Prologis (PLD) 23 Jan 182017 Q4 Earnings call transcript

Welcome to the Prologis Q4 Earnings Conference Call. My name is James and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] Also note this conference is being recorded. to call like Ward. to now will turn over the Tracy I you begin. Tracy, may

and Welcome for CFO, available Thanks, quarter morning, from Investor good James, everyone. we’ll morning, cover call. site prologis.com hear supplemental Relations. Web This XXXX Olinger, to The document will our Gary strategy is our will comment our who Mike and results on and Tom at Also, under who Nekritz, Diana and conference outlook; Chairman fourth our Gene guidance. are And Caton. Scott then CEO, today’s joining Ed Curless, and us the Anderson, Hamid company’s call Moghadam, Reilly, on Chris

statements remarks, assumptions. projections which conference we contain management’s federal Prologis and forward-looking the our prepared state These current beliefs as and to under market in call based estimates expectations, I’d are Before about the on and will operates, this that industry statements well begin laws. as like securities

performance Forward-looking may of statements operating by are affected variety results be not of factors. guarantees and actual a

a the our forward-looking please filings. statement refer list to in and SEC XX-K factors, notice of For those

fourth we quarter reconciliation those financial measures, and call the measures. and get in supplemental that, Tom non-GAAP we’ll do Reg that press such a started. as Additionally, our FFO release measures EBITDA with accordance turn I’ll and have are results provided G and contain With to over to

will an XXXX. earned the of per share $X.XX thank cover morning the for than an to record Good net turn share X% introduce and for for an We over over per and for We excellent $X.XX call. then was FFO you for the more guidance highlights Core share quarter Hamid. joining quarter the I call the Tracy. the reflecting Thanks, year, and of fourth XXXX. per XXXX our promotes year. earnings $X.XX and increase had outstanding quarter, quarter

at a X%. the was of more million in core with Excluding four nearly years also sequentially. promotes, time mission a by XX.X%, in critical also increase XXX The setting logistics feet an delivered square XXX the U.S. over million deleveraging basis basis for that XX.X%, In located up year-end Europe, leased reached we XXXX. last quarter. XX in high back the Well for reached of a square XX% remains points to XXXX basis of occupancy Notably basis to up a while of We XX record feet up all XX%. Global customers. led rental sequential way It's highlight taking the FFO occupancy with year-end points product was FFO growth our than worth core XXX occupancy points. points. step stage France XXXX CAGR sequentially

in with share rent the mix Central down U.S. XX%. rollovers net was effective quarter at was Our in rent Poland change of the U.S. Global the leasing higher nearly on with to due sequential France, XX%, change and

expected of share an the as than average expectations for occupancy. was net same effective year The Our below quarter. same expense growth quarter in due NOI well as X.X% for the X.X% to miss came and forecast store full lower store

billion. in from new around reducing combined number merger the capital our the vehicles to for $X.X streamlining creating slightly world excellent million. in party XXXX extremely value and which stabilizations billion had ahead We our strategic since X, margin an XX to On capital front of to and highlight several grew and business. investors business. raised year an XX% estimated the we $XXX of ventures of significant like year development creation our AUM had the development would an I was came for We shareholders. our from further third expectations productive of $XX value also

perpetual or of XX% durable capital Our long delivers vehicles. and fees consistent revenue with business stream coming a term strategic from

to markets. Turning capital

quarter During our we of used near-term of $XXX a bonds. liquidity to redeem the excess million portion

on to year points we capitalization look XXX a by full the leverage basis through lowered For basis. market XX.X%

We currency as continue U.S. ended net significant to and more we XX% year the dollars. remain from with our than foreign have in liquidity of billion well movements equity protected of in $X.X

to I provide basis. guidance on share an Moving our for which XXXX will

this logistics store expect of announced the set that of We am proud accordance week. leadership net X%. same in effective we our between for NOI X% taking with last and growth This I is important definitions on initiative. new sector sector

net under new store same results XXXX been have definition. effective this would our comparison, X.X% For

Cash, to continues between contributions line will Development range $X about bumps between $X.X in billion, billion Build-to-suits XXXX than range As and will higher I store as less will had be mentioned net this longer for basis and rent steeper than NOI XXX comprise impact billion points. same of be from and terms close. XXXX. to points effective with approximately the XX should we previously, lease growth starts this volume. XX% lag billion. and $X.X had expected roughly basis Dispositions $X.X

Given we close re-capitalization broad buyer may includes effectively point assets XXXX. the Brazil. of want to our non-strategic accelerate I and for dispositions out interest, portfolios, elect in to the that expected particularly remaining volume larger out contribution

will net strategic $X.XX the timing between year, be recognition promote a its related prior consistent income $X.XX range and with capital, the years For promote and will of difference expenses. for between full revenue there in

timing expense two-thirds quarter. first promote quarter recognize XXXX. we in promote perspective, in of recognize the of of From a the We to $X.XX expect expect revenue to roughly each

range G&A, million between $XXX net million. forecasting we are $XXX For and a

is core any our sheet Putting growth particularly hedged material and range This expect between is growth further held We on as impact be income earnings of of Core a to the for tax XXXX. have given to we five together, expect don’t a or strong years FFO balance XXXX excluding reform over already and net bill. billion. XXXX. we to perspective, last result operations new estimated For core while our the FFO $X.XX more have hedged $X.XX this by share most expected promote fully X%. we roughly flat is all AUM Related growing delevering. $XX FFO G&A FX, than

than points year. lower average approximately expect XXXX We basis last in leverage XXX be to

our basis point X% approximately quarter To to For stands mark strong FFO increase of than for The next great globally for wrap year XXXX upward portfolio at a years. bias. reference, a leverage us up, strong momentum. positions several XX% translates growth. and in with to U.S. of market an currently and the are we the with and core in had operating XXX performance more This XX% entering

will had over to our opportunities that on in best the Hamid. sheet fund significant Our liquidity and balance as turn to call investment growth capitalize arise. to With I self class capacity and they

last been keep on although coastal Thanks, my supply. the foreseeable In and are our Today test the today XX% was should are highly a be have will will very Market positioned of holdings a lifted rate global to duplicate our year, remarks market assets new growth as highs trajectory. Net are mile as healthy our has led XXXX, my any and about In Market consists last our and favorable Tom. large markets. it short significantly. was below occupancy U.S., late for business the continued of rental absorption they In I have markets touch for declines noise, of which cap remain strong scale positive such to limited strategy. adopters future. as delivery. career. so for XXXX value by in to last and in-fill portfolio accelerated in continue dynamics view levels impossible constrained the [indiscernible] notwithstanding the it in popular Europe, new all of result now fundamentals

further, normalize. rents have growth even While to the now in rental gap York. U.S. U.S. we recovery the that improved with for we the The Europe on the narrow expect point expect we for inflexion foreseeable conditions rates continent, in point carry in and reached the to Fueled an our the compress inevitable cap momentum future by accelerate will New rental markets beyond lag

Looking ahead, tank. the gas plenty in is there of left

We which mark portfolio extend will for of capital in over The growth. and to rental runway also steadily the developments. increased rental the last growth profitable deploying on are laser months, XX market focused our has continued capturing

the Our scale attractive sourcing world. opportunities us with and around deployment provides capital

bank putting relationships. will unchanged. that by I and to land remains We strategy will work business continue located well saying our deliver our customer our unparalleled value by close leveraging by to

sheet into the to strengthen well strong continues and are for We future. it very to prospects positioned turn the to now operator balance would our results unforeseen vigilant like Our deliver portfolio risks optimistic our beyond. over about in is environment I remain uniquely but Q&A. XXXX and to about this in

question Our Korchman first from is [Operator of Citi. Manny Instructions]

can't I delve referenced those It's how what here miscalculation bit store talked into you little your miss numbers deeper you and growth -- expense just in Bilerman impact with comments had, Can Manny. about you reverts same words XQ the what you that XXXX? they Tom, opening into occupancy an and Michael used. what a were, and recall

Michael. Thanks,

about that’s again, quarter, we in basis blew due in forecast, expense about So right impact. the XX of the forecast XXXX. fourth that fact we expense we the $X.X difference blew to by which half million, about got in points And was the it

on no XXXX. So impact

same expected. thought negative impact the store share occupancy of XX.X% same in same average was we occupancy than of fourth store quarter quarter. to lower driver basis other context, at occupancy We had see increase. ending The We our a positive would had store we But a give occupancy our you the in same was, point XX was store XX.X%. actually but average

bps higher. So XX

you we leasing than as So later just the expected. happened can see,

KeyBanc. Our Craig next question Mailman from of is

from of the expectations is retention ended versus from 'XX. the On lower how rents harder even pushing that of just where Tom, conservatism maybe curious kind occupancy guide, in about you just your much year guys

Yes.

Craig. latter, the it's think I

rents saw might push short-term QX, long-term and right same for We just are answer. like occupancy to continue in And store sacrifice right to you the results growth. higher the we getting going economic get in to long-term the

from of is Guinee Stifel. next Our question John

and TIs, CapEx are space, at providing needed. a When you investors you your numbers are retail into re-leasing look world building? CapEx money the and money the when building, much base happening significantly. tenant these TIs also significant putting into up putting base much re-leasing of what's about and bit turnkey Talk going how are little base is How are cost. are the the going building you as the world, office awareness are If in you leasing up

Sure. John, this Hamid. is

turn the me start over color Gene on for specifics. to it then and some Let

last are those I have value-enhancing, particularly you I think that count recurring, acute mention. all has CapEx that enhancing. gotten as these think generally, industry that recurring, not there And real years and think I involved, things sectors I always problems strong. the Because for people estate the non-value weird the in been XX is

other of stuff the probably major goes have industrial I most [indiscernible] and on. don’t think rehabs that we kind apartments because all and are straightforward those

problem So on that serious to is the generally good many my but that a didn’t years do ago tried a opinion AFFO address problem job you raise in very it.

tenants consists the above would the and carpet our improvements. second improvements general warehouse of office many maybe that Typically space. invest say comment. in Very is So of walls in the bit and little contributions once I and significant moving a the is around building our our paints beyond generation, of portion. little

that Now centers more about that’s the put customers there thousand reflected buildings in nothing really not foot we have square dollars data But the where that there. and customers rent for we our occasions couple actually or collect. that are are in of may a in using put may at and

in improving over to temporary clear not to anybody are of the We just business space and rent. want expense I specific up for at just about customized really be the that. pump our improvements in

depending you this look to and the I simple, all really at the percentage to our cycle. CapEx are the look up of in like at And Just number actually way where is has to historically about add XX% XX% it in business a that as CapEx been to would make NOI. on

Our next of Heck from question Wells is Blaine Fargo.

balance that you long guys continue process years like delevering XXXX. derisking over plan You it sheet come in have a the and and looks way to several the past

higher at As that growth you achieve you lower on, comes with than leverage. touched usually could

about the setting of the safety between balance So you guys how appropriate growth. do finding leverage and think level and

where And XX% I be. I which we and we Blaine, top three under giggles when at was to that the some and with about. the structure in that said a leverage got an a rating, happy point. the going lot want So, time laid have are balance the industry we and balance now sheet we of long-term business out we we are sheet A at here minus just to think capital we objectives, think was really And did what of merger that

recent you we think further I capital are They of doing declines consciously in declines sheet. that improve the and a strategy that just the byproduct do leverage XXXX not are can't projected in in balance to XXXX are our and the recycling executing perfectly. something

want but point some depends on where long-term. that’s the that expect of But done a totally our planned investment of leverage other of assets, will leverage we capital lower line, to few when with that our drift completed it at our and to So basis have be it deployment the opportunities. attractiveness in our than disposing the our Bottom non-strategic to really with aspects consistent probably thereby be hundred are opportunities which strategy. to those points we and is by growth we up XXXX, in propelling we

with Rodgers our And Baird. is next David from question

hitting about comments that made dispositions non-core progresses. in maybe thoughts It markets in to comments please. not wanted assets hump but developments your would be the about. acquisition, as a like new deciding I prepared just or you back sell know sounds finding to additional perhaps that’s supply that maybe the or you Maybe deal go done Tom, get of the the Is might a you what to like would accelerating year one Any function I of worried accelerating over of that to more.

to Yes, is humps Dave, over. get no there

everything of in billion put to We Just merger. since sold real the context. $XX.X estate

couple that sector. added think our in of I represents companies a

anybody probably and we in the So deliberate more in been very dispositions have business. the active than market,

got honestly, of line, billion thought these assets of up the sell we and left. markets And improvement we in approximately we the the XX% that sold what is markets other of Bottom non-strategic we area. to assets would. X.X non-strategic in a sooner wanted than of the have strength the we non-strategic at lot We such least

any time to the you is execute that? XXXX color think plan. I add that want Mike, So to to

was both saw year buyer ability to expect even larger smaller we plan portfolios we were Yes, interest our are so execute of year, There last very of on than this to and continue our some slightly we the trend optimistic projected. or our United in aggregated. we and Europe in States, some more lot a that sales portfolios and

UBS. Next question is from of Nick Yulico

about. I Hamid, latest thoughts new markets, your any, to if want on be and the U.S. in which supply get might concerned you

some start that. Chris this, and to me do have let me Gene Let on maybe provide color

would as Chicago new little drill having to in respect is with So bit we bit, as excess of construction probably in of out little Dallas, supply, recent Louisville, forward, look Chicago Chicago right And down and supply now concerns us call demand. way to a kind a into today. we but this

the they XX X had now a they ago, million feet. have year So in million square pipe

call the the conservatism this to the the speaks that supply. -- recovery. Those during economic markets we seen since we have are markets would So in for few excess out

Jeremy from question Metz, BMO is next Markets. Our Capital

growth in digit occupancy range. moderation in to And obviously, expectations outpaced reached supply rent in coming of this far time Hamid, this the was end nearly the at your mid an portfolio last your XX%. of equilibrium, really Rents, hard are is the fact outlook at for you rents. called end time despite your XQ. all the year demand it year, expectations even at actively above all higher pushing And on single the

than that set other of here year expected it today XXXX just answer outcome. cycle anything similar seeing up than but a for you simple better So maybe further are very into a this such be one being type can

That anything answer no, not different. is, seeing are Yes. simple we

including couple about kind by the you this at year, we way, mentioned. getting excess point these the are remember, maybe of U.S. of out, just we in then some soggier. that growth year. And warned little stronger last as And a and talked of market that had were were that seen that In markets they than fact, supply, we Gene Chicago, ended point X% a rental between markets getting the are up may markets there Last you

XX% So mean to into the growth terms one rental having happened. and going conservative We said in too nobody I we of clearly But what were is got go forecast future. that that, wrong.

in are We waters. unchartered

I what who less assumptions our rate on much as So it and as we have future. are based and half into a on guidance today this don’t is as is think than be that much knows, that are that may numbers year. big counting our growth about and lower higher or insight But, perfect we the

that will better. So, we I will don’t is hope see. do know, My we even

of Kim Ki is question from next Our Bin SunTrust.

this just use your more I impacts new we a an do talk little Could And example. about much questions. think actually will as supply portfolio. bit the supply you How

and if rents of raise I [indiscernible] that example, Long Carson practically you have supply think to Port For Beach, ability new in asset. the wouldn’t your by an asset LA impacts in

how that real larger you portfolio, So describe if you thinking new your from impact across the take would supply.

the So in example mentioned, to impossible you just [ph] add Bay] it's to of markets any some pick like supply. that [South the the

Francisco is are fact supply. supply apartments turning off that. build all has had In and people to coming is supply and San [ph] there negative there because negative [spots]

there. able is very on of is other parameters what further to get is go supply just there some And to So need. the locations, happens that as out, they little that space there people be substitution compromise

color throw to for Gene So let it more in some me there.

actually obviously strong numbers. net bring look So markets interesting demand at up you are an because markets, absorption great point and there our we if strong with

isn't is But decent if because you is growth example, a supply at XX%, infill. as amount net supply have for the then XX%. it's County And very rent neither absorption the the of look Some LA well. impressive,

there markets couple of that today. are category in So fall who

of them. falls year. of in area that rent one the is Much growth New Seattle. Bay York, XX% Jersey category, New last

is really a really of was on supply In question as infill percentage the what's base, of off these small. about and one supply. it's very your going markets, many So

Yes.

in either versus that markets barriers or think is of supply, size. key [indiscernible] growth I year Bin, Ki correct. by product the think, other, terms I was rent differentiator to last in

have So terms been let's rate matter of the the product. market you it know, saw better discussing, let digits. and rate to the supply I up [ph] a in also [big] pipeline, in real now Starts am year the of that in growth. you sure supply But you X% growth. follow, in performance for would are versus numbers a double we contrast slowdown XX%. like question But last go has of environment smaller been supply historically There

supply this is it. there is So discipline in the also that side affecting

question from next is The of Eric Street Advisor. Frankel Green

a topic the guideline guys way, have question. Gene, am One, has part it. pretty two second Do guys maybe I become I see United thinking the in it, question the are And mentioned I thoughtfully obviously in And for going I you not Hamid by forward? uniform multistory 'XX think on portfolio were construction that the effect Tom, appreciate you Just but much same store if for on States. then working a together. popular guidance. an any competitors or sure obviously have you construction strategy about you more any peers pitfalls know or that of

this first. will Tom, Eric, I go is

on is same impact about in XX our bps metric the So XXXX. operating store

methodology comparative the The would look basis, of on 'XX new XXXX is midpoint if So new X.X%. been you for have methodology new our the midpoint X.X%. under at guidance a under

seeing store on year-over-year. a same comparative are acceleration basis we So on

is. the sure are respect but There is will of sure I about is build more. building to for it, popular how only in lot overtime be am product, multistory people being multistoried my Okay. there And knowledge talking it U.S., there the with one not

markets in of and talked got know it's land Gene infill the value about some you And like the about growth that pressures have well. these in We couple pipeline. all one

XX These is I So talk acre are things people not but tough action. I there find to the mitigation these do. really make major easy things to in a and think technology one that, to to land do of and mean it's area and traffic get XX all right all eventually piece than more this. will it measures the a build and limits of height difficult to metro

where think is low it's rents this mid sort high I are So to of construction. penciled the in double kind mid markets of solidly in only those that to digits, XXs, teens, do

would is Hamid schedule I which thing much that only much the implied, is really add longer. Eric, development

a way looking So of an that and lot this requires is future. are into patience you investment the

type people of this of Very will development. sure ultimately So long sector schedules. I I think it's expensive in. a not and lot am a in jump very different

U.S. these Japan, which million, $X.X ones You looking the at know than some are can is in of $XXX easily and we be things billion of are can a in the cheaper couple million, $XXX investment. be

am are I can are they type there office around people that kind know sure those of approaching high You checks. not and good that many rise numbers right

Catherwood Our next Tom question is from BTIG. of

I correctly, am basis. remembering think a up that Following market was on was on if portfolio XX% your I the NREIT, leased below roughly talk

the you of leasing Given like through looking do now spreads, XXXX. XX% this share what's right quarter, those of and leasing how kind as market your see of it that below trending

Thanks. It's Tom.

market said, is rent at Two of that over to XX% place in to globally, composition market, two you So U.S. mark what move. roll Those the consider, how drivers as our end and of to the I in the the of that need year, are the roll will growth. XX% the and things current

about there going global have growth. we mark XX% about market the to XXXX, an X%ish roll, you think were And that rent is as I Looking Hamid look on into just said, arrow the of and thinking composition up at role. to as

So arrow that I number. up an there think is on

Chao Next question, Bank. Deutsche of Vincent

best guess if year What channel? leasing maybe quarter. coming Just the for just been you where of percentage for any the if over curious from past side, is specifically the on for more your your seeing are ecommerce demand two. give and or quarter the you the And us shifts the maybe has in demand

others will and in. to jump may that I want take

we couple that has thing there strong percentage the of a also and who have would also the predict segments is And tough have in been quarters. demand and as plans So see much the transportation, ecommerce for in say. auto construction, an active a guess, been as food really I arrow are over to fairly There on to of also into been customer XXXX. ecommerce participants really steady. But for year, strong last have much that’s this tough look been out haven't has changed because I big absorption How in that very of that those ends up this would distribution But upper new I year very right now. several rollout. being industries mentioned other balance sector

Just to add European continues a strengthen. Europe, little something to on market

As Tom positive which mentioned at huge leasing in in saw we central significant and a least his us. opening remarks, activity southern is Europe, for

demand to those So markets. in is starting pick up

X.X% I that are Europe statistics market them even lower to and XXXX. vacancies we in to important think go is down in forecasting are the

rental opportunities So growth increased going should see forward. you for

construction resi thin is next XXXX year, think I to resi in absorption be I -- or related higher going construction, U.S. the mean I

is Stelzner Morgan question Nick Stanley. from of Next

you to [ph] for straight decrease color Can you any occupancy what's driving and expect is some provide do think on [fifth] Thanks. quarter. inflect in that America So soon? time

Yes.

see bit. if drag down think at to are I Brazil owned going that looking managed, are you a and you

and of in If to occupied. in But record you U.S. there. XX%, on And think get there when in a the that obviously a you we that portfolio us see look are quarter, U.S. on to and the and in great for remember, portfolio. time staying Brazil we think XX% was occupancy third definitely was XXXX. All a get time it was for managed consolidated come going We owned Brazil example, there QX but at more kind record. I turnaround to

I I Very of mean high. Brazil high outside Mexico, add. was the in occupancy might very

Merrill Dennerlein from Next Lynch. Joshua BoA question of

maybe your and thinking I spec development expect build be a forward. suit. to on Should shift Question build to pipeline. would suit going a was between development mix, we there more

Josh, we to terms Mike. suit. did Last in of XX% about this year is build

because pretty global As dearth driven the range we suits that be expect customers that a want think in we of for zone to out of build seeing number next to And those of to similar high XXXX. feels we type particularly our look over be, to are of why we and expect in margin levels I space markets. year, solid

high. is historically super XX% Well,

probably the the number across So like XX%. is cycle more

So anybody to number don’t by that of were used those We of I know that kinds numbers. surprised being high. get

Next Evercore ISI. question from Steve Sakwa of

think desire I land know has but development. also a your I lot down the to development of land to just been bank the there of being through continue get and the guess bank you development Hamid am trying I questions purchased. replenishing and today are pipeline. you land How kind thinking and of sort are guys what yields terms new of on across just in on land seeing land about

Yes, Steve.

XXXX, Our to goal will -- year development two to every supply it back the mean years guidance, get development land but days, around of you of in down I our dark bounces is and may actually you talked we had are. in billion that’s remember $X aggregate. in company, where development think we share $X analyst our as I a XXXX, being we and exactly meeting but about merge between volumes the XXXX, billion aggregate. And first that Not

goes about $XXX are land. We million that roughly of is billion of now land And the in type $X that sort with aggregate. around

quarter So volume. the about total of a investment

value. literally billion to of in $X.X value land, and you two just land So book land in on the own that’s Maybe of if of about want than not that’s market terms books. years have but we more currently

our than be and measures pretty the support are that are fees all the because lower it people may land The but term difficult mitigation exactions, want a business. Getting our to not goals very very most. little hard. to that, need that pile where is too all we to respect really the markets on, So In much today. is the land that we lower about bit land. we to long care We close push it with getting traffic to

land, got years of you before of So work it. entitlements get of to you number for a for these some parcels on

maybe are land of we have year. land have But rate $XXX call million to margin on pretty year billion adding development at on We rate the chewing of been fortunate that we $XXX land, and $XXX a books. at $X through million a $X million it our maybe billion, the for almost of the

So that’s down where million how $XXX $XXX is category D waddling we we bank you our down those to than have to the million land have are bank what that care inherited slower gotten but and bank. those we are we a wouldn’t by land about, year. About land to land things that more essentially And details call of $XXX And million of C parcels absorb. bought. we Probably are.

of side not So we you kind million that. going and to to this $XXX on bank put say, monetize are land of mentally look, have

We sell to and are and chewed exercise started. when going lot more this like number it, over We probably million through that was lands to users uses. a that of alternative $XXX time

getting that near kind figure end the the outside the out mentally are I target that best have. of land of like we bank of we So but would to

about to land opportunities. other land thing the see is in our up Steve, bank the from you that our think show don’t redevelopment

in So when today the you down sitting or think to assets. in portfolio that’s about sitting multistory, on other either go land that’s operating going

it's or entitlement, has buying call the through have five something land we a terminal coupon. last that, to flipping some four covered are good income over what plays, where think we done of are going which we really stream, whether I like a sort truck job a years we of

that and over of that that’s have or we Hamid build out billion $XX mentioned. $X billion development So above the potential

in sits there is that more just the there land opportunity bank. So than redevelopment

continue option it. add to have which emphasis we will on capacity to Plus increased an agreements

from Jefferies. Petersen is Next of question Jon

demand. are I one its what am accelerate your if expensing and know go and we space to bill. that equipment buy spoken am warehouses, customers of need reform that equipment the But or thinking businesses if a on know are you I curious I since of have thoughts have bill five it As aspect tax and customers, have committee means them you talk leasing warehouse just over tax on as to cause about you might the growth about bigger with you am the specifically obviously and not will in. it be reform demand you years tax plans that sure talking. and warehouses is in guys demand may for thinking next any impact to reforms for for I warehouse I

get in One had a and one just me is we advisory one. asked answer January tax you reforms. essentially two yet. we customer No, the So questions let meeting about haven't that that

to level casual think other a net we had XX U.S. of So is these the points. by high know But of organized kind trends. to decisions, about lot going growth really than the that tax I by I to bunch projected a about haven't program than who is basis customers to a any do, faster meeting be people XX report of with things be more

So translate that kind additional growth our product. of is going obviously demand for to to more

for what but absorption surprised to business. feet it's were product be million, wouldn’t think enough is question, am product second to it's good the be I that I the going there. I if more don’t and there. respond I But quickly if know The sure supply million XX XX for going be not to

country act, tax other The of stuff. tax the act, coasts because going more all gotten we the the in those thing and of whether got question the to other have because the the of shift hammered to new the demand middle tax is is, salt

states lower growth. the with to as boats and pretty will ones the GDP a of think disproportionate GDP lower be a On cost going much the smart benefit in that of XX% result a I on and to going But the boats. there tax to some the and is everywhere lift be we but know raised that extra boats tax get the residential are coast whether higher more rates get of could lower than I going benefit. to Midwest think to those XX% lift not am I enough that’s all growth margin, the

Next question from Manny Citi. Korchman of

of that vanilla If closures about disrupting about is or and construction How conversions we it supply think much and supply using are and sort think sort the do shadow of coming down clubs] you maybe [ph] or that. an of doing. about as of type more where example [same guys maybe of you worry

that’s handle basis hurt inflexion quarterly last office the in a pretty ten certainly a has space we good pretty I Manny, points. on have the that problem for track question a we the on consistently because utilization past We and and a shadow years. that’s good done think sector that got at

Right continues actually have So at level we now it's very comparisons absolute be comparisons. highest few both period the sort of within been, utilization to level of to the highest level period and points it's been.

So a leasing there there where people way as needed lot of of is the the hope first were not as into XXXXs and in the a slack in early in burying the dotcom in system twice lot just much space of it. people not the are they were hoarding

crisis disciplined global that. from have think vacancy I then people as X.X%-X%, just to don’t the the financial rates of have the went after doing opportunity they XX% been pretty and

at a don’t there is of we lot So space shadow all. think

Craig from Next is of KeyBanc. Mailman question

mix on am guide think you suit Just this the I of ones. XXX guess sense that the the I initial rate higher rate still non-core a billion of internal I then rest what's second, about at the guess, we on are you X.X two on to the current just billion about growth million portfolio. that growth guys were guys of last built versus sell time. or the starts, curious development first, I in visibility what guess And just Kind the the quick where point. margins. versus would just given, billion on spec, to should to year. how of X.XX the you X kind And on over here

it's what in growth rent are that return rent question But On in we that growth in regarding versus available. our numbers clearly we is our first relative substantially readily have selling the on those place we what the I greater what markets non-core seeing whole your are the than portfolio, selling. Craig, the Tom. don’t portfolio are

cap Historically growth rental number of rate cycle points. benefit been basis differential has about a a XXX across XXX the Yes. points that of about and basis

free and markets has it not XXX in up making are the there to exactly lunch, will, about it that constrained what you development? of is points been yields the it talk am what slightly you roughly mix to more we know enough lower don’t basis of the selling. visibility if taking So by XX Mike, on I smart in growth.

confidence over and too. say should as in the that’s merger would good margins, In solid well there, forecast well your us since our the I then And activity terms based been it's of it as you high on as XX%. visibility, which to level good our expect teens has mid year. question numbers of gives in the

they comparable pretty at you starts, share And when are year-over-year. look Craig our of

I development number. X like low -- is billion the are share total volumes that’s maybe confusing Yes, the mean more in the our and X.XX.

from Next [ph]. Harris [David Plan] of question is Unit

on give secondarily, away Europe as some have you you the I your a year. And thoughts from would if to over Could question thoughts some the your next the walk United on comments States comment could on Brexit impact protectionism. give also in NAFTA?

David, back, protectionism while. respect a supply we haven't to but know, of production welcome you lot of not chain. the Yes, on a With is you that side talked protectionism, obviously so to there as in are focused

chain. of We that are the consumption supply side focused on

is Mexico. New I from don’t LA have as long to care or China York that and themselves, that really coming Kansas and clothe continue inventory or whether to So frankly and people as in all feed

that’s to chosen on consumption So we concentrate takes we and our place really have are where the focused where investments.

I I which to shift you off talking surprise. look lot people if or all side it's tax can because a are regimes production on on better kinds trade think as that concern of interference to of to a got the or that would Brexit, much it about Brexit strategies. is topic. mostly don’t think when excited have respect I be With whether announced know it around, people all your interference whatever focused about those first was probably

day that significant And Germany up torrid the them would with five a but slowed markets occupancies the one I against bucks rental went together we little I say down are and our put but and had the have in and it's any the we U.S. Germany in back Europe, pace growth. in U.K. went U.K. XXXX think two bit from has U.K. would I our markets probably, including anywhere stock best up in

it impact happens have we an any scared when happened didn’t don’t that capital seen So away be development to Because have think what yet and would that really of lot either. of of and a is it's I not Brexit occur. occurred lot Brexit a going evidence having material

will ended continue. being up that in think tighter the market So the actually I U.K. and

Next from John of question Guinee Stifel. is

multiple XX has feet prototype, new comment feet, to smaller automated in you is that square you my how elevator height, a suits XX which to market XXX,XXX that XX, XXX Another thing on out levels. that Hamid, Amazon build came prototype up, understanding feel about is but there and Highly Can maybe footprint, clear it? the much systems.

I can them them comment am comment I with So what to of but am aren't part I sure part our Mike not of what going let are because confidential, confidential. discussions

you So don’t Mike, that? talk why about

massive buzz a out Yes, of big would those is things years, But could to over years. perspective, in have amounts John, given put This year different. suggested rollout of any little are there a couple sizable they underway. certainly the just play a in a there in lot some of about is that yes, RFPs

to Amazon at days that did look to approaches and would the doing we very early they it well. and taking unique at are that, to we a to extent better at are sell or buildings. just unique on we as like be the buildings look will serve we more done have hard the that have those, opinion we Some very other that It's certainly

too. So can with will very we Amazon the in up process keep for being well as them look and early always innovator but you at an

it's Amazon the same much has where I They consumers Yes. the And add those we want I we The square I and harder of market suppose got John, them, would do. single near support say, these that Amazon. is urban pretty plots of But are. same thing find kind to look to have to as be land type strategy look, public earlier, foot being strategy areas. million XXX buildings the only went should harder we storey, in so. that, large that are,

square million the footprint XXX much levels. vertical. them And in foot, even able going So at that to they business into they mezzanine need to a by be three squeeze smaller

for we years. without I operating what that And we tenant, that to want buy the we sell credit clear low it. of lease soft anybody this Mike own If can go is renewing. the those we Any will multiple that we the are any is no the not anything or think point a do keep analysis, and a answer building or them XX normal building to Amazon to is, of answer are do for want fungible maybe, with there by market divisible levels if But else, to people for unusual we the So building heights Amazon leasing and in key it mentioned. that through is stretch. sort that planning and

our big to a there to not business potential otherwise very of So a we up is it and we being will capital And opportunity they for shortage of kind have with portfolio our of that portion than a them. thing. do kind lower that number want manage of to end

Manny Citi. from is question last our of And Korchman

sort Bilerman. of has or all new sort taxes what's guess estate the the that do panels. it how U.S. up the Things react like desire I that in impact across of that. to get to Michael on Hey, countries leader tariff would does corporate. industry to your the you say of megawatts it doing How in? within a been are self-sustaining and Prologis it's Hamid, certainly real the impacting impact I Is XXX but solar sustainability and power? other generally you

you proposals Michael, react one have many we morning in So, of the of ability are don’t to so really know them. every the different time the or single that to coming early there everyday

cycle the our it's that and heaven, are more we to investment life because to stuff we have to stuff do money to the have eventually go make commitment continue Sustainability will as customers is people, can this to and said good our this to long-term operating translates building I we a for don’t in rent. but always of favorable our doing that do it. cost good the because customers We

been proposals we react margin, probably areas. will the I more anything our the will some pencils less not might I we of are us. But on economic of clearer change okay, and on going and think an you that It's roof it or business we a have saying, therefore calculation have never to in answer. and or there in the extent else those do change that, always other So Michael, x for question. in power megawatts do Once dynamics to to more the shall to, can the or areas tariffs not. give whether are economics we been were you specific last some

we in months. your soon you thank couple interest for of Take look the All towards again care. Happy in Prologis all the next to and So seeing of you New Year. best.

gentlemen. ladies and concludes Thank Thank you, This conference. today's for you participating.

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