Item 1. Financial Statements

PROLOGIS, INC.

CONSOLIDATED BA****LANCE SHEETS

(Unaudited)

(In thousands, except per share data)

	March 31, 2023				December 31, 2022
ASSETS
Investments in real estate properties	$	82,385,546			$	81,623,396
Less accumulated depreciation		9,508,351				9,036,085
Net investments in real estate properties		72,877,195				72,587,311
Investments in and advances to unconsolidated entities		9,680,097				9,698,898
Assets held for sale or contribution		734,106				531,257
Net investments in real estate		83,291,398				82,817,466
Cash and cash equivalents		522,501				278,483
Other assets		4,706,985				4,801,499
Total assets	$	88,520,884			$	87,897,448
LIABILITIES AND EQUITY
Liabilities:
Debt	$	25,153,342			$	23,875,961
Accounts payable and accrued expenses		1,507,748				1,711,885
Other liabilities		4,394,565				4,446,509
Total liabilities		31,055,655				30,034,355
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 March 31, 2023 and December 31, 2022		63,948				63,948
Common stock; $0.01 par value; 923,453 shares and 923,142 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively		9,235				9,231
Additional paid-in capital		54,058,036				54,065,407
Accumulated other comprehensive loss		(496,424	)			(443,609	)
Distributions in excess of net earnings		(799,577	)			(457,695	)
Total Prologis, Inc. stockholders’ equity		52,835,218				53,237,282
Noncontrolling interests		4,630,011				4,625,811
Total equity		57,465,229				57,863,093
Total liabilities and equity	$	88,520,884			$	87,897,448

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 Ended
		March 31,
		2023				2022
Revenues:
Rental		$	1,633,770			$	1,076,861
Strategic capital			134,701				133,925
Development management and other			116				8,342
Total revenues			1,768,587				1,219,128
Expenses:
Rental			412,554				275,674
Strategic capital			71,709				51,811
General and administrative			99,777				74,646
Depreciation and amortization			602,367				396,647
Other			7,184				9,589
Total expenses			1,193,591				808,367
Operating income before gains on real estate transactions, net			574,996				410,761
Gains on dispositions of development properties and land, net			-				210,206
Gains on other dispositions of investments in real estate, net			4,047				584,835
Operating income			579,043				1,205,802
Other income (expense):
Earnings from unconsolidated entities, net			75,779				76,962
Interest expense			(136,011	)			(64,064	)
Foreign currency and derivative gains and other income, net			8,614				48,409
Gains (losses) on early extinguishment of debt, net			3,275				(18,165	)
Total other income (expense)			(48,343	)			43,142
Earnings before income taxes			530,700				1,248,944
Income tax expense			(32,071	)			(29,222	)
Consolidated net earnings			498,629				1,219,722
Less net earnings attributable to noncontrolling interests			34,006				68,937
Net earnings attributable to controlling interests			464,623				1,150,785
Less preferred stock dividends			1,453				1,531
Net earnings attributable to common stockholders		$	463,170			$	1,149,254
Weighted average common shares outstanding – Basic			923,888				740,368
Weighted average common shares outstanding – Diluted			951,624				765,517
Net earnings per share attributable to common stockholders – Basic		$	0.50			$	1.55
Net earnings per share attributable to common stockholders – Diluted		$	0.50			$	1.54

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

Index

PROLOGIS, INC.

CONSOLIDATED STATEMENTS OF CO****MPREHENSIVE INCOME

(Unaudited)

(In thousands)

		Three Months Ended
		March 31,
		2023				2022
Consolidated net earnings		$	498,629			$	1,219,722
Other comprehensive income (loss):
Foreign currency translation gains (losses), net			(28,101	)			189,523
Unrealized gains (losses) on derivative contracts, net			(25,853	)			13,349
Comprehensive income			444,675				1,422,594
Net earnings attributable to noncontrolling interests			(34,006	)			(68,937	)
Other comprehensive loss (income) attributable to noncontrolling interests			1,139				(5,739	)
Comprehensive income attributable to common stockholders		$	411,808			$	1,347,918

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

Index

PROLOGIS, INC.

CON****SOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands)

Three Months Ended March 31, 2023 and 2022

					Common Stock												Accumulated				Distributions
					Number								Additional				Other				in Excess of				Non-
	Preferred				of				Par				Paid-in				Comprehensive				Net				controlling				Total
	Stock				Shares				Value				Capital				Loss				Earnings				Interests				Equity
Balance at January 1, 2023	$	63,948				923,142			$	9,231			$	54,065,407			$	(443,609	)		$	(457,695	)		$	4,625,811			$	57,863,093
Consolidated net earnings		-				-				-				-				-				464,623				34,006				498,629
Effect of equity compensation plans		-				288				4				13,468				-				-				51,416				64,888
Capital contributions		-				-				-				-				-				-				-				-
Redemption of noncontrolling interests		-				23				-				1,304				-				-				(43,573	)			(42,269	)
Foreign currency translation losses, net		-				-				-				-				(27,595	)			-				(506	)			(28,101	)
Unrealized losses on derivative contracts, net		-				-				-				-				(25,220	)			-				(633	)			(25,853	)
Reallocation of equity		-				-				-				(22,143	)			-				-				22,143				-
Dividends ($0.87 per common share) and other distributions		-				-				-				-				-				(806,505	)			(58,653	)			(865,158	)
Balance at March 31, 2023	$	63,948				923,453			$	9,235			$	54,058,036			$	**(**496,424	)		$	**(**799,577	)		$	4,630,011			$	57,465,229

					Common Stock												Accumulated				Distributions
					Number								Additional				Other				in Excess of				Non-
	Preferred				of				Par				Paid-in				Comprehensive				Net				controlling				Total
	Stock				Shares				Value				Capital				Income (Loss)				Earnings				Interests				Equity
Balance at January 1, 2022	$	63,948				739,827			$	7,398			$	35,561,608			$	(878,253	)		$	(1,327,828	)		$	4,315,337			$	37,742,210
Consolidated net earnings		-				-				-				-				-				1,150,785				68,937				1,219,722
Effect of equity compensation plans		-				290				3				4,217				-				-				35,947				40,167
Capital contributions		-				-				-				-				-				-				434				434
Redemption of noncontrolling interests		-				72				1				3,300				-				-				(29,570	)			(26,269	)
Foreign currency translation gains, net		-				-				-				-				184,152				-				5,371				189,523
Unrealized gains on derivative contracts, net		-				-				-				-				12,981				-				368				13,349
Reallocation of equity		-				-				-				(22,852	)			-				-				22,852				-
Dividends ($0.79 per common share) and other distributions		-				-				-				(10	)			-				(587,382	)			(129,542	)			(716,934	)
Balance at March 31, 2022	$	63,948				740,189			$	7,402			$	35,546,263			$	**(**681,120	)		$	**(**764,425	)		$	4,290,134			$	38,462,202

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

Index

PROLOGIS, INC.

CONSOL****IDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

		Three Months Ended
		March 31,
		2023				2022
Operating activities:
Consolidated net earnings		$	498,629			$	1,219,722
Adjustments to reconcile net earnings to net cash provided by operating activities:
Straight-lined rents and amortization of above and below market leases			(143,686	)			(37,374	)
Equity-based compensation awards			62,906				41,429
Depreciation and amortization			602,367				396,647
Earnings from unconsolidated entities, net			(75,779	)			(76,962	)
Operating distributions from unconsolidated entities			135,081				95,665
Decrease (increase) in operating receivables from unconsolidated entities			51,164				(819	)
Amortization of debt discounts and debt issuance costs, net			17,623				1,980
Gains on dispositions of development properties and land, net			-				(210,206	)
Gains on other dispositions of investments in real estate, net			(4,047	)			(584,835	)
Unrealized foreign currency and derivative losses (gains), net			10,113				(33,273	)
Losses (gains) on early extinguishment of debt, net			(3,275	)			18,165
Deferred income tax expense			3,577				7,492
Decrease in other assets			21,742				107,702
Decrease in accounts payable and accrued expenses and other liabilities			(62,118	)			(103,806	)
Net cash provided by operating activities			1,114,297				841,527
Investing activities:
Real estate development			(936,921	)			(639,636	)
Real estate acquisitions			(51,866	)			(451,343	)
Duke Transaction, net of cash acquired			(3,828	)			-
Tenant improvements and lease commissions on previously leased space			(78,955	)			(85,024	)
Property improvements			(19,302	)			(18,280	)
Proceeds from dispositions and contributions of real estate			54,903				1,495,260
Investments in and advances to unconsolidated entities			(39,677	)			(34,811	)
Return of investment from unconsolidated entities			21,169				14,302
Proceeds from the settlement of net investment hedges			5,323				3,732
Payments on the settlement of net investment hedges			-				(771	)
Net cash provided by (used in) investing activities			(1,049,154	)			283,429
Financing activities:
Dividends paid on common and preferred stock			(806,505	)			(587,382	)
Noncontrolling interests contributions			-				434
Noncontrolling interests distributions			(58,653	)			(129,542	)
Settlement of noncontrolling interests			(42,269	)			(26,269	)
Tax paid with shares withheld			(18,690	)			(22,602	)
Debt and equity issuance costs paid			(17,868	)			(8,058	)
Net payments on credit facilities			(1,337,857	)			(492,552	)
Repurchase of and payments on debt			(90,793	)			(332,995	)
Proceeds from the issuance of debt			2,545,042				1,841,450
Net cash provided by financing activities			172,407				242,484
Effect of foreign currency exchange rate changes on cash			6,468				(10,807	)
Net increase in cash and cash equivalents			244,018				1,356,633
Cash and cash equivalents, beginning of period			278,483				556,117
Cash and cash equivalents, end of period		$	522,501			$	1,912,750

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.

CONS****OLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

	March 31, 2023				December 31, 2022
ASSETS
Investments in real estate properties	$	82,385,546			$	81,623,396
Less accumulated depreciation		9,508,351				9,036,085
Net investments in real estate properties		72,877,195				72,587,311
Investments in and advances to unconsolidated entities		9,680,097				9,698,898
Assets held for sale or contribution		734,106				531,257
Net investments in real estate		83,291,398				82,817,466
Cash and cash equivalents		522,501				278,483
Other assets		4,706,985				4,801,499
Total assets	$	88,520,884			$	87,897,448
LIABILITIES AND CAPITAL
Liabilities:
Debt	$	25,153,342			$	23,875,961
Accounts payable and accrued expenses		1,507,748				1,711,885
Other liabilities		4,394,565				4,446,509
Total liabilities		31,055,655				30,034,355
Capital:
Partners’ capital:
General partner – preferred		63,948				63,948
General partner – common		52,771,270				53,173,334
Limited partners – common		862,734				843,263
Limited partners – Class A common		462,634				464,781
Total partners’ capital		54,160,586				54,545,326
Noncontrolling interests		3,304,643				3,317,767
Total capital		57,465,229				57,863,093
Total liabilities and capital	$	88,520,884			$	87,897,448

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

Index

PROLOGIS, L.P.

CONSOLIDATED STAT****EMENTS OF INCOME

(Unaudited)

(In thousands, except per unit amounts)

		Three Months Ended
		March 31,
		2023				2022
Revenues:
Rental		$	1,633,770			$	1,076,861
Strategic capital			134,701				133,925
Development management and other			116				8,342
Total revenues			1,768,587				1,219,128
Expenses:
Rental			412,554				275,674
Strategic capital			71,709				51,811
General and administrative			99,777				74,646
Depreciation and amortization			602,367				396,647
Other			7,184				9,589
Total expenses			1,193,591				808,367
Operating income before gains on real estate transactions, net			574,996				410,761
Gains on dispositions of development properties and land, net			-				210,206
Gains on other dispositions of investments in real estate, net			4,047				584,835
Operating income			579,043				1,205,802
Other income (expense):
Earnings from unconsolidated entities, net			75,779				76,962
Interest expense			(136,011	)			(64,064	)
Foreign currency and derivative gains and other income, net			8,614				48,409
Gains (losses) on early extinguishment of debt, net			3,275				(18,165	)
Total other income (expense)			(48,343	)			43,142
Earnings before income taxes			530,700				1,248,944
Income tax expense			(32,071	)			(29,222	)
Consolidated net earnings			498,629				1,219,722
Less net earnings attributable to noncontrolling interests			22,357				36,666
Net earnings attributable to controlling interests			476,272				1,183,056
Less preferred unit distributions			1,453				1,531
Net earnings attributable to common unitholders		$	474,819			$	1,181,525
Weighted average common units outstanding – Basic			939,054				753,159
Weighted average common units outstanding – Diluted			951,624				765,517
Net earnings per unit attributable to common unitholders – Basic		$	0.50			$	1.55
Net earnings per unit attributable to common unitholders – Diluted		$	0.50			$	1.54

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 Ended
		March 31,
		2023				2022
Consolidated net earnings		$	498,629			$	1,219,722
Other comprehensive income (loss):
Foreign currency translation gains (losses), net			(28,101	)			189,523
Unrealized gains (losses) on derivative contracts, net			(25,853	)			13,349
Comprehensive income			444,675				1,422,594
Net earnings attributable to noncontrolling interests			(22,357	)			(36,666	)
Other comprehensive income attributable to noncontrolling interests			(187	)			(155	)
Comprehensive income attributable to common unitholders		$	422,131			$	1,385,773

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

Index

PROLOGIS, L.P.

CONSOLI****DATED STATEMENTS OF CAPITAL

(Unaudited)

(In thousands)

Three Months Ended March 31, 2023 and 2022

	General Partner																Limited Partners																Non-
	Preferred								Common								Common								Class A Common								controlling				Total
	Units				Amount				Units				Amount				Units				Amount				Units				Amount				Interests				Capital
Balance at January 1, 2023		1,279			$	63,948				923,142			$	53,173,334				14,640			$	843,263				8,595			$	464,781			$	3,317,767			$	57,863,093
Consolidated net earnings		-				-				-				464,623				-				7,604				-				4,045				22,357				498,629
Effect of equity compensation plans		-				-				288				13,472				843				51,416				-				-				-				64,888
Capital contributions		-				-				-				-				-				-				-				-				-				-
Redemption of limited partners units		-				-				23				1,304				(386	)			(43,573	)			-				-				-				(42,269	)
Foreign currency translation gains (losses), net		-				-				-				(27,595	)			-				(451	)			-				(242	)			187				(28,101	)
Unrealized losses on derivative contracts, net		-				-				-				(25,220	)			-				(412	)			-				(221	)			-				(25,853	)
Reallocation of capital		-				-				-				(22,143	)			-				22,313				-				(170	)			-				-
Distributions ($0.87 per common unit) and other		-				-				-				(806,505	)			-				(17,426	)			-				(5,559	)			(35,668	)			(865,158	)
Balance at March 31, 2023		1,279			$	63,948				923,453			$	52,771,270				15,097			$	862,734				8,595			$	462,634			$	3,304,643			$	57,465,229

	General Partner																Limited Partners																Non-
	Preferred								Common								Common								Class A Common								controlling				Total
	Units				Amount				Units				Amount				Units				Amount				Units				Amount				Interests				Capital
Balance at January 1, 2022		1,279			$	63,948				739,827			$	33,362,925				12,354			$	557,097				8,595			$	360,702			$	3,397,538			$	37,742,210
Consolidated net earnings		-				-				-				1,150,785				-				19,856				-				12,415				36,666				1,219,722
Effect of equity compensation plans		-				-				290				4,220				837				35,947				-				-				-				40,167
Capital contributions		-				-				-				-				-				-				-				-				434				434
Redemption of limited partners units		-				-				72				3,301				(242	)			(29,570	)			-				-				-				(26,269	)
Foreign currency translation gains, net		-				-				-				184,152				-				3,222				-				1,994				155				189,523
Unrealized gains on derivative contracts, net		-				-				-				12,981				-				227				-				141				-				13,349
Reallocation of capital		-				-				-				(22,852	)			-				23,144				-				(292	)			-				-
Distributions ($0.79 per common unit) and other		-				-				-				(587,392	)			-				(13,241	)			-				(5,558	)			(110,743	)			(716,934	)
Balance at March 31, 2022		1,279			$	63,948				740,189			$	34,108,120				12,949			$	596,682				8,595			$	369,402			$	3,324,050			$	38,462,202

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

Index

PROLOGIS, L.P.

CONSOLIDA****TED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

		Three Months Ended
		March 31,
		2023				2022
Operating activities:
Consolidated net earnings		$	498,629			$	1,219,722
Adjustments to reconcile net earnings to net cash provided by operating activities:
Straight-lined rents and amortization of above and below market leases			(143,686	)			(37,374	)
Equity-based compensation awards			62,906				41,429
Depreciation and amortization			602,367				396,647
Earnings from unconsolidated entities, net			(75,779	)			(76,962	)
Operating distributions from unconsolidated entities			135,081				95,665
Decrease (increase) in operating receivables from unconsolidated entities			51,164				(819	)
Amortization of debt discounts and debt issuance costs, net			17,623				1,980
Gains on dispositions of development properties and land, net			-				(210,206	)
Gains on other dispositions of investments in real estate, net			(4,047	)			(584,835	)
Unrealized foreign currency and derivative losses (gains), net			10,113				(33,273	)
Losses (gains) on early extinguishment of debt, net			(3,275	)			18,165
Deferred income tax expense			3,577				7,492
Decrease in other assets			21,742				107,702
Decrease in accounts payable and accrued expenses and other liabilities			(62,118	)			(103,806	)
Net cash provided by operating activities			1,114,297				841,527
Investing activities:
Real estate development			(936,921	)			(639,636	)
Real estate acquisitions			(51,866	)			(451,343	)
Duke Transaction, net of cash acquired			(3,828	)			-
Tenant improvements and lease commissions on previously leased space			(78,955	)			(85,024	)
Property improvements			(19,302	)			(18,280	)
Proceeds from dispositions and contributions of real estate			54,903				1,495,260
Investments in and advances to unconsolidated entities			(39,677	)			(34,811	)
Return of investment from unconsolidated entities			21,169				14,302
Proceeds from the settlement of net investment hedges			5,323				3,732
Payments on the settlement of net investment hedges			-				(771	)
Net cash provided by (used in) investing activities			(1,049,154	)			283,429
Financing activities:
Distributions paid on common and preferred units			(829,490	)			(606,181	)
Noncontrolling interests contributions			-				434
Noncontrolling interests distributions			(35,668	)			(110,743	)
Redemption of common limited partnership units			(42,269	)			(26,269	)
Tax paid with shares of the Parent withheld			(18,690	)			(22,602	)
Debt and equity issuance costs paid			(17,868	)			(8,058	)
Net payments on credit facilities			(1,337,857	)			(492,552	)
Repurchase of and payments on debt			(90,793	)			(332,995	)
Proceeds from the issuance of debt			2,545,042				1,841,450
Net cash provided by financing activities			172,407				242,484
Effect of foreign currency exchange rate changes on cash			6,468				(10,807	)
Net increase in cash and cash equivalents			244,018				1,356,633
Cash and cash equivalents, beginning of period			278,483				556,117
Cash and cash equivalents, end of period		$	522,501			$	1,912,750

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 (Rental Operations and Development) and Strategic Capital. Our Real Estate Segment represents the ownership, leasing and development of logistics properties. Our Strategic Capital Segment represents the management of properties owned by our 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 March 31, 2023, the Parent owned a 97.55% common general partnership interest in the OP and substantially all of the preferred units in the OP. The remaining 2.45% 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, 2022, as filed with the SEC, and other public information.

NOTE 2. DUKE TRANSACTION

On October 3, 2022, we acquired Duke Realty Corporation and Duke Realty Limited Partnership (collectively “Duke” or the “Duke Transaction”). Through the Duke Transaction, we acquired a portfolio primarily comprised of logistics real estate assets, including 494 industrial operating properties, aggregating 144.4 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. There was approximately 15 million square feet of non-strategic industrial operating properties acquired in the Duke Transaction for which our intent is not to operate these properties long term. These assets are classified as other real estate investments within Investments in Real Estate Properties in the Consolidated Balance Sheets. The portfolio also included properties under development, land for future development and investments in other ventures.

The Duke Transaction was completed for $23.2 billion through the issuance of equity based on the value of the Prologis common stock and units issued of $18.8 billion, the assumption of debt of $4.2 billion and transaction costs. In connection with the transaction, each

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issued and outstanding share or unit held by a Duke shareholder or unitholder was converted automatically into 0.475 shares of Prologis common stock or common units of Prologis, L.P., respectively, including shares and units under Duke’s equity incentive plan that became fully vested at closing.

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

Number of Prologis shares and units issued upon conversion of Duke's shares and units at October 3, 2022		184.80
Multiplied by price of Prologis' common stock on September 30, 2022	$	101.60
Fair value of Prologis shares and units issued	$	18,776

We accounted for the Duke Transaction as an asset acquisition and as a result, the transaction costs of $239.8 million were capitalized to the basis of the acquired properties. Transaction costs included the direct costs incurred to acquire the real estate assets.

Under acquisition accounting, the total cost or total consideration exchanged is allocated to the real estate properties and related lease intangibles on a relative fair value basis. As the fair value of the properties acquired exceeded the purchase price, we allocated the bargain consideration at a property-level based on the relative fair value of the property in comparison to the total portfolio. All other assets acquired and liabilities assumed, including debt, and real estate assets that we intend to sell in the next twelve months were recorded at fair value. The total purchase price, including transaction costs, was allocated as follows (in millions):

Net investments in real estate	$	24,915
Cash and other assets		441
Debt		(4,162	)
Intangible liabilities, net of intangible assets (1)		(1,457	)
Accounts payable, accrued expenses and other liabilities		(719	)
Noncontrolling interests		(2	)
Total purchase price, including transaction costs	$	19,016

(1)

Intangible assets of $836.6 million and intangible liabilities of $2.3 billion were included within Other Assets and Other Liabilities, respectively, on the Consolidated Balance Sheets. The acquired lease intangibles from the Duke Transaction will be amortized over the terms of the respective leases with a weighted average remaining lease term of 64 months at October 3, 2022.

NOTE 3. REAL ESTATE

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

	Square Feet						Number of Buildings
	Mar 31,			Dec 31,			Mar 31,			Dec 31,			Mar 31,			Dec 31,
	2023			2022			2023			2022			2023			2022
Operating properties:
Buildings and improvements		600,985			597,362			2,836			2,825		$	49,020,423		$	48,650,334
Improved land														20,549,061			20,388,461
Development portfolio, including land costs:
Prestabilized		5,844			4,874			21			15			680,951			597,553
Properties under development		37,600			44,011			102			121			3,571,692			3,614,601
Land (1)														3,444,294			3,338,121
Other real estate investments (2)														5,119,125			5,034,326
Total investments in real estate properties														82,385,546			81,623,396
Less accumulated depreciation														9,508,351			9,036,085
Net investments in real estate properties													$	72,877,195		$	72,587,311

(1)

At March 31, 2023 and December 31, 2022, our land was comprised of 7,335 and 7,188 acres, respectively.

(2)

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

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Acquisitions

The following table summarizes our real estate acquisition activity (dollars and square feet in thousands):

		Three Months Ended March 31,
		2023				2022
Number of operating properties			-				1
Square feet			-				303
Acres of land			120				578
Acquisition cost of net investments in real estate, excluding other real estate investments		$	40,474			$	264,485
Acquisition cost of other real estate investments		$	6,185			$	223,411

Dispositions

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

		Three Months Ended March 31,
		2023				2022
Dispositions of development properties and land, net (1)
Number of properties			-				7
Square feet			-				2,583
Net proceeds		$	-			$	442,555
Gains on dispositions of development properties and land, net		$	-			$	210,206
Other dispositions of investments in real estate, net
Number of properties			5				102
Square feet			360				8,676
Net proceeds		$	57,008			$	1,264,280
Gains on other dispositions of investments in real estate, net		$	4,047			$	584,835

(1)

The gains we recognize in Gains on Dispositions of Development Properties and Land, Net are principally 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 $735.1 million and $735.4 million within Other Assets and lease liabilities of $642.4 million and $638.8 million within Other Liabilities, for land and office space leases in which we are the lessee, on the Consolidated Balance Sheets at March 31, 2023 and December 31, 2022, 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 management 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.

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

		March 31,				December 31,
		2023				2022
Unconsolidated co-investment ventures		$	8,055,322			$	8,073,927
Other ventures (1)			1,624,775				1,624,971
Total		$	9,680,097			$	9,698,898

(1)

Included in other ventures is our $174.9 million and $162.6 million investment in early and growth-stage companies that are focused on emerging technologies at March 31, 2023 and December 31, 2022, respectively.

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 March 31,
		2023				2022
Recurring fees		$	113,557			$	113,237
Transactional fees			15,080				17,229
Promote revenue			320				-
Total strategic capital revenues from unconsolidated co-investment ventures (1)		$	128,957			$	130,466

(1)

These amounts exclude strategic capital revenues from other ventures.

The following table summarizes the key property information, financial position and operating information of our unconsolidated co-investment ventures on a U.S. GAAP basis (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)								Europe								Asia								Total
At:	Mar 31, 2023				Dec 31, 2022				Mar 31, 2023				Dec 31, 2022				Mar 31, 2023				Dec 31, 2022				Mar 31, 2023				Dec 31, 2022				Mar 31, 2023				Dec 31, 2022
Key property information:
Ventures		1				1				2				2				2				2				3				3				8				8
Operating properties		740				739				260				260				992				989				220				217				2,212				2,205
Square feet		123				123				60				60				220				219				90				89				493				491
Financial position:
Total assets ($)		12,609				12,617				3,760				3,744				22,957				22,502				9,844				9,964				49,170				48,827
Third-party debt ($)		3,468				3,468				919				919				5,426				5,315				3,827				3,811				13,640				13,513
Total liabilities ($)		4,179				4,143				983				1,011				7,502				7,292				4,259				4,279				16,923				16,725
Our investment balance ($) (2)		2,371				2,398				1,041				1,070				3,850				3,786				793				820				8,055				8,074
Our weighted average ownership (3)		26.2	%			26.2	%			40.6	%			41.0	%			31.0	%			31.0	%			15.2	%			15.2	%			27.4	%			27.4	%
	U.S.								Other Americas (1)								Europe								Asia								Total
Operating Information:	Mar 31, 2023				Mar 31, 2022				Mar 31, 2023				Mar 31, 2022				Mar 31, 2023				Mar 31, 2022				Mar 31, 2023				Mar 31, 2022				Mar 31, 2023				Mar 31, 2022
For the three months ended:
Total revenues ($)		324				286				103				89				414				356				165				169				1,006				900
Net earnings ($)		101				72				43				33				69				104				27				34				240				243
Our earnings from unconsolidated co-investment ventures, net ($)		27				19				16				12				21				31				4				6				68				68

(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. The difference between our ownership interest of a venture’s equity and our investment balance at March 31, 2023 and December 31, 2022, results 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 ($146.4 million and $193.7 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.

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Equity Commitments Related to Certain Unconsolidated Co-Investment Ventures

At March 31, 2023, our outstanding equity commitments were $285.8 million, primarily for Prologis China Logistics Venture. The equity commitments expire from 2023 to 2028 if they have not been previously called. Typically, equity commitments are used for future development and acquisitions in the unconsolidated co-investment ventures.

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 March 31, 2023 and December 31, 2022. 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.

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

		March 31,				December 31,
		2023				2022
Number of operating properties			23				21
Square feet			5,771				4,061
Total assets held for sale or contribution		$	734,106			$	531,257
Total liabilities associated with assets held for sale or contribution – included in Other Liabilities		$	10,533			$	4,536

NOTE 6. DEBT

All debt is incurred by the OP or its consolidated subsidiaries. The following table summarizes our debt (dollars in thousands):

		March 31, 2023										December 31, 2022
		Weighted Average						Amount				Weighted Average						Amount
		Interest Rate (1)		Years (2)				Outstanding (3)				Interest Rate (1)		Years (2)				Outstanding (3)
Credit facilities		2.0%			2.3			$	212,553			4.2%			2.8			$	1,538,461
Senior notes		2.6%			10.7				22,399,340			2.3%			10.3				19,786,253
Term loans and unsecured other		2.4%			4.6				2,093,006			2.3%			4.9				2,106,592
Secured mortgage		3.2%			4.0				448,443			3.0%			4.3				444,655
Total		2.6**%**			10.0			$	25,153,342			2.5**%**			9.2			$	23,875,961

(1)

The weighted average interest rates represent the effective interest rates (including amortization of debt issuance costs and 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 years 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:

			March 31, 2023												December 31, 2022
			Weighted Average Interest Rate				Amount Outstanding				% of Total				Weighted Average Interest Rate				Amount Outstanding				% of Total
	British pound sterling			2.1	%		$	1,263,807				5.0	%			2.1	%		$	1,228,483				5.1	%
	Canadian dollar			4.9	%			813,415				3.2	%			4.5	%			814,491				3.4	%
	Euro			1.7	%			9,100,801				36.2	%			1.3	%			7,991,301				33.5	%
	Japanese yen			1.0	%			3,367,643				13.4	%			1.0	%			3,308,009				13.9	%
	U.S. dollar			3.6	%			10,607,676				42.2	%			3.6	%			10,533,677				44.1	%
	Total			2.6	%		$	25,153,342				100.0	%			2.5	%		$	23,875,961				100.0	%

Credit Facilities

At March 31, 2023, we had two global senior credit facilities: the 2021 Global Facility and the 2022 Global Facility. We may draw on both facilities in British pounds sterling, Canadian dollars, euro, Japanese yen, Mexican pesos and U.S. dollars on a revolving basis up to $2.0 billion and $3.0 billion (subject to currency fluctuations) on the 2021 and 2022 Global Facility, respectively. The 2021 Global Facility is scheduled to initially mature in April 2024 and the 2022 Global Facility in June 2026; however, we can extend the maturity date for each facility by six months on two occasions, subject to the payment of extension fees. We have the ability to increase the

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2021 Global Facility to $2.5 billion and the 2022 Global Facility to $4.0 billion, subject to currency fluctuations and obtaining additional lender commitments.

On April 5, 2023, we amended and restated the 2021 Global Facility as the 2023 Global Facility and upsized its borrowing capacity to $3.0 billion (subject to currency fluctuations). The 2023 Global Facility is scheduled to initially mature in June 2027; however, we can extend the maturity date for the facility by six months on two occasions, subject to the payment of extension fees. We have the ability to increase the 2023 Global Facility to $4.0 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 ($413.0 million at March 31, 2023). We have the ability to increase the borrowing capacity of the Yen Credit Facility to ¥75.0 billion ($563.2 million at March 31, 2023), 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.

We refer to the 2021 Global Facility, the 2022 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.

The following table summarizes information about our available liquidity at March 31, 2023 (in millions):

Aggregate lender commitments
Credit Facilities		$	5,473
Less:
Borrowings outstanding			213
Outstanding letters of credit			39
Current availability			5,221
Cash and cash equivalents			523
Total liquidity		$	5,744

Senior Notes

The following table summarizes the issuances of senior notes during the three months ended March 31, 2023 (principal in thousands):

		Aggregate Principal								Issuance Date Weighted Average
Issuance Date		Borrowing Currency				USD (1)				Interest Rate		Years		Maturity Dates
January		€	1,250,000			$	1,354,125			4.1%		13.8		January 2030 – 2043
March		$	1,200,000			$	1,200,000			4.9%		17.7		June 2033 – 2053
Total						$	2,554,125			4.5**%**		15.6

(1)

The exchange rate used to calculate into U.S. dollars was the spot rate at the settlement date.

Long-Term Debt Maturities

Scheduled principal payments due on our debt for the remainder of 2023 and for each year through the period ended December 31, 2027, and thereafter were as follows at March 31, 2023 (in thousands):

		Unsecured
		Credit				Senior				Term Loans				Secured
Maturity		Facilities				Notes				and Other				Mortgage				Total
2023 (1)		$	-			$	-			$	-			$	31,619			$	31,619
2024 (1) (2)			98,365				326,250				-				95,292				519,907
2025 (3)			-				37,544				722,420				153,480				913,444
2026 (4)			114,188				1,308,918				638,310				67,805				2,129,221
2027			-				1,738,332				53,787				4,156				1,796,275
Thereafter			-				19,569,982				682,140				89,135				20,341,257
Subtotal			212,553				22,981,026				2,096,657				441,487				25,731,723
Unamortized premiums (discounts), net			-				(481,289	)			946				8,554				(471,789	)
Unamortized debt issuance costs, net			-				(100,397	)			(4,597	)			(1,598	)			(106,592	)
Total		$	212,553			$	22,399,340			$	2,093,006			$	448,443			$	25,153,342

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(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 Yen Credit Facility that can be extended until 2025.

(3)

Included in the 2025 maturities is a Canadian term loan that we entered into in 2022 that can be extended until 2027.

(4)

Included in the 2026 maturities is the 2022 Global Facility that can be extended until 2027.

Financial Debt Covenants

Our senior notes, term loans and Credit Facilities outstanding at March 31, 2023 were subject to certain financial covenants under their related documents. At March 31, 2023, 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.

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

	Our Ownership Percentage								Noncontrolling Interests								Total Assets								Total Liabilities
	Mar 31, 2023				Dec 31, 2022				Mar 31, 2023				Dec 31, 2022				Mar 31, 2023				Dec 31, 2022				Mar 31, 2023				Dec 31, 2022
Prologis U.S. Logistics Venture		55.0	%			55.0	%		$	3,170,301			$	3,182,858			$	7,200,384			$	7,225,438			$	150,401			$	158,453
Other consolidated entities (1)	various				various					134,342				134,909				1,679,510				1,737,311				253,241				259,524
Prologis, L.P.										3,304,643				3,317,767				8,879,894				8,962,749				403,642				417,977
Limited partners in Prologis, L.P. (2)(3)										1,325,368				1,308,044				-				-				-				-
Prologis, Inc.									$	4,630,011			$	4,625,811			$	8,879,894			$	8,962,749			$	403,642			$	417,977

(1)

Includes 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 March 31, 2023 and December 31, 2022 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 8.1 million and 8.0 million limited partnership units of the OP at March 31, 2023 and December 31, 2022, respectively.

(3)

There were limited partnership units in the OP, excluding the Class A Units, that were exchangeable into cash or, at our option, 9.7 million and 10.0 million shares of the Parent’s common stock, at March 31, 2023 and December 31, 2022, respectively. Also included are the vested OP Long-Term Incentive Plan Units (“LTIP Units”) associated with our long-term compensation plans of 5.4 million and 4.6 million shares of the Parent’s common stock at March 31, 2023 and December 31, 2022, respectively. See further discussion of LTIP Units in Note 8.

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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 2023 – 2025 performance period in January 2023, with a fair value of $28.3 million using a Monte Carlo valuation model that assumed a risk-free interest rate of 4.2% and an expected volatility of 35.0% for Prologis and 31.0% for the MSCI US REIT Index. The 2023 – 2025 performance period has an absolute maximum cap of $100.0 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. Awards are in the form of common stock, restricted stock units, POP LTIP Units and LTIP Units.

The Outperformance Hurdle was met for the 2020 – 2022 performance period, which resulted in awards of $100.0 million being earned at December 31, 2022 and awarded in January 2023. Additionally, awards of $22.4 million were earned at December 31, 2022 and awarded in January 2023 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. 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 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 three months ended March 31, 2023 (units in thousands):

						Weighted Average
		Unvested RSUs				Grant Date Fair Value
Balance at January 1, 2023			1,533			$	100.59
Granted			764				96.37
Vested and distributed			(333	)			115.60
Forfeited			(11	)			129.01
Balance at March 31, 2023			1,953			$	96.22

LTIP Units

The following table summarizes the activity for LTIP Units for the three months ended March 31, 2023 (units in thousands):

		Unvested				Weighted Average
		LTIP Units				Grant Date Fair Value
Balance at January 1, 2023			4,214			$	73.31
Granted			1,292				78.94
Vested LTIP Units			(688	)			105.99
Balance at March 31, 2023			4,818			$	70.16

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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.

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 Ended
		March 31,
Prologis, Inc.		2023				2022
Net earnings attributable to common stockholders – Basic			463,170			$	1,149,254
Net earnings attributable to exchangeable limited partnership units (1)			11,743				32,338
Adjusted net earnings attributable to common stockholders – Diluted		$	474,913			$	1,181,592
Weighted average common shares outstanding – Basic			923,888				740,368
Incremental weighted average effect on exchange of limited partnership units (1)			23,535				21,089
Incremental weighted average effect of equity awards			4,201				4,060
Weighted average common shares outstanding – Diluted (2)			951,624				765,517
Net earnings per share attributable to common stockholders:
Basic		$	0.50			$	1.55
Diluted		$	0.50			$	1.54

		Three Months Ended
		March 31,
Prologis, L.P.		2023				2022
Net earnings attributable to common unitholders		$	474,819			$	1,181,525
Net earnings attributable to Class A Units			(4,045	)			(12,415	)
Net earnings attributable to common unitholders – Basic			470,774				1,169,110
Net earnings attributable to Class A Units			4,045				12,415
Net earnings attributable to exchangeable other limited partnership units			94				67
Adjusted net earnings attributable to common unitholders – Diluted		$	474,913			$	1,181,592
Weighted average common partnership units outstanding – Basic			939,054				753,159
Incremental weighted average effect on exchange of Class A Units			8,070				7,999
Incremental weighted average effect on exchange of other limited partnership units			299				299
Incremental weighted average effect of equity awards of Prologis, Inc.			4,201				4,060
Weighted average common units outstanding – Diluted (2)			951,624				765,517
Net earnings per unit attributable to common unitholders:
Basic		$	0.50			$	1.55
Diluted		$	0.50			$	1.54

(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 Ended
			March 31,
			2023				2022
	Class A Units			8,070				7,999
	Other limited partnership units			299				299
	Equity awards			7,773				5,839
	Prologis, L.P.			16,142				14,137
	Common limited partnership units			15,166				12,791
	Prologis, Inc.			31,308				26,928

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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, 2022.

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):

		March 31, 2023								December 31, 2022
		Asset				Liability				Asset				Liability
Undesignated derivatives
Foreign currency contracts
Forwards
Brazilian real		$	-			$	741			$	35			$	494
British pound sterling			20,796				915				29,187				648
Canadian dollar			8,316				10				12,074				2
Chinese renminbi			443				434				657				364
Euro			41,794				3,051				51,317				2,801
Japanese yen			33,454				807				34,022				2,344
Swedish krona			5,568				26				6,292				-
Designated derivatives
Foreign currency contracts
Net investment hedges
British pound sterling			16,305				555				23,534				-
Canadian dollar			18,002				-				24,552				-
Chinese renminbi			-				34				-				-
Interest rate swaps
Cash flow hedges
Euro			2,842				-				44,982				-
U.S. dollar			-				-				584				29
Total fair value of derivatives		$	147,520			$	6,573			$	227,236			$	6,682

Undesignated Derivative Financial Instruments

Foreign Currency Contracts

The following table summarizes the activity of our undesignated foreign currency contracts for the three months ended March 31 (in millions, except for weighted average forward rates and number of active contracts):

	2023																								2022
	CAD				EUR				GBP				JPY				Other				Total				CAD				EUR				GBP				JPY			SEK				Other				Total
Notional amounts at January 1 ($)		283				601				349				331				81				1,645				175				749				383				250			85				20				1,662
New contracts ($)		6				9				49				27				41				132				45				350				(21	)			61			9				13				457
Matured, expired or settled contracts ($)		(54	)			(43	)			(22	)			(21	)			(7	)			**(**147	)			(16	)			(182	)			(19	)			(22	)		(4	)			(4	)			**(**247	)
Notional amounts at March 31 ($)		235				567				376				337				115				1,630				204				917				343				289			90				29				1,872
Weighted average forward rate at March 31		1.29				1.18				1.30				110.58												1.27				1.19				1.27				104.39			9.30
Active contracts at March 31		88				94				100				97												81				93				77				85			84

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

		Three Months Ended
		March 31,
		2023				2022
Exercised contracts			52				32
Realized gains on the matured, expired or settled contracts		$	14			$	15
Unrealized gains (losses) on the change in fair value of outstanding contracts		$	(14	)		$	15

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 three months ended March 31 (in millions, except for weighted average forward rates and number of active contracts):

		2023																2022
		CAD				CNH				GBP				Total				BRL				CAD				GBP				Total
Notional amounts at January 1 ($)			534				-				440				974				-				535				432				967
New contracts ($)			119				100				-				219				44				204				229				477
Matured, expired or settled contracts ($)			(124	)			-				-				**(**124	)			(44	)			(125	)			(100	)			**(**269	)
Notional amounts at March 31 ($)			529				100				440				1,069				-				614				561				1,175
Weighted average forward rate at March 31			1.30				6.72				1.28								-				1.26				1.35
Active contracts at March 31			6				1				4								-				7				5

Interest Rate Swaps

The following table summarizes the activity of our interest rate swaps designated as cash flow hedges for the three months ended March 31 (in millions):

		2023												2022
		EUR				USD				Total				EUR				Total
Notional amounts at January 1 ($)			447				150				597				165				165
New contracts ($)			434				550				984				1,004				1,004
Matured, expired or settled contracts ($) (1)			(709	)			(700	)			**(**1,409	)			(722	)			**(**722	)
Notional amounts at March 31 ($)			172				-				172				447				447

(1)

Included in AOCI(L) are cash flow hedges of $268.6 million notional, that settled during the three months ended March 31, 2023, to hedge our exposure to the variability in future cash flows for forecasted debt transactions that have not occurred and will be hedged over 10 years.

Designated Nonderivative Financial Instruments

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

		March 31, 2023				December 31, 2022
British pound sterling		$	1,252			$	1,237
Canadian dollar		$	373			$	370

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The following table summarizes the unrealized gains (losses) in Foreign Currency and Derivative Gains and Other Income, Net on the remeasurement of the unhedged portion of our euro denominated debt and accrued interest (in millions):

		Three Months Ended
		March 31,
		2023				2022
Unrealized gains (losses) on the unhedged portion		$	(4	)		$	15

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 March 31,
		2023				2022
Derivative net investment hedges (1)		$	(8,163	)		$	4,093
Debt designated as nonderivative net investment hedges			(41,499	)			33,597
Cumulative translation adjustment			21,561				151,833
Total foreign currency translation gains (losses), net		$	(28,101	)		$	189,523
Cash flow hedges (1) (2)		$	(19,327	)		$	4,422
Our share of derivatives from unconsolidated co-investment ventures			(6,526	)			8,927
Total unrealized gains (losses) on derivative contracts, net		$	(25,853	)		$	13,349
Total change in other comprehensive income (losses)		$	**(**53,954	)		$	202,872

(1)

The ending balance in AOCI/L for accumulated derivative gains on net investment hedges was $324.8 million and $333.0 million at March 31, 2023 and December 31, 2022, respectively. Additionally, the ending balance in AOCI/L for accumulated derivative gains on cash flow hedges was $13.4 million and $32.7 million at March 31, 2023 and December 31, 2022, respectively.

(2)

We estimate an additional expense of $1.0 million will be reclassified to Interest Expense over the next 12 months from March 31, 2023, due to the amortization of previously settled derivatives designated as cash flow hedges.

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, 2022.

Fair Value Measurements on a Recurring Basis

At March 31, 2023 and December 31, 2022, 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 March 31, 2023 and December 31, 2022, 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 March 31, 2023 and December 31, 2022, 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 Note 3 and assets held for sale or contribution in Note 5.

Fair Value of Financial Instruments

At March 31, 2023 and December 31, 2022, 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.

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 March 31, 2023 and December 31, 2022, as compared with those in effect when the

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debt was issued or assumed, including reduced borrowing spreads due to our improved credit ratings. 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 take the opportunity to refinance our debt at lower rates and longer maturities based on market conditions and other factors. See Note 6 for more information on our debt activity.

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

		March 31, 2023								December 31, 2022
		Carrying Value				Fair Value				Carrying Value				Fair Value
Credit facilities		$	212,553			$	212,553			$	1,538,461			$	1,538,461
Senior notes			22,399,340				19,275,513				19,786,253				16,604,241
Term loans and unsecured other			2,093,006				2,079,813				2,106,592				2,092,264
Secured mortgage			448,443				428,330				444,655				420,964
Total		$	25,153,342			$	21,996,209			$	23,875,961			$	20,655,930

NOTE 11. BUSINESS SEGMENTS

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

Real Estate Segment. 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. The Real Estate 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 and leasing expertise of our local teams; and (iii) our customer relationships.

Strategic Capital Segment. 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 March 31,
		2023				2022
Revenues:
Real estate segment:
U.S.		$	1,574,567			$	1,038,991
Other Americas			25,572				22,191
Europe			19,156				12,008
Asia			14,591				12,013
Total real estate segment			1,633,886				1,085,203
Strategic capital segment:
U.S.			53,696				50,635
Other Americas			14,195				11,653
Europe			43,533				46,196
Asia			23,277				25,441
Total strategic capital segment			134,701				133,925
Total revenues			1,768,587				1,219,128
Segment net operating income: (1)
Real estate segment:
U.S. (2)			1,171,983				771,210
Other Americas			19,178				16,107
Europe			14,210				3,970
Asia			8,777				8,653
Total real estate segment			1,214,148				799,940
Strategic capital segment:
U.S. (2)			21,567				27,677
Other Americas			8,942				7,374
Europe			22,604				32,463
Asia			9,879				14,600
Total strategic capital segment			62,992				82,114
Total segment net operating income			1,277,140				882,054
Reconciling items:
General and administrative expenses			(99,777	)			(74,646	)
Depreciation and amortization expenses			(602,367	)			(396,647	)
Gains on dispositions of development properties and land, net			-				210,206
Gains on other dispositions of investments in real estate, net			4,047				584,835
Operating income			579,043				1,205,802
Earnings from unconsolidated entities, net			75,779				76,962
Interest expense			(136,011	)			(64,064	)
Foreign currency and derivative gains and other income, net			8,614				48,409
Gains (losses) on early extinguishment of debt, net			3,275				(18,165	)
Earnings before income taxes		$	530,700			$	1,248,944

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		March 31, 2023				December 31, 2022
Segment assets:
Real estate segment:
U.S.		$	71,965,308			$	71,858,560
Other Americas			1,899,350				1,831,956
Europe			2,159,880				1,952,160
Asia			934,822				1,031,135
Total real estate segment			76,959,360				76,673,811
Strategic capital segment: (3)
U.S.			10,605				10,817
Europe			25,280				25,280
Asia			224				231
Total strategic capital segment			36,109				36,328
Total segment assets			76,995,469				76,710,139
Reconciling items:
Investments in and advances to unconsolidated entities			9,680,097				9,698,898
Assets held for sale or contribution			734,106				531,257
Cash and cash equivalents			522,501				278,483
Other assets			588,711				678,671
Total reconciling items			11,525,415				11,187,309
Total assets		$	88,520,884			$	87,897,448

(1)

Net Operating Income ("NOI") from the Real Estate Segment is calculated directly from our Consolidated Financial Statements as Rental Revenues and Development Management and Other Revenues less Rental Expenses and Other Expenses. NOI from the Strategic Capital Segment is calculated directly from our Consolidated Financial Statements as Strategic Capital Revenues less Strategic Capital Expenses.

(2)

This includes compensation and personnel costs for employees who were located in the U.S. but also support other geographies.

(3)

Represents management contracts and goodwill recorded in connection with business combinations associated with the Strategic Capital Segment. Goodwill was $25.3 million at March 31, 2023 and December 31, 2022.

NOTE 12. SUPPLEMENTAL CASH FLOW INFORMATION

Our significant noncash investing and financing activities for the three months ended March 31, 2023 and 2022 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 $12.1 million in 2023 and $3.7 million in 2022 for both assets and liabilities.

We capitalized $14.7 million and $10.6 million in 2023 and 2022, respectively, of equity-based compensation expense.

We received $216.4 million in 2022, 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 less than 0.1 million shares in 2023 and 2022, of the Parent’s common stock upon redemption of an equal number of common limited partnership units in the OP.

We paid $129.9 million and $62.9 million for interest, net of amounts capitalized, during the three months ended March 31, 2023 and 2022, respectively.

We paid $46.2 million and $30.7 million for income taxes, net of refunds, during the three months ended March 31, 2023 and 2022, respectively.

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Re****port 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 March 31, 2023, the related consolidated statements of income, comprehensive income, equity, and cash flows for the three-month periods ended March 31, 2023 and 2022, 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, 2022, 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 14, 2023, 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, 2022 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 April 28, 2023

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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 March 31, 2023, the related consolidated statements of income, comprehensive income, capital, and cash flows for the three-month periods ended March 31, 2023 and 2022, 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, 2022, 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 14, 2023, 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, 2022 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 April 28, 2023

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