Item 1. Financial Statements

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Item 1. Financial Statements

PROLOGIS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share data)

September 30, 2021December 31, 2020
ASSETS
Investments in real estate properties$52,458,694$50,384,328
Less accumulated depreciation7,404,3046,539,156
Net investments in real estate properties45,054,39043,845,172
Investments in and advances to unconsolidated entities7,652,3237,602,014
Assets held for sale or contribution571,6711,070,724
Net investments in real estate53,278,38452,517,910
Cash and cash equivalents585,071598,086
Other assets3,153,2152,949,009
Total assets$57,016,670$56,065,005
LIABILITIES AND EQUITY
Liabilities:
Debt$17,135,668$16,849,076
Accounts payable and accrued expenses1,441,7761,143,372
Other liabilities1,681,7521,747,977
Total liabilities20,259,19619,740,425
Equity:
Prologis, Inc. stockholders’ equity:
Series Q preferred stock at stated liquidation preference of $50 per share; $0.01 par value; 1,279 shares issued and outstanding and 100,000 preferred shares authorized at September 30, 2021 and December 31, 202063,94863,948
Common stock; $0.01 par value; 739,323 shares and 739,381 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively7,3937,394
Additional paid-in capital35,526,67135,488,634
Accumulated other comprehensive loss(983,906)(1,193,739)
Distributions in excess of net earnings(2,107,989)(2,394,690)
Total Prologis, Inc. stockholders’ equity32,506,11731,971,547
Noncontrolling interests4,251,3574,353,033
Total equity36,757,47436,324,580
Total liabilities and equity$57,016,670$56,065,005

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

Index

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)

Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
Revenues:
Rental$1,037,281$980,148$3,073,700$2,803,321
Strategic capital141,44898,993390,796516,242
Development management and other4,3203,63217,7117,575
Total revenues1,183,0491,082,7733,482,2073,327,138
Expenses:
Rental256,607245,490779,624705,217
Strategic capital52,38945,791146,938173,910
General and administrative66,97074,348219,344208,701
Depreciation and amortization390,806400,7381,181,1171,144,903
Other4,4133,02015,05125,573
Total expenses771,185769,3872,342,0742,258,304
Operating income before gains on real estate transactions, net411,864313,3861,140,1331,068,834
Gains on dispositions of development properties and land, net139,406134,207500,410383,373
Gains on other dispositions of investments in real estate, net214,390108,927358,180184,357
Operating income765,660556,5201,998,7231,636,564
Other income (expense):
Earnings from unconsolidated entities, net91,81873,972231,286216,844
Interest expense(63,638)(80,711)(203,331)(237,651)
Interest and other income (expense), net(846)(5,866)4,615(4,469)
Foreign currency and derivative gains (losses), net64,172(100,974)138,244(48,481)
Losses on early extinguishment of debt, net-(98,266)(187,453)(164,606)
Total other income (expense)91,506(211,845)(16,639)(238,363)
Earnings before income taxes857,166344,6751,982,0841,398,201
Total income tax expense(59,435)(12,154)(134,347)(89,578)
Consolidated net earnings797,731332,5211,847,7371,308,623
Less net earnings attributable to noncontrolling interests74,19329,827156,676108,703
Net earnings attributable to controlling interests723,538302,6941,691,0611,199,920
Less preferred stock dividends1,5311,6524,6144,921
Loss on preferred stock repurchase-2,347-2,347
Net earnings attributable to common stockholders$722,007$298,695$1,686,447$1,192,652
Weighted average common shares outstanding – Basic739,439738,194739,217724,876
Weighted average common shares outstanding – Diluted764,945764,619764,644750,971
Net earnings per share attributable to common stockholders – Basic$0.98$0.40$2.28$1.65
Net earnings per share attributable to common stockholders – Diluted$0.97$0.40$2.27$1.63

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

Index

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
Consolidated net earnings$797,731$332,521$1,847,737$1,308,623
Other comprehensive income (loss):
Foreign currency translation gains (losses), net48,708(45,576)201,881(180,162)
Unrealized gains (losses) on derivative contracts, net3,7482,37913,379(19,696)
Comprehensive income850,187289,3242,062,9971,108,765
Net earnings attributable to noncontrolling interests(74,193)(29,827)(156,676)(108,703)
Other comprehensive loss (income) attributable to noncontrolling interests(1,242)861(5,427)5,791
Comprehensive income attributable to common stockholders$774,752$260,358$1,900,894$1,005,853

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

Index

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands)

Three Months Ended September 30, 2021 and 2020

Common StockAccumulatedDistributions
NumberAdditionalOtherin Excess ofNon-
PreferredofParPaid-inComprehensiveNetcontrollingTotal
StockSharesValueCapitalIncome (Loss)EarningsInterestsEquity
Balance at July 1, 2021$63,948739,020$7,390$35,432,843$(1,035,120)$(2,363,348)$4,375,091$36,480,804
Consolidated net earnings-----723,53874,193797,731
Effect of equity compensation plans-17-11,141--17,01728,158
Capital contributions------3,0173,017
Redemption of noncontrolling interests-286312,540--(45,149)(32,606)
Issuance of units related to acquisitions------130,416130,416
Foreign currency translation gains, net----47,576-1,13248,708
Unrealized gains on derivative contracts, net----3,638-1103,748
Reallocation of equity---70,153--(70,153)-
Dividends ($0.63 per common share) and other distributions---(6)-(468,179)(234,317)(702,502)
Balance at September 30, 2021$63,948739,323$7,393$35,526,671$(983,906)$(2,107,989)$4,251,357$36,757,474
Balance at July 1, 2020$68,948738,732$7,387$35,424,401$(1,142,129)$(2,115,679)$4,503,28136,746,209
Consolidated net earnings-----302,69429,827332,521
Effect of equity compensation plans-9114,274--20,90535,180
Issuance of units related to acquisitions-----48,53348,533
Repurchase of preferred stock(5,000)--147-(2,347)-(7,200)
Redemption of noncontrolling interests-22429,698--(78,734)(69,034)
Foreign currency translation losses, net----(44,637)-(939)(45,576)
Unrealized gains on derivative contracts, net----2,301-782,379
Reallocation of equity---7,707--(7,707)-
Dividends ($0.58 per common share) and other distributions---(4)-(430,589)(123,112)(553,705)
Balance at September 30, 2020$63,948738,965$7,390$35,456,223$(1,184,465)$(2,245,921)$4,392,132$36,489,307

Nine Months Ended September 30, 2021 and 2020

Common StockAccumulatedDistributions
NumberAdditionalOtherin Excess ofNon-
PreferredofParPaid-inComprehensiveNetcontrollingTotal
StockSharesValueCapitalIncome (Loss)EarningsInterestsEquity
Balance at January 1, 2021$63,948739,381$7,394$35,488,634$(1,193,739)$(2,394,690)$4,353,033$36,324,580
Consolidated net earnings-----1,691,061156,6761,847,737
Effect of equity compensation plans-(403)(5)24,443--61,58086,018
Capital contributions------7,3787,378
Redemption of noncontrolling interests-345415,135--(153,312)(138,173)
Consolidation of other venture----25,75925,759
Issuance of units related to acquisitions------130,416130,416
Foreign currency translation gains, net----196,820-5,061201,881
Unrealized gains on derivative contracts, net----13,013-36613,379
Reallocation of equity---(1,510)--1,510-
Dividends ($1.89 per common share) and other distributions---(31)-(1,404,360)(337,110)(1,741,501)
Balance at September 30, 2021$63,948739,323$7,393$35,526,671$(983,906)$(2,107,989)$4,251,357$36,757,474
Balance at January 1, 2020$68,948631,797$6,318$25,719,427$(990,398)$(2,151,168)$3,418,657$26,071,784
Consolidated net earnings-----1,199,920108,7031,308,623
Effect of equity compensation plans-655721,096--63,90585,008
Liberty Transaction, net of issuance costs106,7231,0679,801,373--211,08610,013,526
Issuance of units related to acquisitions------48,53348,533
Repurchase of common shares-(539)(5)(34,824)---(34,829)
Repurchase of preferred stock(5,000)--147-(2,347)-(7,200)
Capital contributions------916,974916,974
Redemption of noncontrolling interests-329314,249--(126,029)(111,777)
Foreign currency translation losses, net----(174,903)-(5,259)(180,162)
Unrealized losses on derivative contracts, net----(19,164)-(532)(19,696)
Reallocation of equity---(64,752)--64,752-
Dividends ($1.74 per common share) and other distributions---(493)-(1,292,326)(308,658)(1,601,477)
Balance at September 30, 2020$63,948738,965$7,390$35,456,223$(1,184,465)$(2,245,921)$4,392,132$36,489,307

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

Index

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

Nine Months Ended
September 30,
20212020
Operating activities:
Consolidated net earnings$1,847,737$1,308,623
Adjustments to reconcile net earnings to net cash provided by operating activities:
Straight-lined rents and amortization of above and below market leases(109,043)(88,637)
Equity-based compensation awards84,41686,360
Depreciation and amortization1,181,1171,144,903
Earnings from unconsolidated entities, net(231,286)(216,844)
Operating distributions from unconsolidated entities311,284355,395
Decrease in operating receivables from unconsolidated entities18,03671,979
Amortization of debt discounts and debt issuance costs, net6,6325,568
Gains on dispositions of development properties and land, net(500,410)(383,373)
Gains on other dispositions of investments in real estate, net(358,180)(184,357)
Unrealized foreign currency and derivative losses (gains), net(150,443)58,645
Losses on early extinguishment of debt, net187,453164,606
Deferred income tax expense (benefit)10,049(6,564)
Increase in accounts receivable and other assets(223,658)(33,189)
Increase in accounts payable and accrued expenses and other liabilities206,27250,220
Net cash provided by operating activities2,279,9762,333,335
Investing activities:
Real estate development(1,770,353)(1,501,089)
Real estate acquisitions(1,196,994)(700,793)
Liberty Transaction, net of cash acquired-(24,550)
IPT Transaction, net of cash acquired-(1,665,359)
Tenant improvements and lease commissions on previously leased space(233,853)(142,168)
Property improvements(98,874)(91,355)
Proceeds from dispositions and contributions of real estate2,817,9431,684,633
Investments in and advances to unconsolidated entities(454,918)(345,310)
Return of investment from unconsolidated entities56,993206,741
Proceeds from repayment of notes receivable backed by real estate-4,312
Proceeds from the settlement of net investment hedges-2,352
Payments on the settlement of net investment hedges(16,513)(7,236)
Net cash used in investing activities(896,569)(2,579,822)
Financing activities:
Proceeds from issuance of common stock7431,869
Repurchase and retirement of common stock-(34,829)
Repurchase of preferred stock-(7,200)
Dividends paid on common and preferred stock(1,404,360)(1,292,326)
Noncontrolling interests contributions7,378916,974
Noncontrolling interests distributions(337,110)(308,658)
Settlement of noncontrolling interests(138,173)(111,777)
Tax paid with shares withheld(18,434)(23,227)
Debt and equity issuance costs paid(22,008)(51,723)
Net payments on credit facilities(70,200)(142,498)
Repurchase of and payments on debt(2,201,383)(6,156,328)
Proceeds from the issuance of debt2,824,7547,303,761
Net cash provided by (used in) financing activities(1,358,793)94,038
Effect of foreign currency exchange rate changes on cash(37,629)3,787
Net decrease in cash and cash equivalents(13,015)(148,662)
Cash and cash equivalents, beginning of period598,0861,088,855
Cash and cash equivalents, end of period$585,071$940,193

See Note 12 for information on noncash investing and financing activities and other information.

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

Index

PROLOGIS, L.P.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

September 30, 2021December 31, 2020
ASSETS
Investments in real estate properties$52,458,694$50,384,328
Less accumulated depreciation7,404,3046,539,156
Net investments in real estate properties45,054,39043,845,172
Investments in and advances to unconsolidated entities7,652,3237,602,014
Assets held for sale or contribution571,6711,070,724
Net investments in real estate53,278,38452,517,910
Cash and cash equivalents585,071598,086
Other assets3,153,2152,949,009
Total assets$57,016,670$56,065,005
LIABILITIES AND CAPITAL
Liabilities:
Debt$17,135,668$16,849,076
Accounts payable and accrued expenses1,441,7761,143,372
Other liabilities1,681,7521,747,977
Total liabilities20,259,19619,740,425
Capital:
Partners’ capital:
General partner – preferred63,94863,948
General partner – common32,442,16931,907,599
Limited partners – common564,480523,954
Limited partners – Class A common351,090345,553
Total partners’ capital33,421,68732,841,054
Noncontrolling interests3,335,7873,483,526
Total capital36,757,47436,324,580
Total liabilities and capital$57,016,670$56,065,005

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

Index

PROLOGIS, L.P.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per unit amounts)

Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
Revenues:
Rental$1,037,281$980,148$3,073,700$2,803,321
Strategic capital141,44898,993390,796516,242
Development management and other4,3203,63217,7117,575
Total revenues1,183,0491,082,7733,482,2073,327,138
Expenses:
Rental256,607245,490779,624705,217
Strategic capital52,38945,791146,938173,910
General and administrative66,97074,348219,344208,701
Depreciation and amortization390,806400,7381,181,1171,144,903
Other4,4133,02015,05125,573
Total expenses771,185769,3872,342,0742,258,304
Operating income before gains on real estate transactions, net411,864313,3861,140,1331,068,834
Gains on dispositions of development properties and land, net139,406134,207500,410383,373
Gains on other dispositions of investments in real estate, net214,390108,927358,180184,357
Operating income765,660556,5201,998,7231,636,564
Other income (expense):
Earnings from unconsolidated entities, net91,81873,972231,286216,844
Interest expense(63,638)(80,711)(203,331)(237,651)
Interest and other income (expense), net(846)(5,866)4,615(4,469)
Foreign currency and derivative gains (losses), net64,172(100,974)138,244(48,481)
Losses on early extinguishment of debt, net-(98,266)(187,453)(164,606)
Total other income (expense)91,506(211,845)(16,639)(238,363)
Earnings before income taxes857,166344,6751,982,0841,398,201
Total income tax expense(59,435)(12,154)(134,347)(89,578)
Consolidated net earnings797,731332,5211,847,7371,308,623
Less net earnings attributable to noncontrolling interests54,40621,453109,76874,709
Net earnings attributable to controlling interests743,325311,0681,737,9691,233,914
Less preferred unit distributions1,5311,6524,6144,921
Loss on preferred unit repurchase-2,347-2,347
Net earnings attributable to common unitholders$741,794$307,069$1,733,355$1,226,646
Weighted average common units outstanding – Basic751,558750,971751,773737,489
Weighted average common units outstanding – Diluted764,945764,619764,644750,971
Net earnings per unit attributable to common unitholders – Basic$0.98$0.40$2.28$1.65
Net earnings per unit attributable to common unitholders – Diluted$0.97$0.40$2.27$1.63

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

Index

PROLOGIS, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
Consolidated net earnings$797,731$332,521$1,847,737$1,308,623
Other comprehensive income (loss):
Foreign currency translation gains (losses), net48,708(45,576)201,881(180,162)
Unrealized gains (losses) on derivative contracts, net3,7482,37913,379(19,696)
Comprehensive income850,187289,3242,062,9971,108,765
Net earnings attributable to noncontrolling interests(54,406)(21,453)(109,768)(74,709)
Other comprehensive loss (income) attributable to noncontrolling interests336(217)493405
Comprehensive income attributable to common unitholders$796,117$267,654$1,953,722$1,034,461

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

Index

PROLOGIS, L.P.

CONSOLIDATED STATEMENTS OF CAPITAL

(Unaudited)

(In thousands)

Three Months Ended September 30, 2021 and 2020

General PartnerLimited PartnersNon-
PreferredCommonCommonClass A CommoncontrollingTotal
UnitsAmountUnitsAmountUnitsAmountUnitsAmountInterestsCapital
Balance at July 1, 20211,279$63,948739,020$32,041,76512,231$530,3268,595$346,967$3,497,798$36,480,804
Consolidated net earnings---723,538-11,971-7,81654,406797,731
Effect of equity compensation plans--1711,14112517,017---28,158
Capital contributions--------3,0173,017
Redemption of limited partners units--28612,543(523)(45,149)---(32,606)
Issuance of units related to acquisitions----1,031130,416---130,416
Foreign currency translation gains (losses), net---47,576-954-514(336)48,708
Unrealized gains on derivative contracts, net---3,638-71-39-3,748
Reallocation of capital---70,153-(71,466)-1,313--
Distributions ($0.63 per common unit) and other---(468,185)-(9,660)-(5,559)(219,098)(702,502)
Balance at September 30, 20211,279$63,948739,323$32,442,16912,864$564,4808,595$351,090$3,335,787$36,757,474
Balance at July 1, 20201,379$68,948738,732$32,173,98012,914$563,4038,608$350,078$3,589,800$36,746,209
Consolidated net earnings---302,694-5,158-3,21621,453332,521
Effect of equity compensation plans--914,2752220,905---35,180
Issuance of units related to acquisitions----46148,533---48,533
Repurchase of preferred units(100)(5,000)-(2,200)-----(7,200)
Redemption of limited partners units--2249,700(903)(78,215)(13)(519)-(69,034)
Foreign currency translation gains (losses), net---(44,637)-(676)-(480)217(45,576)
Unrealized gains on derivative contracts, net---2,301-52-26-2,379
Reallocation of capital---7,707-(8,454)-747--
Distributions ($0.58 per common unit) and other---(430,593)-(9,080)-(5,558)(108,474)(553,705)
Balance at September 30, 20201,279$63,948738,965$32,033,22712,494$541,6268,595$347,510$3,502,996$36,489,307

Nine Months Ended September 30, 2021 and 2020

General PartnerLimited PartnersNon-
PreferredCommonCommonClass A CommoncontrollingTotal
UnitsAmountUnitsAmountUnitsAmountUnitsAmountInterestsCapital
Balance at January 1, 20211,279$63,948739,381$31,907,59912,142$523,9548,595$345,553$3,483,526$36,324,580
Consolidated net earnings---1,691,061-28,645-18,263109,7681,847,737
Effect of equity compensation plans--(403)24,4381,21061,580---86,018
Capital contributions--------7,3787,378
Redemption of limited partners units--34515,139(1,519)(153,312)---(138,173)
Consolidation of other venture--------25,75925,759
Issuance of units related to acquisitions----1,031130,416---130,416
Foreign currency translation gains (losses), net--196,820-3,424-2,130(493)201,881
Unrealized gains on derivative contracts, net---13,013-226-140-13,379
Reallocation of capital---(1,510)-(169)-1,679--
Distributions ($1.89 per common unit) and other---(1,404,391)-(30,284)-(16,675)(290,151)(1,741,501)
Balance at September 30, 20211,279$63,948739,323$32,442,16912,864$564,4808,595$351,090$3,335,787$36,757,474
Balance at January 1, 20201,379$68,948631,797$22,584,1799,933$355,0768,613$288,187$2,775,394$26,071,784
Consolidated net earnings---1,199,920-20,752-13,24274,7091,308,623
Effect of equity compensation plans--65521,1031,27963,905---85,008
Liberty Transaction, net of issuance costs--106,7239,802,4402,288210,190--89610,013,526
Issuance of units related to acquisitions----46148,533---48,533
Repurchase of common units--(539)(34,829)-----(34,829)
Repurchase of preferred units(100)(5,000)-(2,200)-----(7,200)
Capital contributions--------916,974916,974
Redemption of limited partners units--32914,252(1,467)(125,307)(18)(722)-(111,777)
Foreign currency translation losses, net---(174,903)-(2,957)-(1,897)(405)(180,162)
Unrealized losses on derivative contracts, net---(19,164)-(324)-(208)-(19,696)
Reallocation of capital---(64,752)-(851)-65,603--
Distributions ($1.74 per common unit) and other---(1,292,819)-(27,391)-(16,695)(264,572)(1,601,477)
Balance at September 30, 20201,279$63,948738,965$32,033,22712,494$541,6268,595$347,510$3,502,996$36,489,307

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

Index

PROLOGIS, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

Nine Months Ended
September 30,
20212020
Operating activities:
Consolidated net earnings$1,847,737$1,308,623
Adjustments to reconcile net earnings to net cash provided by operating activities:
Straight-lined rents and amortization of above and below market leases(109,043)(88,637)
Equity-based compensation awards84,41686,360
Depreciation and amortization1,181,1171,144,903
Earnings from unconsolidated entities, net(231,286)(216,844)
Operating distributions from unconsolidated entities311,284355,395
Decrease in operating receivables from unconsolidated entities18,03671,979
Amortization of debt discounts and debt issuance costs, net6,6325,568
Gains on dispositions of development properties and land, net(500,410)(383,373)
Gains on other dispositions of investments in real estate, net(358,180)(184,357)
Unrealized foreign currency and derivative losses (gains), net(150,443)58,645
Losses on early extinguishment of debt, net187,453164,606
Deferred income tax expense (benefit)10,049(6,564)
Increase in accounts receivable and other assets(223,658)(33,189)
Increase in accounts payable and accrued expenses and other liabilities206,27250,220
Net cash provided by operating activities2,279,9762,333,335
Investing activities:
Real estate development(1,770,353)(1,501,089)
Real estate acquisitions(1,196,994)(700,793)
Liberty Transaction, net of cash acquired-(24,550)
IPT Transaction, net of cash acquired-(1,665,359)
Tenant improvements and lease commissions on previously leased space(233,853)(142,168)
Property improvements(98,874)(91,355)
Proceeds from dispositions and contributions of real estate2,817,9431,684,633
Investments in and advances to unconsolidated entities(454,918)(345,310)
Return of investment from unconsolidated entities56,993206,741
Proceeds from repayment of notes receivable backed by real estate-4,312
Proceeds from the settlement of net investment hedges-2,352
Payments on the settlement of net investment hedges(16,513)(7,236)
Net cash used in investing activities(896,569)(2,579,822)
Financing activities:
Proceeds from issuance of common partnership units in exchange for contributions from Prologis, Inc.7431,869
Repurchase and retirement of common units-(34,829)
Repurchase of preferred units-(7,200)
Distributions paid on common and preferred units(1,451,319)(1,336,412)
Noncontrolling interests contributions7,378916,974
Noncontrolling interests distributions(290,151)(264,572)
Redemption of common limited partnership units(138,173)(111,777)
Tax paid with shares of the Parent withheld(18,434)(23,227)
Debt and equity issuance costs paid(22,008)(51,723)
Net payments on credit facilities(70,200)(142,498)
Repurchase of and payments on debt(2,201,383)(6,156,328)
Proceeds from the issuance of debt2,824,7547,303,761
Net cash provided by (used in) financing activities(1,358,793)94,038
Effect of foreign currency exchange rate changes on cash(37,629)3,787
Net decrease in cash and cash equivalents(13,015)(148,662)
Cash and cash equivalents, beginning of period598,0861,088,855
Cash and cash equivalents, end of period$585,071$940,193

See Note 12 for information on noncash investing and financing activities and other information.

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

Index

PROLOGIS, INC. AND PROLOGIS, L.P.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. GENERAL

Business. Prologis, Inc. (or the “Parent”) commenced operations as a fully integrated real estate company in 1997, elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code” or “IRC”), and believes the current organization and method of operation will enable it to maintain its status as a REIT. The Parent is the general partner of Prologis, L.P. (or the “Operating Partnership” or “OP”). Through the OP, we are engaged in the ownership, acquisition, development and management of logistics facilities with a focus on key markets in 19 countries on four continents. We invest in real estate through wholly owned subsidiaries and other entities through which we co-invest with partners and investors. We maintain a significant level of ownership in these co-investment ventures, which may be consolidated or unconsolidated based on our level of control of the entity. Our current business strategy consists of two operating business segments: Real Estate Operations and Strategic Capital. Our Real Estate Operations segment represents the ownership and development of logistics properties. Our Strategic Capital segment represents the management of unconsolidated co-investment ventures and other ventures. See Note 11 for further discussion of our business segments. Unless otherwise indicated, the Notes to the Consolidated Financial Statements apply to both the Parent and the OP. The terms “the Company,” “Prologis,” “we,” “our” or “us” means the Parent and OP collectively.

For each share of preferred or common stock the Parent issues, the OP issues a corresponding preferred or common partnership unit, as applicable, to the Parent in exchange for the contribution of the proceeds from the stock issuance. At September 30, 2021, the Parent owned a 97.26% common general partnership interest in the OP and substantially all of the preferred units in the OP. The remaining 2.74% common limited partnership interests, which include Class A common limited partnership units (“Class A Units”) in the OP, are owned by unaffiliated investors and certain current and former directors and officers of the Parent. Each partner’s percentage interest in the OP is determined based on the number of OP units held, including the number of OP units into which Class A Units are convertible, compared to total OP units outstanding at each period end and is used as the basis for the allocation of net income or loss to each partner. At the end of each reporting period, a capital adjustment is made in the OP to reflect the appropriate ownership interest for each of the common unitholders. These adjustments are reflected in the line items Reallocation of Equity in the Consolidated Statements of Equity of the Parent and Reallocation of Capital in the Consolidated Statements of Capital of the OP.

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

Basis of Presentation. The accompanying Consolidated Financial Statements are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and are presented in our reporting currency, the U.S. dollar. Intercompany transactions with consolidated entities have been eliminated.

The accompanying unaudited interim financial information has been prepared according to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in our annual financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations. Our management believes that the disclosures presented in these financial statements are adequate to make the information presented not misleading. In our opinion, all adjustments and eliminations, consisting only of normal recurring adjustments, necessary to present fairly the financial position and results of operations for both the Parent and the OP for the reported periods have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. The accompanying unaudited interim financial information should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC, and other public information.

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.”

Index

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 have modified debt contracts during the three months ended September 30, 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 and therefore there was no material impact on our Consolidated Financial Statements due to the adoption of the ASU. We anticipate further modifications to other debt and derivative contracts by the end of 2021.

NOTE 2. LIBERTY TRANSACTION

On February 4, 2020, we acquired Liberty Property Trust and Liberty Property Limited Partnership (collectively “Liberty” or the “Liberty Transaction”).

The Liberty Transaction was completed for $13.0 billion through the issuance of equity based on the value of the Prologis common stock and units issued of $10.0 billion, the assumption of debt of $2.8 billion and transaction costs. In connection with the transaction, each issued and outstanding share or unit held by a Liberty stockholder or unitholder was converted automatically into 0.675 shares of Prologis common stock or common units of Prologis, L.P., respectively, including shares and units under Liberty’s equity incentive plan that became fully vested at closing.

Through the Liberty Transaction, we acquired a portfolio primarily comprised of logistics real estate assets, including 519 industrial operating properties, aggregating 99.6 million square feet, which are highly complementary to our U.S. portfolio in terms of product quality, location and growth potential in our key markets.

The aggregate equity consideration is calculated below (in millions, except price per share):

Number of Prologis shares and units issued upon conversion of Liberty shares and units at February 4, 2020109.01
Multiplied by price of Prologis' common stock on February 3, 2020$91.87
Fair value of Prologis shares and units issued$10,015

We accounted for the Liberty Transaction as an asset acquisition and as a result, the transaction costs of $115.8 million were capitalized to the basis of the acquired properties. Transaction costs included investment banker advisory fees, legal fees and other costs.

Under acquisition accounting, the total purchase price was allocated to the Liberty real estate properties and related lease intangibles on a relative fair value basis. All other assets acquired and liabilities assumed, including debt, and real estate assets that we do not intend to operate long-term were recorded at fair value as follows (in millions):

Net investments in real estate$12,636
Intangible assets, net of intangible liabilities491
Cash and other assets233
Debt(2,845)
Accounts payable, accrued expenses and other liabilities(383)
Noncontrolling interests(1)
Total purchase price, including transaction costs$10,131

NOTE 3. REAL ESTATE

Investments in real estate properties consisted of the following (dollars and square feet in thousands):

Square FeetNumber of Buildings
Sep 30,Dec 31,Sep 30,Dec 31,Sep 30,Dec 31,
202120202021202020212020
Operating properties:
Buildings and improvements444,812441,3362,2862,261$32,064,117$31,489,943
Improved land12,145,39712,017,676
Development portfolio, including land costs:
Prestabilized3,7616,0761224433,391553,266
Properties under development31,96722,00484612,377,0981,329,345
Land (1)2,039,7541,606,358
Other real estate investments (2)3,398,9373,387,740
Total investments in real estate properties52,458,69450,384,328
Less accumulated depreciation7,404,3046,539,156
Net investments in real estate properties$45,054,390$43,845,172

Index

(1)At September 30, 2021 and December 31, 2020, our land was comprised of 5,186 and 5,304 acres, respectively.
(2)Included in other real estate investments were: (i) non-strategic real estate assets acquired in the Liberty Transaction that we do not intend to operate long-term; (ii) real estate assets that we intend to redevelop into industrial properties; (iii) land parcels we own and lease to third parties; and (iv) costs associated with potential acquisitions and future development projects, including purchase options on land.

Acquisitions

The following table summarizes our real estate acquisition activity, excluding the Liberty Transaction as discussed in Note 2 (dollars and square feet in thousands):

Three Months Ended September 30,Nine Months Ended September 30,
202120202021 (1)2020 (2)
Number of operating properties15226140
Square feet3,9101946,02320,470
Acres of land6851561,391611
Acquisition cost of net investments in real estate (3)$757,711$188,717$1,796,383$2,730,377
(1)During the nine months ended September 30, 2021, we acquired additional ownership interest in unconsolidated other ventures from our partners and began consolidating the real estate assets.
(2)On January 8, 2020, our two U.S. co-investment ventures, Prologis Targeted U.S. Logistics Fund, L.P. (“USLF”) and Prologis U.S. Logistics Venture, LLC (“USLV”), acquired the wholly-owned real estate assets of Industrial Property Trust Inc. (“IPT”) for $2.0 billion each in a cash transaction, including transaction costs and the assumption and repayment of debt (the “IPT Transaction”). As we consolidate USLV, the number of operating properties, square feet and acquisition cost for the properties acquired by USLV are included in the consolidated acquisition activity.
(3)The acquisition cost of net investments in real estate includes other real estate investments of $50.5 million and $224.3 million during the three and nine months ended September 30, 2021, respectively. Acquisitions of other real estate investments were not material during 2020. This category of real estate is not included within the other metrics in this table.

Dispositions

The following table summarizes our dispositions of net investments in real estate which include contributions to unconsolidated co-investment ventures and dispositions to third parties (dollars and square feet in thousands):

Three Months Ended September 30,Nine Months Ended September 30,
2021 (1)20202021 (1)2020
Dispositions of development properties and land, net (2)
Number of properties12123132
Square feet2,8763,15012,33711,776
Net proceeds$368,131$410,398$1,814,331$1,384,227
Gains on dispositions of development properties and land, net$139,406$134,207$500,410$383,373
Other dispositions of investments in real estate, net
Number of properties31157438
Square feet5,8062,55812,0606,635
Net proceeds$738,396$409,303$1,334,168$763,615
Gains on other dispositions of investments in real estate, net$214,390$108,927$358,180$184,357

Index

(1)During the three and nine months ended September 30, 2021, we sold our ownership interest in an unconsolidated other venture.
(2)The gains we recognize in Gains on Dispositions of Development Properties and Land, Net are primarily driven by the contribution of newly developed properties to our unconsolidated co-investment ventures and occasionally sales to a third party.

Leases

We recognized lease right-of-use assets of $425.6 million and $492.8 million within Other Assets and lease liabilities of $419.2 million and $487.0 million within Other Liabilities, for land and office space leases in which we are the lessee, on the Consolidated Balance Sheets at September 30, 2021 and December 31, 2020, respectively.

NOTE 4. UNCONSOLIDATED ENTITIES

Summary of Investments

We have investments in entities through a variety of ventures. We co-invest in entities that own multiple properties with partners and investors and we provide asset and property management services to these entities, which we refer to as co-investment ventures. These entities may be consolidated or unconsolidated depending on the structure, our partner’s participation and other rights and our level of control of the entity. This note details our investments in unconsolidated co-investment ventures, which are related parties and accounted for using the equity method of accounting. See Note 7 for more detail regarding our consolidated investments that are not wholly owned.

We also have investments in other ventures, generally with one partner, which we account for using the equity method. We refer to our investments in both unconsolidated co-investment ventures and other ventures, collectively, as unconsolidated entities.

The following table summarizes our investments in and advances to unconsolidated entities (in thousands):

September 30,December 31,
20212020
Unconsolidated co-investment ventures$6,896,069$6,685,567
Other ventures (1)756,254916,447
Total$7,652,323$7,602,014
(1)During the nine months ended September 30, 2021, we acquired additional ownership interest in unconsolidated other ventures from our partners and began consolidating the real estate assets. We also sold our ownership interest in an unconsolidated other venture.

Unconsolidated Co-Investment Ventures

The following table summarizes the Strategic Capital Revenues we recognized in the Consolidated Statements of Income related to our unconsolidated co-investment ventures (in thousands):

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Recurring fees$100,167$80,403$288,049$231,263
Transactional fees14,39915,82753,47647,879
Promote revenue (1)1,570-13,821228,421
Total strategic capital revenues from unconsolidated co-investment ventures (2)$116,136$96,230$355,346$507,563
(1)Includes promote revenue earned from our unconsolidated co-investment venture in the U.S. in June 2020.
(2)These amounts exclude strategic capital revenues from other ventures.

Index

The following table summarizes the key property information, financial position and operating information of our unconsolidated co-investment ventures (not our proportionate share) and the amounts we recognized in the Consolidated Financial Statements related to these ventures (dollars and square feet in millions):

U.S.Other Americas (1)EuropeAsiaTotal
As of:Sep 30, 2021Dec 31, 2020Sep 30, 2021Dec 31, 2020Sep 30, 2021Dec 31, 2020Sep 30, 2021Dec 31, 2020Sep 30, 2021Dec 31, 2020
Key property information:
Ventures1122333399
Operating properties7167062362298047681841671,9401,870
Square feet11911753511951857467441420
Financial position:
Total assets ($)10,92910,8403,1553,02317,74716,91810,29810,20942,12940,990
Third-party debt ($)3,0633,1298678543,7504,0023,9923,83111,67211,816
Total liabilities ($)3,6773,7229328985,4995,6074,5064,38914,61414,616
Our investment balance ($) (2)1,8831,8868328113,3633,1528188376,8966,686
Our weighted average ownership (3)25.3%25.6%40.1%40.8%29.7%30.0%15.2%15.2%26.0%26.1%
U.S.Other Americas (1)EuropeAsiaTotal
Operating Information:Sep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020
For the three months ended:
Total revenues ($)2602378170348303164148853758
Net earnings ($)152292823848049152313284
Our earnings from unconsolidated co-investment ventures, net ($)4099827278238467
For the nine months ended:
Total revenues ($)7717022342041,0298744834292,5172,209
Net earnings ($)2551038669253230120210714612
Our earnings from unconsolidated co-investment ventures, net ($)6828312681752032200161
(1)Prologis Brazil Logistics Venture (“PBLV”) and our other Brazilian joint ventures are combined as one venture for the purpose of this table.
(2)Prologis’ investment balance is presented at our adjusted basis derived from the ventures’ U.S. GAAP information. The difference between our ownership interest of a venture’s equity and our investment balance at September 30, 2021 and December 31, 2020, resulted principally from four types of transactions: (i) deferred gains from the contribution of property to a venture prior to January 1, 2018; (ii) recording additional costs associated with our investment in the venture; (iii) receivables, principally for fees and promotes ($126.9 million and $165.6 million, respectively); and (iv) customer security deposits retained subsequent to property contributions to Nippon Prologis REIT, Inc.
(3)Represents our weighted average ownership interest in all unconsolidated co-investment ventures based on each entity’s contribution of total assets before depreciation, net of other liabilities.

Equity Commitments Related to Certain Unconsolidated Co-Investment Ventures

At September 30, 2021, our outstanding equity commitments were $333.6 million, principally for Prologis China Logistics Venture. The equity commitments expire from 2021 to 2028 if they have not been previously called.

NOTE 5. ASSETS HELD FOR SALE OR CONTRIBUTION

We had investments in certain real estate properties that met the criteria to be classified as held for sale or contribution at September 30, 2021 and December 31, 2020. At the time of classification, these properties were expected to be sold to third parties or were recently stabilized and expected to be contributed to unconsolidated co-investment ventures within twelve months. The amounts included in Assets Held for Sale or Contribution represented real estate investment balances and the related assets and liabilities.

Index

Assets held for sale or contribution consisted of the following (dollars and square feet in thousands):

September 30,December 31,
20212020 (1)
Number of operating properties1766
Square feet5,85612,923
Total assets held for sale or contribution$571,671$1,070,724
Total liabilities associated with assets held for sale or contribution – included in Other Liabilities$6,178$16,214
(1)At December 31, 2020, Assets Held for Sale or Contribution included certain properties acquired through the Liberty Transaction and the IPT Transaction that were subsequently sold during 2021.

NOTE 6. DEBT

All debt is incurred by the OP or its consolidated subsidiaries.

The following table summarizes our debt (dollars in thousands):

September 30, 2021December 31, 2020
Weighted AverageAmountWeighted AverageAmount
Interest Rate (1)Term (2)Outstanding (3)Interest Rate (1)Term (2)Outstanding (3)
Credit facilities0.8%2.5$100,0000.8%2.0$171,794
Senior notes1.6%11.714,887,5892.0%11.214,275,870
Term loans and unsecured other0.8%5.71,405,9810.9%5.61,764,311
Secured mortgage3.4%3.2742,0983.1%3.0637,101
Total1.6%10.8$17,135,6681.9%10.2$16,849,076
(1)The weighted average interest rates presented represent the effective interest rates (including amortization of debt issuance costs and the noncash premiums or discounts) at the end of the period for the debt outstanding and include the impact of designated interest rate swaps, which effectively fix the interest rate on certain variable rate debt.
(2)The weighted average term represents the remaining maturity in years on the debt outstanding at period end.
(3)We borrow in the functional currencies of the countries where we invest. Included in the outstanding balances were borrowings denominated in the following currencies:
September 30, 2021December 31, 2020
Weighted Average Interest RateAmount Outstanding% of TotalWeighted Average Interest RateAmount Outstanding% of Total
British pound sterling2.2%$1,005,2665.9%2.2%$1,019,4806.1%
Canadian dollar2.7%283,7511.7%2.7%285,7081.7%
Euro1.1%6,877,87340.0%1.4%6,549,67638.8%
Japanese yen0.8%3,146,73618.4%0.8%2,877,24717.1%
U.S. dollar2.6%5,822,04234.0%2.8%6,116,96536.3%
Total1.6%$17,135,668100.0%1.9%$16,849,076100.0%

Credit Facilities

We have a global senior credit facility (the “2019 Global Facility”) under which we may draw in British pounds sterling, Canadian dollars, euro, Japanese yen, Mexican pesos and U.S. dollars on a revolving basis up to $3.5 billion (subject to currency fluctuations). In April 2021, we entered into a second global senior credit facility (the “2021 Global Facility”) under which we may draw in Canadian dollars, euro, British pounds sterling, Japanese yen, Mexican pesos and U.S. dollars on a revolving basis up to $1.0 billion (subject to currency fluctuations). The 2019 Global Facility is scheduled to initially mature in January 2023 and the 2021 Global Facility in April 2024; however, we may extend the maturity date for both facilities by six months on two occasions, subject to the payment of extension fees. We have the ability to increase the 2019 Global Facility to $4.5 billion and the 2021 Global Facility to $2.0 billion, subject to currency fluctuations and obtaining additional lender commitments.

We also have a Japanese yen revolver (the “Yen Credit Facility”) with total commitments of ¥55.0 billion ($491.1 million at September 30, 2021). We have the ability to increase the borrowing capacity of the Yen Credit Facility to ¥75.0 billion ($669.7 million at September 30, 2021), subject to obtaining additional lender commitments. The Yen Credit Facility is initially scheduled to mature in July 2024; however, we may extend the maturity date for one year, subject to the payment of extension fees.

Index

We refer to the 2019 Global Facility, the 2021 Global Facility and the Yen Credit Facility, collectively, as our “Credit Facilities.” Pricing for the Credit Facilities, including the spread over the applicable benchmark and the rates applicable to facility fees and letter of credit fees, varies based on the public debt ratings of the OP.

Liquidity

The following table summarizes information about our available liquidity at September 30, 2021 (in millions):

Aggregate lender commitments
Credit Facilities$4,990
Less:
Borrowings outstanding100
Outstanding letters of credit14
Current availability$4,876
Cash and cash equivalents585
Total liquidity$5,461

Senior Notes

The following table summarizes the issuances and redemptions of senior notes during the nine months ended September 30, 2021 (principal in thousands):

Aggregate PrincipalIssuance Date Weighted Average
Issuance DateBorrowing CurrencyUSD (1)Interest Rate (2)Term (3)Maturity Dates
February€1,350,000$1,639,3050.7%14.3February 2032 – 2041
February$400,000$400,0001.6%10.1March 2031
June¥65,000,000$587,4410.8%15.4June 2028 – 2061
Total$2,626,7460.9%13.9
Aggregate PrincipalRedemption Date Weighted Average
Redemption DateBorrowing CurrencyUSD (1)Interest Rate (2)Term (3)Maturity Dates
March€599,514$715,7003.4%3.0February 2024
March$750,000$750,0003.8%4.7November 2025
Total$1,465,7003.6%3.8
(1)The exchange rate used to calculate into U.S. dollars was the spot rate at the settlement date.
(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.

During the nine months ended September 30, 2021, we used the net proceeds from the issuance of the senior notes to fund the senior note redemptions, repay other indebtedness and for general corporate purposes.

Early Extinguishment of Debt

During the nine months ended September 30, 2021 and 2020, we recognized $187.5 million and $164.6 million of losses on the early extinguishment of debt, respectively. The losses during both periods were driven by the redemption of certain higher interest rate senior notes before their stated maturity. We redeemed $1.5 billion of senior notes with stated maturities of 2024 and 2025, and $2.0 billion of senior notes with stated maturities between 2021 and 2024, during the nine months ended September 30, 2021 and 2020, respectively. The losses in 2020 included the extinguishment of debt assumed in the Liberty Transaction and the IPT Transaction, which represented the excess of the prepayment penalties over the premium recorded upon assumption of the debt.

Term Loans

In April 2021, the multi-currency term loan (“2017 Term Loan”) was terminated, the outstanding balance paid down and the interest rate swap contracts associated with the outstanding balance of $250.3 million were settled.

Index

Long-Term Debt Maturities

Scheduled principal payments due on our debt for the remainder of 2021 and for each year through the period ended December 31, 2025, and thereafter were as follows at September 30, 2021 (in thousands):

Unsecured
CreditSeniorTerm LoansSecured
MaturityFacilitiesNotesand OtherMortgageTotal
2021 (1)$-$-$-$94,802$94,802
2022 (1)-521,0559,780203,095733,930
2023--133,85036,784170,634
2024 (2)100,000--174,433274,433
2025-44,648-144,446189,094
Thereafter-14,396,2881,268,00178,09515,742,384
Subtotal100,00014,961,9911,411,631731,65517,205,277
Premiums (discounts), net-3,495-12,31915,814
Debt issuance costs, net-(77,897)(5,650)(1,876)(85,423)
Total$100,000$14,887,589$1,405,981$742,098$17,135,668
(1)We expect to repay the amounts maturing in the next twelve months with cash generated from operations, proceeds from dispositions of real estate properties, or as necessary, with additional borrowings.
(2)Included in the 2024 maturities is the 2021 Global Facility that can be extended until 2025.

Financial Debt Covenants

Our senior notes and term loans outstanding at September 30, 2021 were subject to certain financial covenants under their related indentures. We are also subject to financial covenants under our Credit Facilities and certain secured mortgage debt. At September 30, 2021, we were in compliance with all of our financial debt covenants.

Guarantee of Finance Subsidiary Debt

We have finance subsidiaries as part of our operations in Europe (Prologis Euro Finance LLC), Japan (Prologis Yen Finance LLC) and the U.K. (Prologis Sterling Finance LLC) in order to mitigate our foreign currency risk by borrowing in the currencies in which we invest. These entities are 100% indirectly owned by the OP and all unsecured debt issued or to be issued by each entity is or will be fully and unconditionally guaranteed by the OP. There are no restrictions or limits on the OP’s ability to obtain funds from its subsidiaries by dividend or loan. In reliance on Rule 13-01 of Regulation S-X, the separate financial statements of Prologis Euro Finance LLC, Prologis Yen Finance LLC and Prologis Sterling Finance LLC are not provided.

NOTE 7. NONCONTROLLING INTERESTS

Prologis, L.P.

We report noncontrolling interests related to several entities we consolidate but of which we do not own 100% of the equity. These entities include two real estate partnerships that have issued limited partnership units to third parties. Depending on the specific partnership agreements, these limited partnership units are redeemable for cash or, at our option, shares of the Parent’s common stock, generally at a rate of one share of common stock to one limited partnership unit. We also consolidate certain entities in which we do not own 100% of the equity but the equity of these entities is not exchangeable into our common stock.

Prologis, Inc.

The noncontrolling interests of the Parent include the noncontrolling interests described above for the OP, as well as the limited partnership units in the OP that are not owned by the Parent. The outstanding limited partnership units receive quarterly cash distributions equal to the quarterly dividends paid on our common stock pursuant to the terms of the applicable partnership agreements.

Index

The following table summarizes these entities (dollars in thousands):

Our Ownership PercentageNoncontrolling InterestsTotal AssetsTotal Liabilities
Sep 30, 2021Dec 31, 2020Sep 30, 2021Dec 31, 2020Sep 30, 2021Dec 31, 2020Sep 30, 2021Dec 31, 2020
Prologis U.S. Logistics Venture55.0%55.0%$3,204,673$3,385,110$7,272,631$7,663,800$159,883$145,131
Other consolidated entities (1)variousvarious131,11498,4161,395,5791,066,129168,80773,987
Prologis, L.P.3,335,7873,483,5268,668,2108,729,929328,690219,118
Limited partners in Prologis, L.P. (2)(3)915,570869,507----
Prologis, Inc.$4,251,357$4,353,033$8,668,210$8,729,929$328,690$219,118
(1)Includes our two partnerships that have issued limited partnership units to third parties, as discussed above, along with various other consolidated entities. The limited partnership units outstanding at September 30, 2021 and December 31, 2020 were exchangeable into cash or, at our option, 0.3 million shares of the Parent’s common stock.
(2)We had 8.6 million Class A Units that were convertible into 8.0 million limited partnership units of the OP at September 30, 2021 and December 31, 2020.
(3)There were limited partnership units in the OP, excluding the Class A Units, that were exchangeable into cash or, at our option, 8.9 million and 8.2 million shares of the Parent’s common stock at September 30, 2021 and December 31, 2020, respectively. We issued 1.0 million limited partnership units to our partner as partial consideration for the acquisition of additional ownership interest in an unconsolidated other venture in 2021. Also included are the vested OP Long-Term Incentive Plan Units (“LTIP Units”) associated with our long-term compensation plan of 4.0 million at September 30, 2021 and 3.9 million at December 31, 2020. See further discussion of LTIP Units in Note 8.

NOTE 8. LONG-TERM COMPENSATION

Equity-Based Compensation Plans and Programs

Prologis Outperformance Plan (“POP”)

We have allocated participation points or a percentage of the compensation pool to participants under our POP corresponding to three-year performance periods beginning every January 1. The fair value of the awards is measured at the grant date and amortized over the period from the grant date to the date at which the awards vest, which ranges from three to ten years. The performance hurdle (“Outperformance Hurdle”) at the end of the initial three-year performance period requires our three-year compound annualized total stockholder return (“TSR”) to exceed a threshold set at the three-year compound annualized TSR for the Morgan Stanley Capital International (“MSCI”) US REIT Index for the same period plus 100 basis points. If the Outperformance Hurdle is met, a compensation pool will be formed equal to 3% of the excess value created, subject to a maximum as defined by each performance period. POP awards cannot be paid at a time when we meet the outperformance hurdle yet our absolute TSR is negative. If after seven years our absolute TSR has not been positive, the awards will be forfeited.

We granted participation points for the 2021 – 2023 performance period in January 2021, with a fair value of $30.3 million using a Monte Carlo valuation model that assumed a risk-free interest rate of 0.2% and an expected volatility of 32.0% for Prologis and 29.0% for the MSCI US REIT Index. The 2021 – 2023 performance period has an absolute maximum cap of $100 million. If an award is earned at the end of the initial three-year performance period, then 20% of the POP award is paid at the end of the initial performance period and the remaining 80% is subject to additional seven-year cliff vesting. The 20% that is paid at the end of the initial three-year performance period is subject to an additional three-year holding requirement.

The Outperformance Hurdle was met for the 2018 – 2020 performance period, which resulted in awards being earned at December 31, 2020. Additionally, awards were earned at December 31, 2020 for prior performance periods related to the compensation pool in excess of the initial award based on the terms of the POP awards granted prior to 2018. Awards of $100.0 million for the 2018 – 2020 performance period and $35.7 million in the aggregate for the 2016 – 2018 and 2017 – 2019 performance periods were awarded in January 2021 in the form of common stock, restricted stock units, POP LTIP Units and LTIP Units. The tables below include POP awards that were earned but are unvested while any vested awards are reflected within the Consolidated Statements of Equity and Capital. The initial grant date fair value derived using a Monte Carlo valuation model was used in determining the grant date fair value per unit in the tables below.

Other Equity-Based Compensation Plans and Programs

Our other equity-based compensation plans and programs include (i) the Prologis Promote Plan (“PPP”); (ii) the annual long-term incentive (“LTI”) equity award program (“Annual LTI Award”); and (iii) the annual bonus exchange program. Awards under these plans and programs may be issued in the form of restricted stock units (“RSUs”) or LTIP Units at the participant’s election. RSUs and LTIP

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Units are valued based on the market price of the Parent’s common stock on the date the award is granted and the grant date value is charged to compensation expense over the service period.

Summary of Award Activity

RSUs

The following table summarizes the activity for RSUs for the nine months ended September 30, 2021 (units in thousands):

Weighted Average
Unvested RSUsGrant Date Fair Value
Balance at January 1, 2021986$80.32
Granted (1)69178.51
Vested and distributed(392)76.85
Forfeited(150)75.88
Balance at September 30, 20211,135$81.01
(1)Included in granted were unvested units based on the POP performance criteria being met for the 2018 – 2020 performance period and represented the earned award amounts subject to an additional vesting period. Unvested units are included in the award discussion above. These amounts also include awards earned for prior performance periods related to the compensation pool in excess of the initial award.

LTIP Units

The following table summarizes the activity for LTIP Units for the nine months ended September 30, 2021 (units in thousands):

UnvestedWeighted Average
LTIP UnitsGrant Date Fair Value
Balance at January 1, 20213,052$66.50
Granted (1)1,26459.10
Forfeited(51)55.66
Vested LTIP Units(944)79.80
Balance at September 30, 20213,321$60.07
(1)Included in granted were unvested units based on the POP performance criteria being met for the 2018 – 2020 performance period and represented the earned award amounts subject to an additional vesting period. Unvested units are included in the award discussion above. These amounts also include awards earned for prior performance periods related to the compensation pool in excess of the initial award.

NOTE 9. EARNINGS PER COMMON SHARE OR UNIT

We determine basic earnings per share or unit based on the weighted average number of shares of common stock or units outstanding during the period. We compute diluted earnings per share or unit based on the weighted average number of shares or units outstanding combined with the incremental weighted average effect from all outstanding potentially dilutive instruments.

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The computation of our basic and diluted earnings per share and unit was as follows (in thousands, except per share and unit amounts):

Three Months EndedNine Months Ended
September 30,September 30,
Prologis, Inc.2021202020212020
Net earnings attributable to common stockholders – Basic$722,007$298,695$1,686,447$1,192,652
Net earnings attributable to exchangeable limited partnership units (1)19,8908,44047,13134,252
Adjusted net earnings attributable to common stockholders – Diluted$741,897$307,135$1,733,578$1,226,904
Weighted average common shares outstanding – Basic739,439738,194739,217724,876
Incremental weighted average effect on exchange of limited partnership units (1)20,42121,11020,86020,960
Incremental weighted average effect of equity awards5,0855,3154,5675,135
Weighted average common shares outstanding – Diluted (2)764,945764,619764,644750,971
Net earnings per share attributable to common stockholders:
Basic$0.98$0.40$2.28$1.65
Diluted$0.97$0.40$2.27$1.63
Three Months EndedNine Months Ended
September 30,September 30,
Prologis, L.P.2021202020212020
Net earnings attributable to common unitholders$741,794$307,069$1,733,355$1,226,646
Net earnings attributable to Class A Units(7,816)(3,216)(18,263)(13,242)
Net earnings attributable to common unitholders – Basic733,978303,8531,715,0921,213,404
Net earnings attributable to Class A Units7,8163,21618,26313,242
Net earnings attributable to exchangeable other limited partnership units10366223258
Adjusted net earnings attributable to common unitholders – Diluted$741,897$307,135$1,733,578$1,226,904
Weighted average common partnership units outstanding – Basic751,558750,971751,773737,489
Incremental weighted average effect on exchange of Class A Units8,0038,0348,0058,048
Incremental weighted average effect on exchange of other limited partnership units299299299299
Incremental weighted average effect of equity awards of Prologis, Inc.5,0855,3154,5675,135
Weighted average common units outstanding – Diluted (2)764,945764,619764,644750,971
Net earnings per unit attributable to common unitholders:
Basic$0.98$0.40$2.28$1.65
Diluted$0.97$0.40$2.27$1.63
(1)Earnings allocated to the exchangeable OP units not held by the Parent have been included in the numerator and exchangeable common units have been included in the denominator for the purpose of computing diluted earnings per share for all periods as the per share and unit amount is the same.
(2)Our total weighted average potentially dilutive shares and units outstanding consisted of the following:
Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
Class A Units8,0038,0348,0058,048
Other limited partnership units299299299299
Equity awards6,9657,6436,8637,749
Prologis, L.P.15,26715,97615,16716,096
Common limited partnership units12,11912,77712,55612,613
Prologis, Inc.27,38628,75327,72328,709

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NOTE 10. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Derivative Financial Instruments

In the normal course of business, our operations are exposed to market risks, including the effect of changes in foreign currency exchange rates and interest rates. We may enter into derivative financial instruments to offset these underlying market risks. There have been no significant changes in our policy or strategy from what was disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.

The following table presents the fair value of our derivative financial instruments recognized within Other Assets and Other Liabilities on the Consolidated Balance Sheets (in thousands):

September 30, 2021December 31, 2020
AssetLiabilityAssetLiability
Undesignated derivatives
Foreign currency contracts
Forwards
Brazilian real$495$21$620$66
British pound sterling6,0451,6901747,589
Canadian dollar2,9702,326805,827
Chinese renminbi-410-717
Euro31,144-736,247
Japanese yen17,485-7201,604
Swedish krona1,578397-2,355
Designated derivatives
Foreign currency contracts
Net investment hedges
British pound sterling10,463--2,081
Canadian dollar5,949748-9,847
Interest rate swaps
Cash flow hedges
Euro-6-9
U.S. dollar---140
Total fair value of derivatives$76,129$5,598$1,667$36,482

Undesignated Derivative Financial Instruments

Foreign Currency Contracts

The following table summarizes the activity of our undesignated foreign currency contracts for the nine months ended September 30 (in millions, except for weighted average forward rates and number of active contracts):

20212020
CADEURGBPJPYSEKOtherTotalCADEURGBPJPYSEKOtherTotal
Notional amounts at January 1 ($)16347420725238281,16212058117818231151,107
New contracts ($)219362166772027871298452948210321,292
Matured, expired or settled contracts ($)(199)(120)(115)(58)(14)(31)(537)(32)(1,099)(311)(66)(9)(31)(1,548)
Notional amounts at September 30 ($)18371625827144241,4961173271611983216851
Weighted average forward rate at September 301.261.231.37103.198.471.341.171.31102.809.35
Active contracts at September 3073876978714855474831

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The following table summarizes the undesignated derivative financial instruments exercised and associated realized and unrealized gains (losses) in Foreign Currency and Derivative Gains (Losses), Net in the Consolidated Statements of Income (in millions, except for number of exercised contracts):

Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
Exercised contracts6128135101
Realized gains (losses) on the matured, expired or settled contracts$(2)$1$(11)$11
Unrealized gains (losses) on the change in fair value of outstanding contracts$35$(27)$75$7

Designated Derivative Financial Instruments

Changes in the fair value of derivatives that are designated as net investment hedges of our foreign operations and cash flow hedges are recorded in Accumulated Other Comprehensive Income (Loss) (“AOCI/L”) and reflected within the Other Comprehensive Income (Loss) table below.

Foreign Currency Contracts

The following table summarizes the activity of our foreign currency contracts designated as net investment hedges for the nine months ended September 30 (in millions, except for weighted average forward rates and number of active contracts):

20212020
CADGBPTotalCADGBPTotal
Notional amounts at January 1 ($)37713551297387484
New contracts ($)535300835298324622
Matured, expired or settled contracts ($)(299)-(299)(48)(576)(624)
Notional amounts at September 30 ($)6134351,048347135482
Weighted average forward rate at September 301.261.381.321.35
Active contracts at September 307461

Interest Rate Swaps

The following table summarizes the activity of our interest rate swaps designated as cash flow hedges for the nine months ended September 30 (in millions):

20212020
EUR (1)USD (1)TotalEURUSDTotal
Notional amounts at January 1 ($)165250415---
New contracts ($)---1651,5001,665
Matured, expired or settled contracts ($)-(250)(250)-(1,250)(1,250)
Notional amounts at September 30 ($)165-165165250415
(1)During the year ended December 31, 2020, we entered into interest rate swap contracts to effectively fix the interest rate on our euro senior notes issued in February 2020 and the U.S. dollar outstanding balance on our 2017 Term Loan. In April 2021, the 2017 Term Loan was terminated and the interest rate swap contracts associated with the outstanding balance were settled.

Designated Nonderivative Financial Instruments

The following table summarizes our debt and accrued interest, designated as a hedge of our net investment in international subsidiaries as of the quarter ended (in millions):

September 30, 2021December 31, 2020
British pound sterling$396$842

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The following table summarizes the unrealized gains (losses) in Foreign Currency and Derivative Gains (Losses), Net on the remeasurement of the unhedged portion of our debt and accrued interest, including euro and British pound sterling denominated debt, for the three and nine months ended September 30 (in millions):

Three Months EndedNine Months Ended
September 30,September 30,
2021202020212020
Unrealized gains (losses) on the unhedged portion$30$(77)$73$(51)

Other Comprehensive Income (Loss)

The change in Other Comprehensive Income (Loss) in the Consolidated Statements of Comprehensive Income during the periods presented was due to the translation into U.S. dollars from the consolidation of the financial statements of our consolidated subsidiaries whose functional currency is not the U.S. dollar. The change in fair value of the effective portion of our derivative financial instruments that have been designated as net investment hedges and cash flow hedges and the translation of the hedged portion of our debt, as discussed above, are also included in Other Comprehensive Income (Loss).

The following table presents these changes in Other Comprehensive Income (Loss) (in thousands):

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Derivative net investment hedges$25,549$(4,234)$11,090$18,290
Debt designated as nonderivative net investment hedges15,118(46,570)(3,715)2,439
Cumulative translation adjustment8,0415,228194,506(200,891)
Total foreign currency translation gains (losses), net$48,708$(45,576)$201,881$(180,162)
Cash flow hedges (1) (2)$872$1,581$8,246$(12,857)
Our share of derivatives from unconsolidated co-investment ventures2,8767985,133(6,839)
Total unrealized gains (losses) on derivative contracts, net$3,748$2,379$13,379$(19,696)
Total change in other comprehensive income (loss)$52,456$(43,197)$215,260$(199,858)
(1)We estimate an additional expense of $2.7 million will be reclassified to Interest Expense over the next 12 months from September 30, 2021, due to the amortization of previously settled derivatives designated as cash flow hedges.
(2)Included in the nine months ended September 30, 2020 was $16.8 million in losses associated with the termination of four U.S. dollar treasury lock contracts with an aggregate notional amount of $750.0 million that fixed the interest rate on the forecasted issuance of U.S. dollar senior notes issued in February 2020.

Fair Value Measurements

There have been no significant changes in our policy from what was disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.

Fair Value Measurements on a Recurring Basis

At September 30, 2021 and December 31, 2020, other than the derivatives discussed previously, we had no significant financial assets or financial liabilities that were measured at fair value on a recurring basis in the Consolidated Financial Statements. All of our derivatives held at September 30, 2021 and December 31, 2020, were classified as Level 2 of the fair value hierarchy.

Fair Value Measurements on Nonrecurring Basis

Acquired properties and assets we expect to sell or contribute are significant nonfinancial assets that met the criteria to be measured at fair value on a nonrecurring basis. At September 30, 2021 and December 31, 2020, we estimated the fair value of our properties using Level 2 or Level 3 inputs from the fair value hierarchy. See more information on our acquired properties in Notes 2 and 3 and assets held for sale or contribution in Note 5.

Fair Value of Financial Instruments

At September 30, 2021 and December 31, 2020, the carrying amounts of certain financial instruments, including cash and cash equivalents, accounts and notes receivable, accounts payable and accrued expenses were representative of their fair values.

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The differences in the fair value of our debt from the carrying value in the table below were the result of differences in interest rates or borrowing spreads that were available to us at September 30, 2021 and December 31, 2020, as compared with those in effect when the debt was issued or assumed, including reduced borrowing spreads due to our improved credit ratings. The fair value of the senior notes decreased during the nine months ended September 30, 2021 due to the increase in bond yields in the market as compared to the weighted average interest rates on our senior notes. The senior notes and many of the issuances of secured mortgage debt contain prepayment penalties or yield maintenance provisions that could make the cost of refinancing the debt at lower rates exceed the benefit that would be derived from doing so. We evaluate this on an on-going basis and have taken the opportunity to refinance some of our debt at lower rates and longer maturities as discussed in Note 6.

The following table reflects the carrying amounts and estimated fair values of our debt (in thousands):

September 30, 2021December 31, 2020
Carrying ValueFair ValueCarrying ValueFair Value
Credit Facilities$100,000$100,000$171,794$171,794
Senior notes14,887,58915,239,27514,275,87015,452,381
Term loans and unsecured other1,405,9811,417,3331,764,3111,785,706
Secured mortgage742,098766,439637,101673,549
Total$17,135,668$17,523,047$16,849,076$18,083,430

NOTE 11. BUSINESS SEGMENTS

Our current business strategy includes two operating segments: Real Estate Operations and Strategic Capital. We generate revenues, earnings, net operating income and cash flows through our segments, as follows:

•Real Estate Operations. This operating segment represents the ownership and development of operating properties and is the largest component of our revenue and earnings. We collect rent from our customers through operating leases, including reimbursements for the majority of our property operating costs. Each operating property is considered to be an individual operating segment with similar economic characteristics; these properties are combined within the reportable business segment based on geographic location. Our Real Estate Operations segment also includes development activities that lead to rental operations, including land held for development and properties currently under development, and other real estate investments. Within this line of business, we utilize the following: (i) our land bank; (ii) the development expertise of our local teams; and (iii) our customer relationships. Land we own and lease to customers under land leases, along with land and buildings we lease, is also included in this segment.
•Strategic Capital. This operating segment represents the management of unconsolidated co-investment ventures. We generate strategic capital revenues primarily from our unconsolidated co-investment ventures through asset management and property management services and we earn additional revenues by providing leasing, acquisition, construction, development, financing and disposition services. Depending on the structure of the venture and the returns provided to our partners, we also earn revenues through promotes periodically during the life of a venture or upon liquidation. Each unconsolidated co-investment venture we manage is considered to be an individual operating segment with similar economic characteristics; these ventures are combined within the reportable business segment based on geographic location.

Reconciliations are presented below for: (i) each reportable business segment’s revenues from external customers to Total Revenues; (ii) each reportable business segment’s net operating income from external customers to Operating Income and Earnings Before Income Taxes; and (iii) each reportable business segment’s assets to Total Assets. Our chief operating decision makers rely primarily on net operating income and similar measures to make decisions about allocating resources and assessing segment performance. The applicable components of Total Revenues, Operating Income, Earnings Before Income Taxes and Total Assets are allocated to each reportable business segment’s revenues, net operating income and assets. Items that are not directly assignable to a segment, such as certain corporate income and expenses, are not allocated but reflected as reconciling items.

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The following reconciliations are presented in thousands:

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Revenues:
Real estate operations segment:
U.S.$992,583$933,916$2,939,364$2,660,178
Other Americas24,79121,13274,17966,947
Europe11,91219,55844,14053,048
Asia12,3159,17433,72830,723
Total real estate operations segment1,041,601983,7803,091,4112,810,896
Strategic capital segment:
U.S.60,31929,322130,172320,181
Other Americas10,6798,85140,81727,558
Europe45,32536,959136,589101,081
Asia25,12523,86183,21867,422
Total strategic capital segment141,44898,993390,796516,242
Total revenues1,183,0491,082,7733,482,2073,327,138
Segment net operating income:
Real estate operations segment:
U.S. (1)746,710699,2552,190,3081,976,985
Other Americas18,34115,28855,16548,561
Europe6,08914,20726,75433,017
Asia9,4416,52024,50921,543
Total real estate operations segment780,581735,2702,296,7362,080,106
Strategic capital segment:
U.S. (1)31,3975,18455,051222,390
Other Americas7,5186,27632,07217,803
Europe34,08826,775102,53766,483
Asia16,05614,96754,19835,656
Total strategic capital segment89,05953,202243,858342,332
Total segment net operating income869,640788,4722,540,5942,422,438
Reconciling items:
General and administrative expenses(66,970)(74,348)(219,344)(208,701)
Depreciation and amortization expenses(390,806)(400,738)(1,181,117)(1,144,903)
Gains on dispositions of development properties and land, net139,406134,207500,410383,373
Gains on other dispositions of investments in real estate, net214,390108,927358,180184,357
Operating income765,660556,5201,998,7231,636,564
Earnings from unconsolidated entities, net91,81873,972231,286216,844
Interest expense(63,638)(80,711)(203,331)(237,651)
Interest and other income (expense), net(846)(5,866)4,615(4,469)
Foreign currency and derivative gains (losses), net64,172(100,974)138,244(48,481)
Losses on early extinguishment of debt, net-(98,266)(187,453)(164,606)
Earnings before income taxes$857,166$344,675$1,982,084$1,398,201

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September 30, 2021December 31, 2020
Segment assets:
Real estate operations segment:
U.S.$43,812,656$42,559,023
Other Americas1,218,0151,145,699
Europe1,495,5951,604,393
Asia1,138,6531,081,876
Total real estate operations segment47,664,91946,390,991
Strategic capital segment: (2)
U.S.12,30213,257
Europe25,28025,280
Asia312354
Total strategic capital segment37,89438,891
Total segment assets47,702,81346,429,882
Reconciling items:
Investments in and advances to unconsolidated entities7,652,3237,602,014
Assets held for sale or contribution571,6711,070,724
Cash and cash equivalents585,071598,086
Other assets504,792364,299
Total reconciling items9,313,8579,635,123
Total assets$57,016,670$56,065,005
(1)This includes compensation and personnel costs for employees who were located in the U.S. but also support other geographies.
(2)Represents management contracts and goodwill recorded in connection with business combinations associated with the Strategic Capital segment. Goodwill was $25.3 million at September 30, 2021 and December 31, 2020.

NOTE 12. SUPPLEMENTAL CASH FLOW INFORMATION

Our significant noncash investing and financing activities for the nine months ended September 30, 2021 and 2020 included the following:

•We recognized lease right-of-use assets and lease liabilities related to leases in which we are the lessee within Other Assets and Other Liabilities on the Consolidated Balance Sheets, including any new leases, renewals and modifications of $32.7 million in 2021 and $6.6 million in 2020 for both assets and liabilities.
•We capitalized $19.4 million and $18.0 million in 2021 and 2020, respectively, of equity-based compensation expense.
•We assumed debt of $93.7 million upon obtaining a controlling financial interest in and consolidating an unconsolidated venture in 2021.
•We received $299.4 million and $399.2 million in 2021 and 2020, respectively, of ownership interests in certain unconsolidated co-investment ventures as a portion of our proceeds from the contribution of properties to these entities, as disclosed in Note 4.
•We issued 0.3 million shares in both 2021 and 2020 of the Parent’s common stock upon redemption of an equal number of common limited partnership units in the OP.
•We issued 1.0 million common limited partnership units for $130.4 million to our partner and assumed debt of $121.6 million in our acquisition of additional ownership interest in an unconsolidated other venture in 2021.
•We formed an unconsolidated venture by contributing $10.0 million of land in 2021.
•An unconsolidated co-investment venture in the U.S. declared a distribution of $45.6 million, which we subsequently reinvested and increased our ownership in 2020.
•We received $23.7 million of equity interests in PCCLF for the contribution of real estate properties from Prologis China Logistics Venture II, LP in 2020.
•We issued 0.5 million common limited partnership units for $48.5 million as partial consideration for the acquisition of properties in 2020.

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•We completed the Liberty Transaction on February 4, 2020 for $13.0 billion through the issuance of equity and the assumption of debt. See Note 2 for more information on this transaction.

We paid $224.7 million and $230.9 million for interest, net of amounts capitalized, during the nine months ended September 30, 2021 and 2020, respectively.

We paid $85.0 million and $82.3 million for income taxes, net of refunds, during the nine months ended September 30, 2021 and 2020, respectively.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors Prologis, Inc.:

Results of Review of Interim Financial Information

We have reviewed the consolidated balance sheet of Prologis, Inc. and subsidiaries (the Company) as of September 30, 2021, the related consolidated statements of income, comprehensive income, and equity for the three-month and nine-month periods ended September 30, 2021 and 2020, the related consolidated statements of cash flows for the nine-month periods ended September 30, 2021 and 2020, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2020, and the related consolidated statements of income, comprehensive income, equity, and cash flows for the year then ended (not presented herein); and in our report dated February 10, 2021, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2020, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ KPMG LLP

Denver, Colorado October 26, 2021

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Report of Independent Registered Public Accounting Firm

To the Partners of Prologis, L.P. and the Board of Directors of Prologis, Inc.:

Results of Review of Interim Financial Information

We have reviewed the consolidated balance sheet of Prologis, L.P. and subsidiaries (the Operating Partnership) as of September 30, 2021, the related consolidated statements of income, comprehensive income, and capital for the three-month and nine-month periods ended September 30, 2021 and 2020, the related consolidated statements of cash flows for the nine-month periods ended September 30, 2021 and 2020, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Operating Partnership as of December 31, 2020, and the related consolidated statements of income, comprehensive income, capital, and cash flows for the year then ended (not presented herein); and in our report dated February 10, 2021, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2020, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This consolidated interim financial information is the responsibility of the Operating Partnership’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ KPMG LLP

Denver, Colorado October 26, 2021

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