Item 2. Properties

18K characters. Original on sec.gov · Markdown

Item 2. Properties

GEOGRAPHIC DISTRIBUTION

We predominately invest in logistics facilities. Our properties are typically used for distribution, storage, packaging, assembly and light manufacturing of consumer products. The vast majority of our operating properties are used by our customers for retail and online fulfillment and business-to-business transactions.

The following tables provide details of our consolidated operating properties, investment in land and development portfolio and our O&M portfolio. 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 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, 2022, or generated revenue equal to 10% or more of our consolidated total revenues for the year ended December 31, 2022, with the exception of the Southern California market. Dollars and square feet in the following tables are in millions:

	Consolidated Operating Properties						O&M
Geographies	Rentable Square Footage		Gross Book Value		Encumbrances (1)		Rentable Square Footage		Gross Book Value
U.S.:
Atlanta		41	$	3,289	$	-		47	$	3,764
Baltimore/Washington D.C.		13		1,700		-		17		2,104
Central PA		18		1,489		-		19		1,609
Central Valley		21		1,716		-		22		1,856
Chicago		53		4,843		-		70		6,354
Dallas/Ft. Worth		43		3,486		-		50		4,080
Houston		30		3,125		-		36		3,648
Lehigh Valley		30		3,884		-		34		4,174
New Jersey/New York City		42		7,119		28		51		8,492
San Francisco Bay Area		21		3,185		-		26		3,855
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
Other Americas:
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
Europe:
France		-		-	-			34		3,157
Germany		1		84	-			31		3,155
Netherlands		-		-	-			29		2,999
U.K.		2		422	-			31		7,107
Remaining Countries – Europe (8 countries) (2)		2		177	-			97		7,678
Subtotal Europe		5		683		-		222		24,096
Asia:
China	-		-		-			46		3,088
Japan		1		40	-			44		6,709
Singapore		1		142	-			1		142
Subtotal Asia		2		182		-		91		9,939
Total operating portfolio (3)		595		68,363		258		1,084		117,670
Value-added properties (4)		6		1,061		-		9		1,631
Total operating properties		601	$	69,424	$	258		1,093	$	119,301

Items notated by ‘*’ indicate an amount less than one million that rounds to zero.

	Consolidated – Investment in Land						Consolidated – Development Portfolio
Geographies	Acres		Estimated Build Out Potential (square feet) (5)		Current Investment		Rentable Square Footage Upon Completion		TEI (6)
U.S.:
Atlanta		546		6	$	46		1	$	117
Baltimore/Washington D.C.		36	*			15	*			80
Central PA		-		-		-	*			44
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
New Jersey/New York City		194		3		287	*			127
San Francisco Bay Area		-		-		-		2		314
Seattle		149		2		103		1		158
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
Other Americas:
Brazil		263		5		56		-		-
Canada		292		5		435		2		310
Mexico		751		14		150		5		388
Subtotal Other Americas		1,306		24		641		7		698
Europe:
France		176		4		139		1		65
Germany		39		1		28		1		106
Netherlands		15	*			9		1		82
U.K.		224		4		212		2		494
Remaining Countries – Europe (8 countries)		696		14		125		3		417
Subtotal Europe		1,150		23		513		8		1,164
Asia:
Japan		51		4		51		7		988
Subtotal Asia		51		4		51		7		988
Total land and development portfolio		7,188		122	$	3,338		49	$	7,478

Items notated by ‘*’ indicate an amount less than one million that rounds to zero.

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

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

(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, 2022, we had investments in real estate properties that were expected to be contributed to our unconsolidated co-investment ventures totaling $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.

(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.

(5)	Represents the estimated finished square feet available for lease upon completion of a building on existing parcels of land.

(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 $4.2 billion, leaving approximately $3.3 billion of additional required investment. At December 31, 2022, based on TEI, approximately 9% of the properties in the development portfolio were completed but not yet stabilized, 72% of the properties were expected to be completed before December 31, 2023, and the remaining properties were expected to be completed before November 2024.

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

	Investment Before Depreciation
Operating properties, excluding assets held for sale or contribution	$	69,039
Development portfolio, including cost of land		4,212
Land		3,338
Other real estate investments (1)		5,034
Total consolidated real estate properties	$	81,623

(1)

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

LEASE EXPIRATIONS

We generally lease our properties on a long-term basis (the average term for leases commenced, including new leases and renewals, in 2022 was 69 months). The following table summarizes the lease expirations of our consolidated operating portfolio for leases in place at December 31, 2022 (dollars and square feet in millions):


					NER
	Number of Leases		Occupied Square Feet		Dollars		% of Total			Dollars Per Square Foot
2023 (1)		916		54	$	357		8.5	%	$	6.61
2024		1,155		78		508		12.1	%		6.51
2025		993		76		514		12.2	%		6.76
2026		1,039		84		570		13.6	%		6.79
2027		952		85		643		15.3	%		7.56
2028		422		52		420		10.0	%		8.08
2029		251		39		267		6.4	%		6.85
2030		141		27		198		4.7	%		7.33
2031		115		23		162		3.9	%		7.04
2032		123		29		223		5.3	%		7.69
Thereafter		116		35		334		8.0	%		9.54
		6,223		582	$	4,196		100.0	%	$	7.21
Month to month		128		3
Total consolidated		6,351		585

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

CO-INVESTMENT VENTURES

Included in our O&M portfolio are consolidated and unconsolidated co-investment ventures that hold investments in real estate properties, primarily logistics facilities, that we also manage. Our unconsolidated co-investment ventures are accounted for under the equity method. The amounts included for the unconsolidated ventures are reflected at 100% of the amount included in the ventures’ financial statements as calculated on a GAAP basis, not our proportionate share. The following table summarizes our consolidated and unconsolidated co-investment ventures at December 31, 2022 (in millions):

	Operating Properties
	Square Feet		Gross Book Value		Investment in Land		Development Portfolio – TEI
Consolidated Co-Investment Venture
U.S.:
Prologis U.S. Logistics Venture (“USLV”)		77	$	8,037	$	4	$	60
Total		77	$	8,037	$	4	$	60

Unconsolidated Co-Investment Ventures
U.S.:
Prologis Targeted U.S. Logistics Fund (“USLF”)		123	$	12,557	$	-	$	200
Other Americas:
FIBRA Prologis		44		2,916		-		-
Prologis Brazil Logistics Venture ("PBLV") and other joint ventures		16		817		51		106
Subtotal Other Americas		60		3,733		51		106
Europe:
Prologis European Logistics Fund (“PELF”)		161		17,400		13		47
Prologis European Logistics Partners (“PELP”)		58		6,432		34		64
Subtotal Europe		219		23,832		47		111
Asia:
Nippon Prologis REIT (“NPR”)		43		6,669		-		-
Prologis China Core Logistics Fund (“PCCLF”)		31		2,331		-		-
Prologis China Logistics Venture		15		756		13		541
Subtotal Asia		89		9,756		13		541
Total		491	$	49,878	$	111	$	958

For more information regarding our unconsolidated and consolidated co-investment ventures, see Notes 5 and 11 to the Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data.

Previous: Item 1B. Unresolved Staff Comments · Next: Item 3. Legal Proceedings