Prologis (PLD) 10-K risk factor changes: FY2022 vs FY2021

We conduct a significant portion of our business and employ a substantial number of people outside of the U.S. During [removed: 2021,] [added: 2022,] we generated approximately [removed: $620 million] [added: $1.0 billion] or [removed: 13.0%] [added: 17.3%] of our 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:

| • | local businesses and cultural factors that differ from our [removed: usual] [added: domestic] standards and practices; |

| • | volatility in currencies and currency restrictions, which may prevent the [removed: transfer] [added: availability] of capital [removed: and] [added: or the transfer of] profits to the U.S.; |

| • | the impact of regional or country-specific business [removed: cycles] [added: cycles, military conflicts] and economic instability, including government shutdowns and withdrawals from the European Union or other international trade alliances or agreements; |

At December 31, [removed: 2021,] [added: 2022,] approximately [removed: $9.1] [added: $10.2] billion or [removed: 15.6%] [added: 11.6%] of our total consolidated assets were invested in a currency other than the U.S. dollar, principally the British pound sterling, Canadian dollar, euro and Japanese yen.

For the year ended December 31, [removed: 2021, $422] [added: 2022, $762.4] million or [removed: 12.1%] [added: 17.2%] of our total consolidated segment NOI was denominated in a currency other than the U.S. dollar.

At December 31, [removed: 2021, 30.7%] [added: 2022, 30.3%] of our consolidated operating properties or [removed: $13.8] [added: $21.0] 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), which represented [removed: 25.9%] [added: 23.6%] of the aggregate square footage of our operating properties and 33.0% of our consolidated operating property NOI.

Of these markets, no single market contributed more than 10% of our total [removed: consolidated investment before depreciation in operating properties.]

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

[removed: Our] [added: Our] customers may be [removed: unable to] [added: unable to] meet their lease [removed: obligations or] [added: obligations or] we may be unable to lease vacant space or renew leases or re-lease space on favorable terms as leases [removed: expire.][added: expire.]

At December 31, [removed: 2021,] [added: 2022,] our top 10 customers accounted for [removed: 16.7%] [added: 16.4%] of our consolidated NER and [removed: 14.0%] [added: 14.4%] of our O&M NER.

When we acquire properties, we may face risks associated with [added: entering] a [added: new market such as a] lack of market knowledge or understanding of the local economy, forging new business relationships in the area and unfamiliarity with local government and permitting procedures.

| • | we may [removed: have] [added: incur higher] construction [removed: costs] [added: costs, due primarily to this inflationary environment,] or additional [removed: environmental regulation] costs [added: related to regulation] that exceed our estimates and projects may not be completed, delivered or stabilized as planned due to defects or other issues; |

At December 31, [removed: 2021,] [added: 2022,] we had investments in co-investment ventures, both public and private, that owned [removed: operating properties] [added: real estate] with a gross book value of approximately [removed: $54] [added: $59.6] billion.

| • | 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 invest in or manage the assets underlying such relationships resulting in [added: a decrease in our assets under management and a reduction in fee revenues. This may also require us to acquire the properties in order to maintain an investment in the portfolio; and] |

[removed: In addition, third parties may sue the owner or] operator of a site for damages based on personal injury, property damage or other costs, including investigation and clean-up costs, resulting from the environmental contamination.

At December 31, [removed: 2021,] [added: 2022,] our credit ratings were A3 from Moody’s with a stable outlook and [removed: A-] [added: A] from S&P with a [removed: positive] [added: stable] outlook.

[removed: These short-term] borrowing needs could result from differences in timing between the actual receipt of cash and inclusion of income for federal income tax purposes, or the effect of nondeductible capital expenditures, the creation of reserves or required debt or amortization payments.

See Item [removed: 7A.][added: 2.]

Historically, we have satisfied these distribution requirements by making cash distributions to our stockholders, but we may choose to satisfy these requirements by making distributions of cash or [removed: other property, including, in limited circumstances, our own stock.]

Our business may be materially and adversely affected by the impact of [removed: the] global [removed: pandemic of COVID-19.][added: pandemics.]

[removed: Given the ongoing and dynamic nature of these circumstances, we] [added: We] cannot predict the extent to which [removed: the continuation of the COVID-19 pandemic] [added: global pandemics] may impact our business and operating results and that of our co-investment ventures, but [removed: its] [added: their] impact may include the following:

Our logistics facilities [added: and the global supply chain] may be exposed to catastrophic weather events, such as severe storms, fires or floods.

We may [added: also] be adversely impacted [removed: as a real estate developer in the future] by [added: transition risks, such as] potential impacts to the supply chain [added: as a real estate developer] or [added: changes in laws and regulations, such as] stricter energy efficiency standards or greenhouse gas regulations for the commercial building sectors.

consolidated investment before depreciation in operating properties, with the exception of New Jersey/New York City.

| • | our partners may seek to redeem their investment, and may do so simultaneously, causing the venture to seek capital to satisfy these requests on less than optimal terms; |

In addition, third parties may sue the owner or

Properties for more information on the markets above exposed to seismic activities.

These short-term

other property, including, in limited circumstances, our own stock.

| --- | --- |

| • | potentially adverse tax consequences; |

| | a decrease in our assets under management and a reduction in fee revenues. This may also require us to acquire the properties in order to maintain an investment in the portfolio; and |

Transition to an alternative reference rate due to the cessation of the London Inter-bank Offered Rate (“LIBOR”) could have a negative impact on our required debt payments and the value of our related debt and derivative financial instruments.

In March 2021, the Financial Conduct Authority (“FCA”) formally announced that the publication of LIBOR was ending and confirmed that USD LIBOR-indexed rates would cease to be published after June 30, 2023.

Certain interbank offered rates (“IBOR”) ceased on December 31, 2021.

For discussion on the transition of these rates see Note 2 to the Consolidated Financial Statements in Item 8.

Financial Statements and Supplementary Data.

The Federal Reserve Board and the Federal Reserve Bank of New York identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for USD LIBOR for debt and derivative financial instruments.

This extended cessation date for USD LIBOR-indexed rates 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.

At December 31, 2021, only the available USD commitments on our global senior credit facilities were indexed to USD LIBOR.

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

Our global senior credit facility agreements contain provisions that reference a comparable or successor rate to the extent USD LIBOR rates are no longer available and no mandatory prepayment or redemption provisions would be triggered in that instance.

We anticipate managing the transition from USD LIBOR to SOFR using the language set out in our agreements and through potentially modifying our debt and derivative instruments, however future market conditions may not allow immediate implementation of desired modifications and we may incur significant associated costs in doing so.

We will continue to monitor and evaluate the potential impact on our debt payments and value of our related debt and derivative financial instruments.

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 co-investment ventures, and our customers for the long-term continues to be uncertain.

A discussion regarding our financial condition and results of operations for [removed: 2021] [added: 2022] compared to [removed: 2020] [added: 2021] is presented below.

Information on [removed: 2019] [added: 2020] is included in graphs only to show year over year trends in our results of operations and operating metrics.

Our financial condition for [removed: 2019,] [added: 2020,] results of operations for [removed: 2019 and] 2020 [added: and 2021] compared to [removed: 2019] [added: 2020] and details on the [removed: IPT Transaction] [added: acquisitions of Industrial Property Trust Inc. (“IPT” or the “IPT Transaction”)] and [removed: LPT Transaction] [added: Liberty Property Trust and Liberty Property Limited Partnership (“Liberty” or the “Liberty Transaction”)] referenced throughout this document can be found under Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations, which is incorporated by reference herein to our Annual Report on [Form [removed: 10-K](https://www.sec.gov/ix?doc=/Archives/edgar/data/1045609/000156459021005312/pld-10k_20201231.htm)] [added: 10-K](https://www.sec.gov/ix?doc=/Archives/edgar/data/1045609/000156459022004436/pld-10k_20211231.htm)] for the fiscal year ended December 31, [removed: 2020,] [added: 2021,] filed with the SEC on February [removed: 11, 2021,] [added: 9, 2022,] and is available on the SEC’s website at www.sec.gov and our Investor Relations website at www.ir.prologis.com.

[added: | • |] We generated net proceeds of [removed: $5.2] [added: $2.7] billion and realized net gains of [removed: $1.6] [added: $1.2] billion, principally from the contribution of properties to our unconsolidated co-investment ventures in [removed: Japan,] Europe and [removed: the U.S.] [added: Japan] and dispositions [added: of non-strategic assets] to third [removed: parties.][added: parties, primarily in the U.S. |]

[added: | • |] We earned promotes aggregating [removed: $98] [added: $505] million [removed: ($43] [added: ($386] million net of related [added: strategic capital] expenses), primarily during the [removed: fourth] [added: third] quarter of [removed: 2021] [added: 2022] from [removed: one of our unconsolidated co-investment ventures] [added: the third-party investors] in [added: PELF in] Europe. [added: |]

| | Issuance Date | | Borrowing Currency | | | | USD (1) | | | | Interest Rate [removed: (2)] | | | | [removed: Term (3)] [added: Years] | | | | Maturity Dates |

[added: | • |] At December 31, [removed: 2021,] [added: 2022,] we had total available liquidity of [removed: $5.0] [added: $4.1] billion, [removed: principally due to] [added: with] aggregate availability under our credit facilities of [removed: $4.4] [added: $3.9] billion and unrestricted cash balances of [removed: $556] [added: $278] million. [added: |]

We evaluate our business operations based on the NOI of our two operating segments: Real Estate [added: (Rental] Operations and [added: Development) and] Strategic Capital.

Below is [added: our NOI by segment per our Consolidated Financial Statements and] a reconciliation of [removed: our] NOI by segment to *Operating Income* per the Consolidated Financial Statements (in [removed: millions).][added: millions):]

| Real Estate [removed: Operations] [added: Segment] – NOI | | [removed: $] | [removed: 3,105] [added: 3,688] | | | [removed: $] | [removed: 2,820] [added: 3,105] | |

| Strategic Capital [removed: –] [added: Segment–] NOI | | | [removed: 384] [added: 736] | | | | [removed: 419] [added: 384] | |

| General and administrative expenses | | | [removed: (294] [added: (331] | ) | | | [removed: (275] [added: (294] | ) |

| Depreciation and amortization expenses | | | [removed: (1,578] [added: (1,813] | ) | | | [removed: (1,562] [added: (1,578] | ) |

| Operating income before gains on real estate transactions, net | | | [removed: 1,617] [added: 2,280] | | | | [removed: 1,402] [added: 1,617] | |

| Gains on dispositions of development properties and land, net | | | [removed: 817] [added: 598] | | | | [removed: 465] [added: 817] | |

| Gains on other dispositions of investments in real estate, net | | | [removed: 773] [added: 589] | | | | [removed: 252] [added: 773] | |

| Operating income | | $ | [removed: 3,207] [added: 3,467] | | | $ | [removed: 2,119] [added: 3,207] | |

[added: |] Real [removed: Estate Operations][added: estate segment: | | | | | | | | |]

We allocate the costs of our property management and leasing functions to the Real Estate [removed: Operations segment] [added: Segment] through *Rental Expenses* [added: and the Strategic Capital Segment through *Strategic Capital Expenses* based on the square footage of the relative portfolios.]

[added: We allocate the costs of our property management] and [added: leasing functions to] the Strategic Capital [removed: segment] [added: Segment] through *Strategic Capital Expenses* [added: and to the Real Estate Segment through *Rental Expenses*] based on the square footage of the relative portfolios.

Below are the components of Real Estate [removed: Operations] [added: Segment] NOI, derived directly from line items in the Consolidated Financial Statements (in millions):

| Rental revenues | | $ | [removed: 4,148] [added: 4,913] | | | $ | [removed: 3,791] [added: 4,148] | |

| Development management and other revenues | | | [removed: 20] [added: 21] | | | | [removed: 11] [added: 20] | |

| Rental expenses | | | [removed: (1,041] [added: (1,206] | ) | | | [removed: (952] [added: (1,041] | ) |

| Other expenses | | | [removed: (22] [added: (40] | ) | | | [removed: (30] [added: (22] | ) |

The change in Real Estate [removed: Operations (“REO”)] [added: Segment (“RES”)] NOI in [removed: 2021] [added: 2022] compared to [removed: 2020] [added: 2021] of approximately [removed: $285] [added: $583] million was impacted by the following activities (in millions):

[removed: ][added: ]

| [removed: (1)] [added: (2)] | During both periods, we experienced positive rental rate growth. Rental rate growth is a combination of higher rental rates 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. Significant rent change during both periods continues to be a key driver in increasing rental income. See below for key metrics on rent change on rollover and [removed: occupancy for the consolidated operating portfolio.] [added: occupancy.] |

| (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: 2020] [added: 2021] through December 31, [removed: 2021.] [added: 2022.] |

[removed: ][added: ]

| (1) | In [removed: 2020,] [added: 2022,] we completed the [removed: Liberty] [added: Duke] Transaction. |

| Number of new development [removed: projects] [added: buildings] during the period | | | [removed: 78] [added: 91] | | | | [removed: 42] [added: 78] | |

| Square feet | | | [removed: 26] [added: 31] | | | | [removed: 14] [added: 26] | |

| TEI | | $ | [removed: 3,478] [added: 4,679] | | | $ | [removed: 1,997] [added: 3,478] | |

| Percentage of build-to-suits based on TEI | | | [removed: 46.2] [added: 39.1] | % | | | [removed: 40.0] [added: 46.2] | % |

| Number of development [removed: projects] [added: buildings] stabilized during the period | | | [removed: 62] [added: 69] | | | | [removed: 66] [added: 62] | |

| Square feet | | | [removed: 19] [added: 22] | | | | [removed: 23] [added: 19] | |

| TEI | | $ | [removed: 2,329] [added: 2,772] | | | $ | [removed: 2,451] [added: 2,329] | |

| Percentage of build-to-suits based on TEI | | | [removed: 42.7] [added: 38.9] | % | | | [removed: 48.9] [added: 42.7] | % |

Summary of 2022

In 2022, our operating results were robust and we ended the year in a solid financial position.

Strong demand and low vacancy in the global logistics markets drove increases in market rents throughout the year, which translated into significant rent change on rollover and same-store growth in our O&M portfolio.

Our O&M operating portfolio occupancy was 98.2% at December 31, 2022 and rent change on leases commenced during 2022 was 48.0%, on a net effective basis, based on our ownership share.

Our 2022 results are representative of the prospects we see for our business despite challenging headwinds from the capital markets, ongoing inflation, steeply rising interest rates and the war and energy crisis in Europe that are all pressuring the global economy.

Due to current market conditions, we expect some decline in asset valuations in 2023 and therefore will continue to be disciplined as we evaluate capital deployment activities, including a focus on build-to-suit developments and a pause on contributions into our open-ended funds in the near term.

We believe we are well-positioned to organically grow revenues given the increase in market rents over the last several years and our high lease mark-to-market.

However, we will be cautious as we manage our business in this uncertain environment.

We completed the following significant activities in 2022, as described in the Notes to the Consolidated Financial Statements:

| • | On October 3, 2022, we completed the Duke Transaction for $23.2 billion through the issuance of equity and assumption of debt. We assumed $4.2 billion of debt with a weighted average stated interest rate of 2.3% and 4.9% at fair value. We paid down the balance of $745 million on Duke’s line of credit subsequent to closing the acquisition. The Duke portfolio was primarily comprised of logistics real estate assets, including 494 industrial operating properties, aggregating 144 million square feet. |

| • | With the overall strengthening of the U.S. dollar against the foreign currencies in which we operate, in 2022 we realized net gains upon settlement of undesignated derivative instruments that offset the negative impact of the translation of our earnings to U.S. dollars. |

| • | In June, we terminated our global senior credit facility (the “2019 Global Facility”) and entered into the 2022 Global Facility with a borrowing capacity of up to $3.0 billion and an extended initial maturity date of June 2026. We also upsized our second global senior credit facility (the “2021 Global Facility”), increasing its borrowing capacity up to $2.0 billion. This resulted in increasing our total borrowing capacity under both facilities to $5.0 billion and modifying the base rate of the aggregate lender commitments in U.S. dollars from the U.S. dollar London Inter-bank Offered Rate to the Secured Overnight Financing Rate. |

| • | At December 31, 2022, we had total senior notes of $19.8 billion, with a weighted average remaining maturity of 10 years and an effective interest rate of 2.3%. In addition to the senior notes assumed in the Duke Transaction, we issued $3.3 billion of senior notes in 2022 (principal in millions): |

| | January | | £ | 60 | | | $ | 81 | | | 2.1% | | | | | 20.0 | | | December 2041 |

| | February (2) | | € | 1,550 | | | $ | 1,768 | | | 1.0% | | | | | 8.5 | | | February 2024 – 2034 |

| | July | | ¥ | 30,965 | | | $ | 227 | | | 1.4% | | | | | 15.5 | | | July 2027 – 2042 |

| | September (2) | | $ | 650 | | | $ | 650 | | | 4.6% | | | | | 10.3 | | | January 2033 |

| | November | | C$ | 500 | | | $ | 362 | | | 5.3% | | | | | 8.2 | | | January 2031 |

| | December | | ¥ | 24,200 | | | $ | 178 | | | 1.8% | | | | | 13.4 | | | December 2027 – 2037 |

| | Total | | | | | | $ | 3,266 | | | 2.3% | | | | | 9.8 | | | |

| | (2) | A portion of the net proceeds from the issuance of these notes were used to finance green projects eligible under our green bond framework. |

On October 6, 2022, we completed an exchange offer and consent solicitation for nine series of Duke’s senior notes for an aggregate amount of $3.4 billion, with $3.2 billion, or 96%, of the aggregate principal amount being validly tendered for exchange.

The validly tendered senior notes were exchanged for notes issued by the OP.

As a result of the consent solicitation, we have no separate remaining financial reporting obligations or financial covenants associated with the senior notes assumed in the Duke Transaction.

All other terms of the assumed Duke senior notes remained substantially the same.

| | | 2022 | | | | 2021 | | |

Real Estate Segment

| | | 2022 | | | | 2021 | | |

| Rental revenues | | $ | 4,913 | | | $ | 4,148 | |

| Development management and other revenues | | | 21 | | | | 20 | |

| Rental expenses | | | (1,206 | ) | | | (1,041 | ) |

| Other expenses | | | (40 | ) | | | (22 | ) |

| Real Estate Segment – NOI | | $ | 3,688 | | | $ | 3,105 | |

| (1) | Acquisition activity is principally due to the Duke Transaction on October 3, 2022. We primarily recognized intangible liabilities for the lower in-place rents, as compared to current market rents, under the acquired leases from Duke. These intangible liabilities are amortized to rental revenues over the remaining lease term, which on average is 64 months. |

| | | 2022 | | | | 2021 | | |

The development portfolio included 15 buildings that were properties under development by Duke and acquired at the time of the acquisition.

Our investment in the development portfolio was $4.2 billion at December 31, 2022 leaving $3.3 billion remaining to be spent.

Strategic Capital Segment

| | | 2022 | | | | 2021 | | |

| Strategic capital revenues | | $ | 1,040 | | | $ | 591 | |

Summary of 2021

Our financial condition and operating results were strong during 2021.

E-commerce continues to grow well above its historical average and demand for space is robust based on our proprietary data.

As demand surges, having the right logistics real estate in the right location is mission critical for our customers, which is evident with our O&M occupancy at 97.7% at December 31, 2021.

Leasing activity accelerated for our portfolio during 2021.

Our outlook for 2022 is equally as promising as we expect increases in market rents and asset valuations to drive our operating results as well as our execution of profitable deployment activities.

In December 2021, UKLV sold its operating properties to our unconsolidated co-investment ventures, PELF and PELP, and its land to us.

We completed the following consolidated financing activities that included the issuance of $2.9 billion and redemption of $1.5 billion of senior notes, with aggregate principal amounts in U.S. dollars.

This resulted in a consolidated weighted average remaining maturity of 10 years and lowered our weighted average effective interest rate to 1.6% at December 31, 2021 (principal in millions):

| | February | | € | 1,350 | | | $ | 1,639 | | | 0.7% | | | | | 14.3 | | | February 2032 – 2041 |

| | February | | $ | 400 | | | $ | 400 | | | 1.6% | | | | | 10.1 | | | March 2031 |

| | June | | ¥ | 65,000 | | | $ | 587 | | | 0.8% | | | | | 15.4 | | | June 2028 – 2061 |

| | December | | £ | 215 | | | $ | 285 | | | 2.0% | | | | | 17.7 | | | December 2033 – 2041 |

| | Total | | | | | | $ | 2,911 | | | 1.0% | | | | | 14.2 | | | |

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

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

| | March | | € | 600 | | | $ | 716 | | | 3.4% | | | | | 3.0 | | | February 2024 |

| | March | | $ | 750 | | | $ | 750 | | | 3.8% | | | | | 4.7 | | | November 2025 |

| | Total | | | | | | $ | 1,466 | | | 3.6% | | | | | 3.8 | | | |

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

| | (2) | The weighted average interest rate represents the fixed or variable interest rates of the related debt at the issuance or redemption date. |

| | (3) | The weighted average term represents the remaining maturity in years on the related debt at the issuance or redemption date. |

In April 2021, we increased our available liquidity by entering into a second global senior credit facility with an available borrowing capacity of $1.0 billion and we terminated the $500 million multi-currency term loan.

Each segment’s NOI is reconciled to line items in the Consolidated Financial Statements as provided in the related discussion below.

| | | 2021 | | | | 2020 | | |

| (2) | One of the drivers of the increase in NOI in 2021, compared to 2020, was the Liberty Transaction on February 4, 2020. In the transaction we acquired 519 industrial operating properties, aggregating 100 million square feet, and increased our consolidated investments in real estate by approximately $13 billion. |

While construction costs increased during 2021, we continue to maintain high margins as a result of lower capitalization rates and higher market rents.

Our current investment in the development portfolio was $2.7 billion and we expect our development activities to increase in 2022.

We allocate the costs of our property management and leasing functions to the Strategic Capital segment through *Strategic Capital Expenses* and to the Real Estate Operations segment through *Rental Expenses* based on the square footage of the relative portfolios.

| | | 2021 | | | | 2020 | | | | 2021 | | | | 2020 | | | | 2021 | | | | 2020 | | | | 2021 | | | | 2020 | | | | 2021 | | | | 2020 | | | |

| Promote revenue (4) | | | 22 | | | | 228 | | | | 13 | | | | 1 | | | | 63 | | | | 5 | | | | \- | | | | 5 | | | | 98 | | | | 239 | | |

For discussion on our long-term incentive plans refer to the proxy statement for our 2021 annual meeting of stockholders.

| | 2021 | | | | | | | | | | | | 2020 | | | | | | | | | | |

| 2020 | | | | | | | | | | | | | | | | | | | | |

| Rental revenues | | $ | 879 | | | $ | 944 | | | $ | 980 | | | $ | 988 | | | $ | 3,791 | |

| Rental expenses | | | (228 | ) | | | (232 | ) | | | (245 | ) | | | (247 | ) | | | (952 | ) |

| Property NOI | | $ | 651 | | | $ | 712 | | | $ | 735 | | | $ | 741 | | | $ | 2,839 | |

Neither our consolidated results nor those of the co-investment ventures, when viewed individually,

Although our debt balances have increased, interest expense decreased in 2021 as compared to 2020 due to our refinancing activities to redeem higher interest rate senior notes before their stated maturities.

As a result of these activities, we lowered the consolidated weighted average effective interest rate on our senior notes from 2.4% on January 1, 2020 to 1.7% on December 31, 2021 while extending the weighted average remaining maturity of our senior notes from 8 to 12 years over the same two-year period.

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: 2021.][added: 2022.]

At December 31, [removed: 2021,] [added: 2022,] 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: 2021, $573] [added: 2022, $975] million or [removed: 12.0%] [added: 16%] 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, euro and Japanese yen, and have an aggregate notional amount of [removed: $1.7] [added: $1.6] billion to mitigate risk associated with the translation of the future earnings of our subsidiaries denominated in these currencies.

[added: Although the impact to net earnings is mitigated through higher] translated U.S. dollar earnings from these currencies, a weakening of the U.S. dollar against these currencies by 10% could result in a [removed: $166] [added: $164] million cash payment on settlement of these contracts.

At December 31, [removed: 2021, $15.9] [added: 2022, $21.1] 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: 2021, $1.9] [added: 2022, $3.3] 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: 2021] [added: 2022] (dollars in millions):

| | [removed: 2022] [added: 2023] | | | | [removed: 2023] [added: 2024] | | | | [removed: 2024] [added: 2025] | | | | [removed: 2025] [added: 2026] | | | | Thereafter | | | | Total | | | | Fair Value | | |

| Senior notes | | [removed: 340] [added: \-] | | | | [removed: \-] [added: 160] | | | | \- | | | | \- | | | | \- | | | | [removed: 340] [added: 160] | | | | [removed: 340] [added: 160] | |

| (1) | At December 31, [removed: 2021,] [added: 2022,] we had one interest rate swap agreement to fix €150 million [removed: ($165] [added: ($156] million) of our floating rate euro senior notes which is included in fixed rate debt. |

| (2) | The weighted average interest rates represent the effective interest rates (including amortization of debt issuance costs and noncash premiums and discounts) at December 31, [removed: 2021] [added: 2022] for the debt [removed: outstanding.] [added: outstanding and include the impact of designated interest rate swaps, which effectively fix the interest rate on certain variable rate debt.] |

At December 31, [removed: 2021,] [added: 2022,] the weighted average effective interest rate on our variable rate debt was [removed: 0.5%.][added: 2.5%, which was calculated using an average balance on our credit facilities throughout the year and our other variable rate debt balances at December 31, 2022.]

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 [removed: $1] [added: $6] million for the year ended December 31, [removed: 2021,] [added: 2022,] which equates to a change in interest rates of [removed: 5] [added: 25] basis points on our average outstanding variable rate debt balances and [removed: less than 1] [added: 2] basis point on our average total debt portfolio balances.

| Fixed rate debt (1) | $ | 29 | | | $ | 255 | | | $ | 176 | | | $ | 1,313 | | | $ | 19,343 | | | $ | 21,116 | | | $ | 17,324 | |

| Weighted average interest rate (2) | | 3.4 | % | | | 1.4 | % | | | 3.1 | % | | | 3.3 | % | | | 2.3 | % | | | 2.3 | % | | | | |

| Credit facilities | $ | \- | | | $ | 487 | | | $ | \- | | | $ | 1,051 | | | $ | \- | | | $ | 1,538 | | | $ | 1,538 | |

| Secured mortgage debt | | 4 | | | | \- | | | | 10 | | | | 64 | | | | \- | | | | 78 | | | | 79 | |

| Term loans | | \- | | | | \- | | | | 721 | | | | 645 | | | | 190 | | | | 1,556 | | | | 1,555 | |

| Total variable rate debt | $ | 4 | | | $ | 647 | | | $ | 731 | | | $ | 1,760 | | | $ | 190 | | | $ | 3,332 | | | $ | 3,332 | |

Although the impact to net earnings is mitigated through higher

| Fixed rate debt (1) | $ | 646 | | | $ | 36 | | | $ | 136 | | | $ | 188 | | | $ | 14,858 | | | $ | 15,864 | | | $ | 15,995 | |

| Weighted average interest rate (2) | | \-0.1 | % | | | 4.4 | % | | | 7.6 | % | | | 3.1 | % | | | 1.7 | % | | | 1.7 | % | | | | |

| Credit facilities | $ | \- | | | $ | 266 | | | $ | 225 | | | $ | \- | | | $ | \- | | | $ | 491 | | | $ | 491 | |

| Term loans | | \- | | | | 134 | | | | \- | | | | \- | | | | 956 | | | | 1,090 | | | | 1,090 | |

| Total variable rate debt | $ | 340 | | | $ | 400 | | | $ | 225 | | | $ | \- | | | $ | 956 | | | $ | 1,921 | | | $ | 1,921 | |

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

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

We make operating decisions based on our total O&M [removed: portfolio,] [added: portfolio] as we manage the properties without regard to their ownership.

Included in our discussion below are references to funds from operations (“FFO”) and net operating income (“NOI”), neither of which are [removed: U.S.] [added: United States (“U.S.”)] generally accepted accounting principles (“GAAP”).

[removed: We are] [added: Prologis is] the global leader in logistics real estate with a focus on high-barrier, [removed: high growth] [added: high-growth] markets.

Our portfolio focuses on the world’s most vibrant centers of commerce and our scale across these locations allows us to [removed: respond to] [added: better serve] our customers’ diverse logistics requirements.

Our teams actively manage our portfolio [removed: to] [added: and] provide comprehensive real estate services, including leasing, property management, development, acquisitions and dispositions.

We believe this demand [removed: surge] is driven by three primary factors: (i) [removed: overall consumption growth; (ii)] customer supply chains [removed: still] re-positioning to address the significant shift to [removed: e-commerce, as well as preparing for higher growth] [added: e-commerce] and [added: heightened] service expectations; [added: (ii) overall consumption] and [added: household growth; and] (iii) our customers’ desire for more supply chain resiliency.

[removed: We continue to] [added: Through Prologis Essentials, we] focus on [removed: differentiated] [added: innovative] ways to meet our customers’ [removed: needs through our Prologis Essentials business.][added: operations, energy and sustainability, mobility and workforce needs.]

This includes new development and redevelopment of buildings to specifications that align with leading sustainable building standards and [added: the] implementation of energy solutions such as [added: onsite] solar [removed: power and] [added: generation, cool roofs,] LED [removed: lighting.][added: lighting, EV charging stations, waste diversion, recycling and xeriscaping.]

At December 31, [removed: 2021,] [added: 2022,] we owned or had investments in, on a wholly-owned basis or through [added: co-investment] ventures, properties and development projects [removed: (based on gross book value and total] expected [removed: investment at completion, respectively) in] [added: to total approximately 1.2 billion square feet across] the following geographies:

[removed: ][added: ]

Throughout this discussion, we reflect amounts in the [removed: United States (“U.S.”)] [added: U.S.] dollar, our reporting currency.

Our business comprises two operating segments: Real Estate [added: (Rental] Operations and [added: Development) and] Strategic Capital.

[removed: ][added: ]

| (1) | NOI from [added: the] Real Estate [removed: Operations] [added: Segment] is calculated directly from our Consolidated Financial Statements as *Rental Revenues* and *Development Management and Other Revenues* less *Rental Expenses* and *Other Expenses.* NOI from [added: the] Strategic Capital [added: Segment] is calculated directly from our Consolidated Financial Statements as *Strategic Capital* *Revenues* less *Strategic Capital* *Expenses.* |

| (2) | A developed property moves into the operating portfolio when it meets our definition of stabilization, which is the earlier of when a property that was developed has been completed for one year, is contributed to a co-investment venture following completion or is 90% occupied. Amounts represent our total expected investment [removed: (“TEI”),] [added: (“TEI”) upon stabilization,] which includes the estimated cost of development or expansion, [added: including] land, construction and leasing costs. |

Real Estate [removed: Operations][added: Segment]

For leases that commenced during [removed: 2021] [added: 2022] within the consolidated operating portfolio, the weighted average lease term was [removed: 62] [added: 69] months.

The primary driver of our revenue [removed: growth] [added: growth, outside of the Duke Transaction,] will be rolling in-place leases to current market rents [removed: as] [added: when] leases [removed: expire.][added: expire, as discussed further below.]

Substantially all of our consolidated rental revenue, NOI and cash flows [added: from rental operations] are generated in the U.S.

Given the scarcity of modern logistics facilities in our target markets, our development business provides the opportunity to build to [added: the requirements of] our [removed: customers’] current and future [removed: requirements and deepen] [added: customers while deepening] our market presence.

We believe we have a competitive advantage due to (i) the strategic locations of our global land bank and redevelopment sites; (ii) the development expertise of our local teams; (iii) the depth of our customer [removed: relationships and] [added: relationships;] (iv) our ability to integrate sustainable design features [removed: and practices, as detailed in our Environmental Stewardship, Social Responsibility and Governance section below,] that result in cost-savings and operational efficiencies for our [removed: customers.][added: customers; and (v) our procurement capabilities that allow us to secure high-demand construction materials at lower cost.]

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

Strategic Capital [added: Segment]

[removed: We capitalize our] [added: The] business [added: is capitalized principally] through private [removed: equity, principally] [added: and public equity of which 95% is either in] perpetual open-ended or long-term ventures, and two publicly traded [removed: vehicles: Nippon] [added: vehicles (Nippon] Prologis REIT, Inc. in Japan and FIBRA Prologis in [removed: Mexico.][added: Mexico).]

This segment produces durable, long-term cash flows and generally contributes 10% to 15% of our recurring consolidated revenues, earnings and [removed: FFO.][added: FFO, all while requiring minimal capital other than our investment in the venture.]

Asset management fees are primarily driven by the [removed: real estate] [added: quarterly] valuation of the [added: real estate properties owned by the] respective ventures.

In certain ventures, we also have the ability to earn revenues through incentive fees (“promotes” or “promote revenues”) periodically during the life of a [added: venture, upon liquidation of a] venture or upon [removed: liquidation] [added: stabilization of individual venture assets] based primarily on the [removed: appreciation] [added: total return] of the [removed: portfolio.][added: investments over certain financial hurdles.]

We plan to [removed: profitably] grow this business [added: and increase revenues] by increasing our assets under management in existing or new ventures.

[removed: Most] [added: The majority] of [removed: the] strategic capital revenues are generated outside the U.S.

We believe [added: that] the quality and scale of our [removed: global] portfolio, our ability to build out [removed: the global] [added: our] land bank, our strategic capital business, the expertise of our team, the depth of our customer relationships and the strength of our balance sheet are differentiators that allow us to drive growth in revenues, NOI, earnings, FFO and cash flows.

[removed: ][added: ]

| • | Rent Growth. We expect rents in our markets to continue to increase due to [removed: the] [added: healthy] demand [removed: for the location and quality of our properties. In addition, due] [added: combined with low vacancy. Due] to strong market rent growth over the last several years, our in-place leases have considerable upside potential to drive future [removed: incremental] organic NOI growth. We estimate that our [removed: net effective] lease mark-to-market is approximately [removed: 36%,] [added: 67% (on a net effective basis),] which represents the growth rate from in-place rents to [added: current] market rents based on our [removed: weighted average ownership] [added: share] of the O&M portfolio at December 31, [removed: 2021.] [added: 2022.] Therefore, even if [added: there was no additional] market rent growth [removed: is flat] in the future, we expect our lease renewals to translate into significant increases in future [removed: rental income, on a consolidated basis or through the earnings we recognize from our unconsolidated co-investment ventures based on our ownership.] [added: income.] We have experienced positive rent change on rollover (comparing the net effective rent (“NER”) of the new lease to the prior lease for the same space) in every quarter since 2013. |

| • | Value Creation from Development. A successful development and redevelopment program requires [removed: maintaining control of] [added: sourcing] well-located land and redevelopment sites [removed: and sourcing a future pipeline] through acquisition opportunities, including our innovative approach with Covered Land Plays, which are income [removed: generating] [added: producing] assets acquired with the intention to redevelop for higher and better use as industrial properties. [removed: The global nature of our] [added: Our investment in the] development [removed: program is a wide landscape of opportunities to pursue based on our judgement of market conditions, opportunities and risks.] [added: portfolio was $4.2 billion at December 31, 2022.] We believe that the carrying value of our [removed: global] land bank is [removed: meaningfully] below its current fair value. [removed: Due] [added: Based on our current estimates, our consolidated land, including options and Covered Land Plays, has the potential] to [added: support] the [removed: strategic] [added: development of $34.2 billion ($39.0 billion on an O&M basis) of TEI of new logistics space. The global] nature of our [removed: global land bank,] development [removed: expertise] [added: program provides a wide landscape] of [added: opportunities to pursue based on] our [removed: teams and strength] [added: judgement] of [removed: our customer relationships, we expect to create value as we build new properties.] [added: market conditions, opportunities and risks.] |

We measure the estimated value creation of a development project as the [removed: margin] [added: stabilized value] above our TEI.

As properties [removed: stabilize,] [added: are completed and leased,] we expect to realize the value creation principally through [added: gains realized through] contributions [added: of these properties] to unconsolidated co-investment ventures and increases in the NOI of the consolidated portfolio.

[removed: ][added: ]

| (1) | [removed: *General and Administrative (“G&A”)] [added: *G&A] Expenses* is a line item in the Consolidated Financial Statements. Adjusted G&A expenses is calculated from our Consolidated Financial Statements as *G&A Expenses* and *Strategic Capital Expenses*, less expenses under the Prologis Promote Plan (“PPP”) and property-level management expenses for the properties owned by the ventures. |

| • | Balance Sheet Strength. [removed: We continue to seek] [added: The Duke Transaction increased the strength] and [removed: execute on opportunities] [added: size of our balance sheet while allowing us] to [removed: refinance debt at historically] [added: maintain our] low [removed: rates. Our financing activities over] [added: leverage. At December 31, 2022,] the [removed: last three years resulted in extending our consolidated] weighted average remaining maturity [removed: from 6 to 10] [added: of our consolidated debt was 9] years and [removed: lowering our] [added: the] weighted average [removed: effective] interest rate [removed: from 2.7% to 1.6% at January 1, 2019] [added: was 2.5%, primarily as a result of our refinancing activities over the last several years. Through our refinancing activities we have substantially addressed all our debt maturities until 2026] and [removed: December 31, 2021, respectively.] [added: have taken advantage of previously low interest rates.] At December 31, [removed: 2021,] [added: 2022,] we had total available liquidity of [removed: $5.0 billion and] [added: $4.1 billion. We] continue to maintain low leverage as a percentage of our real estate investments and our market capitalization. As a result of our low leverage, available liquidity and investment capacity in the co-investment ventures, we have significant capacity to capitalize on [added: opportunistic] value-added [removed: investment opportunities that will translate into future earnings growth.] [added: investments as they arise.] |

Our O&M portfolio includes our consolidated properties as well as properties owned by our unconsolidated co-investment ventures.

We invest significant capital into new logistics properties principally through our

development activity and third-party acquisitions.

The contribution of newly developed properties to our co-investment ventures and the sale of non-strategic properties to third parties allows us to recycle capital into our development and acquisition activities.

While the majority of our properties in the U.S. are wholly owned, we hold a significant ownership interest in properties internationally and in the U.S. through our investments in the co-investment ventures.

Partnering with the world’s largest institutional investors through co-investment ventures allows us to enhance and diversify our real estate returns as well as mitigate our exposure to foreign currency movements.

Logistics supply chains have increased dramatically in importance to our customers and the global economy.

The long-term trends of e-commerce adoption and supply chain resiliency continue to drive the need for increased warehouse space to store and distribute goods.

This demand has translated into meaningful increases in rents and low vacancy.

We believe these forces will keep demand strong for the long-term.

The nature of the services we are providing to our customers is expanding.

The scale of our 1.2 billion square foot portfolio allows us to provide a platform of solutions to address challenges that companies face in global fulfillment today.

Our customer experience teams, proprietary technology and strategic partnerships are foundational to Prologis Essentials and allow us to provide our customers with unique and actionable insights to drive greater efficiency in their operations.

2022 Significant Acquisition

On October 3, 2022, we acquired Duke Realty Corporation and Duke Realty Limited Partnership (collectively “Duke”) through a merger transaction that we refer to as the “Duke Transaction” and is detailed in Note 3 to the Consolidated Financial Statements in Item 8.

Our financial condition and operating results include the Duke properties subsequent to the acquisition date.

The Duke portfolio was primarily comprised of logistics real estate assets, including 494 industrial operating properties, aggregating 144 million square feet and was highly complementary to our U.S. portfolio in terms of product quality, location and growth potential.

There was approximately 15 million square feet of non-strategic industrial operating properties that we do not intend to hold long-term and are classified as other real estate investments.

The portfolio also included properties under development, land for future development and investments in other ventures.

The acquisition expanded our presence in target markets such as Chicago, Dallas, Atlanta, South Florida and Southern California.

The total acquisition price, including transaction costs, was $23.2 billion and was funded through the issuance of equity based on the value of the Prologis, Inc. common stock issued using the closing price on September 30, 2022 and the assumption of debt.

As a result of the closely aligned portfolios and similar business strategy and our ability to scale, we integrated the Duke portfolio while adding minimal property management and general and administrative expenses (“G&A”).

Overview

Rental Operations.

We expect to create value as we build new properties.

| • | Strategic Capital Advantages. We raise capital to support the long-term growth of the co-investment ventures while maintaining our own substantial investments in these vehicles. At December 31, 2022, the gross book value of the operating portfolio held by our eight unconsolidated co-investment ventures was $49.3 billion across 488 million square feet. |

| • | services and solutions offered through Prologis Essentials to assist our customers with their operations, energy and sustainability, mobility and workforce needs; |

Primary categories do not sum to 100% as the difference is attributable to customers that do not clearly fall into a single category.

| 2. Home Depot | | 2.6 | | | | 15 | | | 2. Home Depot | | 1.7 | | | | 17 | |

| 4. UPS | | 1.0 | | | | 6 | | | 4. Geodis | | 1.3 | | | | 17 | |

| 7. NFI Industries | | 0.6 | | | | 3 | | | 7. UPS | | 0.8 | | | | 8 | |

| 10. Pepsi | | 0.5 | | | | 3 | | | 10. Maersk | | 0.6 | | | | 6 | |

| Top 10 Customers | | 16.4 | | | | 86 | | | Top 10 Customers | | 14.4 | | | | 141 | |

| 12. GXO | | 0.5 | | | | 4 | | | 12. Wal-Mart | | 0.5 | | | | 6 | |

| 13. Sycamore Partners (Staples) | | 0.4 | | | | 3 | | | 13. U.S. Government | | 0.5 | | | | 4 | |

| 16. CEVA Logistics | | 0.4 | | | | 3 | | | 16. NFI Industries | | 0.4 | | | | 3 | |

| 17. Uline | | 0.4 | | | | 1 | | | 17. Hitachi | | 0.4 | | | | 4 | |

| 18. Berkshire Hathaway | | 0.4 | | | | 3 | | | 18. XPO Logistics | | 0.4 | | | | 4 | |

| 19. Target | | 0.4 | | | | 2 | | | 19. Nippon Express | | 0.4 | | | | 3 | |

| 20. Office Depot | | 0.4 | | | | 3 | | | 20. ZOZO | | 0.4 | | | | 4 | |

Our property dispositions allow us to recycle capital and contribute to self-funding our development and acquisition activities.

With the broadening of e-commerce adoption driving requirements for increased warehouse space to store inventory, surging customer demand has continued to outpace supply.

With inventory-to-sales ratios below pre-pandemic levels, our customers not only need to restock for this shortfall, but build an additional safety stock.

We believe these forces have placed a premium on speed-to-market and flexibility, driving demand for years to come.

The scale of our 1.0 billion square foot portfolio allows us to help our customers in a multitude of unique ways.

This program includes product and service solutions for our customers’ operations, workforce, energy, transportation and data and analytic needs.

Our integrated suite of solutions allows our customers to benefit from our global scale, strategic partnerships with vendors and local expertise to obtain services and products more efficiently.

We use our proprietary data and analytics to provide our customers actionable insights on everything from inventory, shipping, security, communications management and dock visibility.

Prologis Essentials has a strong sustainability component to its suite of services, which supports our customers’ progress toward their sustainability goals.

As we explore additional ways to deliver revenue-generating sustainability solutions, we created a new senior leadership role in 2021 – chief sustainability and energy officer.

We also are anticipating the introduction of electric vehicle (“EV”) fleets in logistics and are making long-term investments in our portfolio and talent to be well prepared for the future of EV trucking and logistics.

| --- | --- |

Rental.

We are able to maintain strong margins despite rising construction costs, as we experienced in 2021, due to our procurement activities that mitigate a portion of the inflationary increases, as well as rising market rents.

Based on our current estimates, our consolidated land, including options and Covered Land Plays, has the potential to support the development of $22.2 billion ($26.4 billion on an O&M basis) of TEI of new logistics space.

Our current investment in the development portfolio was $2.7 billion and we expect our development activities to increase in 2022.

| • | Strategic Capital Advantages. We continue to successfully raise capital to propel the long-term growth of the co-investment ventures while maintaining our substantial investments in these vehicles. At December 31, 2021, the gross book value of the operating portfolio held by our eight unconsolidated co-investment ventures was $45.3 billion across 456 million square feet. During 2021, the valuations of the real estate portfolios owned by the unconsolidated co-investment ventures increased significantly, resulting in higher asset management fees. We expect that continued market rent growth will result in an increase in the asset valuations of the unconsolidated co-investment ventures, which will drive significant returns to the investors and increase the potential for earning promote revenues over the next couple of years. Our Strategic Capital business generates durable fee streams, with asset management fees marked to fair values each quarter, all while requiring minimal capital other than our investment in the venture. |

| • | long-term relationships with customers served by our customer experience team that allows us to proactively and promptly respond to their needs across our global platform; |

| • | the access our customers have to Prologis Essentials integrated suite of solutions; |

| 2. FedEx | | 2.1 | | | | 7 | | | 2. Geodis | | 1.4 | | | | 15 | |

| 5. Wal-Mart | | 1.0 | | | | 4 | | | 5. Home Depot | | 1.2 | | | | 11 | |

| 7. UPS | | 0.8 | | | | 4 | | | 7. DSV Panalpina | | 0.8 | | | | 7 | |

| Top 10 Customers | | 16.7 | | | | 64 | | | Top 10 Customers | | 14.0 | | | | 116 | |

| 11. Pepsi | | 0.6 | | | | 3 | | | 11. Wal-Mart | | 0.6 | | | | 6 | |

| 12. Office Depot | | 0.5 | | | | 3 | | | 12. U.S. Government | | 0.6 | | | | 3 | |

| 13. Staples | | 0.5 | | | | 3 | | | 13. ZOZO | | 0.5 | | | | 3 | |

| 14. Berkshire Hathaway | | 0.5 | | | | 2 | | | 14. Hitachi | | 0.5 | | | | 4 | |

| 16. Kellogg | | 0.4 | | | | 2 | | | 16. J Sainsburys | | 0.5 | | | | 3 | |

| 18. Mondelez International | | 0.4 | | | | 2 | | | 18. BMW | | 0.4 | | | | 4 | |

| 19. National Distribution Centers | | 0.3 | | | | 1 | | | 19. Maersk | | 0.4 | | | | 3 | |

| 20. Westrock Company | | 0.3 | | | | 1 | | | 20. Ingram Micro | | 0.3 | | | | 4 | |

| 22. Sysco Guest Supply | | 0.3 | | | | 2 | | | 22. Pepsi | | 0.3 | | | | 3 | |

| 23. Lindt & Sprüngli | | 0.3 | | | | 2 | | | 23. Staples | | 0.3 | | | | 4 | |

| 24. Ingram Micro | | 0.3 | | | | 1 | | | 24. Panasonic | | 0.3 | | | | 2 | |

| 25. Iron Mountain | | 0.3 | | | | 1 | | | 25. Mercado Libre | | 0.3 | | | | 3 | |

| Top 25 Customers | | 22.5 | | | | 91 | | | Top 25 Customers | | 20.3 | | | | 171 | |

Employees

We have strong employee engagement throughout all areas of the company, which we regularly measure through employee engagement surveys.

Throughout the COVID-19 pandemic, we have protected our employee’s health and well-being by providing the technology and communication equipment necessary to allow the majority of our employees to work remotely.

Our talented team allows Prologis to deliver on our commitment to our customers and investors.

For the fiscal year ended December 31, [removed: 2021][added: 2022]

[removed: ][added: ]

Based on the closing price of Prologis, Inc.’s common stock on June 30, [removed: 2021,] [added: 2022,] the aggregate market value of the voting common equity held by nonaffiliates of Prologis, Inc. was [removed: $87,997,816,686.][added: $86,814,282,420.]

The number of shares of Prologis, Inc.’s common stock outstanding at February [removed: 7, 2022,] [added: 13, 2023,] was approximately [removed: 740,000,000.][added: 923,429,000.]

Portions of Part III of this report are incorporated by reference to the registrant’s definitive proxy statement for the [removed: 2021] [added: 2022] 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: 2021,] [added: 2022,] of Prologis, Inc. and Prologis, L.P. Unless stated otherwise or the context otherwise requires, references to “Prologis, Inc.” or the “Parent” mean Prologis, Inc. and its consolidated subsidiaries; and references to “Prologis, L.P.” or the “Operating Partnership” or the “OP” mean Prologis, L.P., and its consolidated subsidiaries.

At December 31, [removed: 2021,] [added: 2022,] the Parent owned [removed: 97.32%] [added: a 97.60%] common general partnership interest in the OP and substantially all of the preferred units in the OP.

The remaining [removed: 2.68%] [added: 2.40%] common limited partnership interests are owned by unaffiliated investors and certain current and former directors and officers of the Parent.

| | | [removed: [Environmental Stewardship,] [added: [Environmental,] Social [removed: Responsibility] and Governance](#ESG) | | 11 |

| | | [Insurance Coverage](#INSURANCE) | | [removed: 12] [added: 13] |

| 1A. | | [Risk Factors](#ITEM_1A_RISK_FACTORS) | | [removed: 12] [added: 13] |

| 1B. | | [Unresolved Staff Comments](#ITEM_1B_UNRESOLVED_STAFF_COMMENTS) | | [removed: 21] [added: 22] |

| 2. | | [Properties](#ITEM_2_PROPERTIES) | | [removed: 21] [added: 22] |

| | | [Geographic Distribution](#GEOGRAPHIC) | | [removed: 21] [added: 22] |

| | | [Purchases of Equity Securities](#PURCHASESOFEQUITYSECURITIES) | | [removed: 27] [added: 26] |

| | | [Securities Authorized for Issuance Under Equity Compensation Plans](#SECURITIESAUTHORI) | | [removed: 27] [added: 26] |

| 9B. | | [Other Information](#ITEM_9B_OR_INFORMATION) | | [removed: 46] [added: 47] |

Some of the factors that may affect outcomes and results include, but are not limited to: (i) international, national, regional and local economic and political climates and conditions; (ii) changes in global financial markets, interest rates and foreign currency exchange rates; (iii) increased or unanticipated competition for our properties; (iv) risks associated with acquisitions, dispositions and development of properties, including [removed: increased development costs due to additional regulatory requirements related to climate change;] [added: the integration of the operations of significant real estate portfolios;] (v) maintenance of Real Estate Investment Trust (“REIT”) status, tax structuring and changes in income tax laws and rates; (vi) availability of financing and capital, the levels of debt that we maintain and our credit ratings; (vii) risks related to our investments in our co-investment ventures, including our ability to establish new co-investment ventures; (viii) risks of doing business internationally, including currency risks; (ix) environmental uncertainties, including risks of natural disasters; (x) risks related to [removed: the coronavirus (“COVID-19”) pandemic;] [added: global pandemics;] and (xi) those additional factors discussed under Part I, Item 1A.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

| | | | | | | |

[removed: investment] [added: The O&M portfolio includes the properties we consolidate and the properties owned by our unconsolidated co-investment] ventures reflected at 100% of the amount included in the ventures’ financial statements as calculated on a GAAP basis, not our proportionate share.

Included in the operating property information below for our consolidated operating properties are [removed: 497] [added: 498] 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: 2021,] [added: 2022,] or generated revenue equal to 10% or more of our consolidated total revenues for the year ended December 31, [removed: 2021,] [added: 2022,] with the exception of the Southern California market.

| Baltimore/Washington D.C. | | | [removed: 11] [added: 36] | | | [added: *] | [removed: 1,269] | | | | [removed: 12] [added: 15] | | | [added: *] | [removed: 15] | | | | [removed: 1,667] [added: 80] | |

| Dallas/Ft. Worth | | | [removed: 32] [added: 43] | | | | [removed: 2,281] [added: 3,486] | | | | [removed: 8] [added: \-] | | | | [removed: 39] [added: 50] | | | | [removed: 2,872] [added: 4,080] | |

| New Jersey/New York City | | | [removed: 33] [added: 42] | | | | [removed: 3,869] [added: 7,119] | | | | [removed: 44] [added: 28] | | | | [removed: 41] [added: 51] | | | | [removed: 5,144] [added: 8,492] | |

| San Francisco Bay Area | | | [removed: 20] [added: \-] | | | | [removed: 2,951] [added: \-] | | | | [removed: 9] [added: \-] | | | | [removed: 25] [added: 2] | | | | [removed: 3,611] [added: 314] | |

| Netherlands | | [removed: *] | [added: 15] | | | [added: *] | [removed: 12] | | | [removed: \-] | [added: 9] | | | | [removed: 24] [added: 1] | | | | [removed: 2,261] [added: 82] | |

| Remaining Countries – Europe (8 countries) [removed: (3)] [added: (2)] | | | 2 | | | | [removed: 117] [added: 177] | | | \- | | | | | [removed: 90] [added: 97] | | | | [removed: 7,064] [added: 7,678] | |

| Subtotal Asia | | | [removed: 1] [added: 51] | | | | [removed: 167] [added: 4] | | | | [removed: \-] [added: 51] | | | | [removed: 83] [added: 7] | | | | [removed: 10,440] [added: 988] | |

| Value-added properties [removed: (5)] [added: (4)] | | | [removed: 3] [added: 6] | | | | [removed: 626] [added: 1,061] | | | | \- | | | | [removed: 5] [added: 9] | | | | [removed: 968] [added: 1,631] | |

| Geographies | | Acres | | | | Estimated Build Out Potential (square feet) [removed: (6)] [added: (5)] | | | | Current Investment | | | | Rentable Square Footage Upon Completion | | | | TEI [removed: (7)] [added: (6)] | | |

| Baltimore/Washington D.C. | | | [removed: 41] [added: 13] | | | [removed: *] | [added: 1,700] | | | | [removed: 18] [added: \-] | | | [removed: *] | [added: 17] | | | | [removed: 13] [added: 2,104] | |

| Central PA | | | [removed: 29] [added: \-] | | | [removed: *] | [added: \-] | | | | [removed: 8] [added: \-] | | | [added: *] | [removed: \-] | | | | [removed: \-] [added: 44] | |

| New Jersey/New York City | | | [removed: 18] [added: 194] | | | | [removed: 1] [added: 3] | | | | [removed: 56] [added: 287] | | | * | | | | | [removed: 124] [added: 127] | |

| San Francisco Bay Area | | | [removed: \-] [added: 21] | | | | [removed: \-] [added: 3,185] | | | | \- | | | [removed: *] | [added: 26] | | | | [removed: 42] [added: 3,855] | |

| Seattle | | | [removed: 158] [added: 149] | | | | 2 | | | | [removed: 116] [added: 103] | | | [removed: *] | [added: 1] | | | | [removed: 77] [added: 158] | |

| Brazil | | | 263 | | | | 5 | | | | [removed: 52] [added: 56] | | | | \- | | | | \- | |

| Germany | | | [removed: 26] [added: 1] | | | | [removed: 1] [added: 84] | | | [added: \-] | [removed: 12] | | | | [removed: 1] [added: 31] | | | | [removed: 96] [added: 3,155] | |

| Subtotal Asia | | | [removed: 74] [added: 2] | | | | [removed: 5] [added: 182] | | | | [removed: 92] [added: \-] | | | | [removed: 7] [added: 91] | | | | [removed: 1,127] [added: 9,939] | |

| (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: $10] [added: $184] million of encumbrances related to [added: two properties under development,] one [added: prestabilized property, two other real estate investments and one] land parcel included in the consolidated [removed: land] portfolio. |

| (2) | No remaining market within the U.S. [added: or country within Europe] represented more than 2% of the total gross book value of the consolidated [added: and O&M] operating properties. |

| [removed: (4)] [added: (3)] | 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: 2021,] [added: 2022,] we had investments in real estate properties that were expected to be contributed to our unconsolidated co-investment ventures totaling [removed: $535] [added: $489] million and aggregating 4 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.* |

| [removed: (5)] [added: (4)] | Value-added properties are properties we have either acquired at a discount and believe we could provide greater returns post-stabilization or properties we expect to repurpose to a higher and better use. |

| [removed: (6)] [added: (5)] | Represents the estimated finished square feet available for lease upon completion of a building on existing parcels of land. |

| [removed: (7)] [added: (6)] | TEI is based on current projections and is subject to change. As noted in the table below, our current investment in the development portfolio was [removed: $2.7] [added: $4.2] billion, leaving approximately [removed: $2.0] [added: $3.3] billion of additional required investment. At December 31, [removed: 2021,] [added: 2022,] based on TEI, approximately [removed: 18%] [added: 9%] of the properties in the development portfolio were completed but not yet stabilized, [removed: 71%] [added: 72%] of the properties were expected to be completed before December 31, [removed: 2022,] [added: 2023,] and the remaining properties were expected to be completed before [removed: October 2023.] [added: November 2024.] |

The following table summarizes our investment in consolidated real estate properties at December 31, [removed: 2021] [added: 2022] (in millions):

| Operating properties, excluding assets held for sale or contribution | | $ | [removed: 44,454] [added: 69,039] | |

| Development portfolio, including cost of land | | | [removed: 2,729] [added: 4,212] | |

| Other real estate investments (1) | | | [removed: 3,302] [added: 5,034] | |

| Total consolidated real estate properties | | $ | [removed: 53,005] [added: 81,623] | |

| (1) | Included in other real estate investments were: (i) non-strategic real estate [removed: assets] [added: assets, primarily] acquired [added: in the Duke Transaction,] that we do not intend to operate long-term; (ii) [added: land parcels we own and lease to third parties; (iii) non-industrial] real estate assets that we [added: generally] intend to redevelop into industrial properties; [removed: (iii) land parcels we own] and [removed: lease to third parties; and] (iv) costs associated with potential acquisitions and future development projects, including purchase options on land. |

We generally lease our properties on a long-term basis (the average term for leases commenced, including new leases and renewals, in [removed: 2021] [added: 2022] was [removed: 62] [added: 69] months).

The following table summarizes the lease expirations of our consolidated operating portfolio for leases in place at December 31, [removed: 2021] [added: 2022] (dollars and square feet in millions):

| Month to month | | | [removed: 93] [added: 128] | | | | 3 | | | | | | | | | | | | | |

| (1) | We have signed leases that were due to expire in [removed: 2022,] [added: 2023,] totaling [removed: 31] [added: 24] million square feet in our consolidated portfolio [removed: (5.7%] [added: (3.4%] of total NER). These are excluded from [removed: 2022] [added: 2023] expirations and are reflected at their respective expiration year. |

The following table summarizes our consolidated and unconsolidated co-investment ventures at December 31, [removed: 2021] [added: 2022] (in millions):

| Prologis U.S. Logistics Venture (“USLV”) | | | 77 | | | $ | [removed: 7,927] [added: 8,037] | | | $ | [removed: 12] [added: 4] | | | $ | [removed: 6] [added: 60] | |

| Prologis Targeted U.S. Logistics Fund (“USLF”) | | | [removed: 122] [added: 123] | | | $ | [removed: 12,199] [added: 12,557] | | | $ | \- | | | $ | [removed: 288] [added: 200] | |

| FIBRA Prologis | | | [removed: 43] [added: 44] | | | | [removed: 2,763] [added: 2,916] | | | | \- | | | | [removed: 27] [added: \-] | |

| Atlanta | | | 41 | | | $ | 3,289 | | | $ | \- | | | | 47 | | | $ | 3,764 | |

| Central PA | | | 18 | | | | 1,489 | | | | \- | | | | 19 | | | | 1,609 | |

| Central Valley | | | 21 | | | | 1,716 | | | | \- | | | | 22 | | | | 1,856 | |

| Chicago | | | 53 | | | | 4,843 | | | | \- | | | | 70 | | | | 6,354 | |

| Houston | | | 30 | | | | 3,125 | | | | \- | | | | 36 | | | | 3,648 | |

| Lehigh Valley | | | 30 | | | | 3,884 | | | | \- | | | | 34 | | | | 4,174 | |

| Seattle | | | 16 | | | | 2,653 | | | | \- | | | | 24 | | | | 3,529 | |

| South Florida | | | 22 | | | | 3,792 | | | | 14 | | | | 28 | | | | 4,661 | |

| Southern California | | | 98 | | | | 15,639 | | | | 9 | | | | 118 | | | | 18,009 | |

| Remaining Markets – U.S. (18 markets) (2) | | | 129 | | | | 10,659 | | | | 69 | | | | 158 | | | | 12,862 | |

| Subtotal U.S. | | | 577 | | | | 66,579 | | | | 120 | | | | 700 | | | | 78,997 | |

| Brazil | | | 1 | | | | 53 | | | \- | | | | | 17 | | | | 870 | |

| Canada | | | 10 | | | | 845 | | | | 138 | | | | 10 | | | | 845 | |

| Mexico | | * | | | | | 21 | | | \- | | | | | 44 | | | | 2,923 | |

| Subtotal Other Americas | | | 11 | | | | 919 | | | | 138 | | | | 71 | | | | 4,638 | |

| France | | | \- | | | | \- | | | \- | | | | | 34 | | | | 3,157 | |

| Netherlands | | | \- | | | | \- | | | \- | | | | | 29 | | | | 2,999 | |

| U.K. | | | 2 | | | | 422 | | | \- | | | | | 31 | | | | 7,107 | |

| Subtotal Europe | | | 5 | | | | 683 | | | | \- | | | | 222 | | | | 24,096 | |

| China | | \- | | | | \- | | | | \- | | | | | 46 | | | | 3,088 | |

| Japan | | | 1 | | | | 40 | | | \- | | | | | 44 | | | | 6,709 | |

| Singapore | | | 1 | | | | 142 | | | \- | | | | | 1 | | | | 142 | |

| Total operating portfolio (3) | | | 595 | | | | 68,363 | | | | 258 | | | | 1,084 | | | | 117,670 | |

| Total operating properties | | | 601 | | | $ | 69,424 | | | $ | 258 | | | | 1,093 | | | $ | 119,301 | |

| Atlanta | | | 546 | | | | 6 | | | $ | 46 | | | | 1 | | | $ | 117 | |

| Central Valley | | | 803 | | | | 14 | | | | 262 | | | | 1 | | | | 111 | |

| Chicago | | | 103 | | | | 2 | | | | 35 | | | | 3 | | | | 381 | |

| Dallas/Ft. Worth | | | 359 | | | | 5 | | | | 121 | | | | 3 | | | | 341 | |

| Houston | | | 335 | | | | 4 | | | | 114 | | | | 1 | | | | 123 | |

| Lehigh Valley | | | 105 | | | | 1 | | | | 34 | | | | 1 | | | | 177 | |

| South Florida | | | 113 | | | | 2 | | | | 109 | | | | 1 | | | | 203 | |

| Southern California | | | 494 | | | | 9 | | | | 464 | | | | 5 | | | | 1,427 | |

| Remaining Markets – U.S. (18 markets) | | | 1,444 | | | | 23 | | | | 543 | | | | 8 | | | | 1,025 | |

| Subtotal U.S. | | | 4,681 | | | | 71 | | | | 2,133 | | | | 27 | | | | 4,628 | |

| Canada | | | 292 | | | | 5 | | | | 435 | | | | 2 | | | | 310 | |

| Mexico | | | 751 | | | | 14 | | | | 150 | | | | 5 | | | | 388 | |

| Subtotal Other Americas | | | 1,306 | | | | 24 | | | | 641 | | | | 7 | | | | 698 | |

| France | | | 176 | | | | 4 | | | | 139 | | | | 1 | | | | 65 | |

| Germany | | | 39 | | | | 1 | | | | 28 | | | | 1 | | | | 106 | |

| U.K. | | | 224 | | | | 4 | | | | 212 | | | | 2 | | | | 494 | |

The O&M portfolio includes the properties we consolidate and the properties owned by our unconsolidated co-

| Atlanta | | | 25 | | | $ | 1,629 | | | $ | 13 | | | | 31 | | | $ | 2,084 | |

| Central PA | | | 15 | | | | 1,308 | | | | \- | | | | 17 | | | | 1,428 | |

| Central Valley | | | 17 | | | | 1,326 | | | | 9 | | | | 19 | | | | 1,461 | |

| Chicago | | | 39 | | | | 3,248 | | | | 8 | | | | 55 | | | | 4,724 | |

| Houston | | | 24 | | | | 2,518 | | | | 4 | | | | 31 | | | | 3,034 | |

| Lehigh Valley | | | 25 | | | | 3,107 | | | | \- | | | | 28 | | | | 3,386 | |

| Orlando | | | 10 | | | | 1,022 | | | | 70 | | | | 11 | | | | 1,120 | |

| Seattle | | | 14 | | | | 2,066 | | | | \- | | | | 22 | | | | 2,932 | |

| South Florida | | | 12 | | | | 1,614 | | | | 28 | | | | 19 | | | | 2,471 | |

| Southern California | | | 77 | | | | 9,181 | | | | 14 | | | | 97 | | | | 11,515 | |

| Remaining Markets – U.S. (15 markets) (2) | | | 76 | | | | 5,500 | | | | 38 | | | | 102 | | | | 7,485 | |

| Subtotal U.S. | | | 430 | | | | 42,889 | | | | 257 | | | | 552 | | | | 54,934 | |

| Brazil | | \- | | | | \- | | | | \- | | | | | 13 | | | | 641 | |

| Canada | | | 10 | | | | 833 | | | | 150 | | | | 10 | | | | 833 | |

| Mexico | | * | | | | | 28 | | | \- | | | | | 43 | | | | 2,765 | |

| Subtotal Other Americas | | | 10 | | | | 861 | | | | 150 | | | | 66 | | | | 4,239 | |

| France | | | 1 | | | | 93 | | | \- | | | | | 33 | | | | 2,913 | |

| Germany | | | 1 | | | | 78 | | | \- | | | | | 26 | | | | 2,387 | |

| U.K. | | * | | | | | 69 | | | \- | | | | | 28 | | | | 5,351 | |

| Subtotal Europe | | | 4 | | | | 369 | | | | \- | | | | 201 | | | | 19,976 | |

| China | | \- | | | | \- | | | | \- | | | | | 42 | | | | 3,098 | |

| Japan | | * | | | | | 26 | | | \- | | | | | 40 | | | | 7,201 | |

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

| Total operating portfolio (4) | | | 445 | | | | 44,286 | | | | 407 | | | | 902 | | | | 89,589 | |

| Total operating properties | | | 448 | | | $ | 44,912 | | | $ | 407 | | | | 907 | | | $ | 90,557 | |

| Atlanta | | | 221 | | | | 3 | | | $ | 34 | | | | 3 | | | $ | 191 | |

| Central Valley | | | 770 | | | | 14 | | | | 158 | | | | 2 | | | | 272 | |

| Chicago | | | 134 | | | | 2 | | | | 43 | | | | 2 | | | | 292 | |

| Dallas/Ft. Worth | | | 351 | | | | 5 | | | | 140 | | | | 2 | | | | 173 | |

| Houston | | | 163 | | | | 2 | | | | 39 | | | * | | | | | 99 | |

| Lehigh Valley | | | 208 | | | | 2 | | | | 77 | | | | 1 | | | | 101 | |

| Orlando | | | 100 | | | | 1 | | | | 27 | | | | 1 | | | | 106 | |

| South Florida | | | 150 | | | | 2 | | | | 134 | | | | 1 | | | | 154 | |

| Southern California | | | 536 | | | | 10 | | | | 400 | | | | 3 | | | | 468 | |

| Remaining Markets – U.S. (15 markets) | | | 814 | | | | 12 | | | | 281 | | | | 4 | | | | 368 | |

| Subtotal U.S. | | | 3,693 | | | | 56 | | | | 1,531 | | | | 19 | | | | 2,480 | |

| Canada | | | 167 | | | | 3 | | | | 125 | | | | 1 | | | | 54 | |

| Mexico | | | 681 | | | | 12 | | | | 94 | | | | 1 | | | | 103 | |

| Subtotal Other Americas | | | 1,111 | | | | 20 | | | | 271 | | | | 2 | | | | 157 | |

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: 2016,] [added: 2017,] to the cumulative total return of the S&P 500 Stock Index and the Financial Times and Stock Exchange NAREIT [removed: Equity REITs Index from December 31, 2016, to December 31, 2021.]

The graph assumes an initial investment of $100 in our common stock and each of the indices on December 31, [removed: 2016,] [added: 2017,] and, as required by the SEC, the reinvestment of all dividends.

[removed: ][added: ]

At December 31, [removed: 2021,] [added: 2022,] we had 1.3 million shares of [removed: the] Series Q preferred stock [added: outstanding] 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 year ended December 31, [removed: 2021.][added: 2022.]

During [removed: 2021,] [added: 2022,] we issued [removed: 0.8] [added: 2.1] million [added: common limited partnership units in Prologis, L.P. in the Duke Transaction and 0.3 million] shares of common stock of Prologis, Inc. in connection with the redemption of common units of Prologis, L.P. [removed: and issued 1.0 million common units] in [removed: Prologis, L.P. in connection with the acquisition of additional ownership interest in an unconsolidated other venture from our partner in] reliance on the exemption from registration requirements of the Securities Act of 1933, as amended, afforded by Section 4(a)(2) thereof.

During [removed: 2021,] [added: 2022,] we did not purchase any common stock of Prologis, Inc. in connection with our share purchase program.

[removed: OTHER] [added: OTHER] STOCKHOLDER [removed: MATTERS][added: MATTERS]

Equity REITs Index from December 31, 2017, to December 31, 2022.

The Consolidated Balance Sheets of Prologis, Inc. and Prologis, L.P. at December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] 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: 2021,] [added: 2022,] 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.

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: 2021.][added: 2022.]

Subsequent to December 31, [removed: 2021,] [added: 2022,] 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 have not been any changes in Prologis, Inc.’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that occurred during the quarter ended December 31, [removed: 2021,] [added: 2022,] that have materially affected, or are reasonably likely to materially affect, Prologis, Inc.’s 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: 2021,] [added: 2022,] 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: 2021,] [added: 2022,] the internal control over financial reporting was effective.

Our internal control over financial reporting at December 31, [removed: 2021,] [added: 2022,] has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their attestation report, which is included herein.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may [removed: become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.]

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: 2021.][added: 2022.]

There have not been any changes in Prologis, L.P.’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) that occurred during the quarter ended December 31, [removed: 2021,] [added: 2022,] that have materially affected, or are reasonably likely to materially affect, Prologis, L.P.’s internal control over financial reporting.

Subsequent to December 31, 2022, 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.

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, 2022, 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, 2022, the internal control over financial reporting was effective.

become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The information required by this item is incorporated herein by reference to, including relevant sections in our [removed: 2022] [added: 2023] 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: 2022] [added: 2023] 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: 2022] [added: 2023] 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: 2022] [added: 2023] 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: 2022] [added: 2023] Proxy Statement, under the caption entitled Audit Matters or will be provided in an amendment filed on Form 10-K/A.

(b) Exhibits: The Exhibits required by Item 601 of Regulation S-K are listed in the Index to the Exhibits on pages [removed: 102] [added: 104] to [removed: 112] [added: 116] of this report, which is incorporated herein by reference.

| [Consolidated Balance Sheets](#B_S_1) | [removed: 53] [added: 55] |

| [Consolidated Statements of Income](#S_O_1) | [removed: 54] [added: 56] |

| [Consolidated Statements of Comprehensive Income](#S_C_I_1) | [removed: 55] [added: 57] |

| [Consolidated Statements of Equity](#S_E_1) | [removed: 56] [added: 58] |

| [Consolidated Statements of Cash Flows](#S_C_F_1) | [removed: 57] [added: 59] |

| [Consolidated Balance Sheets](#B_S_2) | [removed: 58] [added: 60] |

| [Consolidated Statements of Income](#S_O_2) | [removed: 59] [added: 61] |

| [Consolidated Statements of Comprehensive Income](#S_C_I_2) | [removed: 60] [added: 62] |

| [Consolidated Statements of Capital](#S_C_2) | [removed: 61] [added: 63] |

| [Consolidated Statements of Cash Flows](#S_C_F_2) | [removed: 62] [added: 64] |

| [Notes to the Consolidated Financial Statements](#NOTES_TO_CONSOLIDATED_FINANCIAL_STATEMEN) | [removed: 63] [added: 65] |

| [Note 1. Description of the Business](#NoteOne) | [removed: 63] [added: 65] |

| [Note 2. Summary of Significant Accounting Policies](#NoteTwo) | [removed: 63] [added: 65] |

| [Note 3. [removed: Liberty Transaction](#NoteThree)] [added: Acquisitions](#NoteThree)] | [removed: 70] [added: 72] |

| [Note 4. Real Estate](#NoteFour) | [removed: 71] [added: 73] |

| [Note 5. Unconsolidated Entities](#NoteFive) | [removed: 73] [added: 75] |

| [Note 6. Assets Held for Sale or Contribution](#NoteSix) | [removed: 76] [added: 78] |

| [Note 7. Other Assets and Other Liabilities](#NoteEight) | [removed: 76] [added: 78] |

| [Note 8. Debt](#NoteNine) | [removed: 77] [added: 79] |

| [Note 9. Stockholders' Equity of Prologis, Inc.](#NoteTen) | [removed: 80] [added: 83] |

| [Note 10. Partners' Capital of Prologis, L.P.](#NoteEleven) | [removed: 82] [added: 84] |

| [Note 11. Noncontrolling Interests](#NoteTwelve) | [removed: 82] [added: 85] |

| [Note 12. Long-Term Compensation](#NoteThirteen) | [removed: 83] [added: 85] |

| [Note 13. Income Taxes](#NoteFourteen) | [removed: 86] [added: 88] |

| [Note 14. Earnings Per Common Share or Unit](#EPS) | [removed: 88] [added: 90] |

| [Note 15. Financial Instruments and Fair Value Measurements](#NoteSixteen) | [removed: 89] [added: 91] |

| [Note 16. Commitments and Contingencies](#NoteSeventeen) | [removed: 92] [added: 94] |

| [Note 17. Business Segments](#NoteEighteen) | [removed: 93] [added: 95] |

| [Note 18. Supplemental Cash Flow Information](#NoteNineteen) | [removed: 95] [added: 97] |

| [Note 19. Selected Quarterly Financial Data (Unaudited)](#NoteTwenty) | [removed: 97] [added: 99] |

| [Schedule III — Real Estate and Accumulated Depreciation](#SCHEDULE_III_REAL_ESTATE_ACCUMULATED_DEP) | [removed: 99] [added: 101] |

We have audited the accompanying consolidated balance sheets of Prologis, Inc. and subsidiaries (the Company) as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] 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: 2021,] [added: 2022,] 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: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, [removed: 2021,] [added: 2022,] 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: 2021,] [added: 2022,] 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 [removed: 9, 2022] [added: 14, 2023] expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

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 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.]

As discussed in Notes 2 and 4, the Company had [removed: $44,454] [added: $69,039] million of operating properties as of December 31, [removed: 2021.][added: 2022.]

We have audited the accompanying consolidated balance sheets of Prologis, L.P. and subsidiaries (the Operating Partnership) as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] the related consolidated statements of income, comprehensive income, capital, and cash flows for each of the years in the three-year period ended December 31, [removed: 2021,] [added: 2022,] 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 Operating Partnership as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, [removed: 2021,] [added: 2022,] in conformity with U.S. generally accepted accounting principles.

Duke Realty transaction

As discussed in Note 3 to the consolidated financial statements, on October 3, 2022 Prologis, Inc. and Prologis, L.P. acquired Duke Realty Corporation and Duke Realty Limited Partnership (collectively the “Duke Realty transaction”) for $23.2 billion and the transaction was accounted for as an asset acquisition.

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.

The Company determines fair value of the real estate properties based on the expected future cash flows of the property and various characteristics of the markets where the property is located utilizing an income approach methodology, which may be a discounted cash flow analysis or applying a capitalization rate to the estimated net operating income of a property.

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 Duke Realty transaction as a critical audit matter.

Evaluating the fair value amounts estimated by the Company in the allocation involved complex auditor judgment as a result of measurement uncertainty.

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

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, including land and building.

This included controls related to the determination of amounts allocated to land and building and determination of market rents and capitalization rates 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:

| | • | Comparing the Company’s determination of the fair value of investments in real estate properties to sales prices from available property sales |

| | • | Comparing the Company’s market rent and capitalization rate 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 |

| | • | Comparing the Company’s determination of the fair value of land to sales prices from available land sales |

| | • | Comparing the Company’s determination of the fair value of building to developed ranges of estimates based on market data, such as industry guides used for developing replacement building values. |

February 14, 2023

Critical Audit Matters

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

The communication of critical audit 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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

Duke Realty transaction

As discussed in Note 3 to the consolidated financial statements, on October 3, 2022 Prologis, Inc. and Prologis, L.P. acquired Duke Realty Corporation and Duke Realty Limited Partnership (collectively the “Duke Realty transaction”) for $23.2 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 or bargain consideration is allocated to the real estate properties and related lease intangibles 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.

The Company determines fair value of the real estate properties based on the expected future cash flows of the property and various characteristics of the markets where the property is located utilizing an income approach methodology, which may be a discounted cash flow analysis or applying a capitalization

rate to the estimated net operating income of a property.

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 Duke Realty transaction as a critical audit matter.

Evaluating the fair value amounts estimated by the Company in the allocation involved complex auditor judgment as a result of measurement uncertainty.

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

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 Company’s fair value estimation process for investments in real estate properties, including land and building.

This included controls related to the determination of amounts allocated to land and building and determination of market rents and capitalization rates 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:

| | • | Comparing the Company’s determination of the fair value of investments in real estate properties to sales prices from available property sales |

| | • | Comparing the Company’s market rent and capitalization rate 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 |

| | • | Comparing the Company’s determination of the fair value of land to sales prices from available land sales |

| | • | Comparing the Company’s determination of the fair value of building to developed ranges of estimates based on market data, such as industry guides used for developing replacement building values |

February 14, 2023

February 14, 2023

| | 2022 | | | | 2021 | | |

| Cash and cash equivalents | | 278,483 | | | | 556,117 | |

February 9, 2022

| Interest and other income, net | | | 871 | | | | 1,044 | | | | 24,213 | |

| Foreign currency and derivative gains (losses), net | | | 164,407 | | | | (167,473 | ) | | | (41,715 | ) |

| Balance at January 1, 2019 | $ | 68,948 | | | | 629,616 | | | $ | 6,296 | | | $ | 25,685,987 | | | $ | (1,084,671 | ) | | $ | (2,378,467 | ) | | $ | 3,502,795 | | | $ | 25,800,888 | |

| Consolidated net earnings | | \- | | | | \- | | | | \- | | | | \- | | | | \- | | | | 1,572,959 | | | | 128,887 | | | | 1,701,846 | |

| Effect of equity compensation plans | | \- | | | | 961 | | | | 10 | | | | 37,008 | | | | \- | | | | \- | | | | 67,691 | | | | 104,709 | |

| Purchase of noncontrolling interests | | \- | | | | \- | | | | \- | | | | 2,133 | | | | \- | | | | \- | | | | (15,383 | ) | | | (13,250 | ) |

| Redemption of noncontrolling interests | | \- | | | | 1,220 | | | | 12 | | | | 32,878 | | | | \- | | | | \- | | | | (141,323 | ) | | | (108,433 | ) |

| Contribution to Brazil venture | | \- | | | | \- | | | | \- | | | | \- | | | | \- | | | | \- | | | | (12,630 | ) | | | (12,630 | ) |

| Foreign currency translation gains, net | | \- | | | | \- | | | | \- | | | | \- | | | | 95,572 | | | | \- | | | | 2,910 | | | | 98,482 | |

| Dividends ($2.12 per common share) and other distributions | | \- | | | | \- | | | | \- | | | | (18 | ) | | | \- | | | | (1,345,660 | ) | | | (164,419 | ) | | | (1,510,097 | ) |

| Balance at January 1, 2019 | | 1,379 | | | $ | 68,948 | | | | 629,616 | | | $ | 22,229,145 | | | | 10,516 | | | $ | 371,281 | | | | 8,849 | | | $ | 295,045 | | | $ | 2,836,469 | | | $ | 25,800,888 | |

| Consolidated net earnings | | \- | | | | \- | | | | \- | | | | 1,572,959 | | | | \- | | | | 26,211 | | | | \- | | | | 20,454 | | | | 82,222 | | | | 1,701,846 | |

| Effect of equity compensation plans | | \- | | | | \- | | | | 961 | | | | 37,018 | | | | 1,525 | | | | 67,691 | | | | \- | | | | \- | | | | \- | | | | 104,709 | |

| Purchase of noncontrolling interests | | \- | | | | \- | | | | \- | | | | 2,133 | | | | \- | | | | \- | | | | \- | | | | \- | | | | (15,383 | ) | | | (13,250 | ) |

| Redemption of noncontrolling interests | | \- | | | | \- | | | | \- | | | | (8,045 | ) | | | \- | | | | \- | | | | \- | | | | \- | | | | (13,048 | ) | | | (21,093 | ) |

| Redemption of limited partnership units | | \- | | | | \- | | | | 1,220 | | | | 40,935 | | | | (2,108 | ) | | | (120,387 | ) | | | (236 | ) | | | (7,888 | ) | | | \- | | | | (87,340 | ) |

| Contribution to Brazil venture | | \- | | | | \- | | | | \- | | | | \- | | | | \- | | | | \- | | | | \- | | | | \- | | | | (12,630 | ) | | | (12,630 | ) |

| Foreign currency translation gains, net | | \- | | | | \- | | | | \- | | | | 95,572 | | | | \- | | | | 1,502 | | | | \- | | | | 1,220 | | | | 188 | | | | 98,482 | |

| Reallocation of capital | | \- | | | | \- | | | | \- | | | | (38,561 | ) | | | \- | | | | 36,603 | | | | \- | | | | 1,958 | | | | \- | | | | \- | |

| Distributions ($2.12 per common unit) and other | | \- | | | | \- | | | | \- | | | | (1,345,678 | ) | | | \- | | | | (27,806 | ) | | | \- | | | | (22,585 | ) | | | (114,028 | ) | | | (1,510,097 | ) |

We estimate the fair value of

Beginning on January 1, 2019, we no longer capitalize internal costs related to our leasing activities and amounts capitalized prior to adoption continue to be amortized in accordance with previously applicable guidance.

applicable.

Undesignated Derivatives.

translation at exchange rates that were different than our expectations.

Reclassifications.

Lease right-of-use assets and lease liabilities have been reclassified in the Consolidated Financial Statements for 2020 to *Other Assets* and *Other Liabilities*, respectively, in order to conform to the 2021 financial statement presentation.

Accounting Pronouncements.

Reference Rate Reform.

In March 2020, the Financial Accounting Standards Board issued an Accounting Standard Update (“ASU”) that provided practical expedients to address existing guidance on contract modifications and hedge accounting due to the expected market transition from the London Inter-bank Offered Rate (“LIBOR”) and other interbank offered rates (together “IBORs”) to alternative reference rates, such as the Secured Overnight Financing Rate.

We refer to this transition as “reference rate reform.”

The ASU was effective upon issuance on a prospective basis beginning January 1, 2020 and we elected to adopt the ASU over time as our reference rate reform activities occurred.

In reliance on the relief, we modified certain of our Japanese yen term loans ($955.6 million at December 31, 2021) and our available commitments in British pound sterling and Japanese yen on our global senior credit facilities and Japanese revolver associated with the GBP LIBOR and Yen LIBOR rates prior to December 31, 2021.

We did not modify any derivative financial instruments, as none were impacted by this ASU at December 31, 2021.

There were no other changes to the contracts other than the base rate from GBP LIBOR and Yen LIBOR to their alternative reference rates of SONIA and TIBOR, respectively, and therefore there was no material impact on our Consolidated Financial Statements due to the adoption of the ASU.

Transaction costs included investment banker advisory fees, legal fees and other costs.

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

| Acquisition cost of net investments in real estate, excluding land (3) | | $ | 1,590,457 | | | $ | 2,820,692 | | | $ | 633,923 | |

| Acquisition cost of land | | $ | 1,452,686 | | | $ | 439,773 | | | $ | 440,892 | |