need for more inventory as supply chains emphasize resilience over efficiency and (ii) the acceleration of e-commerce adoption.

As we look to the future of logistics real estate, we are focused on solving our customers’ pain points, innovating in pursuit of creative solutions and operational excellence.

We are listening and responding to our customers’ needs for skilled labor through initiatives to create community workforce programs to develop their talent pool, utilize our proprietary data and analytics to ensure efficient distribution solutions and negotiate better pricing on common products and services that our customers need.

We accomplish all of this by employing individuals who continue to grow, embrace change and draw strength from inclusion and diversity.

2020 Significant Events

The portfolio included 235 properties, aggregating 37 million square feet and were highly complementary to our U.S. portfolio in terms of product quality, location and growth potential.

Our aggregate investment in the IPT Transaction was $1.6 billion.

On a combined basis, there were 42 million square feet of non-strategic industrial properties with a gross book value of approximately $3 billion acquired in both the Liberty Transaction and the IPT Transaction that we do not intend to operate long-term.

Depending on the expected hold period, these assets were either classified as *Assets Held for Sale or Contribution* or other real estate investments within *Investments in Real Estate Properties* at the time of acquisition in the Consolidated Balance Sheets.

Since acquisition some of these non-strategic industrial properties have been sold.

In early 2020, COVID-19 was characterized as a global pandemic by the World Health Organization.

The COVID-19 outbreak has disrupted financial markets and global, national and local economies since this time.

Our operating results have remained strong in the COVID-19 environment and our business has been resilient.

We expect operating conditions in our portfolio to continue to strengthen in 2021.

However, with the continued uncertainty across the globe, we cannot predict the impact on our business, future financial condition or operating results.

For discussion on current operating results and our operational and financial outlook, as well as our response to help protect employees and customers, see the Summary of 2020 section in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In addition to our land portfolio, we have also made investments in other properties that have the potential to be redeveloped to increase value.

| • | Balance Sheet Strength. Through the acquisitions of Liberty and IPT and execution of several opportunistic debt refinancings at historically low rates, we further enhanced our financial position during 2020 while maintaining low leverage. At December 31, 2020, we had total available liquidity of $4.8 billion. As a result of our low leverage and available liquidity, we have significant capacity to capitalize on value-added investment opportunities that will translate into future earnings growth. |

| | digitization efforts. Underlying our future strategy for growth is our ongoing commitment to, and initiatives in, environmental stewardship, social responsibility and governance (“ESG”). |

In order to provide for a customer-centric location strategy, we have invested in properties located within infill and urban areas in our largest global markets with same day and next day access to the consumer population, these are our Last Touch® and city distribution facilities, respectively.

To support these distribution facilities, we utilize multi-market facilities located at key transportation hubs on the edge of these major infill and urban areas and gateway distribution facilities that incorporate access to major sea and intermodal ports.

| 1. Amazon | | 6.1 | | | | 22 | |

| 3. FedEx | | 1.9 | | | | 6 | |

| 4. UPS | | 1.2 | | | | 5 | |

| 6. Geodis | | 1.0 | | | | 5 | |

| 9. DHL | | 0.7 | | | | 3 | |

| 13. Kellogg Company | | 0.5 | | | | 2 | |

| 14. Staples | | 0.4 | | | | 3 | |

| 15. Ryder System Inc. | | 0.4 | | | | 2 | |

| 17. Berkshire Hathaway Inc. | | 0.4 | | | | 1 | |

| 18. ZOZO, Inc. | | 0.4 | | | | 1 | |

| 19. Westrock Company | | 0.4 | | | | 1 | |

| 20. Kuehne + Nagel | | 0.3 | | | | 1 | |

| 21. Express Messenger | | 0.3 | | | | 1 | |

| 24. Sysco Guest Supply, LLC | | 0.3 | | | | 2 | |

For additional discussion on the impact of COVID-19 on our employees, see the Summary of 2020 section in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

As the global leader in logistics real estate, Prologis has a presence in 19 countries across four continents.

As e-commerce increasingly moves to the forefront of the global supply chain, it

As we look to the future of logistics real estate, we strive to innovate through the development of multistory logistics facilities, creating community workforce programs to develop skilled labor, leveraging technology to invest in data driven operational efficiencies and negotiating better pricing on common products and services that our customers need.

The portfolio included 236 properties, aggregating 38 million square feet.

The portfolio was generally split evenly between the two co-investment ventures.

These revenues are principally earned from open-ended or long-term ventures.

| • | an investment across the portfolio in environmental stewardship, social responsibility and governance (“ESG”) practices that enhance asset value while improving sustainability performance; |

| 1. Amazon | | 5.8 | | | | 17 | |

| 3. FedEx | | 1.7 | | | | 4 | |

| 4. UPS | | 1.3 | | | | 4 | |

| 5. Geodis | | 0.9 | | | | 4 | |

| 8. NFI | | 0.7 | | | | 2 | |

| 13. DSV Air and Sea | | 0.5 | | | | 2 | |

| 14. Kimberly-Clark | | 0.5 | | | | 3 | |

| 15. Ingram Micro | | 0.4 | | | | 2 | |

| 17. APL Logistics | | 0.4 | | | | 2 | |

| 19. Georgia-Pacific | | 0.4 | | | | 1 | |

| 20. Expeditors International of Washington, Inc. | | 0.3 | | | | 1 | |

| 21. C&S Wholesale Grocers | | 0.3 | | | | 1 | |

| 23. Essendant | | 0.3 | | | | 2 | |

| 24. International Paper | | 0.3 | | | | 1 | |

| U.S. (1) | | | 932 | |

| Europe | | | 398 | |

| Asia | | | 243 | |

| Total | | | 1,712 | |

The principles of ESG are a natural fit in our business strategy.

Through our community workforce initiative, for example, we partner with local community organizations to provide logistics training and help our customers with their labor needs, while benefitting local economies and providing new career opportunities.

We [removed: do not] believe [removed: that the ultimate disposition of] [added: that, with respect to] any [removed: additional] [added: such] matters to which we are currently a [removed: party] [added: party, the ultimate disposition of any such matter] will [added: not] result in a material adverse effect on our business, financial position or results of operations.

In connection with the Liberty Transaction, six lawsuits have been filed seeking damages and/or rescission, among other things.

An adverse decision being entered for any lawsuit may adversely affect our financial results.

See Note 20 to the Consolidated Financial Statements in Item 8.

Financial Statements and Supplementary Data for further information on the Liberty Transaction.

For the fiscal year ended December 31, [removed: 2019][added: 2020]

[removed: ][added: ]

Based on the closing price of Prologis, Inc.’s common stock on June 30, [removed: 2019,] [added: 2020,] the aggregate market value of the voting common equity held by nonaffiliates of Prologis, Inc. was [removed: $50,236,866,166.][added: $68,586,769,164.]

The number of shares of Prologis, Inc.’s common stock outstanding at February 5, [removed: 2020,] [added: 2021,] was approximately [removed: 738,743,000.][added: 739,500,000.]

Portions of Part III of this report are incorporated by reference to the registrant’s definitive proxy statement for the [removed: 2020] [added: 2021] annual meeting of its stockholders or will be provided in an amendment filed on Form 10-K/A.

This report combines the annual reports on Form 10-K for the year ended December 31, [removed: 2019,] [added: 2020,] 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.

At December 31, [removed: 2019,] [added: 2020,] the Parent owned [removed: 97.23%] [added: 97.35%] common general partnership interest in the OP and 100% of the preferred units in the OP.

The remaining [removed: 2.77%] [added: 2.65%] common limited partnership interests are owned by unaffiliated investors and certain current and former directors and officers of the Parent.

[removed: TABLE] [added: TABLE] OF [removed: CONTENTS][added: CONTENTS]

| | | [Environmental Matters](#ENVIRON2) | | [removed: 9] [added: 10] |

| | | [Governmental Matters](#GovMatters) | | [removed: 9] [added: 10] |

| | | [Insurance Coverage](#INSURANCE) | | [removed: 9] [added: 10] |

| 1A. | | [Risk Factors](#ITEM_1A_RISK_FACTORS) | | [removed: 9] [added: 10] |

| 1B. | | [Unresolved Staff Comments](#ITEM_1B_UNRESOLVED_STAFF_COMMENTS) | | [removed: 18] [added: 19] |

| 2. | | [Properties](#ITEM_2_PROPERTIES) | | [removed: 18] [added: 19] |

| | | [Geographic Distribution](#GEOGRAPHIC) | | [removed: 18] [added: 19] |

| | | [Lease Expirations](#LEASEEX) | | [removed: 21] [added: 22] |

| | | [Co-Investment Ventures](#COINVT) | | [removed: 22] [added: 23] |

| 3. | | [Legal Proceedings](#ITEM_3_LEGAL_PROCEEDINGS) | | [removed: 22] [added: 23] |

| 4. | | [Mine Safety Disclosures](#ITEM_4_MINE_SAFETY_DISCLOSURES) | | [removed: 22] [added: 23] |

| | | [Preferred Stock Dividends](#PREFERRED) | | [removed: 23] [added: 24] |

| | | [Sale of Unregistered Securities](#SALESUNREGISTER) | | [removed: 23] [added: 24] |

| | | [Securities Authorized for Issuance Under Equity Compensation Plans](#SECURITIESAUTHO) | | [removed: 24] [added: 25] |

| | | [Other Stockholder Matters](#OTHERSTOCK) | | [removed: 24] [added: 25] |

| 6. | | [Selected Financial Data](#ITEM_6_SELECTED_FINANCIAL_DATA) | | [removed: 24] [added: 25] |

| 7. | | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#ITEM_7_MANAGEMENTS_DISCUSSION_ANALYSIS_F) | | [removed: 24] [added: 25] |

| | | [Management’s Overview](#MGTOVER) | | [removed: 25] [added: 26] |

| | | [Results of Operations](#RESULTS) | | [removed: 26] [added: 27] |

| | | [Environmental Matters](#ENVIRO_MATTERS) | | [removed: 34] [added: 36] |

| | | [Liquidity and Capital Resources](#LIQANDCAP) | | [removed: 34] [added: 36] |

| | | [Critical Accounting Policies](#Critical) | | [removed: 39] [added: 40] |

| | | [New Accounting Pronouncements](#NewAccountingPro) | | [removed: 40] [added: 41] |

| | | [Funds from Operations Attributable to Common Stockholders/Unitholders](#FFO) | | [removed: 40] [added: 41] |

| 7A. | | [Quantitative and Qualitative Disclosures About Market Risk](#ITEM7AMKT) | | [removed: 42] [added: 43] |

| 8. | | [Financial Statements and Supplementary Data](#ITEM_8_FINANCIAL_STATEMENTS_SUPPLEMENTAR) | | [removed: 43] [added: 44] |

| 9. | | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#ITEM_9_CHANGES_IN_DISAGREEMENTS_WITH_ACC) | | [removed: 43] [added: 44] |

| 9A. | | [Controls and Procedures](#ITEM_9A_CONTROLS_PROCEDURES) | | [removed: 43] [added: 44] |

| 9B. | | [Other Information](#ITEM_9B_OR_INFORMATION) | | [removed: 44] [added: 46] |

| 10. | | [Directors, Executive Officers and Corporate Governance](#ITEM_10_DIRECTORS_EXECUTIVE_FICERS_CORPO) | | [removed: 45] [added: 46] |

| 11. | | [Executive Compensation](#ITEM_11_EXECUTIVE_COMPENSATION) | | [removed: 45] [added: 46] |

| | | | | | | |

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

| | | [Purchases of Equity Securities](#PURUNREGISTER) | | 25 |

| Prologis, L.P. | | 1.375% Notes due 2021 | | PLD/21 | | New York Stock Exchange |

| Prologis, L.P. | | 3.000% Notes due 2022 | | PLD/22 | | New York Stock Exchange |

| Prologis, L.P. | | Floating Rate Notes due 2020 | | PLD/20B | | New York Stock Exchange |

| | | [Off-Balance Sheet Arrangements](#OFFBS) | | 38 |

| | | [Contractual Obligations](#CONTRACTUAL) | | 38 |

Included in the operating property information below for our consolidated operating properties are [removed: 382] [added: 482] buildings owned primarily by one co-investment venture that we consolidate but of which we own less than 100% of the equity.

No individual property or market amounted to 10% or more of our consolidated total assets at December 31, [removed: 2019,] [added: 2020,] or generated revenue equal to 10% or more of our consolidated total revenues for the year ended December 31, [removed: 2019,] [added: 2020,] with the exception of the Southern California market.

| Baltimore/Washington D.C. | | | [removed: 6] [added: 41] | | | | [removed: 674] [added: 1] | | | | [removed: 13] [added: 16] | | | | [removed: 10] [added: 1] | | | | [removed: 1,044] [added: 120] | |

| New Jersey/New York City | | | [removed: 27] [added: 26] | | | | [removed: 2,827] [added: 1] | | | | [removed: 45] [added: 34] | | | | [removed: 35] [added: 1] | | | | [removed: 3,853] [added: 16] | |

| San Francisco Bay Area | | | [removed: 19] [added: \-] | | | | [removed: 2,600] [added: \-] | | | | [removed: 25] [added: \-] | | | [added: *] | [removed: 23] | | | | [removed: 3,070] [added: 96] | |

| Germany | | | [removed: 1] [added: 66] | | | | [removed: 78] [added: 2] | | | | [removed: \-] [added: 39] | | | [added: *] | [removed: 24] | | | | [removed: 2,021] [added: 76] | |

| Netherlands | | | [removed: \-] [added: 31] | | | | [removed: \-] [added: 1] | | | | [removed: \-] [added: 15] | | | | [removed: 22] [added: 1] | | | | [removed: 1,990] [added: 98] | |

| Remaining Countries – Europe (8 countries) (3) | | | 3 | | | | [removed: 141] [added: 178] | | | | \- | | | | [removed: 78] [added: 82] | | | | [removed: 5,566] [added: 6,675] | |

| Value-added properties (5) | | | [removed: 3] [added: 5] | | | | [removed: 397] [added: 594] | | | | \- | | | | [removed: 5] [added: 9] | | | | [removed: 565] [added: 983] | |

| Baltimore/Washington D.C. | | | [removed: \-] [added: 10] | | | | [removed: \-] [added: 1,210] | | | | [removed: \-] [added: 12] | | | [removed: *] | [added: 14] | | | | [removed: 10] [added: 1,603] | |

| [removed: Dallas/Fort] [added: Dallas/Ft.] Worth | | | [removed: 8] [added: 108] | | | | [removed: 1] [added: 2] | | | | [removed: 2] [added: 25] | | | | 1 | | | | [removed: 91] [added: 98] | |

| New Jersey/New York City | | | [removed: 20] [added: 32] | | | [removed: *] | [added: 3,798] | | | | [removed: 11] [added: 45] | | | | [removed: 1] [added: 41] | | | | [removed: 105] [added: 5,059] | |

| San Francisco Bay Area | | | [removed: 13] [added: 21] | | | [removed: *] | [added: 2,909] | | | [removed: *] | [added: 9] | | | | [removed: 1] [added: 26] | | | | [removed: 200] [added: 3,562] | |

| Seattle | | | [removed: 9] [added: 41] | | | [removed: *] | [added: 1] | | | | [removed: 14] [added: 67] | | | [added: *] | [removed: 1] | | | | [removed: 71] [added: 62] | |

| South Florida | | | [removed: 70] [added: 13] | | | | [removed: 1] [added: 1,677] | | | | [removed: 61] [added: 29] | | | [removed: *] | [added: 18] | | | | [removed: 48] [added: 2,220] | |

| Southern California | | | [removed: 79] [added: 78] | | | | [removed: 1] [added: 9,151] | | | | [removed: 74] [added: 16] | | | | [removed: 2] [added: 97] | | | | [removed: 232] [added: 11,227] | |

| Brazil | | | 196 | | | | 4 | | | | [removed: 20] [added: 16] | | | | \- | | | | \- | |

| Total land and development portfolio | | | [removed: 4,411] [added: 5,304] | | | | [removed: 84] [added: 94] | | | $ | [removed: 1,102] [added: 1,606] | | | | [removed: 36] [added: 28] | | | $ | [removed: 3,970] [added: 3,769] | |

| (1) | Certain of our consolidated properties are pledged as security under secured mortgage debt and assessment bonds. For purposes of this table, the total principal balance of a debt issuance that is secured by a pool of properties is allocated among the properties in the pool based on each property’s investment balance. In addition to the amounts reflected here, we also have [removed: $38] [added: $101] million of encumbrances related to one prestabilized property [removed: and one property under development not] included in [added: the] consolidated [removed: operating properties.] [added: development portfolio.] |

| (4) | Included in our consolidated operating properties are properties that we consider to be held for contribution and are presented within *Assets Held for Sale or Contribution* in the Consolidated Balance Sheets. We include these properties in our operating portfolio as they are expected to be contributed to our co-investment ventures and remain in our O&M operating portfolio. At December 31, [removed: 2019,] [added: 2020,] we had investments in real estate properties that were expected to be contributed to our unconsolidated co-investment ventures totaling [removed: $605] [added: $454] million and aggregating [removed: 8] [added: 5] million square feet. See Note 6 to the Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data for further information on our *Assets Held for Sale or Contribution.* |

| (7) | TEI is based on current projections and is subject to change. [added: In the first quarter of 2020, we suspended several recently started speculative development projects for the short-term. Most of the suspended projects were restarted by the fourth quarter of 2020. At December 31, 2020, the outstanding suspended development projects had a TEI of $82 million and remain within our consolidated development portfolio.] As noted in the table below, our current investment [added: in our active development portfolio, excluding suspended development projects,] was $1.9 billion, leaving approximately [removed: $2.1] [added: $1.8] billion of additional required investment. At December 31, [removed: 2019,] [added: 2020,] based on TEI, approximately [removed: 23%] [added: 17%] of the properties in the development portfolio were [removed: already] completed but not [removed: yet stabilized and approximately 64% of the properties under development in the development portfolio were expected to be completed by December 31, 2020. The remainder of our properties under development were expected to be completed before December 2021.] |

The following table summarizes our investment in consolidated real estate properties at December 31, [removed: 2019] [added: 2020] (in millions):

| Operating properties, excluding assets held for sale or contribution | | $ | [removed: 31,288] [added: 43,508] | |

| Development portfolio, including cost of land | | | [removed: 1,868] [added: 1,882] | |

| Other real estate investments (1) | | | [removed: 966] [added: 3,388] | |

| Total consolidated real estate properties | | $ | [removed: 35,224] [added: 50,384] | |

| (1) | Included in other real estate investments were: (i) [removed: non-logistics] [added: non-strategic] real [removed: estate;] [added: estate assets acquired in the Liberty Transaction that we do not intend to operate long-term;] (ii) land parcels [removed: that are ground leased] [added: we own and lease] to third parties; (iii) [removed: our corporate headquarters;] [added: real estate assets that we intend to redevelop into industrial properties; and] (iv) costs [removed: related to] [added: associated with potential acquisitions and] future development projects, including purchase options on [removed: land; (v) earnest money deposits associated with potential acquisitions; and (vi) infrastructure costs related to projects we are developing on behalf of others.] [added: land.] |

We generally lease our properties on a long-term basis (the average term for leases [removed: commenced] [added: commenced, including new leases and renewals,] in [removed: 2019] [added: 2020] was [removed: 66] [added: 64] months).

The following table summarizes the lease expirations of our consolidated operating portfolio for leases in place at December 31, [removed: 2019] [added: 2020] (dollars and square feet in millions):

| Month to month | | | [removed: 69] [added: 121] | | | | [removed: 3] [added: 4] | | | | | | | | | | | | | |

The following table summarizes our consolidated and unconsolidated co-investment ventures at December 31, [removed: 2019] [added: 2020] (in millions):

| Prologis U.S. Logistics Venture (“USLV”) | | | [removed: 65] [added: 78] | | | $ | [removed: 6,142] [added: 7,772] | | | $ | 12 | | | $ | [removed: 76] [added: 21] | |

| Prologis Targeted U.S. Logistics Fund (“USLF”) | | | [removed: 99] [added: 117] | | | $ | [removed: 8,920] [added: 10,987] | | | $ | [removed: \-] [added: 43] | | | $ | [removed: \-] [added: 37] | |

| FIBRA Prologis | | | [removed: 35] [added: 40] | | | | [removed: 2,102] [added: 2,549] | | | | 6 | | | | 6 | |

| Prologis Brazil Logistics Venture ("PBLV") and other joint ventures | | | [removed: 10] [added: 11] | | | | [removed: 627] [added: 507] | | | | [removed: 116] [added: 47] | | | | [removed: 64] [added: 188] | |

| Subtotal Other Americas | | | [removed: 45] [added: 51] | | | | [removed: 2,729] [added: 3,056] | | | | [removed: 122] [added: 53] | | | | [removed: 70] [added: 194] | |

| Prologis European Logistics Fund (“PELF”) | | | [removed: 120] [added: 127] | | | | [removed: 10,838] [added: 12,916] | | | | [removed: 6] [added: 10] | | | | [removed: 44] [added: 87] | |

| Prologis European Logistics Partners Sàrl (“PELP”) | | | [removed: 52] [added: 53] | | | | [removed: 3,972] [added: 4,400] | | | | [removed: 23] [added: 25] | | | | [removed: 33] [added: \-] | |

| Prologis UK Logistics Venture (“UKLV”) | | | [removed: 4] [added: 5] | | | | [removed: 677] [added: 779] | | | | [removed: 102] [added: 68] | | | | [removed: 122] [added: 246] | |

| Nippon Prologis REIT (“NPR”) | | | [removed: 32] [added: 35] | | | | [removed: 5,980] [added: 6,831] | | | | \- | | | | \- | |

| Atlanta | | | 24 | | | $ | 1,549 | | | $ | 14 | | | | 30 | | | $ | 1,996 | |

| Central PA | | | 16 | | | | 1,309 | | | | \- | | | | 17 | | | | 1,403 | |

| Central Valley | | | 17 | | | | 1,306 | | | | 10 | | | | 19 | | | | 1,440 | |

| Chicago | | | 39 | | | | 3,201 | | | | 9 | | | | 52 | | | | 4,359 | |

| Dallas/Ft. Worth | | | 31 | | | | 2,205 | | | | 8 | | | | 38 | | | | 2,732 | |

| Houston | | | 24 | | | | 2,454 | | | | 5 | | | | 30 | | | | 2,963 | |

| Lehigh Valley | | | 24 | | | | 2,951 | | | | \- | | | | 27 | | | | 3,228 | |

| Seattle | | | 13 | | | | 2,016 | | | | \- | | | | 22 | | | | 2,873 | |

| Remaining Markets – U.S. (15 markets) (2) | | | 80 | | | | 5,728 | | | | 39 | | | | 107 | | | | 7,630 | |

| Subtotal U.S. | | | 422 | | | | 41,464 | | | | 196 | | | | 538 | | | | 52,295 | |

| Brazil | | | \- | | | | \- | | | | \- | | | | 10 | | | | 506 | |

| Canada | | | 10 | | | | 882 | | | | 153 | | | | 10 | | | | 882 | |

| Mexico | | | 1 | | | | 53 | | | | \- | | | | 41 | | | | 2,597 | |

| Subtotal Other Americas | | | 11 | | | | 935 | | | | 153 | | | | 61 | | | | 3,985 | |

| France | | | 1 | | | | 92 | | | | \- | | | | 32 | | | | 2,861 | |

| Germany | | * | | | | | 18 | | | | \- | | | | 25 | | | | 2,397 | |

| Netherlands | | * | | | | | 19 | | | | \- | | | | 23 | | | | 2,314 | |

| U.K. | | | 1 | | | | 103 | | | | \- | | | | 26 | | | | 4,031 | |

| Subtotal Europe | | | 5 | | | | 410 | | | | \- | | | | 188 | | | | 18,278 | |

| China | | | \- | | | | \- | | | | \- | | | | 32 | | | | 2,504 | |

| Japan | | | 2 | | | | 348 | | | | 199 | | | | 37 | | | | 7,179 | |

| Singapore | | | 1 | | | | 144 | | | | \- | | | | 1 | | | | 144 | |

| Subtotal Asia | | | 3 | | | | 492 | | | | 199 | | | | 70 | | | | 9,827 | |

| Total operating portfolio (4) | | | 441 | | | | 43,301 | | | | 548 | | | | 857 | | | | 84,385 | |

| Total operating properties | | | 446 | | | $ | 43,895 | | | $ | 548 | | | | 866 | | | $ | 85,368 | |

| Atlanta | | | 344 | | | | 3 | | | $ | 34 | | | * | | | | $ | 17 | |

| Central PA | | | 29 | | | | 1 | | | | 8 | | | | \- | | | | \- | |

| Central Valley | | | 934 | | | | 16 | | | | 185 | | | | 1 | | | | 80 | |

| Chicago | | | 182 | | | | 3 | | | | 64 | | | | 1 | | | | 36 | |

| Houston | | | 197 | | | | 3 | | | | 44 | | | * | | | | | 13 | |

| Lehigh Valley | | | 208 | | | | 2 | | | | 82 | | | | 2 | | | | 197 | |

| South Florida | | | 183 | | | | 3 | | | | 148 | | | * | | | | | 24 | |

| Southern California | | | 116 | | | | 2 | | | | 108 | | | * | | | | | 62 | |

| Remaining Markets – U.S. (15 markets) | | | 620 | | | | 9 | | | | 106 | | | | 6 | | | | 633 | |

| Subtotal U.S. | | | 3,029 | | | | 47 | | | | 921 | | | | 13 | | | | 1,454 | |

| Canada | | | 162 | | | | 3 | | | | 89 | | | * | | | | | 72 | |

| Mexico | | | 414 | | | | 7 | | | | 76 | | | | 1 | | | | 44 | |

| Subtotal Other Americas | | | 772 | | | | 14 | | | | 181 | | | | 1 | | | | 116 | |

| France | | | 263 | | | | 5 | | | | 28 | | | | 1 | | | | 126 | |

| U.K. | | | 198 | | | | 4 | | | | 120 | | | | 2 | | | | 328 | |

| Atlanta | | | 22 | | | $ | 1,319 | | | $ | 14 | | | | 25 | | | $ | 1,488 | |

| Central and Eastern Pennsylvania | | | 18 | | | | 1,282 | | | | \- | | | | 20 | | | | 1,501 | |

| Central Valley | | | 15 | | | | 1,046 | | | | 10 | | | | 16 | | | | 1,159 | |

| Chicago | | | 37 | | | | 2,848 | | | | 9 | | | | 47 | | | | 3,648 | |

| Dallas/Fort Worth | | | 25 | | | | 1,574 | | | | 8 | | | | 32 | | | | 2,091 | |

| Houston | | | 12 | | | | 1,025 | | | | 10 | | | | 19 | | | | 1,528 | |

| Seattle | | | 13 | | | | 1,793 | | | * | | | | | 20 | | | | 2,457 | |

| South Florida | | | 11 | | | | 1,315 | | | | 29 | | | | 16 | | | | 1,856 | |

| Southern California | | | 68 | | | | 7,318 | | | | 18 | | | | 86 | | | | 9,338 | |

| Remaining Markets – U.S. (16 markets) (2) | | | 64 | | | | 3,970 | | | | 42 | | | | 85 | | | | 5,360 | |

| Subtotal U.S. | | | 337 | | | | 29,591 | | | | 223 | | | | 434 | | | | 38,393 | |

| Brazil | | | \- | | | | \- | | | | \- | | | | 10 | | | | 627 | |

| Canada | | | 10 | | | | 866 | | | | 150 | | | | 10 | | | | 866 | |

| Mexico | | | 4 | | | | 258 | | | | \- | | | | 39 | | | | 2,356 | |

| Subtotal Other Americas | | | 14 | | | | 1,124 | | | | 150 | | | | 59 | | | | 3,849 | |

| France | | | 1 | | | | 67 | | | | \- | | | | 31 | | | | 2,486 | |

| U.K. | | * | | | | | 69 | | | | \- | | | | 25 | | | | 3,733 | |

| Subtotal Europe | | | 5 | | | | 355 | | | | \- | | | | 180 | | | | 15,796 | |

| China | | * | | | | | 10 | | | | \- | | | | 27 | | | | 1,993 | |

| Japan | | | 2 | | | | 275 | | | | 157 | | | | 34 | | | | 6,255 | |

| Singapore | | | 1 | | | | 141 | | | | \- | | | | 1 | | | | 141 | |

| Subtotal Asia | | | 3 | | | | 426 | | | | 157 | | | | 62 | | | | 8,389 | |

| Total operating portfolio (4) | | | 359 | | | | 31,496 | | | | 530 | | | | 735 | | | | 66,427 | |

| Total operating properties | | | 362 | | | $ | 31,893 | | | $ | 530 | | | | 740 | | | $ | 66,992 | |

| Atlanta | | | 203 | | | | 2 | | | $ | 23 | | | * | | | | $ | 15 | |

| Central and Eastern Pennsylvania | | | 29 | | | * | | | | | 8 | | | | \- | | | | \- | |

| Central Valley | | | 948 | | | | 19 | | | | 145 | | | | 2 | | | | 148 | |

| Chicago | | | 100 | | | | 2 | | | | 13 | | | | 1 | | | | 72 | |

| Houston | | | 177 | | | | 3 | | | | 33 | | | * | | | | | 13 | |

| Remaining Markets – U.S. (16 markets) | | | 385 | | | | 7 | | | | 100 | | | | 8 | | | | 744 | |

| Subtotal U.S. | | | 2,041 | | | | 36 | | | | 484 | | | | 17 | | | | 1,749 | |

| Canada | | | 167 | | | | 3 | | | | 88 | | | | 1 | | | | 49 | |

| Mexico | | | 449 | | | | 8 | | | | 83 | | | | 1 | | | | 87 | |

| Subtotal Other Americas | | | 812 | | | | 15 | | | | 191 | | | | 2 | | | | 136 | |

| France | | | 230 | | | | 4 | | | | 28 | | | | 1 | | | | 86 | |

| Germany | | | 36 | | | | 1 | | | | 20 | | | | 1 | | | | 114 | |

| Netherlands | | | 10 | | | * | | | | | 9 | | | | 2 | | | | 157 | |

| U.K. | | | 138 | | | | 2 | | | | 86 | | | | 2 | | | | 354 | |

| Remaining Countries – Europe (8 countries) | | | 1,066 | | | | 22 | | | | 181 | | | | 5 | | | | 355 | |

| Subtotal Europe | | | 1,480 | | | | 29 | | | | 324 | | | | 11 | | | | 1,066 | |

The following line graph compares the change in Prologis, Inc. cumulative total stockholder’s return on shares of its common stock from December 31, [removed: 2014,] [added: 2015,] to the cumulative total return of the S&P 500 Stock Index and the Financial Times and Stock Exchange NAREIT Equity REITs Index from December 31, [removed: 2014,] [added: 2015,] to December 31, [removed: 2019.][added: 2020.]

[removed: The graph assumes an initial investment of $100 in our common] stock and each of the indices on December 31, [removed: 2014,] [added: 2015,] and, as required by the SEC, the reinvestment of all dividends.

[removed: ][added: ]

At December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] we had [added: 1.3 million and] 1.4 million shares of the Series Q preferred [removed: stock] [added: stock, respectively,] with a liquidation preference of $50 per share that will be redeemable at our option on or after November 13, 2026.

Dividends payable per share [removed: was] [added: were] $4.27 for the years ended December 31, [removed: 2019] [added: 2020] and [removed: 2018.][added: 2019.]

Further information relative to our equity compensation plans will be provided in our [removed: 2020] [added: 2021] Proxy Statement or in an amendment filed on Form 10-K/A.

The graph assumes an initial investment of $100 in our common

During 2020, we issued 0.7 million shares of common stock of Prologis, Inc. in connection with the redemption of common units of Prologis, L.P. and 0.5 million common units of Prologis, L.P. in connection with the acquisition of properties (see Note 11 to the Consolidated Financial Statements in Item 8.

Financial Statements and Supplementary Data) in reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, afforded by Section 4(a)(2) thereof.

PURCHASES OF EQUITY SECURITIES

The table below sets forth the information with respect to purchases by Prologis, Inc. of its common stock during the year ended December 31, 2020:

| Period | Total Number of Shares Purchased (1) | | | | Average Price Paid per Share (2) | | | | Total Number of Shares Purchased as Part of Publicly Announced Plan (3) | | | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan (in millions) (4) | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| January 1 – January 31 | | \- | | | $ | \- | | | | \- | | | $ | \- | |

| February 1 – February 29 | | \- | | | | \- | | | | \- | | | | \- | |

| March 1 – March 31 | | 539,000 | | | | 64.66 | | | | 539,000 | | | | 965 | |

| April 1 – April 30 | | \- | | | | \- | | | | \- | | | | \- | |

| May 1 – May 31 | | \- | | | | \- | | | | \- | | | | \- | |

| June 1 – June 30 | | \- | | | | \- | | | | \- | | | | \- | |

| July 1 – July 31 | | \- | | | | \- | | | | \- | | | | \- | |

| August 1 – August 31 | | \- | | | | \- | | | | \- | | | | \- | |

| September 1 – September 30 | | \- | | | | \- | | | | \- | | | | \- | |

| October 1 – October 31 | | \- | | | | \- | | | | \- | | | | \- | |

| November 1 – November 30 | | \- | | | | \- | | | | \- | | | | \- | |

| December 1 – December 31 | | \- | | | | \- | | | | \- | | | | \- | |

| Total | | 539,000 | | | $ | 64.66 | | | | 539,000 | | | $ | 965 | |

| (1) | In March 2020, the Board of Directors authorized a new share purchase program to repurchase up to $1.0 billion of common stock on the open market or in privately negotiated transactions. This column primarily represents open market share repurchases. |

| --- | --- |

| (2) | Average price paid per share is a weighted average calculation using the aggregate price, excluding commissions and fees. |

| --- | --- |

| (3) | The aggregate value of shares purchased in the year ended December 31, 2020 as part of the publicly announced plan was $35 million. |

| --- | --- |

| (4) | As of February 5, 2021, $965 million in share repurchase authorization remained. There is no scheduled expiration date for the program, but the program may be discontinued at any time. |

| --- | --- |

During 2019, we issued 1.2 million shares of common stock of Prologis, Inc. in connection with the redemption of common units of Prologis, L.P. The shares of common stock were issued in reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, afforded by Section 4(a)(2) thereof.

None.

The following table summarizes selected financial data related to our historical financial condition and results of operations for both Prologis, Inc. and Prologis, L.P. (in millions, except for per share and unit amounts):

| | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Operating Data: | | | | | | | | | | | | | | | | | | | |

| Total revenues | $ | 3,331 | | | $ | 2,804 | | | $ | 2,618 | | | $ | 2,533 | | | $ | 2,197 | |

| Gains on dispositions of development properties and land, net | $ | 468 | | | $ | 470 | | | $ | 328 | | | $ | 334 | | | $ | 258 | |

| Gains on other dispositions of investments in real estate, net | $ | 390 | | | $ | 371 | | | $ | 855 | | | $ | 423 | | | $ | 501 | |

| Consolidated net earnings | $ | 1,702 | | | $ | 1,823 | | | $ | 1,761 | | | $ | 1,293 | | | $ | 926 | |

| Net earnings per share/unit attributable to common stockholders/ unitholders – Basic | $ | 2.48 | | | $ | 2.90 | | | $ | 3.10 | | | $ | 2.29 | | | $ | 1.66 | |

| Net earnings per share/unit attributable to common stockholders/ unitholders – Diluted | $ | 2.46 | | | $ | 2.87 | | | $ | 3.06 | | | $ | 2.27 | | | $ | 1.64 | |

| Dividends per common share and distributions per common unit | $ | 2.12 | | | $ | 1.92 | | | $ | 1.76 | | | $ | 1.68 | | | $ | 1.52 | |

| Consolidated Balance Sheet Data: | | | | | | | | | | | | | | | | | | | |

| Total assets | $ | 40,032 | | | $ | 38,418 | | | $ | 29,481 | | | $ | 30,250 | | | $ | 31,395 | |

| Total debt | $ | 11,906 | | | $ | 11,090 | | | $ | 9,413 | | | $ | 10,608 | | | $ | 11,627 | |

| FFO attributable to common stockholders/unitholders (1): | | | | | | | | | | | | | | | | | | | |

| Reconciliation of net earnings to FFO: | | | | | | | | | | | | | | | | | | | |

| Net earnings attributable to common stockholders | $ | 1,567 | | | $ | 1,643 | | | $ | 1,642 | | | $ | 1,203 | | | $ | 863 | |

| Total NAREIT defined adjustments | | 950 | | | | 707 | | | | 101 | | | | 534 | | | | 461 | |

| Total our modified adjustments | | 74 | | | | (118 | ) | | | 52 | | | | (35 | ) | | | (15 | ) |

| FFO, as modified by Prologis attributable to common stockholders/ unitholders (1) | $ | 2,591 | | | $ | 2,232 | | | $ | 1,795 | | | $ | 1,702 | | | $ | 1,309 | |

| Total core defined adjustments | | (427 | ) | | | (444 | ) | | | (244 | ) | | | (302 | ) | | | (128 | ) |

| Core FFO attributable to common stockholders/unitholders (1) | $ | 2,164 | | | $ | 1,788 | | | $ | 1,551 | | | $ | 1,400 | | | $ | 1,181 | |

| (1) | FFO; FFO, as modified by Prologis; and Core FFO attributable to common stockholders/unitholders are non-GAAP measures. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for our definition of FFO measures and a complete reconciliation to net earnings. |

| --- | --- |

The Consolidated Balance Sheets of Prologis, Inc. and Prologis, L.P. at December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] the Consolidated Statements of Income of Prologis, Inc. and Prologis, L.P., the Consolidated Statements of Comprehensive Income of Prologis, Inc. and Prologis, L.P., the Consolidated Statements of Equity of Prologis, Inc., the Consolidated Statements of Capital of Prologis, L.P. and the Consolidated Statements of Cash Flows of Prologis, Inc. and Prologis, L.P. for each of the years in the three-year period ended December 31, [removed: 2019,] [added: 2020,] Notes to Consolidated Financial Statements and Schedule III — Real Estate and Accumulated Depreciation, together with the reports of KPMG LLP, independent registered public accounting firm, are included under Item 15 of this report and are incorporated herein by reference.

Selected unaudited quarterly financial data are [added: voluntarily] presented in Note 19 of the Consolidated Financial Statements.

Controls and Procedures [removed: (The Parent)][added: (Prologis, Inc.)]

Prologis, Inc. carried out an evaluation under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934 (the “Exchange Act”)) at December 31, [removed: 2019.][added: 2020.]

[removed: Based on this evaluation, the Chief Executive] Officer and the Chief Financial Officer have concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms.

Subsequent to December 31, [removed: 2019,] [added: 2020,] there were no significant changes in the internal controls or in other factors that could significantly affect these controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

There has been no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that occurred during the quarter ended December 31, [removed: 2019,] [added: 2020,] that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

[removed: Management’s] [added: Management’s] Annual Report on Internal Control over Financial [removed: Reporting][added: Reporting]

Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the internal control over financial reporting was conducted at December 31, [removed: 2019,] [added: 2020,] based on the criteria described in “Internal Control — Integrated Framework” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, management determined that, at December 31, [removed: 2019,] [added: 2020,] the internal control over financial reporting was effective.

Our internal control over financial reporting at December 31, [removed: 2019,] [added: 2020,] has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their attestation [removed: report] [added: report,] which is included herein.

[removed: The internal control over financial reporting is a process] designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

Controls and Procedures [removed: (The OP)][added: (Prologis, L.P.)]

Prologis, L.P. carried out an evaluation under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) at December 31, [removed: 2019.][added: 2020.]

Subsequent to December 31, [removed: 2019,] [added: 2020,] there were no significant changes in the internal controls or in other factors that could significantly affect these controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

There has been no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that occurred during the quarter ended December 31, [removed: 2019,] [added: 2020,] that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the internal control over financial reporting was conducted at December 31, [removed: 2019,] [added: 2020,] based on the criteria described in “Internal Control — Integrated Framework” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, management determined that, at December 31, [removed: 2019,] [added: 2020,] the internal control over financial reporting was effective.

Based on this evaluation, the Chief Executive

The internal control over financial reporting is a process

[removed: PART III][added: PART III]

The information required by this item is incorporated herein by reference to, including relevant sections in our [removed: 2020] [added: 2021] Proxy Statement, under the captions entitled Board of Directors and Corporate Governance; Executive Officers; Executive Compensation; Director Compensation; Security Ownership; Equity Compensation Plans and Additional Information or will be provided in an amendment filed on Form 10-K/A.

The information required by this item is incorporated herein by reference to the relevant sections in our [removed: 2020] [added: 2021] Proxy Statement, under the captions entitled Board of Directors and Corporate Governance; Executive Officers; Executive Compensation and Director Compensation or will be provided in an amendment filed on Form 10-K/A.

The information required by this item is incorporated herein by reference to the relevant sections in our [removed: 2020] [added: 2021] Proxy Statement, under the captions entitled Security Ownership and Equity Compensation Plans or will be provided in an amendment filed on Form 10-K/A.

The information required by this item is incorporated herein by reference to the relevant sections in our [removed: 2020] [added: 2021] Proxy Statement, under the caption entitled Board of Directors and Corporate Governance or will be provided in an amendment filed on Form 10-K/A.

The information required by this item is incorporated herein by reference to the relevant sections in our [removed: 2020] [added: 2021] Proxy Statement, under the caption entitled Audit Matters or will be provided in an amendment filed on Form 10-K/A.

See Index to the Consolidated Financial Statements and Schedule III on page [removed: 46] [added: 48] of this report, which is incorporated herein by reference.

(b) Exhibits: The Exhibits required by Item 601 of Regulation S-K are listed in the Index to the Exhibits on pages [removed: 98] [added: 103] to [removed: 105] [added: 112] of this report, which is incorporated herein by reference.

(c) Financial Statements: See Index to the Consolidated Financial Statements and Schedule III on page [removed: 46] [added: 48] of this report, which is incorporated by reference.

[removed: INDEX] [added: INDEX] TO THE CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE [removed: III][added: III]

| [Reports of Independent Registered Public Accounting Firm](#Report_1) | [removed: 47] [added: 49] |

| [Consolidated Balance Sheets](#B_S_1) | [removed: 50] [added: 52] |

| [Consolidated Statements of Income](#S_O_1) | [removed: 51] [added: 53] |

| [Consolidated Statements of Comprehensive Income](#S_C_I_1) | [removed: 52] [added: 54] |

| [Consolidated Statements of Equity](#S_E_1) | [removed: 53] [added: 55] |

| [Consolidated Statements of Cash Flows](#S_C_F_1) | [removed: 54] [added: 56] |

| [Consolidated Balance Sheets](#B_S_2) | [removed: 55] [added: 57] |

| [Consolidated Statements of Income](#S_O_2) | [removed: 56] [added: 58] |

| [Consolidated Statements of Comprehensive Income](#S_C_I_2) | [removed: 57] [added: 59] |

| [Consolidated Statements of Capital](#S_C_2) | [removed: 58] [added: 60] |

| [Consolidated Statements of Cash Flows](#S_C_F_2) | [removed: 59] [added: 61] |

| [Notes to the Consolidated Financial Statements](#NOTES_TO_CONSOLIDATED_FINANCIAL_STATEMEN) | [removed: 60] [added: 62] |

| [Note 1. Description of the Business](#NoteOne) | [removed: 60] [added: 62] |

| [Note 2. Summary of Significant Accounting Policies](#NoteTwo) | [removed: 60] [added: 62] |

| [Note 4. Real Estate](#NoteFour) | [removed: 68] [added: 71] |

| [Note 5. Unconsolidated Entities](#NoteFive) | [removed: 70] [added: 73] |

| [Note 6. Assets Held for Sale or Contribution](#NoteSix) | [removed: 73] [added: 76] |

| [Note 7. Other Assets and Other Liabilities](#NoteEight) | [removed: 73] [added: 76] |

| [Note 8. Debt](#NoteNine) | [removed: 74] [added: 77] |

| [Note 9. Stockholders' Equity of Prologis, Inc.](#NoteTen) | [removed: 77] [added: 81] |

| [Note 10. Partners' Capital of Prologis, L.P.](#NoteEleven) | [removed: 78] [added: 82] |

| [Note 11. Noncontrolling Interests](#NoteTwelve) | [removed: 79] [added: 82] |

| [Note 12. Long-Term Compensation](#NoteThirteen) | [removed: 79] [added: 83] |

| [Note 13. Income Taxes](#NoteFourteen) | [removed: 82] [added: 86] |

| [Note 14. Earnings Per Common Share or Unit](#EPS) | [removed: 84] [added: 89] |

| [Note 15. Financial Instruments and Fair Value Measurements](#NoteSixteen) | [removed: 85] [added: 90] |

| [Note 16. Commitments and Contingencies](#NoteSeventeen) | [removed: 88] [added: 93] |

| [Note 17. Business Segments](#NoteEighteen) | [removed: 89] [added: 94] |

| [Note 18. Supplemental Cash Flow Information](#NoteNineteen) | [removed: 91] [added: 96] |

| [Note 19. Selected Quarterly Financial Data (Unaudited)](#NoteTwenty) | [removed: 93] [added: 98] |

| [Schedule III — Real Estate and Accumulated Depreciation](#SCHEDULE_III_REAL_ESTATE_ACCUMULATED_DEP) | [removed: 95] [added: 100] |

We have audited the accompanying consolidated balance sheets of Prologis, Inc. and subsidiaries (the Company) as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, [removed: 2019,] [added: 2020,] and the related notes and financial statement schedule III (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, [removed: 2019,] [added: 2020,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in *Internal Control – Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 10, [removed: 2020] [added: 2021] expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

As discussed in [removed: Note] [added: Notes] 2 [added: and 4] to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Codification Topic 842, *Leases*.

These consolidated financial statements are the responsibility of the [removed: Company’s] [added: Operating Partnership’s] management.

Critical Audit [removed: Matter][added: Matters]

The critical audit [removed: matter] [added: matters] communicated below [removed: is a matter] [added: are matters] arising from the current period audit of the consolidated financial statements that [removed: was] [added: were] communicated or required to be communicated to the audit committee and that: (1) [removed: relates] [added: relate] to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex [removed: judgment.][added: judgments.]

The communication of [removed: a] critical audit [removed: matter] [added: matters] does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit [removed: matter] [added: matters] below, providing [removed: a] separate [removed: opinion] [added: opinions] on the critical audit [removed: matter] [added: matters] or on the accounts or disclosures to which [removed: it relates.][added: they relate.]

| [Note 3. Acquisitions](#NoteThree) | 69 |

Liberty Transaction

As discussed in Note 3 to the consolidated financial statements, on February 4, 2020 Prologis, Inc. and Prologis, L.P. acquired Liberty Property Trust and Liberty Property Limited Partnership (collectively the “Liberty Transaction”) for $13.0 billion and the transaction was accounted for as an asset acquisition.

In asset acquisitions, the Company measures the real estate assets acquired based on their cost or total consideration exchanged and any excess consideration is allocated to the real estate properties, excluding those identified as held for sale, on a relative fair value basis.

The components of the acquisition include an initial allocation to investments in real estate properties acquired based on fair value and an initial allocation of that fair value to buildings and land.

We identified the evaluation of the fair value allocated to investments in real estate properties acquired, including the allocation of the property fair value to land and building, in the Liberty Transaction as a critical audit matter.

Evaluating the fair value amounts estimated by the Company in the allocation, which have measurement uncertainty, required specialized skill and knowledge.

Specifically, testing significant assumptions of market rents and capitalization rates in relation to investments in real estate and testing the allocation of property fair value to land and building.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s fair value estimation process for investments in real estate properties, land and building.

This included controls related to the determination of amounts allocated to land and building and significant assumptions used to estimate the fair value of investments in real estate properties.

For a selection of investments in real estate properties we involved valuation professionals with specialized skills and knowledge, who assisted in 1) comparing the Company’s determination of the fair value of investments in real estate properties to sales prices from available property sales, 2) comparing the Company’s significant assumptions used in the determination of the fair value of investments in real estate properties to available leasing information, industry research publications and inquiries of market participants, 3) comparing the Company’s determination of the fair value of land to sales prices from available land sales and 4) comparing the Company’s determination of fair value of building to developed ranges of estimates based on market data, such as industry guides used for developing replacement building values.

February 10, 2021

The Operating Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Operating Partnership’s internal control over financial reporting.

Accordingly, we express no such opinion.

Liberty Transaction

As discussed in Note 3 to the consolidated financial statements, on February 4, 2020 Prologis, Inc. and Prologis, L.P. acquired Liberty Property Trust and Liberty Property Limited Partnership (collectively the “Liberty Transaction”) for $13.0 billion and the transaction was accounted for as an asset acquisition.

In asset acquisitions, the Operating Partnership measures the real estate assets acquired based on their cost or total consideration exchanged and any excess consideration is allocated to the real estate properties, excluding those identified as held for sale, on a relative fair value basis.

The components of the acquisition include an initial allocation to investments in real estate properties acquired based on fair value and an initial allocation of that fair value to buildings and land.

We identified the evaluation of the fair value allocated to investments in real estate properties acquired, including the allocation of the property fair value to land and building, in the Liberty Transaction as a critical audit matter.

Evaluating the fair value amounts estimated by the Operating Partnership in the allocation, which have measurement uncertainty, required specialized skill and knowledge.

Specifically, testing significant assumptions of market rents and capitalization rates in relation to investments in real estate and testing the allocation of property fair value to land and building.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Operating Partnership’s fair value estimation process for investments in real estate properties, land and building.

This included controls related to the determination of amounts allocated to land and building and significant assumptions used to estimate the fair value of investments in real estate properties.

For a selection of investments in real estate properties we involved valuation professionals with specialized skills and knowledge, who assisted in 1) comparing the Operating Partnership’s determination of the fair value of investments in real estate properties to sales prices from available property sales, 2) comparing the Operating Partnership’s significant assumptions used in the determination of the fair value of investments in real estate properties to available leasing information, industry research publications and inquiries of market participants, 3) comparing the Operating Partnership’s determination of the fair value of land to sales prices from available land sales and 4) comparing the Operating Partnership’s determination of fair value of building to developed ranges of estimates based on market data, such as industry guides used for developing replacement building values.

The following are the primary procedures we performed to address this critical audit matter.

February 10, 2021

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

February 10, 2021

| Consolidated net earnings | | \- | | | | \- | | | | \- | | | | \- | | | | \- | | | | 1,481,814 | | | | 134,816 | | | | 1,616,630 | |

| Effect of equity compensation plans | | \- | | | | 690 | | | | 7 | | | | 27,745 | | | | \- | | | | \- | | | | 82,233 | | | | 109,985 | |

| Liberty Transaction, net of issuance costs | | \- | | | | 106,723 | | | | 1,067 | | | | 9,801,373 | | | | \- | | | | \- | | | | 211,086 | | | | 10,013,526 | |

| [Note 3. DCT Transaction](#NoteThreeDCT) | 67 |

| [Note 20. Subsequent Events](#NoteTwentyOne) | 94 |

February 10, 2020

February 10, 2020

We have audited Prologis, Inc.’s and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2019, based on criteria established in *Internal Control – Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in *Internal Control – Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes and financial statement schedule III (collectively, the consolidated financial statements), and our report dated February 10, 2020 expressed an unqualified opinion on those consolidated financial statements.

February 10, 2020

| Balance at January 1, 2017 | $ | 78,235 | | | | 528,671 | | | $ | 5,287 | | | $ | 19,455,039 | | | $ | (937,473 | ) | | $ | (3,610,007 | ) | | $ | 3,467,059 | | | $ | 18,458,140 | |

| Consolidated net earnings | | \- | | | | \- | | | | \- | | | | \- | | | | \- | | | | 1,652,325 | | | | 108,634 | | | | 1,760,959 | |

| Effect of equity compensation plans | | \- | | | | 2,000 | | | | 20 | | | | 74,506 | | | | \- | | | | \- | | | | 41,446 | | | | 115,972 | |

| Capital contributions | | \- | | | | \- | | | | \- | | | | \- | | | | \- | | | | \- | | | | 254,214 | | | | 254,214 | |

| Purchase of noncontrolling interests | | \- | | | | \- | | | | \- | | | | (202,040 | ) | | | \- | | | | \- | | | | (611,807 | ) | | | (813,847 | ) |

| Conversion of noncontrolling interests | | \- | | | | 1,515 | | | | 15 | | | | 47,711 | | | | \- | | | | \- | | | | (47,726 | ) | | | \- | |

| Foreign currency translation gains, net | | \- | | | | \- | | | | \- | | | | \- | | | | 13,810 | | | | \- | | | | 49,645 | | | | 63,455 | |

| Unrealized gains on derivative contracts, net | | \- | | | | \- | | | | \- | | | | \- | | | | 22,005 | | | | \- | | | | 586 | | | | 22,591 | |

| Dividends ($1.76 per common share) and other distributions | | \- | | | | \- | | | | \- | | | | (66 | ) | | | \- | | | | (942,884 | ) | | | (199,611 | ) | | | (1,142,561 | ) |

| Acquisition of a controlling interest in unconsolidated entities, net of cash received | | | \- | | | | \- | | | | (374,605 | ) |

| Repurchase of preferred stock | | | \- | | | | \- | | | | (13,182 | ) |

| Balance at January 1, 2017 | | 1,565 | | | $ | 78,235 | | | | 528,671 | | | $ | 14,912,846 | | | | 5,323 | | | $ | 150,173 | | | | 8,894 | | | $ | 244,417 | | | $ | 3,072,469 | | | $ | 18,458,140 | |

| Consolidated net earnings | | \- | | | | \- | | | | \- | | | | 1,652,325 | | | | \- | | | | 18,372 | | | | \- | | | | 26,642 | | | | 63,620 | | | | 1,760,959 | |

| Effect of equity compensation plans | | \- | | | | \- | | | | 2,000 | | | | 74,526 | | | | 1,386 | | | | 41,446 | | | | \- | | | | \- | | | | \- | | | | 115,972 | |

| Capital contributions | | \- | | | | \- | | | | \- | | | | \- | | | | \- | | | | \- | | | | \- | | | | \- | | | | 254,214 | | | | 254,214 | |

| Repurchase of preferred units | | (186 | ) | | | (9,287 | ) | | | \- | | | | (3,895 | ) | | | \- | | | | \- | | | | \- | | | | \- | | | | \- | | | | (13,182 | ) |

| Purchase of noncontrolling interests | | \- | | | | \- | | | | \- | | | | (202,040 | ) | | | \- | | | | \- | | | | \- | | | | \- | | | | (587,976 | ) | | | (790,016 | ) |

| Redemption of limited partnership units | | \- | | | | \- | | | | \- | | | | \- | | | | (369 | ) | | | (23,831 | ) | | | \- | | | | \- | | | | \- | | | | (23,831 | ) |

| Conversion of limited partners units | | \- | | | | \- | | | | 1,515 | | | | 47,726 | | | | (684 | ) | | | (18,753 | ) | | | \- | | | | \- | | | | (28,973 | ) | | | \- | |

| Foreign currency translation gains, net | | \- | | | | \- | | | | \- | | | | 13,810 | | | | \- | | | | 146 | | | | \- | | | | 221 | | | | 49,278 | | | | 63,455 | |

| Unrealized gains on derivative contracts, net | | \- | | | | \- | | | | \- | | | | 22,005 | | | | \- | | | | 234 | | | | \- | | | | 352 | | | | \- | | | | 22,591 | |

| Reallocation of capital | | \- | | | | \- | | | | \- | | | | (12,143 | ) | | | \- | | | | 11,829 | | | | \- | | | | 314 | | | | \- | | | | \- | |

| Distributions ($1.76 per common unit) and other | | \- | | | | \- | | | | \- | | | | (942,950 | ) | | | \- | | | | (14,215 | ) | | | \- | | | | (23,006 | ) | | | (162,390 | ) | | | (1,142,561 | ) |

| Acquisition of a controlling interest in unconsolidated entities, net of cash received | | | \- | | | | \- | | | | (374,605 | ) |

| Cash and cash equivalents, beginning of year | | | 343,856 | | | | 447,046 | | | | 807,316 | |

| Cash and cash equivalents, end of year | | $ | 1,088,855 | | | $ | 343,856 | | | $ | 447,046 | |

Reclassifications.

Upon adoption of the new lease standard, as detailed below, rental recoveries for 2017 and 2018 have been reclassified to *Rental Revenues* in the Consolidated Statements of Income to conform to the 2019 financial statement presentation.

sections throughout the Consolidated Financial Statements, different assumptions and estimates could materially impact our reported results.

Capitalized leasing costs are

Generally, we borrow in the functional currency of our consolidated subsidiaries.

and the related earnings.