I'm Natasha Law, a Director of Investor Relations here at Prologis, and along with our Executive Committee, our speakers, and the entire Investor Relations team, I'd like to welcome you to the Prologis Investor Forum. Before jumping into the day, I'd like to point to the above and what you're shared online as well, our forward-looking statements. We have a full agenda today, so you can expect to see me to send you out to breaks and to usher you back throughout the day. We will do a session within the lunch hour, so after we break, we ask that you get your lunches and head back to your seats. We will also have a morning and afternoon break, along with a Q&A session in both the morning and afternoon. We will have mics for those of you that are live in the audience, and then those of you that are submitting questions online. We will try our best to answer them within the sessions, and if not, we will reach out to you after. With the full schedule, I will not stay up here any longer, and without further ado, I'll welcome Jill, Hamid, and Dan to the stage. Good morning, everyone. It's great to see you all. Thanks for joining us. My name is Jill Sawyer. I, I'm head of Investor Relations at Prologis. It's been over four years since we've all gotten together like this, so I thought we might do something a little different to kick things off today. Sitting up here with two highly influential people at our company, our CEO and Co-Founder, Hamid Moghadam, and our President, Dan Letter. And I speak to you all, all the time. So what I thought I'd do over the next 20 or so minutes is hearing your questions, I'm gonna ask these guys a series of fairly pointed questions so you can hear how they're thinking about our business and the logistics industry overall, and how our leaders are, are thinking. So having framed that, let's jump right in. Hamid, I'm gonna start with you. We have a lot of great content today, but you could pick one main takeaway, the audience would leave here today with, what would that be? And, Dan, I'm gonna ask you the same question after. Tough to come up with one. Good morning, everyone. It's great to see all of you here, and I look forward to the rest of the day with you. It's tough to take one, but let me try. Maybe I can talk you into three. So, one, the first most important thing is that Prologis is really a world-class organization, and we really think of ourselves in the context of other leading companies, not just in the real estate industry, but in industry generally. And we'll explain why we mean that, because our business is increasingly surrounding the customer, which is really my second point, with more and more products and services. Our foundation has always been real estate, will continue to be real estate and logistics real estate. But on top of this, we're building a customer franchise that is unparalleled in the industry, and that has opened up a number of doors for us in terms of business opportunities in areas that you'll hear about today, like energy and mobility and things like that. And while these started as little green shoots, we think these businesses are gonna be significant drivers of value and economics for the company going forward, and we'll try to quantify that for you. The other advantage of doing all this and surrounding the customer with these services is that we increase the number of touch points we have with the customer organization. It's no longer interacting with the real estate buyer, which historically has had a very procurement orientation and mentality, but we're connecting to them with the heads of innovation, with their CEOs. You've seen a couple of them at Groundbreakers, for example, of leading companies, because increasingly we're taking care of more and more of their needs, and we're moving up the food chain in terms of the influence of the organization and its relation with the leaderships of our customers. And those are very profitable opportunities. Third thing I want to say is scale is really important in this business, not in the traditional sense that you all know about, which is lower cost capital, lower G&A, more efficiency and all that. Those are obvious. We achieved those literally years ago. But scale gives you the ability to experiment with different ways of serving your customers in a low-risk way that doesn't really affect your economics in the short term. So we run a lot of experiments, many of which you don't ever hear about, and we kill because they don't work. But the ones that really resonate with customers are the ones we put a lot of effort and energy into, and that's what makes Prologis different than other companies. Dan? Yeah, let me pile onto that. What I hope this group gets out of our day today, what Hamid just described really is a moat we're building. Right? Over the last 40 years, we've built this irreplaceable portfolio, and now we're building this moat. So I got my little prop here. I actually think about it, and I explain this to a lot of new employees that our business this way. I think about the iPhone. No, I'm not suggesting we're Apple or looking for a tech multiple or anything like that, but I look at the iPhone and I say: Okay, they created a best-in-class piece of hardware, and then they started building businesses on top of it. They started building businesses next to it, right? I got AirPods in my pocket here. This is what we're doing in the logistics real estate realm… Right? Look at our energy business. It has solar, it has energy storage. We have a mobility business, we have operating Essentials. So I think getting the what, the why, and the how, out of how we're building this moat around this irreplaceable portfolio would be a key for today. Dan, let's stick with the future for a minute. What major trends are you watching that you believe will drive the logistics real estate industry over the next five years? Sure. So couple things. First of all, I think about the future of retail. Think about the future of retail when it comes to choice, when it comes to convenience. Think about the future of the supply chain. How many headlines have we seen in the last four years about the complications of the supply chain? Now we're trying to navigate a more complicated supply chain and make it cleaner, more sustainable. A very tech-forward supply chain. So we've got all these complications in making things move faster, cleaner, with more choice, and the residual outcome of all that is the need for more warehouses, right? So take the convergence of those trends with the rising barriers to supply in our space. It's just getting harder to build warehouses. People want their stuff, they want it faster, they want it cleaner, but they don't want these warehouses in their communities. So the rise of the anti-warehouse sentiment, I personally don't think anybody knew what logistics was until COVID. And now there's just that many more people focused on what on, on us building this space out. I just think going forward, you're gonna have to have more resources. You need to have more patience, more know-how to execute in our space. And what this is gonna lead to is customers just having to pay the freight, no pun intended, to be in these locations that they need. And I think it kinda breaks their pricing sensitivity models. But we've seen customers pay for this to get closer to those rooftops, and I think we're gonna see that trend continue. Hamid, let's switch gears to focus on the current environment. You do tend to say that you've seen this movie before, but today does feel very different. So what will you call out as the main difference between the last cycle and the current cycle that we're in? Yeah, past cycles in our business have been usually, you know, a long period of prosperity. People get lose all fear, supply comes on, then you have a normal run-of-the-mill recession, demand falls off, but supply is still coming on, and vacancies go really high, and eventually construction stops and the, the space gets absorbed, the economy comes out of the downturn, and things get back to semi-normal. But they go back to semi-normal at reasonably elevated levels of vacancy. I mean, I would say most of my career, other than the last five years, vacancy rates have, in a normal environment, have been about 7% or 8%. In peak areas, they've been 10%, 11%. If they got really tight, it was 6%. A very different story today. Today, we're dealing with 4% vacancies, and yes, there's a lot of new supply coming on board, but we think at max, it's gonna go to the high 5s before it comes back down to 4%. So we're going into an economic, maybe softer period, but with fundamentals in excellent shape. You know, I can't think of an era other than maybe 2021, 2022, where the market was tighter than it is today. So I'm very optimistic about the near-term fundamentals of the business. What is really different than other cycles is that we've never had a 300-400 basis increase in interest rates over such a short period of time. Yes, we've had very elevated interest rates. When I started the business in 1980, 1981, the prime rate was 22%. Unemployment rate was 12. There was this thing called the misery index, which was the sum total of inflation and unemployment, and that was around 25. So this is nothing like that, but the rate of change has been very fast, and that comes at the tail end of a 12-13-year period, where rates were constantly going down, and for the last five of those years, money was free. So a lot of people thought this was a really easy game. You just buy real estate and its value goes up, and that's the end of the story. Well, guess what? A lot of those business models don't work anymore when interest rates have gone up 400-500%. I personally think that we've seen the high of the interest rate cycle. I think the Fed, frankly, has overdone it, and they have not been patient in terms of the two years that it takes for this kind of policy to kick in. I do think we're gonna have a slower economy next year, but I don't think we're gonna have a recession. But the strong fundamentals are the most important difference, and on the interest rate side, there's no company that's better positioned in terms of cost to capital, average interest rates, debt capital, and maturity, long maturities that we have in our picture. So we're not dependent on that free capital, and I think we're gonna have competitive advantage going forward. So I'm actually very excited about the next couple of years. Yeah, I think, too, on top of everything Hamid said, just continuing to underscore how much more complicated it is to build our space. But I've seen many of you out on property tours over the years, and I think there's a lot of focus on going out and seeing properties around the country. I would actually suggest, recommend, challenge each of you, maybe rather than take that next property tour, tune into a planning commission meeting in New Jersey, or Southern California or Southern Florida, and see what issues we are dealing with, what our industry is dealing with, to create more logistics real estate. Hamid, you just mentioned that we're probably going into a softer economy, but that you also feel optimistic about the future. You definitely have a reputation for calling things as you see them. You know, analysts have come to respect that, of course. But I've been hearing from many of you lately, especially over the last few earnings calls, asking why we have such a sobering tone on our earnings calls, particularly when we're showing such strong results. So what drives you to do that? Honestly, we have a special responsibility in this industry. I mean, we're by far the largest company in the space, and I don't mean industrial, I mean in the sector. We go very early in the process, so we set the tone on the discussion, and I think it would be. And we've spent decades building a reputation of being straight shooters and calling it as we see it. Now, we call it as we see it, but we don't always get it right. So, you know, sometimes we're overly optimistic or pessimistic, but we call it as we see it. We don't spend a lot of time prepping for analyst calls, trying to work on, well, what's the spin of the message? Well, we think you guys are pretty sophisticated. You talk to a lot of companies, you sit on many more earnings calls than in one session in one quarter than I ever will participate in in my career. So you guys have the ability to process nuance. I'm pretty comfortable at that. So with that. So we'll tell you what we see, and... But I find that the reactions are extreme, which actually gets the companies in a funny place, that they actually end up sharing less because the reactions are so extreme. So things are not one or ten on the scale. They're not black or white. There's a continuum, and along that continuum, the market moves, and that's what we try to give you a sense for on a very real-time basis. So I hope you appreciate that. Look, yeah, we could, for the last three, three quarters, we could have gotten up there and said, "Look how great our results were in the last quarter." Well, A, that's been, that's already in the past. You already know that. And secondly, that's not what's important. What's important is what's gonna happen in the future, and we're gonna give you our best thoughts. If, if they sound pessimistic, so, so be they. But really, really, if at the end of the day, somebody asks me, "On the optimistic, pessimistic range, where are you?" I would say I'm in the top quarter, optimistic, because when things are great like they are in 2021 and 2022, I actually am more scared than, than I, than I am when the, when there's some sobriety, sobriety in the, in the environment, and people don't think the trees will grow to the sky. I like this kind of environment. Dan, turning to you, you have a unique perspective. You've been 20 years at Prologis. You started in the field, then to Regional President, then Global Head of Capital D eployment, excuse me, and now president. So are there one or two things that you really want to focus your attention on in the next few years? I thought you were gonna say I have a unique perspective after sitting 100 ft down the hall from him for the last 15 or so years. That, too. So, my perspective, 20 years ago, I started in February of 2004, so, we had less than 100 million sq ft of operating portfolio. We had 185 people at the company, and I look at where we are today, 1.2 billion sq ft, over 1.2 billion sq ft, nearly 6,000 buildings in 20 countries. Pretty amazing what has happened over that time frame. Obviously, this company's been built over a 40-year time frame. And, what has been the focus for a majority of that time? It's been focusing, laser-focusing on location, product, quality, responsible growth. Not growing for growth's sake, really focusing on where we want to be and maintaining a high quality of product. Certainly, we focused on driving that G&A down. Certainly, we focused on... Really, what we've been doing is writing the playbook on what the leader in logistics real estate should do. And so we have that playbook on how to build that portfolio. It's irreplaceable. Nobody can match it, right? But we did all that now, it puts us in this position where we can actually now think about the next 20 years. And what we really focus on now, what I need to focus on a fair amount of my time. First of all, we have to focus every day on the golden goose, right? We have to continue refining the portfolio and growing that portfolio responsibly. But we've put ourselves in this position with our customers to offer much more, and it makes our life that much harder. There's no playbook for this, right? It makes it harder for us to talk with you all. There's no benchmark for what we do. There's no real way to compare us to any other company. So it makes for tougher conversations, makes for a lot more critical thinking, a lot more decisive decisions we have to make around these new businesses. And really, when it, when it comes down to it, this is all, it's all about returns. It's all about growth. It's, it's about cash flow growth, earnings growth, durable quality earnings growth. And the work that we're doing now is gonna bolster that earnings growth for years to come. So that's where you'll see my focus in the next few years. ... Can I, can I add to that? So, just listening to Dan talk, I wish I were 25 years younger, honestly, because I remember those days. I remember the 1,000 sq ft, or 800 sq ft office space we were renting, and we were deciding who was going to sit in the single office and who was going to get the conference room and all that. And now I look at the company and I know that at every step of the way, how difficult it has been to build this. This is a great platform today. I mean, the next 25 years of this company are, are, are just - we're just beginning. And I say that at every annual Christmas party to our team, and people shake their head. I say, "The next 10 years are going to be a lot better than the last 10 years." And people say, "You've got to be crazy. I mean, we've gone from X to Y in the last 10 years. How could you possibly say that?" I really mean that, and I don't mean it in terms of, in terms of scale. Of course, we'll get bigger in terms of scale, but we never start there. We start with the customer, how can we serve them better? And that gives us more opportunities with those customers, which in turn makes the company bigger, and we've got a balance sheet to support that. So I'm more excited, literally, about the next 10 or 20 years than what we have all accomplished together in the last 10 or 20. I think it'd be really cool. The most important thing on my mind to ensure that is to make sure that we have a great succession to a new team of professionals that know our DNA, know our culture, know our business, and can frankly execute a lot better than we did. So that's where I'm focused, and I'm not going to let that get messed up. Hamid, we'll hear more on Essentials later today, but higher level, we are pursuing many real estate adjacent initiatives. So what gives you the confidence that these are going to be successful? I think some of them will be very successful, some of them are already very successful, and some of them will fail. But I think with constant experimentation and listening to customers, we'll get it right. We might, we might not get it right on the first instance, but we'll get it right. And there are certainly things that we've tried one way and have failed, killed it, and pivoted, and tried it another way, and it's worked. So that's going to be the model. We're not clairvoyant. We just, we just listen to the customers and try our best to deliver what they think they're asking for, which they can't always articulate. By the way, you used the iPhone analogy. I'm sure Steve Jobs didn't go around and conduct a focus group- Right ... of customers and say: Do you want this little thing in your pocket that you can make phone calls to, and then you're going to have 26 apps on? No. As smart as he was, he couldn't have possibly done that, right? He put a tool out there, and the market told him what additional features and all that you needed to build on them. And thousands of people built things for that device, 90% of which didn't work, and, but, you know, you got some killer apps that really make our lives a lot easier. So think of the same approach on a more B2B scale than a B2C scale. You know, when we approached this business, I think we really leaned in, starting about five years ago. We thought we knew what we were doing, and we've learned so much along the way. Take at that point, 35-year-old company, and try to introduce these new businesses, and the change management and the mindset of innovation. So we did stumble, or stub our toe a few times, right? I mean, we've done things like we tried to do short-term premium, flexible space, right? How many different markets have we tried that in? We thought, could we reserve 1 million sq ft in the heart of Dallas, in the heart of LA, and get that, you know, the surge pricing you pay on an Uber for the space that these customers need during, you know, seasonality and what have you? And we just haven't figured that out. So finally, we decided: Hey, let's kill it. Let's just cut our losses. Let's. There's a tuition we just paid for that, and let's take those learnings and bring it to the next experiment. And along the way, with. That's just one of many. Along the way, we realized we can't do this on the sides of our desk, right? These aren't these can't be hobbies, these are businesses. The best thing we've done, I would say, is we realized, let's go hire from these relevant industries. You're going to see talent up here today, world-class talent from industries that we're focused on, that we brought in, that are now scaling these businesses, that they just see the opportunity better than we do, as, as real estate folks. So I think that's probably maybe the biggest learning, is bringing people that know the business, that can build the business, and scale the business. Dan, let's end with you. Sure. In three years from now, we'll all likely be back in a similar setting here, our next investor forum. Can you give me three predictions, either about our business or the industry, that we'll be talking about next time we get back together? Sure. Well, I have to start with our core business, because that's what got us here and what's going to keep us focused on these new businesses. And so I would say... You heard Hamid describe at the front end his thoughts on the supply-demand dynamics. And so we're in this new era of just lower vacancies, right? So I strongly believe our thesis is going to play out. We've talked about all this supply that's been coming on the last few quarters, going to come on for the next couple of quarters... but the dearth in starts and the fact that our competition, they're on their backs, they really, you can't capitalize on the deals, and I think it's just gonna lead to a slower start volume. Well, here we're sitting with $40 billion of opportunity in our land bank. So I would suggest, at the risk of getting kicked by Hamid here, that over the next three years, you're gonna see an acceleration year-over-year in our development starts. We're not gonna start for start's sake, but it's gonna... our thesis on the supply and demand is gonna play out, and we're in a very unique position to capitalize on these very low vacancies, given the location of our land bank, our balance sheet, our internal expertise. Second, I would say... Let me take it to the energy side. Data centers. Data centers are gonna create more scarcity of opportunity in the logistics business, which could propel number one there, right? So just overall, I think that's gonna happen. On the flip side of that, you're gonna see these capabilities we're building internally. On the energy side, you're gonna see how many people we have on that team. You're gonna see these folks that we've hired from the industry that are gonna help unlock opportunities. So I don't have the number, but I know they're gonna unlock other opportunities for us in the data center realm. And certainly help us execute our core business, given how difficult it is to energize properties these days. And then maybe lastly, I'd finish with, I think three years from now, in this room, we will have colleagues of yours from other sectors. I think the investment community will broaden. It won't just be focused on the REIT sector. They'll be focused on these other businesses that we're building as well, the solar and the energy storage and mobility, and so I think you'll see that group crowding into this room as well. I'm proud of us. So the timer didn't work, and, I think, we kept it into pretty good time here. So, nice. Well, thank you all. You'll have an opportunity to ask these two questions, midday and at the end of the day, and we really hope you enjoy the content we've put together for you. Great. Thank you. The world leader in logistics real estate, spanning 4 continents and 20 countries, and critical to the global supply chain. For more than 40 years, driven by a passion for innovation, Prologis has been at the forefront of the transformation of global commerce, facilitating the rapid rise of e-commerce, which has revolutionized the way we consume goods. At a time in which speed to consumer is the ultimate competitive advantage, Prologis owns an unparalleled 1.2 billion sq ft portfolio of exceptional real estate in premier locations across the globe. As population and consumption grow, the supply chain must not only keep pace, but meet increasing demands for speed and resiliency. Having developed over 500 million sq ft of logistics real estate in the last 40 years, Prologis stands apart in delivering this crucial infrastructure and creating long-term value. With another $40 billion in future development through its irreplaceable land bank, there is a long runway for future growth, but being bigger has never been the goal. Prologis centers its strategy on a long-standing commitment to best serve its customers as they deliver in the first, middle, and last mile. Over $7 billion of goods flow through Prologis facilities each day, making it the largest logistics landlord to the world's top brands. This scale has led to the creation of Prologis Essentials, designed to serve customers and the future of logistics, a platform providing tools to boost warehouse efficiency and capacity, as well as solutions for mobility, renewable energy production, and storage. Prologis is committed to setting the industry-leading standard net zero across its value chain by 2040, supporting its customers' transition to a low-carbon economy. From the beginning, Prologis has grounded its strategy in data and innovation. When paired with advanced technological investments, the opportunities to deepen its competitive advantage are limitless. Everything has been done by design, and over the last decade, this visionary approach has delivered double-digit growth in earnings, total shareholder returns, and dividends. You are an important part of that story as investors in a new age of global commerce. Together we are, and always have been, ahead of what's next. Great! Good morning, everyone. I'm Joseph Ghazal, and I've been with Prologis for the past 22 years. As the Chief Investment Officer, I'm responsible for all of our capital deployment activities across the globe. Prior to my current role, I was the global head of capital deployment and the Chief Investment Officer of Prologis in Europe. Earlier this year, in January, I moved from Paris to San Francisco, where I now office out of our global headquarters. It's great to be here, presenting in front of you guys for the third time. Good morning, everyone. We're happy to be here. I'm Carter Andrus. I've been with Prologis for 15 years. As Chief Operating Officer, I'm responsible for the performance of our 1.2 billion sq ft real estate portfolio. Previously, I was Global Head of Operations, and prior to that, I was in leadership roles in the Central Region in the U.S. as President, Head of Capital Deployment, and Head of Operations. After years in the industry, one thing has become clear to us: not all buildings or markets are created equal. Our customers are at the center of everything that we do, and this is a recurring theme that you'll hear throughout the day. We cater to their needs, remove as many pain points as possible, and push the envelope of what our assets and people can deliver. This has driven our focus to deliver the right product in the right location. Joseph and I are gonna share with you, today how we've built an irreplaceable portfolio and how that drives our performance. We're gonna cover this in three parts. First, our history. We recognize that many of you, that are here with us today have an understanding of our company history, but there's a number of you that maybe aren't as familiar, so we're gonna give you a brief refresher on those 40 years. Next, we're gonna give you a deeper understanding of our unique and disciplined investment strategy. And lastly, how our scale with a differentiated platform is a competitive advantage. We're gonna cover our history in these four eras. You're gonna hear how we've evolved over these eras, but the one thing that is constant throughout all eras is our intense focus on the customer. Let's jump into the first era. These early days were about shaping our investment thesis and our pivot to industrial. So we were founded in 1983 in San Francisco. We started as an advisor to institutional investors, focused on office, industrial, and community shopping centers. In 1987, we exited office and then focused mainly on industrial at that time. So why, why industrial? What was the appeal then? Well, what was true then is true today, right? That people buy goods, everyday goods, toothbrush, toothpaste, clothes, the fancy shoes that Joseph has on. Joseph, can you show them those shoes? Fancy shoes that he's wearing, but these goods come through warehouses, okay? So we wanted to own industrial near major population centers, those with a propensity for growth, and in particular, markets with a higher barrier to supply. We liked the low CapEx nature of industrial, and we liked its potential for future higher and better use. We, we sometimes joke internally that, while industrial has the potential to be the cheapest house on the block, and while, while returning on its own, and we like that about industrial, it's that potential for a future higher and better use that has it sitting above other asset classes. It was in the late 1990s that we sold out of all of our retail, okay? And we entirely focused on industrial. So what was happening in the 1990s? What was our trigger for doing that? The internet, and the e-commerce boom to come. The impact that that would have on retail, for sure, but on the flip side, the positive impact that that would have on industrial. And there's an interesting story around this time. Hamid was given the opportunity to invest in a couple e-commerce companies, one by the name of Amazon, and the other being an online grocer by the name of Webvan, if anybody recalls them. And with books being too narrow of a focus, made the decision to invest in Webvan, and as Hamid says, while he picked the wrong company, he got the long-term trend right. So by the end of this era, we are firmly rooted in industrial. Our strategy's playing out, it works, and there's a recognition that this applies to markets outside of the U.S. So at this point, all we needed was access to capital to embark on our next era of global expansion. Thank you, Carter. In 1997, we listed here on the New York Stock Exchange, granting us access to all capital markets. This gave us scale and capital to fuel our global expansion. Started in Mexico, then went to Europe, then off to Japan, and finally in China. With the right local team in place, we've established our in-house development capabilities and created our land bank strategy. Coupled with our increased customer base, our portfolio grew during this era from 140 million sq ft to nearly 600 million sq ft. During this era, we've launched also our Strategic Capital business. Launching those private funds allowed us to recycle our capital and further fuel the growth of our platform. You will hear more about our Strategic Capital business from Tim later today. For now, let's go to the next era, which was all about optimizing the portfolio. Optimizing the portfolio. So in 2011, we executed the merger between AM B and Prologis. This was the largest merger in REIT history. Some of you may recall that we had a strategic plan at the time, and amongst other key priorities, to bring these two businesses together, we needed to align our new combined portfolio, okay? We needed to increase our asset utilization. This is both in terms of our operating assets, to boost our occupancy, but also getting our land bank to work. And then we needed to rationalize our Strategic Capital business. We had 22 funds, and we wanted to bring those down to 14. We had a goal to complete the strategic plan in 10 quarters, which we successfully did in 8 quarters. Over this period, we sold $6 billion of non-strategic real estate. We exited markets like Boston, Salt Lake City, Romania, Austria, and Korea. Took this money, we recycled all of this into newer, better properties, so with new development and third-party acquisitions. Everything that we were doing during this era was about streamlining our focus and creating a more efficient business. Thanks, Carter. Let's go now to our most recent era, which started in 2015. Our portfolio back then was nearly 600 million sq ft. Over the span of the last nine years, we've more than doubled our portfolio to 1.2 billion sq ft. The five M&As that we closed on are highly complementary to our portfolio and increased our customer base massively. In addition, during this period, we've also deployed more than $45 billion in new development starts, third-party acquisitions, and strategic land positions. But let's be clear, we didn't grow just for the sake of growing. We strategically grew in the submarkets where we wanna be in and where we wanna have assets for the long term. In fact, as Carter mentioned also in the previous era, we've disposed of more than $10 billion of assets that we didn't believe were long-term holds for us. What did this all do? It increased our coverage of the submarkets and more improved our operational efficiencies. The result of all these deployment activities for the last nine years resulted in the following: Our AUM nearly quadrupled during this era, but we're in less markets than we were in back in 2015. I'd like you more to focus on the last column here, which is the clusters. The way we define a cluster is relatively simple. It's any submarket where we own 20 or more properties in a 5-mile radius. As you can see, the number of clusters more than doubled since 2015. Why is that important? Because it gives our customers more flexibility and allows them to grow within any cluster while benefiting from our improved services. Also, during this era, we've launched three new business lines or capabilities: Essentials, Procurement, and Data Analytics, all of which you'll hear more about later today. So we've just covered 40 years of history, explained why we're focused on industrial, why we went global, why optimizing the portfolio is important, and the benefits of our scale. Let's now go to our business today. So to sum up where we are, we have 1.2 billion sq ft across four continents and in 20 countries. 5,500 buildings servicing 6,700 customers. We have close to $200 billion in assets under management, $40 billion of potential build-out with our land bank, and we have 2,600 of the most talented people in the business. We hope you have a better appreciation for our portfolio and everything that it took to get us to where we are today. We're gonna spend the rest of our time with you talking about how we invest and how we operate. Thank you, Carter. So wanna talk a little bit about our disciplined investment strategy, and I would like us to focus on three things: how we invest, as Carter mentioned; I would like to talk about our land bank that Dan mentioned a little bit earlier; and then finally, our higher and better use strategy. So how we invest, while every deal is unique, we really focus on four core components that drive all of our investment decision: location, to which we add our asset quality, customers, and our disciplined underwriting. And when we add all of these four components together, this will drive our investment outperformance. Now, I know every company stands here in front of you and tells you, "We're focused on location. We have a very disciplined underwriting strategy." Nobody will come and say, "Yeah, we're kind of half-half on underwriting," but please allow me to give you some examples why this is important to us and how it might be different. Let's start with location, and let's talk about one of our markets in Dallas. Dallas is nearly 1 billion sq ft market and has 10 submarkets, but we're really focused on the five most strategic submarkets in Dallas. Our clusters are mainly west and northwest of Dallas at DFW, complemented by strategic infill locations closer to the city centers and along the ring road. Some of our competitors buy land that are not even on this map, way north of DFW or south of the I-20, if you're familiar with the Dallas market, and they still call it Dallas. That's not what we do. We really are focused on the local consumption centers and where we need to be in the markets that stand the test of time, drive alphas through higher rental growth, lower vacancies, which will result in increased valuation. This is the approach we do in every other market we invest in around the world. Let's add to this our asset quality. With our in-house development team, we're really selective and picky, about how we design and what we pursue and not pursue in the market. From building size, to clear heights, to column grids, to access, to amenities, all these specifications drive our focus to deliver the best product to our customers. Third, customer, when we add this to the equation, you've heard from Hamid and Dan this morning, and you'll hear more from Scott and Damon later on about how we partner with our customers to deliver the best product for them in each market. Finally, we add to this, obviously, the underwriting discipline, and it's admittedly simple. We use our... It's the same discipline for every investment that we make in the market. We don't invest with fees, leverage, or other financial engineerings in mind. It's all about unlevered returns, margin, replacement cost, or cost of capital that Hamid touched upon. Let's take cost of capital, for example. This is a metric that we evaluate internally every four to six weeks in partnership with our treasury, valuation, and research team, and that will guide most of our investment decisions. When you add all of these together, we will have an investment outperformance. As you can see on this slide, and this is a slide that you're all familiar with, that you see probably every quarter, but I'd like to highlight a couple of things in there. Over the span of the past two decades and across several cycles, therefore, tempering down a little bit the effect of cap rate compression. We've invested more than $45 billion in new development starts, creating $13 billion of value at nearly 30% margin in a business that's typically between a 15%-18% margin. Most importantly, 70% of this margin has been created outside of the U.S. Being global and serving our customers pays off. Next, I would like to talk about our land bank that Dan touched upon earlier. We own and control land bank that can deliver 200 million sq ft and $40 billion of additional investments. We have a dedicated entitlement team that works every day in order to bring this land to a ready-to-go status. Today, 30% of our land bank is entitled. This is unique as it can deliver to our customers' needs on a build-to-suit basis across the globe, where our competitors usually rely on just-in-time land, which is more and more hard to get these days. This is future growth in our more strategic submarkets. Finally, I would like to talk about our higher and better use strategy. Higher and better use is embedded within our DNA since inception, actually, whether it's covered land play, conversion to life sciences, or data centers. Higher and better use historically used to be converting logistics into something that's better or more valuable. Today, it's also converting something else into logistics, because logistics is better and more valuable. We have today 80 covered land plays across the globe that can deliver 26 million sq ft and up to $8 billion of new investments that we can convert into higher and better use. I've put some examples here on the slide in front of you. We've recently sold logistics parks in Silicon Valley to be converted to a global headquarters for Facebook. Watertown Business Park near Boston, where we've converted an older logistics park into newer state-of-the-art logistics parks, and part of the site was converted also to life science. We're building a life science building in Cambridge, in the U.K., and a lot of our land south of San Francisco is being converted to life sciences, as most of you know. Finally, our investment committee recently approved the acquisition of five car dealership sites in Brazil, in a sale and leaseback off-market transaction to be converted to last-touch facilities. This plays to our knowledge and, as a global platform, to staying ahead of what our customers needs and provide them with solution in those dense infill locations. Finally, I want to touch on data centers, which is the topic of this era, I would say. First of all, I would like to remind the audience that our first data center deal was done in 1999 in Northern Virginia, here in the U.S. And that over the last 10 years, 28 buildings in our portfolio have been converted to data centers by our customers. Once we already have technical and commercial expertise within our team, we're in the process of establishing a data center team that will be focused on those key conversion opportunities within our portfolio. What we're looking to do is really simple. One, identify those buildings that sit in data center clusters, can be converted to data centers, and apply for power and fiber to those sites. Second, lease those sites or buildings as a powered shel l and potentially convert them to turnkey data centers if our customers ask us to do so. What's the size of the opportunity? Over the next five years, we think that there's 20 sites between buildings and land that can be converted to data centers. That will provide an additional 3 GW of power and $7 billion-$8 billion additional investment, mostly being powered shell and some of it being turnkey development. We're not looking to be a data center operator, and we're not looking to take any SLA risk in this. What we're trying to do is just take advantage of key conversion opportunities within our portfolio. Over the longer term, we're identifying more than 100 opportunities in our portfolio that can be converted, that could provide up to 10 GW of power. Now, why is this compelling for us? Because margins for the conversion of data centers are 50%-100% higher than industrial margin, providing us an outsized value creation to all those conversion opportunities. This is higher and better use on steroids. With that, let me hand over to Carter, who will walk us through our operations business. Okay, thanks. Operations, it's with a long-term mindset that we're able to leverage the scale and our differentiation platform to drive our performance in ops. Let's explore this mindset a bit. It starts with our people and our culture. They're everything to us. We have a culture of innovation and one that embraces change. In fact, this year alone, we completed 66 continuous improvement projects. Okay, this is part of our every day, our people iterating, how do we get better? How do we get more efficient? Next, our relationships and reputation. We have the most experienced and engaged teams in the field. And when I say in the field, I mentioned before, we have 2,600 employees, okay? Only 5% of those 2,600 actually sit in our headquarters in San Francisco. We want our teams in their markets-... with the properties and with the customers. And it's these relationships and this reputation that we've built over decades that gets us the first and last look on deals, and it absolutely, absolutely gets us the best market intel. Third, our decision-making is based on maximizing long-term value. We're not a low-cost provider like some others, okay? We're willing to make the investment to maintain our properties so that they're in a position to lease in any operating environment. We're not risk averse. We have the scale and the platform to balance that risk, and we're gonna be the first to prioritize rent growth over occupancy in the right operating environment. We're not short-term value maximizers. Think like a, a merchant builder that favors speed over all others, which leaves, you know, value on the table for long-term owners like ourselves. So I've mentioned differentiated platform a couple times today, so what is it? What do I mean by that? Let me let me explain. So this is how much of the industry operates today. You've got leasing, construction management, capital deployment, got their maintenance and property management functions. And much of our competition, local and national, doesn't have the scale to have these functions in-house, so they'll third party. And when you third party, there's just less connectivity that you're gonna have amongst these functions, and you lose that direct interaction with the customer. So how are we different? For us, the customer is at the center of everything we do. I know that it sounds simple, but this is not where other real estate companies are focused. We've been very deliberate in how we set up our organization. We have these same five functions. They're in-house. We have them surrounding the customer. And no, you guys are not mistaken, and that's not a marketing goof. There's a missing piece to this circle: Essentials. It's because our customers need more than four walls and a roof, that we added this Essentials capability. Essentials Operations, where we can outfit their warehouse with all that they need, whether it's racking to forklifts or even relocation services to get into the building in the first place. We have our energy and sustainability capability to align with our and our customers' ESG goals. And to further enhance our platform, we added capabilities into Procurement, okay? To reduce our spend and also for preferred service providers and availability of product. We added in advanced analytics. All of the data that we have internally, external, all that we have coming through our system, how do we use that to inform better decision making? You're gonna hear from Chris Caton a little bit later on this. Our Prologis Ventures team is with us here as well. They're talking to thousands of companies every year. What technology is out there? What are the trends that are shaping the logistics space and others that could influence and help Prologis and our customers? So what, what have we, what have we built here? What have we done? What we've built is a super integrated platform that absolutely drives better customer experience and more value to our shareholders. And when you take our scale with the super integrated platform, this is what drives operating outperformance. We see that showing up with industry-leading operational efficiency, reduced capital and operating expenses at our properties, and we're able to maximize revenue. We'll talk about industry-leading operational efficiency. This is a chart that shows our G&A as a percentage of AUM over time. Despite the investments in these new business lines, these new capabilities that I mentioned to create this super integrated platform, you can see that our G&A, as a percentage of AUM, went from 85 basis points down to 34 basis points since 2011. In comparison to other logistics REITs, we're 45% lower and 60% lower than blue chips. With our scale and our Procurement team, we achieve reduced capital and operating expenses. When we were with you in 2019, we walked you through a case study of how we reduced the cost that we were paying on our LED lighting, reduced it by two-thirds. We went from $1.50/sq ft down to $0.50/sq ft. We went from local Procurement with no scale benefit to global consolidation. And since 2019, we've expanded these Procurement efforts into other areas of our business. And I'll walk you through a more recent example of that, which is vendor optimization. Our vendor optimization program is where we're utilizing this scale, and then in combination with the, with the clustering of our properties that Joseph had elaborated on a little bit earlier, but our scale and the clustering of our properties, we're able to reduce our operating expenses. Okay, this is like landscaping, snow removal, painting, the repair and maintenance, okay? And through this exercise, we were able to reduce the amount of vendors that service our properties by 700. We went from 1,700 vendors to 1,000, a 40% reduction. We awarded more business to fewer of the highest performing vendors, okay? So we're getting better service. And in exchange for that, we get below market rates. In 2024, we anticipate savings of 10%-15% on a $200 million operating expense spend. And this is just for the U.S. We're gonna expand this program outside the U.S. in the coming year. Lastly, we outperform on rent. Let me walk you through a comparison. On the map here, you've got four other logistics REITs and the markets that they're represented, REIT A, REIT B, REIT C, REIT D.... To compare our operations with these other logistics REITs, we recalibrated our reported rent change to align with their market composition. So this equalizes for geographic differences and gives you a more direct head-to-head comparison of our operations and our asset selection versus theirs. So let's see how we stack up. See the annual rent change for the other logistics REITs over two time periods. You've got your three-year and your five-year. Prologis' rent change in those same time periods. And as you can see, Prologis outperforms all others in the sector in each of these time frames. This is outperformance that we're gonna continue, that we're never gonna let up on. And with that, I'm gonna turn it to Joseph to close us out. Thank you, Carter. Impressive numbers indeed. So as Carter and I conclude our time with you today, we hope that we have given you proof that our irreplaceable portfolio has a highly integrated platform, has embedded growth, and drives outperformance. What got us here won't get us there. The blueprint of the next decade is anything but a copy and paste from the past. We are, we are nimble, we are agile, we adjust at every turn, and we continue learning as we progress. We believe that the future is brighter and more successful than our past, and that the best days are going to be ahead of us. Thank you. And with that, I'd like to introduce Scott Marshall and Damon Austin, who will talk more about our customer centricity. All right. Good morning, everybody. My name is Damon Austin, and I'm our Global Head of Customer- Led Development. Good morning. My name is Scott Marshall. I am our Chief Customer Officer. We couldn't be happier to be here this morning with you to talk about customer centricity. What a better way to kick off this session than to start with a case study. Damon, off to you. Terrific. Well, last month, Scott was visiting me in Southern California, and we set off to tour in the Inland Empire with some of our customers. For those of you who haven't been, the Inland Empire is truly the heartbeat of Southern California, and in fact, all of West Coast logistics. This market is home to nearly every single large customer in our global portfolio, and it's ground zero for some of Prologis's largest global build-to-suit projects. Let me orient you really quickly. This map behind me, this is the entire Southern California basin. The blue dots, they represent Prologis assets. There are 543 buildings. This is 121 million sq ft that is nearly 98% leased. This market is supercharged by the flow of goods coming through the ports of L.A. and Long Beach, and by the huge Southern California population base and local consumption. But it's not just the products that come in through the ports and into our warehouses in SoCal stay in SoCal, half of them go on to travel throughout the entire U.S. Now, let's zoom in a little bit closer. This is the Inland Empire market. This is one hour inland of the ports of L.A. and Long Beach. Again, the blue dots, represented by Prologis assets, 201 buildings, 79 million sq ft, also almost 98% leased. This market is essentially the big box market of Southern California. It's also one of the single densest clusters of Prologis assets that we have on the entire globe. In fact, we have more than 12% market share in this critical market. Because of all these factors, it turns into a magnet for some of our largest global customers. I want to tell you a story about one huge asset that we put together in the heart of the Inland Empire West. Welcome to the Merrill Commerce Center. This drone footage was shot just a couple of weeks ago and gives you a sense of the huge scale of this 400-acre master planned industrial campus. This is a project nine years in the making. We started this assemblage in 2015 with five different sellers. In fact, we were missing one small 30-acre slice right in the middle. That was bought by a competitor of ours, Liberty Property Trust. A few years later, with that M&A acquisition, we were able to fill in that donut hole. This park is a who's who of corporate America. We have VF Corp Vans in more than 1.2 million sq ft. We have Amazon in almost 4 million sq ft. We have Lululemon in 1.2 million sq ft, and we have another 2.2 million sq ft under construction with Home Depot. This park is a perfect example of what happens when we put together our best-in-class capital deployment and land acquisition strategy with our customer business. So how does a park come like this? How does it come together? Well, it's really a big combination of things. It's our capital deployment team, our boots on the ground, knowing exactly where to source, how to entitle, and how to design the very best land sites on the planet. It's our operations team, knowing when our customers are bursting at the seams and ready to take on new space. It's our Sustainability, our Energy, our Mobility teams guiding our customers on their journeys to net zero. it's our construction and development teams that know our customers' design specifications inside and out. This all comes together under the banner of customer centricity. ...Customer centricity is truly in our DNA at Prologis. It drives outcomes for our customers, it drives outcomes for Prologis, and it drives profits. When all is said and done, this park will be more than 10 million sq ft. But what's most amazing still, the 8 million sq ft completed so far, we haven't built a single speculative project on this entire campus. It's been developed 100% through risk-mitigated build-to-suits. Now, let me say that again, 100%, 8 million sq ft without a drop of leasing risk. When all is said and done, this park will be more than 10 million sq ft. That's $1.4 billion in economic investment at more than a 50% profit margin. That's $800 million of profits that we'll realize on this project alone. But this is just one project. We have opportunities like this all around the globe. These four customers, Lululemon, Home Depot, Vans, VF Corp Vans, they are all large, repeat, multi-market customers that we've worked with dozens, in fact, hundreds of times. These four customers alone represent 213 leases in 75 different markets for 64 million sq ft. That's 213x that this set of four customers alone has said yes to us. That is customer centricity in motion. But before we go any further, I think it's really important for us to ask the question: What is customer centricity, and how do we do it here at Prologis? So you've heard Damon say that phrase 7 or 8x in his opening. You heard Hamid talk about it in his opening comments about the customer first. But what truly is customer centricity? If you've heard Hamid say this before, he tells a story that this industry, this industry historically has been known to sign long-term leases with our customers and then pretty much ignore them for 5, 7, or 10 years until the lease is about to expire. We believe that if you take the customer and you put them at the center of the decision that you make, it actually shapes our business. So, for example, if we sign a lease with a customer, they're about to move into a building, but they're having a problem with racking or they're having a problem with forklifts. Is that truly our problem? No, it's actually an operational issue on their behalf. It's inside the yellow line in a building. But we believe with our scale, if we're partnered with that customer, we can help them with that solution based on that scale, based on our regional reach. So customer centricity is not just signing a lease and moving on to the next deal, to the next development deal, it's keeping that customer close for the entire life of our relationship. So let's level set. Across the globe today, we have 6,700 global customers, 10,600 leases. We do about 10 leases a day for about 1 million sq ft. 21% of our net effective rent is embodied in our top 25 customers. This is massive scale, and all those logos you see, other than the U.S. government, all the rest of those customers are global, where we're doing business with them all around the world. When you look at our largest customers and how they've expanded with us, how we have gone with our largest customers, region by region, deal by deal, all of these are individual transactions we've done with these top relationships, with these top customers. Every one of these is a deal. Every one of these is involving a market team, a capital deployment officer, leasing, whatever it might be. It's our whole entire organization coming together. I referenced back to Carter's slide, talking about our ops teams. Everyone needs to work together to let these deals come together. But one other major point here is that all of these are unique interactions. So how do we take these relationships with the customer and turbocharge it? Well, about 15 years ago, we toyed with the Customer Advisory Board, where we get outside of the office, we actually talk about what are the pain points that our customers are experiencing. Not just doing one deal in one market, but truly, what's happening to shape your business? Customer Advisory Board. for those of you that were at this Investor Day in 2019, we talked about these events. Since that time, since we talked about this Customer Advisory Board meetings right through covid. We did them virtually. By the way, we got 100% attendance. That's how much people didn't want to stare at their family anymore at their homes. They actually wanted to attend virtually. So we had 100% attendance. In 2023 alone, we've held seven of these. We did them in the U.S., we did them in Mexico, and we did them in Europe. These are some logos of customers who have attended. These are thousands of hours of one-on-one time that we have with our customers, and I'm not joking. We don't talk about rent. We don't talk about a penny in the Inland Empire. We don't talk about what's going on with a single deal in Poland. We do, maybe over a cocktail, solve some of those problems, but we talk about bigger issues. We talk about ways we can adapt our business to theirs. So we thought we'd just highlight a few. First is predictable operating expenses. Many of you have heard about our Clear Lease. This is a proprietary, modified gross lease that we designed Customer Advisory Board meeting to eliminate the single biggest pain point we have with customers. After signing a lease, the single biggest point of contention is when you go back and you justify previous years' CAM and taxes. That gets eliminated because we provide predictability into those expenses into the future for the customer. It also takes about 4 pages of the lease form out, so it allows us an ease of doing business with these customers. That Customer Advisory Board meeting. critical warehouse infrastructure. I joked about forklifts and racking. These are real issues, especially in the last 18 months. People had an issue sourcing racking. So what we started doing was buying racking on the secondary market to provide it to our customers. This Customer Advisory Board meeting, where our operations Essentials teams helped actually source these products for Sustainability goals. We were meeting with a large 3PL in the U.S., and they were talking about their Sustainability goals to roll out LED across their entire portfolio. Think about this: We have a large portion of their leases, but they have hundreds of other leases of their landlords and even in owned buildings. We said, "We can do that for you. We can actually provide LED. We can provide solar on and off our platform," designed and came and Customer Advisory Board. and then last but not least, geographic expansion. The best way to know where we should be expanding our portfolio, and actually where we shouldn't, is to be dealing with our customers. When we started discussing India, one of the things Joseph and I discussed was getting customers in a room to talk about how we can help them with their needs in India and in other regions. This is a hotbed of information we can get, and it is 100% sourced by the fact that we have these unique interactions. So if you look on the left, you saw this image earlier from Carter. This is our operating environment, where we surround the customer with these businesses. Well, you think about it, one deal at one time. That's what we're. That's our normal day. That's when you talk to an ops team in Chicago, and they're starting a lease for a company. That's one deal at one time. But these customers are dealing with multiple leases being operated all over the globe at the same time. It's actually chaotic. So how can we help them organize the chaos? Well, okay, let's start with the customer at the center. Let's surround them with the businesses that Carter explained. Okay, this is a unique way we interact with our customer. Now, you surround them with things like advanced Customer Advisory Board meetings, by the way, we have Chris Caton, who's speaking later today. We have him or Melinda. Customer Advisory Board meetings. the customers actually then ask them to go speak at board meetings for them, to help them explain what's going on. But we provide that as a service. Our Procurement team, Scale plus Scale, how can we help them accelerate their Procurement? And then last but not least, Prologis Ventures, you're going to hear from that team at lunch. So when we take that, and that chaos is happening for our customer, all these different opportunities, we've now launched... In the dead center now you see our Customer-Led Solutions team. This is an account-based team that engages with a customer directly. They make sure we have the right relationships all the way up the food chain. We're dealing with the right relationships, whether it's in Sustainability, whether it's in any side of the business, and we're accelerating the relationship. So this is just another way that we help organize the chaos on behalf of our customers. Let's just do a quick case study. Let's talk about Maersk, one of our largest 3PL customers. We're engaged with Maersk right now on multiple build-to-suits across the U.S. We're also engaged with Maersk on Energy and Sustainability Essentials needs as they're thinking about EV, both, excuse me, solar and storage. Right now, we're talking about multiple proposals. We're also dealing with Maersk's U.S.-based business, which is Performance Team. You're going to hear about this later. We have the opportunity to be the largest vehicle electrification partner. We are the largest vehicle electrification partner for Performance Team right now, all charging for 200 heavy-duty trucks. That's happening right now. We're also dealing with our Operations Essentials team on move-in and move-out services. We're also dealing with ventures where we're investing alongside them. And then last but not least, let's not forget, we have 49 leases and 7.2 million sq ft with this customer. All of this is happening simultaneously with this one customer. We have hundreds of these relationships. So the idea that we can organize the chaos, and we can sit with them to get these unique interactions is a differentiator for our business. So, Damon, let's dive in deeper and talk about how we're actually driving business to the operating platform. Terrific. So Scott just explained what customer centricity is, how we do it here at Prologis, and why it's so important for our customers. I'd like to flip the script a little bit now and talk about a few different ways that customer centricity actually drives outcomes and what it does for us here at Prologis. We're going to look at that in three different ways. First, how does it drive the bottom line? What's the ROI of our customer-centric business when we look at it in our operations and in our capital deployment businesses? Second, we're going to talk about how we utilize these customer learnings to both inform and drive our new business lines, like our Essentials offerings. And then third, how do we put customer centricity all together and use it to build brand equity and durable, lasting partnerships with our customers? Let's start with that first category first. Let's talk about the ROI of this business and the bottom line. How does it affect our operating business? Well, I'd like to bring this up with 2 separate metrics. That's retention, and then that's net effective rent change. In other words, do Prologis customers stay in our units longer, and do they pay us more rent? Well, let's cut to the chase. The answer is yes to both. These two graphs, they're brought up on the 5-year basis, with the blue chart representing Prologis' outcomes and the gray representing the other publicly traded REITs, and that's already adjusted for market mix. What we show here is that from a retention perspective, we outperform our competitors by 300 basis points on retention, and at the same time, we're driving outperformance on net effective rent change by a whopping 690 basis points. So this is pretty amazing. Not only are our customers staying in our units longer, but they're paying us for that as well. When we look at our top 100 managed accounts, that's the rarefied air Scott talked about earlier. These top 100 accounts, they're responsible for paying 30% of our total global net effective rent, while retention with this rare group shoots all the way up to 85%. But it's not just that our customers pay us more and stay in our units longer. As Scott mentioned, we talk to them all the Customer Advisory Boards, what we learn is that the partnership with Prologis goes so much farther than just talking about rent. When we talk to our customers, the things that matter to them go way beyond that. It's the concierge-level service that we provide them. It's our single point of contacts that we have through our Customer-Led Solutions teams. It's the enhanced offerings, like our operations Essentials business, helping them outfit their warehouses. It's how we can help them on their journey to decarbonization with Sustainability solutions, and of course, it's our huge portfolio of buildings and land that can help them grow. This is customer centricity in action. Next, I'd like to shift a little bit and talk about this from a capital deployment perspective. We're gonna look at this both in terms of land and the build-to-suits that we can drive out of it. Joseph Ghazal talked about our land portfolio earlier, but he was thinking about it more in terms of total embedded development capacity. I just brought this bank up again, but I wanna think about it really, truly through the eyes of our customers. When you put all aspects of our land bank together, that's the land held on our balance sheet, that's our options, it's our joint ventures, it's our covered land plays. All together, that's more than 12,000 acres of land that we have access to. We can build more than 200 million sq ft on this portfolio, and it's located in 68 different global high barrier to entry markets. That is pure gold for our customers when they want to grow their portfolio. As Joseph mentioned, nearly a third of this bank is fully entitled and has all of its infrastructure installed, including utilities, roads. It's truly ready to go for our customers. Now, it takes us years to put this land bank into play, but those years give us years to actually talk with our customers, to market this land bank to them, and during that same time, they're often reciprocating by sharing their development pipelines with us. This all creates a virtuous cycle where we are buying and entitling land precisely where our customers want us to be. It's like fishing in a stocked pond. So all this, what does it mean for our customers? Well, what it means is that we're always ready to meet their growth needs. And what does it mean for Prologis? Well, for Prologis, it means we get to do a lot of build-to-suit deals, and we get to do them very profitably. Here at Prologis, we like to say that doing a build-to-suit deal is the single biggest expression of trust that our customers can offer us, and we thrive on that partnership. These dots that just appeared behind me on the map, they represent 154 different development stabilizations over the last five years. By development stabilizations, that means projects that are completed and have rent-paying customers inside of them. These projects, these 154 different deals, they represent 60 million sq ft of build-to-suits, $6.4 billion in total economic investment. This is 46% of the total development stabilizations that we've seen over the last five years alone at Prologis. Now, let me just say that again. Nearly half of our development starts and stabilizations over the last five years have come in the form of risk-mitigated developments in build-to-suits with no leasing risk. How have we performed on these deals? Well, we've done exceedingly well. We've shown a 42% profit margin. That's $2.7 billion worth of risk-mitigated profits. Our market share in the markets where we work has been about 8.6% over the last five years in the build-to-suit realm, but over the last 2 years, that's continuing to accelerate, and it's showing more than 10%. Now that we've talked about the how we can drive outcomes, I'd like to shift it back to Scott to talk about what this business means for our new emerging business lines. So, let's think back. All of these thousands of touch points we've had with customers coming out Customer Advisory Board meetings, how do they actually give birth to new businesses within our business? How do they actually create this new opportunity? And I think the best way to do this case study is to talk about our operating Essentials business. I think about all the different discussions about pain points and ways that we can help with solutions. Then we go back into the incubator back at Prologis, and we think about how we can make this come alive. We launched our Prologis Essentials business to absolutely meet that need on behalf of our customers, but I don't want you to take my word for it. We've got a video that's gonna introduce you to this business. I know a lot of you are familiar with it, but as it's evolved, this is a way to level set as to how it's being delivered today. Our goal within Prologis Essentials is to provide frictionless, turnkey warehouse solutions as a single source integrated provider. We started with a few key offerings, namely racking and forklifts. The thought was simple. These are material handling and storage solutions that 80% of our customers use, and many of them are at a disadvantage, either in terms of scale, access, or price. Move-ins and even move-outs are complicated, costly, and require lots of resources and planning. Now we have a solution in Essentials. We value being close to our customers. Having the Essentials team built out in our markets and pointing customers to everything we can help them with just furthers that relationship. We've been thoughtfully building up our capabilities, both in terms of breadth of service, depth of product offerings, and internal capabilities, streamlining the entire process. Today, we can handle everything from design, engineering, and permitting, all the way to installation. To support our customers' need to improve productivity and safety, we've moved beyond simple material handling into more sophisticated products, technology products that involve connectivity, robotics, and even automation. The Essentials Marketplace has over 200 strategic partners that we work with every day to deliver that value to our customers. The implementation of any solution in a large-scale warehouse is difficult and challenging. At Essentials, we brought in key leaders with extensive experience and knowledge that have worked at the largest 3PLs, the biggest retailers in the world. ... We're just getting started on the inside of the building. The key and fundamental value that Essentials brings is, one, a turnkey solution. Secondly, the overall experience of the team. The third is our scope and scale. The value Prologis Essentials brings to our shareholders is we solve our customers' most complex problems. From that, we develop long-standing relationships that then extract long-term value for us and for them. The Prologis Essentials platform really offered all aspects that we needed to launch the new business, from lighting to material handling equipment, to material handling equipment providers, docks and doors, utility carts. All key fundamental aspects of warehousing, Prologis was able to provide a service, and it made a turnkey transition that made us very successful. We're excited for the future of Prologis Essentials. We've remained agile in building the newest arm of our business and continue to learn every day. We will continue to provide new solutions to remain true to our unrelenting forty-year commitment to uniquely serve our customers. That is uniquely serving our customers. You know, there are ways that we can execute leasing, there's ways we can execute development, but when you engage at a higher level through customer centricity, you uniquely serve that customer. They come to you with needs that they're not even thinking about. So this is a. This has just been. It's been amazing to see this business evolve, and I'm excited to add it to the customer section because it is truly informed by and evolving around our customers' needs. So with that, Damon, let's talk about the value of the brand. Okay. So look, everything that Scott and I have talked about today, it's all about shaping our offerings. It's in getting our offerings informed by and built for our customers. It's about truly putting our customers at the center of everything we do, every decision we make. And what we think happens when we do this is we build loyalty, we build lifelong partnerships with these customers, and we build brand equity for Prologis. But this is really built into everything we do at Prologis. It's one of our ethos. I'd like to bring this ethos to life with one more case study. 18 months ago, we started work with a Fortune 10 company. Now, this is a company that really wasn't on our radar in a big way. We didn't have a big footprint with them in our portfolio, and we didn't see them really as a fast-growing account. We actually only ran into them episodically. But 18 months ago, they became interested in a piece of land that we had in Central Florida, and that local team was able to put a build-to-suit together with them for 470,000 sq ft. Locally, that team was able to build a great relationship with this customer and had the foresight to ask that one extra question: "What do you see in your portfolio? Do you have incremental needs elsewhere that we can talk to you about?" What we learned was really encouraging. We learned that there was an opportunity, that this company did have growth aspirations in other parts of the country. We took that one piece of information, and we set an in-person meeting with this company's global head of real estate, and what we learned was music to our ears. We learned that this company had bold aspirations to do multiple build-to-suits throughout multiple markets in 2023. We also learned that this was a customer that really highly valued strategic partnerships. They were looking for 1-2 partners that they could roll out with, rather than reinvent the wheel in every single market. So what we did, we took that information, and we went straight to the drawing room. We put together a bespoke playbook for this customer. We put together a dedicated team, both on the transaction side and on the construction and development side. We got to know this customer's design criteria and prototypes inside and out so that we could price their assets and schedule them with efficiency. We put together replicable documents with proposals, with LOIs, with leases, with development agreements that were consistent, so that no matter where we went, our customer saw the same team, the same Prologis. And the outcomes? Well, the outcomes speak for themselves. Over the last 12 months, in 2023, we did four more build-to-suits in four additional markets with the same customer. That's five build-to-suits with a new customer over the last 18 months. And now we're talking to the same customer about so much more than just real estate. We're talking to them about how we can guide them from a Sustainability perspective on their net zero and decarbonization. We're talking to them about win-wins with installation of photovoltaic on their rooftops. We're talking to them about energizing their fleets with EV and mobility solutions. So why is this important? Why am I bringing up this case study? Well, for me, what it really speaks to is how we build these partnerships, how we build loyalty, and how we build brand equity. So what is brand equity? Well, for me, what brand equity really means is that our customers show a stated preference to work with us as opposed to any of our competitors. Sometimes this comes together in very small ways. Sometimes it means that when we're competing on a deal, it means that we win the jump balls, and trust me, we win an awful lot of jump balls here. But sometimes it manifests in much more profound ways, with our customers really going way out of their way to work with us and to partner with us. But I don't expect you just to take my word for it. Let's hand it back to Scott to hear what our customers have to say about us. Okay, so what's our scorecard? One of the best industry benchmarks is using Net Promoter Score s, so using NPS. I think most of you are familiar with it. It's an index from negative to 100 to positive 100. It offsets promoters with detractors. ...And what we've learned, we went out this year, by the way, we sent out surveys to 27,000 global customers. What we learned is that our customers are happy with not only the way we're performing for them, but the way that we're engaging with them. So our NPS score this year was 53. Just to give you an idea of a benchmark, the 2023 B2B average for NPS was 32. Some things to highlight, one, 91% favorable rate for trustworthiness, an 86% favorable rate for communication, and an 84% favorable rate for responsiveness. Our customers trust us, they appreciate the way we're communicating with them, and most importantly, we're responsive. These aren't just being responsive for all the positive moments. You get that score when you're responsive, when things go bad, when a roof has an issue, when you have a snow plowing issue, when you have a flood, when you have a hurricane. To get an 84% response rate, B2B, in responsiveness or positive rate, is incredibly powerful. So this is what our customers are saying about us. Okay, so we've covered a ton of ground. We started with a case study around Merrill Commerce Center. We talked about a few other case studies. We wrapped it around how customer centricity drives value in our operating portfolio, how it gives life to new opportunities, new business opportunities, and last but not least, how it builds brand equity. So there are three things we want you to remember from this section. Just three things alone. One, is that customer centricity is embedded in our DNA as a company. It was one of the first things to be talked about today. Every one of our new employees at the company goes through training. One of the first things they learn about is customer centricity as a major pillar of our company. We talk about it on town halls. We talk about it on earnings calls. This is not optional. When we roll out opportunities like that case study Damon just talked about with that Fortune 10 company, the idea of everyone coming together for customer centricity for that opportunity was non-negotiable. It's not even a conversation. Everyone's in. It's in the DNA of our company. Two, at our scale, with the number of touch points we have, it's virtually impossible to replicate. The interactions we're having at the height, at the levels of these companies, the information we're getting is virtually impossible to replicate. So we're creating a competitive moat around what we're doing by way of information from customers. And then last but not least, it truly drives out performance. As Damon showed, our customers are staying longer. They're making a higher level of contribution to rent because they're seeing value outside of just the four walls and a roof. So with that, thank you so much for your time. We're excited for you to spend the rest of the day. We hope you learned a little bit more about customer centricity and why it's important to Prologis. Thank you. Thank you. Hi, we have reached the first end of our first segment today, and we'll take a brief break. There are snacks and refreshments at the back of this room, so we'll see you back in your seats in 15 minutes to resume content. Thank you. You don't have to finish the journey, but you must begin. There's a lot of low-hanging fruit that we can get right. Achieving real decarbonization relies on working closely with partners across the value chain. I really see Prologis as a thought leader when it comes to decarbonizing the built environment. It's hard to beat, and that's why we like working with them as, as a leader. So how do you work with your utility provider to make sure that that warehouse facility or that campus has a virtual power plant experience where it can both buy and sell energy back to the grid? How do you deploy distributed energy resources or microgrids? And that can be rooftop solar, it can be battery plants. But how do you have the infrastructure on site to generate and store energy, as well as interplay with the grid? And I think companies, and Prologis is one of the leading ones in this space, that can invest and deliver this as a systemic outcome, to really solve the problems for their customers in one go, are gonna have just a massive head start. What's really needed when it comes to transitioning to more clean energy is to really take a systems perspective. It's really about the infrastructure that's going to be in place. A lot of times, Sustainability efforts are a paradox to financial outcomes. Ultimately, Sustainability is about being more efficient. That efficiency drives down costs and improves competitiveness. We are trying to add energy access to billions of people on the planet. Resilient construction techniques can make sure that, it withstands hurricanes, fires, floods, but resilient energy on site could mean on-site solar, but then also battery backups as well. Minimizing risk in the future is really trying to think about what kind of climate events can occur, and then how do we do our best to make sure that the building can operate and be resilient to those problems. Any disruptive change in any industry goes through three phases. At first, it's crazy, then it's dangerous, and then it's obvious. The trouble is, if you wait till it's obvious, you're going to get out-executed by somebody else. ... Hello, good morning. I'm Susan Uthayakumar. I'm the Chief Energy and Sustainability Officer for Prologis. I joined Prologis in January of 2023, so I've been with the company two years. Prior to that, I was with Schneider Electric. I really come from the energy space. I spent 17 years there. With me today is Henrik Holland, who is leading our mobility business globally. I'm gonna start with, what are people from the energy world doing in a real estate company? When you think about the generation of energy, you really need real estate, and you need strategic real estate, and you also need capital, and you need innovation, a company that's founded in innovation. I joined Prologis because I wanted to build, along with my team, a renewable energy company. Okay? So with that, there are three things I really hope you take away from our discussion today. The first is we are future-proofing our portfolio with sustainable actions. Second, we're securing access to power and clean energy. And I wanna draw a parallel on this one to real estate. One of the strategic things that Prologis has done is that it has acquired amazing land banks throughout the years, and having access to power, thinking about where the future is leading, is going to be a differentiator for us. And the third thing that I want you to take away from here is that we are building an energy company in a real estate company. Why are we building an energy company? Because the world is at an inflection point. What do I mean by that? By 2050, the global energy consumption is expected to double. Just think about the amount of power that's going to be required by data centers, and we're building lots of them. There's automation, there's digitization, and at the same time, the world is focused on decarbonization. You hear it, you see it in every paper or every news article that you're reading, and that means emissions have to be cut by half by 2050. The only way to do that is by bringing renewable energy. This is where Prologis has an amazing advantage because of our 1.2 billion sq ft that's located near urban populous centers. You hear many times, energy transition. The energy transition that we speak of is the shift to renewable power. While the energy transition is happening, here is what's happening on the regulatory environment. It's definitely increasing towards climate action. You see it globally. So if you were to look at Europe today, the need for renewable power is being driven by the policy that's requiring decarbonization. When you look at the U.S., the Inflation Reduction Act, which I consider to be the most impactful regulation that's pushing capital towards renewable energy, is accelerating the renewable energy play. And then, if you look forward to the future, not only is there a requirement for renewable energy, but there is also a requirement to disclose emissions. California has just adopted a policy that's requiring Scope 3 disclosure, and I'll talk about what Scope 3 is later. We are very cognizant of this environment. This is complex, it's dynamic, and we've got the know-how to prepare our portfolio and our customers for the future. Energy transition is happening, regulation is accelerating, and we have committed to an ambitious Sustainability roadmap. We net zero ambition that we declared last year, and that is net zero in our operations, so these are assets that we own and operate by 2030, and net zero in our value chain by 2040. So these are assets that we don't own and operate, that we don't control. This is our customer footprint. But because we want to lead, what we did is we looked at our data and what it's telling us about our emissions. 99.9% of Prologis's emissions come from Scope 3. So if we don't take leadership, and if we don't address it, then we can't lead in this space. And when you look at the two drivers of emission, the number one driver is the customer energy use on our premises, and I want you to remember that. The second one is the emissions that come from the construction of our buildings. It's the concrete that we use and the steel that we use primarily. In order to drive the actions to address these emissions, these are the initiatives that we put at play. Number one, we are scaling the energy and Sustainability business because it helps to decarbonize the biggest driver of our emissions. Number two, we've adopted new construction standards. We build 40 million sq ft of real estate per year, and all of those assets are now being built to this new standard. What are those new standards? It is to make sure that those buildings are ready to host solar. We have moved from 20-year roof to 30-year roof because we can then extend the life of the solar asset. We are, as a standard, implementing metering, so we know the energy consumption patterns of the, of the new buildings. We are doing life cycle assessments, so we know where the embodied carbon is coming from. We think about the efficiency of our heating. We think about how do we change the design so we lose as less material as possible. And at Prologis, with our 1.2 billion sq ft, we retrofit more buildings than we build, so we apply the same standards. We think about the roof life to extend the life of the energy assets. We think about the efficiency of our heating. We think about LED lighting because it brings energy efficiency. And every single new construction or retrofit is done with these new standards in mind. So when I started the presentation, I said there are three things I wanted you to take away from. The first one is that we are future-proofing our asset based on our new standards, and this is how we're doing that. I want to now move to addressing embodied carbon. So as you look at, decarbonization, the hardest thing to do is to decarbonize how you build buildings, because there is no zero-emissions or low-emission concrete or steel. And what we're doing is knowing that there are companies out there, so cement producers, for example, Cemex, as well as Holcim, they are thinking about this. So we're leveraging the know-how. We're making the partnerships to understand what are the low-carbon possibilities so we can deploy that. Number two, there are others in the market that are very focused on solving for these, right? MIT has a concrete consortium. Stanford Net Zero Alliance, so we want the best minds to think along with us in terms of how we should be focused on addressing embodied carbon. Change also doesn't happen without innovation, and there's a lot of startups and companies that are thinking about new technologies in renewable energy, new technologies in addressing embodied carbon. And through our ventures arm, we are working and looking at these companies and investing in these companies. A great example would be Solarcycle, which really focuses on recycling the PVs that we're implementing on our roofs, and our ventures team will speak about that in more detail at lunch. The last thing that I want to highlight here is data. Everything is underpinned by data. If you want to bring in efficiency, you need to know what you're consuming, and you need to know what the emissions are, and we are implementing a centralized system that has multicurrency, multicountry, multilanguage capability that's digitizing our consumption data, and that is going to be able to provide emissions data by site. Okay? So we're preparing the future for also additional revenues we can think about once we understand the data and we generate this data. So that is what we're doing in terms of Sustainability, Sustainability roadmap. Now, I want to speak about access to power and how we're building the Energy business. So when you build something, you have to have the talent base, and for the last two years, we have been strengthening our talent bench strength. Our talent is global. I have 96 people in my team, and as you can see with the recruiting that we're doing, we are continuing to invest in talent. And not only have we been investing in talent, we're bringing in very specific skill set to us. So there are people in my team that understand utilities, that understand renewable technology, that understand execution capability. And if you look at just my leadership, there's over 100 years of experience cumulatively, okay? Okay, so with that talent and with the intent to build the Energy company, how are we approaching it? So this is how we're approaching it. So imagine, I'm going to go a little bit technical here. So imagine that you have Prologis building on one side, you have the utility meter in the middle, and then you have the utility that provides the power. In the business that we're building, we are serving both. We're serving behind the meter, which is our customers on our premises, as well as front of the meter, which are energy aggregators or utilities. The offers that we're taking are solar. You know, we've got 1.2 billion sq ft of real estate, which has rooftops, which are very usable for solar, and storage, because, you know, you can't always produce power when you want it. The sun doesn't always shine, and there's also peak energy prices, so storage really helps to manage that. And then microgrids, which are islanded solutions. So when you think about data centers, for example, you need uninterrupted power, so solutions like microgrids are very helpful. And mobility solutions that Henrik will speak about later. The other customer base that we serve are utilities and energy aggregators. If you think about our rooftop and the space, we use about 30%-40% to serve our customers on-site, and then we're optimizing the rest of the roof space to provide community solar solution, grid-scale storage, and grid-scale solar. This, you know, serving both customer base allows us to maximize our roof and scale our business. Okay? So that's the offers. I spoke to you about the customers that we are serving. Now, I want to speak about the value proposition.... We want to make it easy for people to do business with us. Energy systems are complex. You need to have the right talent to build, maintain, and operate them. So what we do is we invest the capital. We design, build, and operate the systems, and we provide clean energy to our customers. So for the customers on our premises, we provide clean energy for the price of grid energy, and for utilities, we provide it at the contracted kilowatt per hour charge that we agree to. And the one thing that I really want to highlight when we speak of customers on our premises, what they really want is they don't want to worry about when they're moving out of our building. So we have made those contracts, the energy contracts that serve our customers, to be coterminous with their lease. And you may say, "But then you are taking the vacancy risk." This is where we have made a step change, and Prologis now has the meter, meaning that when the next customer comes on board, we are able to provide them real estate and energy. Okay. So I've spoken to you about the value creation. I've spoken to you about the value proposition. I've spoken to you about the offers. Now, I want to share with you two real examples of how we're implementing this on the ground. So the first example that I want to speak to is a front-of-the-meter solution that we're providing to a utility in Seattle, Washington. As you know, in Seattle, the sun doesn't always shine, so you really need to couple that with storage. So the utilities, who now understand that Prologis is providing these solutions, is working with us. They needed about 35 MW of solar plus storage solution. They needed it built, and they wanted to make sure that they can access the generated energy when they need it, so we couple them with storage. So it's about just over $8 million of annual revenue. It's a 30-year contract, and we have, as we look at our pipeline, 400 more similar projects like this. It's in total, 800 MW that we will be executing over the next couple of years. Now, I want to speak about a back-of-the-meter solution. So this is for customer on our premises, and this really started with them saying, "You know what? We are really thinking about how to reduce the emissions because of our Sustainability ambition." And we said, "You know, well, what do you need?" So it's a conversation, and what ended up, what they needed was green energy, because that's where most of the emissions were coming from. So we are providing about 10 MW solution of solar and storage, and that's about $1.7 million of recurring revenue for us, and the customer is really happy because they don't have to invest. They don't have to worry about maintaining the system. So it's really a win-win solution for both. Okay, with that, what I want to speak about: What does the business look like? So today, we have 555 MW that's operating on our roofs, and we are realizing $49 million of recurring revenue. The associated net operating income is $37 million, which is really, you know, taking into account the operating expenses to operate this system. What's really important for me to highlight is that by the end of the year, we will have executed on solar projects that are operating, that's already alive on our roofs. We will have storage projects that are operating. As I speak, eight projects are coming on live in ERCOT market, which is in Texas, and we will have 10 MW of mobility solutions that's operating. As we look at 2030, this is our ambition: $1.4 billion of recurring revenue and $800 million of net operating income. You may say, "You know what? That's a, that's a hockey stick." Yes, it is a hockey stick. However, it's based on known pipeline. And if you, if you really step back and think about it, we have the real estate. We have customers in our premises that are asking for decarbonization solutions, so you have certainty. We have gone further. You know, when you think about the risk, what do you worry about? You worry about supply chain. So we have agreements with tier-one battery manufacturers and panel manufacturers, so we have de-risked what we anticipate. The returns that we target are 12%-14% IRR, and the required capital is $6.3 billion net of investment tax credits. I mentioned when I started that the Inflation Reduction Act has been a catalyst for renewable energy, and we are leveraging that to deploy our capital. The last point that I want to make on this is, you know, when you think about the need for renewable energy, and you see that on the total available market, that's indicated, for example, for solar, that's $60 billion. When we get to 2030, when we deploy the almost 2,000 MW, that's going to take up 20% of our rooftop. That means we have the remainder of the rooftop for the generation of revenue in the future. Yesterday, you know, I mentioned to you that I've only been with Prologis for two years, and I heard a data point that really made an impression on me. This company started 40 years ago with 800 sq ft of real estate. It is now 1.2 billion. So we have 555 MW of energy that's operating. We will get to 7,000 by 2030 and beyond, okay? And with that, I'm gonna pass it on to Henrik. Thank you so much, Susan. Good morning, everybody. My name is Henrik Holland, and I'm the Global Head of Prologis Mobility. And I'm gonna be talking to you today about EV charging in transportation logistics. I joined the company in 2021 after spending almost 20 years of my career at Shell, and I hope that by the end of my presentation, you'll understand why an energy person like myself is so excited to be here at Prologis. I'll give you a little bit of a hint, and Susan alluded to it already as well. It's in the real estate. To do EV charging well, to do it profitably, and at scale, you need trucks, you need chargers, you need infrastructure, but perhaps more importantly, you need the location of where those trucks are gonna charge and where you, you can install that infrastructure to sell services to your customers. And it's that combination that Prologis has to offer. To get to that point, there are three things that I want to touch on with you today. First of all, I wanna talk about how we're really at the cusp of a revolution in transportation logistics as the industry and our customers move from the diesel truck to zero emissions vehicles. Secondly, I'm gonna talk about what we're doing about that as Prologis, and how our Charging as a Service product and business model is supporting our customers in that transition and driving additional value from our portfolio. Lastly, I'm gonna give you a glimpse of the future and show you where we're going as Prologis and as a mobility business, and I'm gonna put some numbers around that. Let's start with this revolution that I was talking about, and this is really a story of change and how change can happen very fast once technology is beyond the tipping point of adoption. This goes for our infrastructure systems as well and our transportation system, and frankly, it's happened before. To illustrate that point, I'd like you to look at this picture. Now, this picture was taken not very far from here on Fifth Avenue in the year 1900. If you look at this picture, what do you see? There are some buildings, of course, but the key point here is that you see a lot of horses and carriages, with one exception, and I put a little red circle around it for you. There's one car in this picture. So this was around the time that the internal combustion engine was being commercialized. Think about everything that needed to happen for this technology to get to scale. There had to be a cheaper vehicle. Well, that happened in 1908 with the introduction of the Model T Ford. But there wasn't enough oil, there wasn't enough refining capacity, there was not enough gasoline distribution or gas stations. All of that had to be built. Huge hurdles to adoption. But lo and behold, 13 years later, same spot on Fifth Avenue, and what do you see? Only cars, no more horses. That's how fast things can go. In less than 20 years, our entire transportation system changed, and companies had to adopt new operating procedures, they had to change their supply chains, and those who did not do that and who did not reap the benefits of this new technology, they were left behind. Today, in many ways, is no different. Today, we are going from that very same internal combustion engine that fundamentally hasn't changed for 100 years to something newer and better, and that is battery, electric, and hydrogen-powered zero emissions vehicles. Driven by significant technological and cost improvements of battery electric technology, the expectation is that EVs will gain rapid market share in the decade to come. To put that in the context of some numbers, I'd like to share this chart with you. This chart shows the percentage of EVs sold as a portion of global total new vehicle sales, and I took this from Bloomberg New Energy Finance's most recent EV outlook. Now, there's three things that pop out at me when I look at this chart. First of all, that we're at the very early stages of this revolution, going from almost nothing a few years ago to a few percentage adoption today. Secondly, that the adoption is gonna happen quite fast over the next decade. And then thirdly, that adoption is starting in the passenger vehicle space, where adoption is already quite far beyond the 5%, which is typically the tipping point at which technology adoption really starts to accelerate. Now, that technology from passenger vehicles, it's is making its way into the commercial segment, all the way from light duty delivery vehicles to heavy duty trucks. Now, I know you all pay attention to the news and investment news specifically, that there has been quite a lot out there recently about the slowdown of EV sales. Although the year-on-year growth numbers of new EV product lines are actually very robust. But the fundamental advantages of this technology in terms of operating efficiency and total cost to operate at scale over the life cycle of a vehicle, together with society's push for zero emissions transportation options, means that this is not going to go away. For example, in the light-duty commercial vehicle space, last mile delivery vehicles, today, in many markets, it's already more cost-effective to buy an EV than a new diesel truck. Based on that, the expectation is that by 2030, more than 30% of all light-duty commercial vehicles will be electric. And keep in mind that these are global averages, which means that in specific markets, these numbers could be much higher. For example, in California, by 2035, all heavy-duty drayage vehicles, these are the big trucks that haul goods out of the ports of Long Beach and L.A., two of the biggest ports in the country, they have to be zero emissions by 2035. So you need to start today to make that transition a reality. So change is coming, and it's coming fast, but it's not going to be an easy one for our customers. That brings me to the second thing that I wanted to share with you today, and that is what we are doing as Prologis to support our customers with this transition. That really starts with one simple question: What do our customers need? What do they really struggle with as they transition to EVs? If I were to boil it down to one single thing, it's infrastructure. It's the ability to charge their vans and trucks when they need it, where they need it, preferably in a way that's as easy as buying diesel fuel today. That is the problem that Prologis is solving. We call this Charging as a Service. By investing in the capability for our customers to charge at our locations, at our warehouses, at dedicated charging hubs in our core real estate markets, we provide our customers with the simple electrical fueling product that they're looking for. We invest in the infrastructure, and we sell our customers the use of that infrastructure as a service, so they get the energy they need for the duration of a lease term. Now, in essence, this is no different from how we make money in real estate. We're investing in a capital asset, and we're charging our customers for the use of that asset over the lease term. The returns that we're generating by investing in these charging assets is in the range of 12%-14% on an unlevered IRR project basis. Now, by investing in the capability to sell charging as a service to our customers, we're creating this additional income stream, but we're also high-grading our assets, meaning that they become more attractive than competitive real estate product. So we bring together EV expertise with real estate to create a product that is truly unique, truly unique in its way to address real customer problems and drive profitable growth at scale. So I've explained to you how, with Charging as a Service, we improve our assets, and you've heard my colleagues, Scott Marshall and Damon Austin, talk to you about customer centricity. Now, to bring that to life and how these projects work, and how we support our enterprise customers with this transition, I'd like to share two examples with you. I'd like to introduce you to PepsiCo and Maersk Performance Team. With PepsiCo, we're doing a project not too far from here in Queens, where PepsiCo is introducing more than 60 electric E-Transit vans that will deliver goods into the various boroughs of New York. And with Maersk, we're working on electrifying some of their drayage fleet. As I mentioned, by 2035 in California, all those trucks need to be electric, and Maersk has taken a real industry leadership position, by introducing some of the first EVs in that market, and we have been there with them every step of the way. These are amazing project. These are industry-leading projects, and with humility, I like to think that our customers believe that we're doing very well at this. But rather than hearing that from me, why don't we listen to our customers speak, in this short video? As part of our Sustainability initiatives at PepsiCo, we launched pep+ in 2021, focused on both people and planet, and that's really the strategic transformation of our fleet and supply chain. And so being able to have these aggressive goals means that we can't just talk about it. We've got to turn talk into action. We are meeting with Prologis, who shared in a lot of our similar goals for decarbonizing fleets. This is one of our fastest sites we've ever moved on, going from 0 EVs to 100% electrified with over 60 EV route trucks by the end of the year. What this allows us to do is work with the utility one time, put the infrastructure in one time, go through a lot of training one time, and really upgrade the fleet for the employees all at once. Performance Team Logistics, third-party logistics company. We do transportation, we do distribution, and we have over 50 distribution centers in North America. The trucks that you see behind me, we've got 136 of them on order. We have 38 of them operational today. By the end of the year, we'll have 136 of them. We were fortunate enough to partner with Prologis Mobility. They build out all the sites that we have, so at the end of the day, they're responsible. They own the chargers, they install the chargers, they maintain them. They get the utility connection here. They administer all of the credits that we have, and it's a really kinda turnkey operation for us. That was the only way that we could scale it. You know, I did the first project myself and realized quickly that we wanted to scale. That wasn't the method to do it. So partnering with Prologis Mobility and, and Volvo from an OEM standpoint has, has really gotten us to where we're at today. Now, that is customer centricity. And these are just two examples of how we're working with our customers to support their fleet electrification. As we look to the future and build our projects one by one, what we're doing is building a network of charging locations that will provide our customers with unparalleled charging flexibility, across our portfolio. And we see a lot of opportunity. Based on customer demand that we see right in front of us today, and expected adoption of EVs, we believe that by 2030, about 20%-30% of our locations will have some form of charging capacity. And that translates to an opportunity to invest more than $1 billion in charging infrastructure at the aforementioned 12%-14% unlevered IRRs on a project basis. Now, as we build that network and it becomes denser, not only are we creating more flexibility for our customers to charge in different locations, but it also enables us to drive more value from that network by, for example, selling grid services to local utilities, leveraging vehicle-to-grid and energy management technology. So to summarize, there were three things that I wanted to leave you with today. First of all, that we are at the cusp of a very significant change in transportation logistics. And although the road to EV is not going to be a straight line up, it's not going to go away. The technology is simply too good, and the societal push to zero emissions transportation is simply too strong. Secondly, trucks are going to want to charge at logistics real estate locations. It simply makes sense, and customers are going to demand it. And that means that Prologis, with its industry-leading logistics real estate portfolio, has the best global platform to profitably and at scale, develop charging infrastructure and sell charging as a service to customers in the logistics industry. In closing, I've been in this industry for more than 20 years, and I've deployed a lot of energy and mobility infrastructure, and I can tell you it takes kind of two things to do this well. You need the trucks, the chargers, the infrastructure, but more importantly, you need the locations where these trucks are going to charge and where it all comes together, where you can install the infrastructure and sell services to your customers. Those two things together, that is the Prologis platform. Thank you. Thank you very much. Back to you, Susan. So at the start of our discussion, I outlined three things to take away: the fact that we're building sustainable logistics and future-proofing our valuable assets. You know us for providing premier logistics real estate. We are future-proofing those valuable assets because we see potential disruption, and we are staying ahead of that. Number two, we are really focusing on access to power. Joseph Ghazal and Carter were speaking about the data centers that we're building that need 10 gigawatts of energy. Well, you need to stay ahead of that. Number three, if you think about the climate crisis that we have, and it doesn't matter which way you're oriented, whether you want to save the world or just realizing that it has real impact to businesses, there is an opportunity in the crisis, and we're looking at the opportunity, and we're building the energy business. Thank you for your time. Hi, everyone. We have reached our first Q&A session. So we will have Hamid, Dan, Tim, and Susan on stage for Q&A. Thank you. If you have a question in the room, please raise your hand, and we will have a mic runner bring you a mic to your spot. We will get started here shortly. Thank you so much. We should have waited something. My mic's not working? Is it working? Yeah. Okay. Jill- When I call on you guys, just wait for the mic so we can make sure it goes in. You know the drill, and try to keep it to not, you know, five-part questions. We also have some questions from the people on the webcast, so I, I may just start with those. We can run down those kinda quickly. So one question was on our, our development track record. So why do we accept lower margins outside of the U.S., versus U.S. margins? Well, the U.S. is a lower risk marketplace, so when you're going outside, you should get the higher margins. But at the end of the day, these are all strong margins, and the margins overseas are- Just discussion. The margins overseas, over time, as the industry matures, will probably collapse to where the U.S. margins are, but that's taken longer than we thought. At the end of the day, we're deploying capital at very high returns, attractive returns, to service a pretty definite set of customers that we need to serve everywhere, and we can't just be selective one way or another, but they're all profitable, and we'd like to do more everywhere. ... Someone asked on the webcast, are the 12%-14% IRRs unlevered? The answer is yes. They also asked if the plan to install solar on all of our 1.2 billion sq ft, is that our plan? Yeah, the answer is we'll never get to 100%, but we'll get to 85%-90%, but that's gonna be a decade, decade and a half before we get there. On the question of the 12%-14%, there's a nuance I want you to understand. There are subsidies, tax subsidies that are available in some jurisdictions. The way we look at, and some of them come in the form of financing. So the way we look at that is that the present value of the below market financing is a credit offset to your investment. But we look at it, we look at everything as an unleveraged return. Terminal value depends on the assets. Some assets have longer terminal values, and some are relatively short life. For example, charging infrastructure is likely to have a shorter life than, for example, storage and batteries. You know, there's some degradation in the performance of these assets over time, but you can supplement them. For example, in battery arrays, you may lose 1% or 2% efficiency every year, but you can just supplement what you have with another 10% or 20%, in 10 years. Yeah. Sorry, one second. I think somebody's about to get the hooks. Try to fix that. We could take, start taking some from the room. Steve Sakwa. Just wait for the mic. May need more. Are you still hearing me? Yeah, I'm still here. Hi, Steve Sakwa, Evercore ISI. On the data center business, I guess just the two-parter. You know, when you think about the split between, say, turnkey data centers and powered shells, you know, do you have a thought process on kind of which one you want to do? And, as you think about partners, you know, how would you think about sort of funding that business long term? So let me give you a little more framework around what we're doing in data centers. We are currently building more capabilities internally. We have a hire out for a very senior leader, we'll have in the first quarter. We have applications in for power in 50 or so sites. We have capabilities internally now that are very technically focused. We pulled them from different data center companies. And we've been partnering with joint venture partners. We've got a couple different partners we've done a number of projects with, and so we've been leveraging their skill sets for sure. We have the relationships with these hyperscalers. We have deep relationships with them. You can imagine if you go through the list of hyperscalers and how our businesses have overlapped many ways. We have great relationships there. We look at this business as our higher and better use, supercharged, no pun intended. It is literally, we've got 12,000 acres that we control our own. We've got 5,500 buildings around the globe, right? So with this surge in demand from data centers, of course, we're going to do a higher and better use there, much like we have for the last... well, the 20 years I've been here, and I know, we are, converting a lot of properties that were bought the 20 years I wasn't here before that. So that's the basis of our data center mindset. It's, it's our higher and better use, it's the new age, I think Joseph called it the, du jour, of, of higher and better use. So when we look at these deals, we don't think about them as what percentage of powered shells we want to do or turnkeys we want to do. 99% of the deals you see us do in data centers are gonna be build-to-suits. You saw Damon up here. Damon runs our customer-led development business. Damon's very involved in our data center business alongside Joseph. That's why we're bringing in new talent from the industry, like I talked about earlier, make sure we have industry talent to run this for us. We'll be able to shed some of these partners over time. But so I can't give you a percentage of powered shell or turnkey, and I can't give you exact economics on any of these deals either, because we've done conversions. We've converted our properties in Northern Virginia or in Elk Grove Village in Chicago, from logistics buildings to powered shells. We have a mix of powered shells and turnkey going on also elsewhere. So of the percentage of those deals, I don't have a great mix for you, but these are going to be build-to-suits with a credit customer behind them, and we'll take them all on a deal-by-deal basis. So Steve, if I can add on, I think you create the real value by putting in place the relationship with the customer, the lease, and securing power. That's where the vast majority of the value creation happens. We're certainly gonna write that, and that gets you to the power powered shell. The incremental decision to go from that to a turnkey depends on who the credit is on the lease and what our exit strategy is for that deal. So if there is sufficient incremental margin to do that, and there appears to be a lot of it today in today's marketplace, to go further into the into the turnkey situation, for example, if you have one of the Big Four on the lease, we'll do that. But at the end of the day, our current thinking, and this may change, is that we want to be a developer in the data center business. We don't want to be an operator, we don't want to be a co-locator. We want to just do these deals with these large customers and then replace our capital and recycle it. Now, tying it to our business, for the last 5, 6, 7 years, if it's not obvious, let me state it. We bought a bunch of public companies. We stripped out the assets that were compatible with our strategy. But depending on the company, in the case of some of the early ones, there was about 25, 30% that were noncompliant. In the case of Duke, there was only 5% that wasn't compliant. We sold those excess assets. That was the way we capitalized our development program. And remember, we're the only company that has never issued equity since the, I think, 2012 or whatever. No ATM, no nothing. That's been the way we capitalized our business. Today, data centers and the margins coming from data centers and our higher and better use operations, that's how we're gonna capitalize our growth engine going forward. So by holding on to those data center assets, we're in effect making a statement that we like long-term returns on those better than warehouses, and that is not the statement we're making. We're saying, "Look, we like being in the logistics business, but we've got to maximize value by doing data centers and other higher and better use. But we'll use that. We'll create the value, harvest the value, and invest that in our business." So that's how the whole strategy fits together. I'm going to try to go both sides so I don't play favorites. Michael. Third row. Thank you. Michael Goldsmith with UBS. You've provided some really helpful numbers around, and goals around the solar storage and mobility businesses, but my question's on the essential businesses. Where does revenue and NOI for this segment stand now? You know, what are the margins of business, and where could this go over the next few years? Wait for Tim's presentation at the end, because he'll bring it all together at the end of the session. I mean, I can do it, but let's just do it all at once. Great. Instead of that, maybe just talk a little bit about the vendor reduction. You know, 40% fewer vendors, lower spend of 15% on $200 million. How much of that has been realized already? How much is left, and what's the future opportunity for that? Most of the vendor optimization benefits are in the process of being realized and will be fully realized probably in 2 years or so, as we go through that process. The energy and operations, essential benefits and mobility will probably have the vast majority of them will happen between now and 2030. That's why we've guided you to those numbers in 2030. Will we have covered all our roofs with solar by 2030? No. We would have covered maybe 40% of our roofs. There's still a lot more to do, but I think we should have a reasonable time frame. Seven years seems reasonable to us, so we've anchored around seven years, but there's plenty of runway beyond that. And the portfolio is not going to remain static. I mean, we're going to acquire more assets, develop more assets, et cetera. This is gonna be, I mean, maybe conceptually, this is what I can tell you: if we're successful, if we're as successful as I think it's going to be, 10 years from now, we're going to be sitting here talking about multiple billion of EBITDA flowing to the bottom line from these businesses. That's why there will be other analysts sitting in this room in addition to real estate analysts. And then the question that you're going to ask next is: What are we going to do with those businesses? And the answer is, we're setting up so we can keep them or we can spin them or do whatever. We're giving ourselves flexibility. We're not going to make that decision today. Mike Mueller, hope you feel better. Thank you for not making us sick, but he asked a good question that's relevant. Dan, when you talked about an accelerated development pipeline over the next three years, is that just because of the data center opportunity, or does it hold true for industrial as well? No, I just would reinforce what Hamid said. We love logistics. We're not doing data centers in place of logistics. We're doing data centers because it's an opportunity to maximize that asset, optimize that asset. So I would not think about it as though we're doing data centers in place of logistics. We are going to deliver logistics, based on the demand fundamentals, and that's what I was touching on. We like atoms better than electrons because they're not going to be as easily disrupted. Everybody talks about the demand side of data centers, and they're going to be fabulous, whether it's AI, streaming, whatever else you can think of. We get that. Everybody gets that. How technology is going to affect that, we're not—none of us are smart enough here to figure that out. So that's why we don't want to create confusion by having multiple lines of business in our P&L. We could change our mind about that, but that's where we are today. John, second row. Good morning. John Kim at BMO. Not to harp on data centers, but the way you describe it, it's going to be a very NAV accretive exercise, but not earnings accretive. So I was wondering if there was a way that you could get a recurring revenue component from the data center conversion opportunity, or if not, are you concerned you won't get the credit from the markets because it's not- ... recurring earnings? So we are getting recurring revenue from it. What we're doing is harvesting value, taking it out, and doing logistics with it that produces recurring revenue. The question is not recurring revenue or no recurring revenue. We're gonna get recurring revenue. The question is, do you wanna mix various sources of recurring revenue that all have different multiples and create complexity in your business? Or do you wanna be a recurring revenue engine in logistics and use all these other HBU businesses as a way of capitalizing the growth of that business? George, front row. George Cimini, Cohen & Steers. I wanna go back to Hamid's comments from the beginning on, you know, the economic cycle. So using your words, the monetary policy has a two-year lag. The economy's gonna slow down next year relative to 2023. When we look at the third quarter run rate on leasing activity, for example, we're already at, you know, decade lows type of run rate back from the early, you know, 2011, 2012 type of timeframe. So, putting all that together, what is that for 2024, you know, demand as we head into 2024? Our working assumption is that demand is gonna be moderate. Supply is gonna be a lot, between now and, say, third quarter of 2024, maybe end of 2024. So vacancy rates are gonna go, and we'll have a five in front of them for sure, and they may touch six. But that number will turn right around and come down to the fours by virtue of, 65% collapse in, starts. That one you can predict. I mean, you don't have to guess a lot about supply. You need to guess about demand. And based on the dialogue, I will tell you, with our customers today, and, you know, Scott can answer that question if he were up here. Our level of dialogue is much higher than what you just described, and it has elevated from our earnings call. So I don't know whether any of that is gonna translate into real demand, but I'm feeling better today about demand than I did at the time of our earnings call. Stick on this side. South side, Blaine. Yep. Blaine Heck from Wells Fargo. Just taking that a step further, I wanted to ask how you guys are thinking about the range of outcomes for U.S. rent growth in 2024, given that we saw a couple of negative revisions in 2023 despite low vacancy. We've got this supply that's coming on, so, you know, just how are you guys thinking about your ability to push rents versus preserve occupancy in 2024? And where could U.S. rent growth shake out in 2024? So we are terrible at near-term rent forecasts. If you ask us a forecast for the next year, we'll be wrong. In 2022, I think we forecast 8%, we got 30%. Last year, we forecast 8%-10%, and I think we're gonna come at 7%-8%, somewhere in that range. That's pretty close. I mean, that's better than it should be, honestly. I have no idea what rental growth is gonna be, but we got a lot of analysis here from some people who are smarter than me that suggest that it's gonna be in the 4%-6% range per year over the next three years. That's the way we're gonna bracket it, and Tim is gonna present how all of this comes together based on those bookends. But I've really told him, "Look, let's also show a Armageddon scenario of zero rent growth, just to show everybody that it actually doesn't matter that much." Matters a little bit on the margin, but it doesn't matter that much. So sorry, I could be more, couldn't be more precise. We'll hear more on that this afternoon in the second session, so. Yeah, you'll also hear about the tools we've built and how we're operating in an environment like this, and we'll get comfortable with how we'll definitely capture our outside share of whatever the rent growth will be. By the way, the other thing you will see from this presentation, not to steal his thunder, is that we've done this a couple of times before. We've told you what the three-year growth outlook is a couple of times ago, for some of the faces who have been to as many of these as I have been. You know that we've actually stuck our neck out and talked about three-year growth, not just rent, but earnings, and we've always exceeded it. So stay tuned. Nick. Thanks. Nick Yulico, Scotiabank. Turning to the build-to-suit activity, can you— Since it's been such a key piece of the pipeline the past five years, can you just talk about the dynamic today about, you know, your return hurdles presumably have gone up, means higher rents you have to achieve than a year ago, all else being equal, customers' willingness to pay that higher rent, and in many cases, I think, with build-to-suit, you're often solving for a higher rent than maybe in the market today, and whether a customer is actually gonna be looking at existing space, that is delivered spec, maybe at a different cost than what you're trying to solve for on a build-to-suit, and how you're able to capture deals in that environment? Yeah. So, first of all, our build-to-suit business this year is actually quite good, and interestingly, most of the deals we've seen get done this year are in the less expensive markets... The more expensive coastal markets haven't seen as much build-to-suit, and we think that ties to the trepidation that our customers have right now. The apprehension they have as they look at deals, where are they gonna invest their time, and what are they gonna be able to get through the C-suite as they try to build out their supply chain network? So, that could just be coincidental, but it is interesting to us just when we see our volumes, where they're shaken out. We are hearing and seeing. Our build-to-suit pipeline quarter-over-quarter has grown. We're seeing some of this activity maybe get dislodged, and we'll see-- We're seeing some new names come back or some former names come back and really start looking at new deals. So, I think they're getting their head around the fact that for them to execute in some of these markets, it's just gonna be more expensive. So do we have a headwind, maybe, I think you're saying, Nick, with a lot of supply coming on? I think that's a location discussion. I think of-- there are so many pockets of just overbuilding. I mean, not so many. There's five or six around the U.S., very few in Europe. So, I don't see that as a big headwind because these customers are gonna make enormous investments. Rent is 3%-4% of the overall equation. It still is. We've been talking about that for 10 years. It still is, and the investment they put into these buildings is, is literally orders of magnitude more than the actual building itself. The bottom line is, with more spec space being available in the market, vacancy rates being higher, some of those spec vacant buildings will take demand away from build-to-suits, but the mentality of customers to engage on build-to-suits at this time feels pretty good. I don't know whether that makes up for that higher vacancy and the leakage of build-to-suits into leasing up of spec. I don't know how to do that math, but I'm feeling good about demand, but I think some of it will go into the spec spaces. Craig? Hi, Craig Mailman with Citi. Just kind of trying to put some of the parts together on the vendor initiatives, on the solar program. You guys have put up sort of where you stack up relative to peers on rent growth over the cycle. I'm just kind of curious if you guys have a thought on where PLD-owned assets with these vendor efficiencies and the solar on board could have kind of a growth profile on that net effective rent because of the occupancy costs you guys are gonna be able to potentially keep down lower versus peers. What that premium that you guys generate from your platform could be relative to the broader market? You know, difficult question to answer, but kind of what that enormous value on that type of asset versus just a commodity asset in the peer set. So please tell the audience that I didn't put you up to asking that question. The question that I'm just amazed that people don't focus on is, with a consistent track record, essentially with the same team and the same strategy of producing superior rental growth, how come and all these additional businesses that we're building and have built, that some of which don't require any capital. Prologis Essentials doesn't need capital. Getting savings from Procurement doesn't need capital. Our capital management business doesn't need capital. All these businesses that we built, plus a superior rent growth history, all of that translating into superior earnings growth, how come our multiples are not that different? Yeah, we are higher, but in any other business other than real estate, which is anchored by this thing called NAV, we, the industry would, would trade at a much broader multiple. Do I spend a lot of time worrying about that? No, because we'll outlast the market perception. We'll keep pounding the numbers, and some people will get it and will do well, and some people won't get it. And by the way, that won't happen every quarter. There is too much noise going on every quarter. But you look beyond that, to years and decades, and there's a reason why this company is where it is, and I'm pretty confident it will do that in the future. That's what great companies do. Great companies don't worry about same-store growth in the third quarter of 2024. I mean, there's a lot of noise in that data. Got a couple of quick from online, just clarification. Was that comment earlier on vacancies having a 5 or 6 in front of it, specific to PLD or an industry-level comment? I'm talking about the market, all the stats that we report are in the 50 markets that we operate in. We don't keep track of the markets that we would never invest capital in, as you know, but they're not with respect to the Prologis portfolio. I think we'll do better than that. We always have. Good clarification. Going back to construction cost and yields, have you seen construction costs start to stabilize, and are you confident that you'll continue to be able to build attractive yields in the future as the vacancy rates start to increase? I would say, on the construction side, in the U.S., we've seen definitely stabilize. We've definitely seen the pricing stabilize, but it, it's probably up this year at inflation. Europe, we've seen pricing come down pretty significantly. Some places as much as 15%-20%. So- Japan is much higher. Japan has had- It's sh- this, this explosion in cost due to some major projects underway there. So, there's another piece to that. The one thing I would say is when you think about our construction- Attractive yields. Our construction buying, we have this Procurement effort that we've talked about for the last few years. We build a superior product, which on an apples to apples basis, would be more expensive than the rest, but we buy things better. We were able to buy steel in advance. We're able to capture pricing advantages when they present themselves. So we definitely are able to buy that back down closer to, or in many places, cheaper. Let's scare them a little bit. How much electrical equipment did we commit to buy on Monday? We're buying 150 MW worth of gen sets that was costing... What was that number? A hundred and- 190. $180 million. Yeah, $179 million. How much steel do we pre-buy and commit, last time we did this? Oh, boy! We had orders out there, now reaching back 2-3 years. I would say it was tens of millions. It was $150 milllion-$200 million. I think it was higher than that. So I can see a time where we're gonna be pre-buying $500 million of this stuff. I mean, we could do that, and it's not because we can get it 15%-20% cheaper. That's good, but we can deliver that building that needs that last electric panel to get a certificate of occupancy, and if there's a customer that needs to move in, they need that. So the time being, able to commit to time and delivery time is almost as important, if not more important than the cost advantage. I'll go... If pick on Ron over here, if it's a pretty quick one, and it'll be the last one for the morning session Q&A. Ellie, back here, Ron. She's had her hand up for a long time. Thank you. Ron Kamdem, Morgan Stanley. Just a quick one back to data centers. That slide said the returns were 1.5-2x greater than industrial, which would imply some projects are getting 10% yields or higher. Maybe can you talk about what drives that differential, and how do you think about the power costs when you're thinking about that opportunity over the next 3-5 years and beyond? Yeah. So part of that margin comes from the fact that the asset that you're converting to a data center is an industrial asset with industrial economics. If you wanted to go buy that same site with power already in place, the landowner would capture some of that profit. But since we already have the real estate and we have a great energy team procuring power as we speak, we have 46 applications in specifically for our pipeline today on getting power, and we're making great progress on them. And remember what our value proposition is when we go to these utilities, okay? Infrastructure developer, data center developer goes in and says, "Please, please, please give us power." Prologis goes into the utility and says, "Please give us power. By the way, we're here to solve your renewable requirements, because we can feed you renewable energy." And this is a much more two-way relationship, front of the meter, back of the meter. And we've got a team that has been doing this for a living and has been on the other side, and they know exactly how these decisions are made. His name is Vibhu, and next time, we'll put him up here so you meet him and ask him questions. So it's a very different proposition. That's why the margins are better. But if somebody gave you a piece of land with power secured, and all you were doing is developing it, the price of land would go to such a level where those margins would get arbed out and be like regular real estate development. Amit, I wanted to add something to that. You know, the other, as you mentioned, we know what capacity is available on which grid, which allows us to actually make a lot more intelligent decisions on when we apply for interconnection, which is absolutely necessary for data centers. By the way, we're spending a lot of time also, and again, at the risk of scaring you, we're spending a lot of time looking in alternative technologies like SMRs and all that as well. Now, we're some years away from that, but I think that could be a real source of on-site generation because it skips over all the issues with the grid. It's not ready yet, but 10 years from now, somebody sitting in this room is gonna be talking about SMRs actually being deployed. Great. I think we're on to lunch now. We'll get another crack at Q&A at the end of the day, and I'll promise I'll get more people from the back. Thank you. Hi, everyone. I'm gonna try that again. Hi, everyone. Can you hear me okay? Awesome. So, why should our company's culture matter to a room full of investors? I'll pause. Well, while you may think that you're investing in the future financial outcomes of the company, it's actually a byproduct of our culture, of the people that we will entrust to make the decisions that will lead to the success that we all know that we can achieve. Prologis's culture is a differentiator, and we think that it gives us a competitive advantage, and that is something that should matter to you. My name is Nathaalie Carey, and I'm the SVP of HR here at Prologis, and in that role, I seek to strengthen and anchor Prologis' culture of innovation and excellence so that the achievements of our past pale in comparison to what we'll be able to achieve in the future. So I'd like to tell you a little bit about this culture that I say you should care about. So, Prologis is a company that is all about staying ahead of what's next. We are a workforce of innovators, decision-makers, and thought leaders who truly despise stagnation. As you've heard, we put our customers first, and we love to simplify problems and sprint to solutions. We have this concept at Prologis called Failing Fast. But what that actually means is that we learn fast, we adapt fast, and we improve fast. And when you put all of these things together, what it leads to is building a culture of innovation and excellence that is truly hard for any other company to be able to replicate. So how do we build this culture of innovation and excellence? It all starts with our people. We have the ability to attract and retain the best and the brightest talent from all over the globe. At Prologis, we don't just hire smart, we hire smart and hungry. We have had roles that are unconventional to traditional real estate companies for years. We've had roles that a data analytics program, for instance, that's full of world-class data scientists. That is unheard of for core real estate companies. We've also been really thoughtful about what it takes to be successful in this industry and what are the best transferable skills that we can bring in from all over. That's how you explain Prologis' ability to attract talent in fields like energy and mobility and workforce. We are able to do that because of our reputation for innovation and excellence. But what about retention? Now, I know every company will tell you that they invest in their workforce, and at Prologis, we're no different. Of course, we will invest in our workforce. But we also offer three things that I think are critical to any employee's success. We will, and we do, empower and expect our workforce to make decisions. We provide the support of senior leadership, and we will fund innovative ideas. Now, I've worked in different companies at different industries, and if you find a company, you may find a company that does one of those things or maybe two of those things in various permutations, but it is really difficult to find a company that does all three of those things actively and consistently. This is one of the things that truly attracted me to joining the Prologis team. So what does all of this investment in culture and people and talent get us? What's the return? Why does this matter? Well, I can think of five things that I'd like to share with you today. One, we have the ability and a really competitive edge when it comes to attracting talent. We've already talked about that. We have low turnover and high retention rate. We have stellar employee engagement, and we're a company that has a global reputation for excellence. And finally, again, this allows us to create this culture of innovation that is truly hard to replicate. So as you listen to today's presenters and the various speeches and the conversations that you're having today, know that there is a workforce of Prologis employees who are actively working to bring all of the concepts and ideas that you're hearing to fruition. We want you to know that we are a workforce of innovators, decision-makers, and thought leaders who are committed to achieving the success that you would be investing in. If you take nothing else away, just know that we are the culture that we have built and the people that we have are the reasons why your investment is in excellent hands. At this time, I would like to bring to the stage one of the most innovative teams that we have at Prologis, and I would venture to say, at any real estate company anywhere, our Prologis Ventures team. First, you're going to hear from Will O'Donnell, who is the Managing Director of Prologis Ventures, and he will be accompanied by two of our colleagues, Todd Lewis and Lisa Costello. Thank you. Thank you very much, Nathaalie. Todd, Lisa, and I are gonna cover Prologis Ventures today. There's gonna be three main areas of conversation. First, why Prologis Ventures? What's the value proposition that we bring? Secondly, how have we intentionally built out an ecosystem of partners to understand pain points? And third, how do we invest, and what's the value proposition and outcomes that our portfolio companies drive for Prologis and our customers? So first, we started Prologis Ventures almost eight years ago, and at that time, no one in real estate really thought they could be disrupted. You could own a building on Main and Main for 80 years and still collect rent. However, we started looking and saw what Airbnb was doing to the hospitality industry. We saw what WeWork, despite being WeWork, it was actually changing the concept of tenancy for office. In our own buildings, we saw the impact that e-commerce was having. So we realized we really needed, even though our, our DNA had always been one of change and innovation, we needed to take a step forward and really understand what was happening with our customers, how their business was changing, how it was evolving, stay ahead of what's next. In the words of Wayne Gretzky, "You need to skate to where the puck is going, not where it's been." And the only certainty I've had at this company over these years is change is inevitable. So it gets back into what is innovation? It's something we are very intentional about as this company, but I'll simplify it. Innovation occurs when constraints are removed and new opportunities open up. So a lot of these constraints are self-imposed. It's the business processes that we follow. It's the procedures we use. It's how we interact with each other, and it's why companies are successful, because over the time, we've developed a great process. But just because we've done something for the last 20 years, doesn't mean it will continue to be successful. So these things are self-imposed. Dan gave an example earlier of the iPhone. There's actually a great story behind the derivation of that. Originally, when the iPod came out, because of Steve Jobs' focus, that he hated Windows and it needed to be a closed platform, you could only buy an iPod and use it if you had a Macintosh. It actually was a self-imposed constraint, and until they realized that the rest of the 97% of the population wanted to actually buy an iPod, they removed that constraint and opened it up. McDonald's most successful day on the stock market was the day they removed the constraint that they could serve breakfast all day. So it's something we're always questioning ourselves: How do we remove these constraints? The other area is with technology. The Internet, the iPhone, AI, these are all technologies that come in, it can remove constraints. But this is a key area that we need to think about, which gets to the second part of this, really intentionally building out an ecosystem of partners, both customers, technologists, that Todd's going to talk about. But with this, we're going in and really understanding where the pain points are. We're studying how can we remove constraints? How is the industry and evolution happening? We spend a lot of time looking at other industries. What's happening in financial services? What are people in insurance, manufacturing? What's happening with automobile manufacturing industry? How do we take those learnings and bring them back internally so we can drive change? With that, it's really important to have a diversity of perspective. How do we listen to different things, bring people in? Nathaalie talked about how we're very intentionally going out and finding smart people. We want people who challenge the status quo, people who ask, "Why not?" And really push us forward. You want people who are intellectually curious, and, and coincidentally, it's one of the things I'm actually really proud of with my team, that we're 70% female now, because we went out and found really intellectually curious people who challenged the status quo. But it gets back into why do we do this? Because once you have clear pain points, you can develop thesis on how you can drive change. As a ventures group, that gets into the third point on our investment strategy. With clear pain points or thesis, we can get beyond understanding. A lot of times, a new technology comes out, blockchain or Web 3.0, or now AI, it's going to change the world, and there's all this hype around it. But we've started with, if we understand the outcome we're looking for, we can go out with our customers and our partners and find the right solution for that. So we've taken a stage-agnostic approach. We'll invest in venture companies, and we've done 48 investments that I'll get to in a little bit. We also sometimes look and realize there isn't someone solving the solution that we want, and Prologis is uniquely set up and able to do that. So Todd's going to talk about how we originally thought about incubating the mobility business. Lisa's going to talk about a company called Terminal that we recently incubated with another VC firm. And third, we're starting to partner with private equity firms to really look at portfolio companies or opportunities to attack some of the major spend areas of Prologis or our customers. But it's all about solving defined outcomes. So within our venture portfolio, it's where we spent the longest time. We've made 48+ investments, really around things that are important to our customers, whether it's operations, data analytics, automation. We've done things, a lot of things around transportation, because fifty percent of supply chain costs, about $800 billion a year, is spent on transportation. Energy and Sustainability, as you heard Susan and Henrik up here, is a major area of focus. We're spending a lot of time on construction materials. Concrete contributes 12% to carbon emissions. We have an opportunity, and we're in a very unique position at Prologis to drive change, to accelerate the adoption... and really push forward and make the world a better place with our partners. Another area we spent a lot of time on is how do we improve ourselves? How do we continuously improve? And one of the things that Prologis has done the last couple of years is broken down every single major process we've had. There's a term, Kaizen, which comes out of Japan, from Toyota, but where are the friction points? Where can we improve, and how do we invest in technology that can accelerate us becoming better, enhancing our decision-making, making our workers more productive? So these are some of the portfolio companies that we've invested in that are helping Prologis get better. But what it also does, as new technologies like AI come out, it allows us to understand how we can leverage that technology, how we can improve it, because we actually know what outcome we're trying to solve for. Chris Caton is gonna talk a little bit later today on our AI strategy. So with that, I'm gonna turn it over to Todd Lewis, who's gonna really talk about the ecosystem of partners that we've developed and how that helps us really drive innovation across our industry. Thanks, Will. I'm Todd Lewis, Vice President of Prologis Ventures, and I've spent the best part of the last decade focused on supply chain innovation, looking at transformative technologies that are reshaping how e-commerce will work tomorrow. Prior to joining Prologis three years ago, I was a customer at UPS, and my role was to identify new technologies that UPS could use to become a better version of itself. This included things like drone delivery, autonomous vehicles, warehouse robotics, and vehicle electrification. You heard from Will a little bit about our history and the role we play at Prologis, and how innovation is at the heart of everything we do, and our customers play a huge role in that. But I want to talk a bit about how Prologis Ventures plays an active role in using innovation and working together with our customers to make real investments, to drive real change that drives value for both ourselves and our shareholders. So how do we do that? Well, it starts by building out a best-in-class ecosystem of partners across the entire space. This includes VCs, investors, thought leaders in the space, tech giants like Google and Microsoft. Most importantly, it also includes our customers. We find ourselves at the center, where we can collaborate and work across different spectrums, different markets, to bring together folks to solve common problems. And these pain points are not small. At scale, they are massive, and I want to give you a live example. So the ventures team, back in 2020, we partnered with Walmart, Ryder, Georgia-Pacific, and Maersk to take on a very small problem of loading and unloading trucks at the dock door. Sounds simple, right? Well, annually, that's a multi-billion-dollar operational spend for every single one of those customers individually. And our ability to work together with those partners to identify who's the best in the space... There were hundreds of companies trying to solve automation at the dock door, but together, we could identify the best and the company that could do it at scale. And I'm happy to announce that today, that very company that we co-invested alongside those enterprise customers of ours, is actively deploying autonomous forklifts in North America as we speak, and this is just the beginning. But it's important to note that we don't just invest alongside our enterprise customers. That's not where it stops. In fact, we invest as a steward on behalf of some of our smallest customers. They make up a huge percentage of our footprint, and it's our position as a partner, as an invested partner, to make sure that they have access to the latest innovation that could transform their business. It's not enough that they can just be around in five years. We want them to thrive. We want them to grow. And these are not companies that have teams of data scientists, that have AI specialists on hand or machine learning experts in-house. And so our goal is to work together with those customers to give them access, access to what's coming, access to what technologies could reshape how they do business and stay competitive in a changing world. It's also a great opportunity for us to introduce new business lines like Energy and Mobility or our Essentials business, where we're providing turnkey real estate. And even more so, a picture that was earlier being presented was Locus Robotics, where we can now actually offer warehouse robotic systems, the most sophisticated machinery on the planet, to a very small customer to make immediate impacts. Outside of investing, we do things a bit differently on the Prologis Ventures team. We don't just invest. We can also incubate, and we can build, especially where our platform and our scale give us an outright competitive advantage. And back in 2020, we were working with our customers to understand, "Listen, we know you're trying to electrify your vehicles. We know that that is so critical to your future. How can we help?" The answer that we got back was that we're not just a part of the equation, we're a necessary part of it, and we play a critical role as an infrastructure provider to support that endeavor. We worked with our customers to create Prologis Mobility. Again, you heard from Henrik and Susan earlier, that's a business that we built because of the synergies of our platform and the real estate that we have in-house. It gives us a special advantage to go out and create real value instantly for our customers, solving problems that they can't solve themselves... We spend a lot of time talking about staying ahead of what's next. You've heard it time and time again up here today, but we don't just do it for ourselves. Our goal is to do that on behalf of our customers as well. It's not enough for us to stay ahead of what's coming around the corner. We need to ensure that our customers are doing the same. And so on some examples, actually, funny, fun fact, we've actually helped several of our customers launch their own venture arms so that they can take an active role in investing in their future and the innovations that will operate their businesses in the future. So I wanna take a moment, I'm gonna introduce Lisa here, who's gonna give you some live examples of companies we've invested in and the value that it's driven to Prologis and our customers. Lisa? Thanks. Thanks, Todd. Hi, everyone. My name is Lisa Costello, Director and Head of Platform for Prologis Ventures. My team drives portfolio growth by bridging the gap between our internal business units, customers, and startups. You just heard from Will and Todd about why and how we invest in startups on behalf of Prologis and our customers. But a question that I get asked a lot is: How do you continue to work with startups after you've made the investment? And what's in it for Prologis? The exciting part to me is the investment is really just the beginning. Sorry. Our size and scale as a partner means that we can foster industry collaboration with a lot of different players, and it becomes a win-win situation for everyone. Startups get access to the network and resources that they need to grow, and Prologis and our customers get access to game-changing technologies that can help them evolve their businesses. I'd like to give you a couple of examples of those today. If any of you joined us for Groundbreakers this past October, the first one might be familiar to you. So let me start by painting the picture. Today, when our Prologis development teams are evaluating a building site, they go back and forth with architects, sometimes up to days or weeks at a time, to develop a site layout. This back and forth is not necessarily an automated or cost-effective way to design, refine a site plan. Insert TestFit. TestFit is a startup that built an AI-based generative design tool to help developers create site layouts in hours instead of days. So users go in, they input constraints, and algorithms generate the most optimal site plan and square footage for that use case. We were really excited to see that, that TestFit was already making waves in the residential space with their program for multifamily homes. You'll see some of that here. But then we got very excited to hear that they were adapting their technology for industrial real estate, and so we connected them with some of our best and brightest within Prologis to test the programs, provide feedback, and help them refine their roadmap. Together, we worked with this startup and custom-built an industrial product, not just for Prologis teams, but for the entire industry. This means that we can put decision-making into the hands of our people. It means that they can respond to customers faster and keep our proprietary data in-house. We already spend millions with architects per year, but more importantly, we spend time. Using something like TestFit means we can do multiple iterations in minutes. So using the latest in AI advancements, we're staying ahead of our peers, starting with using AI to underwrite our building projects. But we're also creating an industry standard to change the way that all of us do business. Speaking of ways that we're changing the way all of us do business, you just heard from Susan and Henrik on our transition and commitment to the clean energy transition. You may not know this, though. Solar panels actually have a shelf life. So what that means is, after a decade or so of use, they become less effective, or sometimes even during normal installation of solar panels, they might break. Or we can experience some extreme weather events, like hurricanes or hailstorms, and nobody wants to see something that was designed for the production of clean energy ending up in a landfill. In fact, municipalities are starting to require us to have a solar panel recycling strategy in order to approve solar projects. So if we want Prologis to continue to be one of the leading providers of rooftop solar, we have to enable the solar portion of our business by having a recycling strategy. Insert Solarcycle. This is a startup that's revolutionized solar panel recycling. They can recycle up to 95% of the materials from these solar panels, like glass, aluminum, or silicon, and return them back to the supply chain to be repurposed for brand-new panels. Not only are we a customer of Solarcycle ourselves, we're proud that our investment is allowing them to double the capacity of their recycling facility. This investment has an immediate impact on Prologis and our customers and our ability to decommission solar panels in a sustainable way. How about one more example? Sometimes to stay ahead of what's next, you need to invent, because sometimes the solution doesn't actually exist yet.... Every good innovation story starts something like: there was a guy with a clipboard. Well, fun fact, there are actually thousands of guys and gals with clipboards in yards outside of our facilities every day, and they play a critical role in our customers' operations. They handle things like security and truck check-in, managing the flow of goods, entering and exiting the facility. Today, the yard is becoming a bottleneck for our customers because this process is entirely manual. We have trucks sometimes waiting in line for hours outside the facility, idling and producing exhaust, and local governments are starting to crack down. Just in Southern California this year, they passed a law where operators are going to have to self-report on truck traffic. That means a facility that has 900 trucks a day coming in and out, could face up to a $1.4 million annual fine. This is becoming a big deal for our customers. Insert Terminal Industries. Prologis Ventures worked with some of our best partners and customers to invent a brand-new business model to tackle this problem head-on. Using the latest in AI and computer vision, Terminal can identify, log, and report trucks, trailers, and chassis, giving customers the ability and the digital means to manage goods entering and exiting their facilities. This allows customers to automate their reporting, potentially saving them $ millions in annual fines. Terminal is currently piloting with two of Prologis's largest customers, and we aim to have this in 6,000 or more Prologis yards. These are just a couple of examples today of how Prologis is working with startups to drive value for Prologis and our customers. With TestFit, granting us the time and efficiency to have rapid iteration in our site planning. Solarcycle, enabling our recycling strategy for our Energy business, and Terminal Industries, addressing a major freight inefficiency that no one else has dared to take on. All three of these companies are helping us future-proof on behalf of our customers. Thank you, and back to Todd. Thank you, Lisa. If we could leave you with three thoughts, it would be this: Prologis is so much more than a landlord. We are actively investing in the success of all of our customers. Number two, because of that position and because of the role we play, we can anticipate the needs of those customers before anyone else, especially because of the ecosystem that we've curated with our customers and thought leaders around the globe. And number three, you've heard this time and time again today, it allows us to future-proof our infrastructure, but it also allows us to future-proof our customers. So with that, we'd like to thank you. And now we'd like to introduce a video with our CTO, Sineesh Keshav, who's gonna talk about how Prologis is using data to become a technology-first business. Thank you. For the last five years, Prologis has undertaken a significant digital transformation, driven by our deep commitment to leverage our scale for the benefit of our customers, employees, brokers, and investors. With 2.8% of the world's GDP flowing through 1.2 billion sq ft of Prologis buildings globally, we have a unique ability to harness data and technology in profound ways. At Prologis, the big difference that drew me to this company was the fact that we were trying to disrupt ourselves before someone else did. Technology spend at Prologis has grown 50% over the last three years and continues to grow as we innovate across our business. Our data-driven approach enables us to optimize our pricing, provide accurate customer insights, and offer our customers a variety of Prologis Essentials, products, and services. When it comes to data at Prologis, quality is our unique imperative. This is why we created a state-of-the-art data foundation to collect, curate, model, and provide access to our enterprise data across all our stakeholder groups, which has involved investments in a variety of technology infrastructure, all with the goal of servicing our customers. To do this, we've partnered with some of the world's leading technology companies. This new foundation enables us to run sophisticated, descriptive, and predictive analytics for a variety of scenarios. It also enables the use of generative AI for both efficiency and capital allocation. This foundation also helps us with the Energy and Sustainability side of our business. We're building an energy carbon data management system that lets us reliably model our greenhouse gas emissions across our portfolio, down to the individual property. The world today stands on the brink of limitless possibilities. We embrace this era where technology has an opportunity to reshape our customers' experiences and expectations. Good afternoon, everyone. I am so glad to be back with you today. For those of you I've not met, I'm Chris Caton, Managing Director for Strategy and Analytics at Prologis. My whole career, it's now over 20 years, has been spent in research and analytics. Why? Real estate is a business comprised of critical decisions, irreversible decisions. Some businesses might only make a handful in a given year. What building to buy, where to go vertical, what leases to make. And I have seen the power and the advantage of marshaling data as an asset. Now, on the surface, real estate might appear data-driven, but it's not. You've got these rules of thumb. You've got market analysis that just isn't quite the thoroughness that you would expect. And so when I look at the quality of work we've been able to do over the years, the insight unlocked by connecting data and insight across markets, between continents over time, translates to really powerful outcomes. You're talking about getting a better basis. You're talking about exposing yourself to capturing a higher market rent, capturing higher rent growth over time, better investment performance. Now, Sineesh, in the video, talked about our commitment, the significant effort we go to and the money we spend to do it, and our opportunity, our foundation, and our successes. So what I wanna do is just take that a level deeper. How do we monetize data at Prologis? And so what I'm going to do is talk about the why, the how, and the what of data at the company. What I hope you see, and I hope you agree today, is that Prologis has an uncommon commitment, makes an uncommon effort within the real estate business, and that translates to meaningful financial, financial outcomes for all of you. Now, you've already seen our track record. Carter and Joseph shared it. Scott and Damon also covered it. Outperformance on rent change, high absolute returns, and our development track record. The analytical mind that I have, what I wanna share with you is that it comes down to rent achievement. I wanna give you an example. What you see here is a distribution of outcomes. We're looking at the market in Atlanta. These are lease comps over the last 18 months. This is a combination of Prologis and non-Prologis comps. You see they range from $5 up to almost $20. I'll tell you, look, I've been at the company a decade, and we are constantly looking for a single metric to document our superior portfolio composition, the discipline with which we've showed, putting our business together. So rent is one objective metric. Now, the green dots here are the Prologis lease comps. So they average $10.74. The broader marketplace, $9.43. That is a 12% better outcome. This is massive, okay? This ties back to the point that Carter was making earlier. Our superior location strategy, product quality, operational ability, translates to this 12% outperformance in the Atlanta market. Now, what I know, I know what you might be thinking, Chris, there are a lot of ways in which these, these comps can appear, good, good reasons and bad reasons. And so what I wanna do is level these comps, right? We have the ability to go space by space, and in fact, we've developed algorithms to do just that on an automated basis. And so when we do that, we are able to actually decompose our outperformance. So 12%. That first 10% is really related to our portfolio composition, our submarket selection, our site selection, and our product quality. In fact, inside the comps, inside the model, the majority of that comes from our submarket selection in Atlanta, in this case. So we have an outsized portfolio in the Northeast, along I-85. Rents there are $1 higher. So here, the 10% part of that outperformance comes simply from submarket selection, much like you heard from Joseph earlier today. One thing I wanna draw your eye to is the 2.2% operating capability. This has outperformed beyond what the market comps would have otherwise suggested. In fact, Atlanta is a low estimate. When we ran this in Chicago, in I-55, O'Hare, we found a 4% operating capability outperformance. When we did it in New Jersey, it was even higher. Our A/B testing over the years, over the last five years, shows us that we routinely get 3% and higher in our operating capability. So indeed, the why of data as an asset is our ability to sustain and grow our outperformance. So the next logical question is: How are you going to sustain and grow that outperformance? We've been doing this a while now. We have some experience, some battle scars, some toes stubbed, and I would tell you there are really three necessary conditions to developing and monetizing data as an asset, and this is so important. The first is strategic alignment. The culture needs to buy in. The culture needs to support this shift. The second is proprietary data. You need to have unique and valuable data that is the origin of profitable insight. The third is business process replacement. Data tools are unlocking new ways of working, and we must be methodical in adopting them. I'm taking the time to take you through this because this is hard. We are making an uncommon effort, and it is difficult to replicate. Let me take you briefly through each. Strategic alignment. This is about cultural alignment, agreement from the top on down and the bottom on up. This is our prioritization framework that I'm showing you here, and the most important is important decisions, monetizable decisions. Let me give you a couple of examples. Our operations. We have over $8 billion in NOI. It's more than $12.5 billion on a market rent basis. 1% better execution here translates to more than $100 million in NOI, and we are doing multiples of that as leases roll. Deployment, transaction activity, not transportation, transaction activity. We've done over $100 billion in transactions in the last decade. 1% better execution translates to $1 billion of value creation. This stuff is important because it translates to financial outcomes for all of you. We have other things we orient our data capabilities on. They are farther down our prioritization list. Continuous improvement, new ways of working, identifying cost savings opportunity, and marshaling our analytical tools or technology tools to our most common and valuable problems. We also have new capabilities and companies. Structuring our data reveals new insights that we can, we can share as a business, and Will and team just covered that. So there are three necessary conditions. The first is absolutely strategic alignment, but I think perhaps the most important is data, proprietary data. Unique and valuable data is the lifeblood of monetizing data as a capability. You may, you may not be aware. In the last year, Prologis collected, structured, analyzed more data than in the prior four decades as a company. Our data has doubled in the last year. I expect it to double in the next year. What I want to do with you today is just briefly take you through a hierarchy to show you that not all data is created equal and that we are setting the standard. There are five levels here, kind of from a commonplace standard all the way up to really valuable data. The first two levels are market statistics and asset and lease comps, and these are broadly available. You can get them from partners. You might be able to buy them. In some cases, you can get them on the internet. Now, we go again to an uncommon level of effort to set the standard here in terms of market breadth, in terms of history, in terms of thoroughness and accuracy, but that's level one and two. Level three is IoT data. We have a wide range of use cases in our logistics facilities. We have over 80,000 IoT devices streaming data to us live, 80,000, and that's going to grow in the months and years ahead. Give you a brief case study. The Prologis Pavement Index. The Prologis Pavement Index is derived based upon drone photography of our parking surfaces. We are able to get a consistent experience for our customers with this pavement index, while also leveling spend over time. Next is sales funnels and customer databases. This is more than just simply knowing a market-leading broker and having their phone number to get a deal done. This is about tracking activity at a very nuanced level to understand the demand impulse. And you've heard about our multiple business lines. This is about a matrix sales organization with the necessary customer contacts across the range of any account to get energy, mobility, real estate, et cetera, done. Level five, proprietary enriched databases. This is where our development track record, our operational and financial track record, valuations data, rent budgeting data, that's where this lives. These are the crown jewels of our business from a data perspective, and they describe the life cycle investment performance, and it's attachable to a wide range of predictive variables. Data as an asset is nothing, without proprietary, unique, and valuable data. Now, what you need to do, though, is go from data to ultimately action, and to do that, you're left with my last necessary condition. Three necessary conditions. Number three is business process replacement. There are five quick steps that I want to cover just to show you the depth with which, we have a commitment, an uncommon commitment to monetizing data as an asset. So we already talked about data. So you need to have data. You then need to have an architecture. Prologis prides itself, you heard Sineesh Keshav talk about it, prides itself on our market-leading architecture. So for example, we are 100% cloud-based and have been for years. Next, an area near and dear to my heart is insight generation. We will use any and all analytic methods to generate insight, so long as it works. And in fact, I think there's so much opportunity. We're using, you know, still kind of basic supervised learning models to develop predictive and prescriptive analytics. The comp leveling I showed you earlier in Atlanta, for example, is kind of basic advanced analytic tools. Team might not appreciate my saying that, but they're indeed advanced analytic tools. And AI offers us tremendous opportunity. The generative technologies, large language models, and we are already experimenting, and we are partnering with the leading companies, and we will also make our own refinements for our unique business cases. While I expect this to be our area of highest growth, we will always have a human in the loop for the time being. Next, process alignment. This is simply about data offers us new ways of working, and we need to be purposeful in terms of replacing those ways and adopting new technologies. For example, you may not be aware, we have a Chief Transformation Officer, and she and her team are practiced in driving adoption of new ways of working. And then the last is, look, there is a whole technology infrastructure to seamlessly integrate insights to the front line to get action. Okay, so we've gone through a pretty conceptual conversation, right? It's valuable for the company. There are three necessary conditions that really lead our effort to be uncommon in nature, and now let's look at what we're doing with it. Two case studies for you. The first is revenue management, and this is so important 'cause it's so fundamental to the value of the company. Like I mentioned earlier, our AB testing and revenue management over the last five years has revealed a 3% and sometimes higher outcome as leases roll. So it's really, really valuable. And when I describe revenue management, what I want the picture in your mind to be is this is about the processes, the technologies, the data analytics to plan, propose, negotiate, and ultimately settle on a lease. And as I was thinking about how best can I bring the group along? I am so proud of the work that my team and I have done. How can I bring you along? And I think, I think the best way to do it is simply to tell you the three ways in which we are different. The first is a callback to what Carter said earlier. It's written down as a culture of value maximization, and that's absolutely what he described. There is no replacement for having a local team on the ground with the right relationships and compensation structure to make the best decision, the best long-term decision for the real estate. There are three ways in which our approach is unique. The second is our proprietary price analysis, offering a unique set of tools to that frontline deal team. A proprietary price analysis is one that is able to evaluate any opportunity as it comes in for its attractiveness from a price perspective, one that stays up to the minute current on pricing, one that is able to have a rather refined understanding of pricing, of the trade-off, kind of penny by penny on the price to your tolerance or our tolerance for risk, and that's what you see described here. I'm showing you a small demand curve, and it shows you the rent accomplishment against the win probability. So, for example, if we had an $11 rent, that might be, for a particular space, a rather aggressive price, so maybe it's 50/50 win probability. And then we're able to understand how our win probability dissipates over time, say, as it rises. Let's say we go to a $9.75 rent. So a lower rent, that might be judged to be a 90% win probability. And our teams are able to use a tool like this in terms of setting their asking rent, proposing, counter proposing, and ultimately evaluating the deal they make. We have other technology tools as well. So here you see a scenario analysis tool. There are a lot of deal points, and we were able to surface technology to maximize the NPV of the lease while minimizing or while mixing the lease in a way that our customers are, are desiring. So you take rental rate, you're trading off with TIs, you're trading off with other concessions, thinking about lease term, et cetera. So the third area where we're distinct is real-time portfolio optimization. I've got a couple points for you here. The first is a concept of risk pooling, of understanding really the negotiation dynamic in our industry. So let me describe kind of a real way in which the sales work across logistics real estate. I think a typical leasing rep or even a small portfolio, they might make 30 or 40 transactions in a given year. Now, most of those are gonna be small, but one, two, sometimes three are going to be large. They'll be larger than 100,000 sq ft. They might even be 250, 500,000 or 1,000,000 sq ft. But they are rare. They are rare. Now, let's pause and think about this. Let's say in this hypothetical, we're talking about a smaller landlord who may have 10 million sq ft of leases to make in a year. How are they gonna approach that 600,000 sq ft lease? Our experience, what we see in the marketplace, is that they take a risk-off approach. If they miss out on that 600,000 sq ft lease, they have a six percentage point occupancy hole, that there is no amount of leasing that can overcome that within a reasonable amount of time for them. So we see is this accommodative approach to pricing and just inconsistent ability to get that pricing all the way to market because of that risk-off approach. Now, consider this scenario at Prologis, and our ability to diversify risk over our 1.2 billion sq ft. We make multiple hundred thousand sq ft, sq ft leases in a day. We make multiple 250,000 sq ft leases in a week. That 600,000 sq ft lease that really intimidated that smaller scale player is 5 basis points of our occupancy. By our ability to diversify those leases across a year, across a portfolio, we were able to more consistently get all the way to market. Internally, we refer to this program as our Star program, as our Star program, and when we rolled out, we thought, well, there might be a modest occupancy hit. And it's. Hamid knew there wouldn't, I'm sorry to say. I was doing my best to manage his expectations, and indeed, there was no occupancy hit. The wins and losses averaged out. We were able to more consistently execute pricing all the way up to a fair and full market price without an occupancy hit, simply through a change in how we think about risk, pooling outcomes between markets, across countries and continents. We have other real-time portfolio optimization. We're able to track our leasing pipeline in real time, identifying deals as they make or identifying deals as they fall out and responding dynamically, adjusting price to balance the accomplishment of rent against the risk of downtime. So revenue management is a program that we're very proud of, and it is translating to meaningful financial outcomes as those leases roll. It has also been an unlock. The tools that we've developed here has also been an unlock for our deployment activities. And so what I wanna do is talk to you a little bit about one other tool, and then I will wrap up. Joseph talked about the discipline with which we've built our portfolio over time. And in the last decade, our customers have had a lot more attention to site selection. With it, we've matched that level of site selection. In the last year, we've brought a new level of rigor to that site selection. So I'm gonna take you through a tool here. It's a little fly-through we call the Site Selection Strategist. It is a dynamic application that allows our teams to browse their market data across a variety of categories. What I think is important and why I want to show you some videos here, I'm going to do my best to voice over them. Our teams are the best in the marketplace, as you've heard multiple times earlier today. What this tool allows them to do is dynamically hypothesize, test, and learn and identify new trends before they become apparent to the marketplace. This is so valuable because when you're able to lock in a basis, a lower basis, or identify a submarket that's emerging where the rents are going to be different, that's how you outperform. That's how we have outperformed, that's how we will outperform in the future. Let me give you a brief tour. We're looking here at Baltimore-Washington, for those of you who may not be able to read the screen. We bring together a couple of different data sources here, a variety of data sources. I'm showing you kind of the CliffsNotes version. I'm going to show you four today. The first is basic economic and demographic and zoning information. We're going to look at median income across the Baltimore-Washington area. The dark color is high and the light color is low. This has been a boon to our revenue management modeling. Really becoming quite sophisticated in the geospatial variables is, is unlocking new insights for us. And then also just simply showing this data allows our teams to test their fundamental thesis even before there might be a modelable technical track record. So that's one data source. The second is just the building list, 3,000-odd buildings in the greater Baltimore-Washington area. We were able to attach a wide range of performance variables against individual assets. Might be vacancy, could be lease-up time, downtime, new developments, et cetera. What I'm showing you here is our revenue management prediction at a building level across every building in the Baltimore-Washington area. Blue is high rent, red is low rent. And our teams can use this to better understand the marketplace, maybe a submarket they haven't previously been through. Since this is a deployment-centric tool, it's naturally drillable, so you can go down to the asset level. You're able to get traditional metrics, the building characteristics, non-traditional metrics. We're showing you our revenue management assessment, but there are a wide range of other things that we could attach to it. Because it's a deployment tool, the contact information of the property owner. Because we're using this for deployment purposes, it's filterable. You can look at the rent on the property. You can filter by different property characteristics. You're able to be quite precise in how you browse this data set. The third is the lifeblood. The third data set is the lifeblood of local real estate execution lease comps. So here we're showing you lease comps, I think, it's for the last 6 months. This is across Baltimore- Washington, this is not data you can procure. It's data that we have developed internally through our relationships and analysis. And again, we're shading it with our revenue management tool, but this time. We're evaluating the ability of that property owner to get up to a full market rent. So blue is not a full market rent. Now, think about it. That property owner thought that was an acceptable rent, we don't. That might present an acquisition opportunity. Their gap in understanding where the market is. Now, the last kind of feature that I want to show you today, and again, I'm not giving you everything for competitive reasons, is a heat map across all of the Baltimore-Washington area. Again, we could attach any of a set of performance variables, valuation trend over time. Here, we're sticking with our assessment of market rent. We're matching our understanding of comps, of the local building accomplishment against economic, demographic, and other predictive variables. And this is, again, a way for our teams to hypothesis test and identify opportunity. Give you an example, if we move into the Southeast here, we are able to identify the rent gradient as it rises over as you enter the District of Columbia, along the interstate here. The reason why I'm going so deep on a tool here is that data is translating to monetizable outcomes. And it is going to be part of the fuel that sustains our outperformance going forward. And it's not just historical, it's the future that I'm really excited about. And so let me just briefly... There's a lot on the page here, but what I'm going to briefly do is describe a couple of highlights for the future. So this is a range of projects that we are all working on. There are more than are represented here. They also flow out of our prioritization framework that I shared earlier. For example, green is revenue-centric, black is new, that's foundational technology. And there's a lot here we could really spend the whole day on, and I, I think I wanna be mindful of your time. So let's focus on four. So revenue management. This is something we've been working on for a long time, and we are now deployed in over 80% of the Prologis portfolio on a market share basis, 80%. So that's all the United States, that's Western Europe, and I'm excited about the future because in 2024, we are gonna close out Europe. We are also going to launch and close out Mexico. So on an our share basis, we will cover more than 95% of the Prologis portfolio. We're also doing R&D on our models. We're gonna be able to handle a wider range of scenarios and special outcomes. Site Selection Strategist. This is where we are launching to more markets and also flowing in more outcome variables. Wider range of adoption in new markets. What about AI? What about AI? Well, I'm really excited. We're, we're building the foundation for the future. One thing we need to do is make our data machine readable, and so that's what LLM vector databasing means. We are making our data machine readable so that modern AI tools, generative tools, are able to combine both our internal data as well as our—as well as the broad public domain. I'll give you one example. It's called customer and client LLM applications. LLM, large language models. I think this is... This is a classic sales enablement tool. Likely, many of you have this opportunity. Imagine a scenario. Imagine it's 10, 15 minutes before a client meeting, and you need to prepare really quickly. Well, there is a solve here where AI can give you, summarize your past interactions, summarize your business's interactions, summarize your business, business together, as well as the public information, and allow you to have as specific a conversation as possible to increase customer loyalty, increase customer conversion. So you can see, I hope, that this has wide applicability across our traditional real estate business, our Energy, Sustainability, Mobility, Essential Operations Business. So the best is yet to come, and data is a capability. Thank you for your time and attention today. I really enjoy working with all of you, and I hope that my remarks have been clear. This page summarizes some of the highlights that I just told you. Look, why do we go to so much trouble with data as a capability? We have outperformed, and we will accelerate that outperformance. How? I covered the three necessary conditions. Each individually are difficult, and we go to a common, uncommon effort to execute well across all three. And what transformational capabilities, translating to meaningful financial outcomes. At the end of the day, what I really hope you hear, what I hope you take away is Prologis is going to, like I've said a few times, an uncommon effort, has an uncommon commitment to generating data as a capability, and is translating directly to better NOI performance and better financial outcomes, say, on deployment. Thank you. Good afternoon. Welcome back from the break. I promise we're getting to the end of our day, and so far, you've heard a lot about some great and unique Prologis capabilities that are in the process of being built across the company. And while my team and I benefit from all of those capabilities, especially the data, I'm here today to have a different conversation. There are a lot of opinions out there about the logistics real estate industry, and you've heard a little bit of our views already previewed through the day.... here to walk you through our process of how we look at the market and how we understand it better than everybody else, and to close with our view of the near term outlook. So while I'll get into specifics, I'd like to start with reminding you of the larger logistics real estate story, and that story has four elements. The first is that logistics real estate is a growth industry. I'll go into the reasons for that in a bit. The second is that today's customers are solving for revenue generation and risk mitigation. The third is that new supply is falling sharply, and it's going to be harder to deliver in the future. Finally, all of this means that barriers to supply and proximity to end consumers will be primary factors driving durable outperformance through the long term. We're going to walk through all these points, and we're going to start with demand, which, to be honest, is the hardest to forecast and is something that we have a good track record of understanding. Now, all we care about is the future, of course, but to understand what we expect in the future, we need to look at the past. Since the last Investor Day in 2019, we've all been through a lot of changes, to say the least, and so is the logistics real estate market. What you see on the page here are three core drivers of logistics real estate demand. One, cyclical. Today's real retail goods sales are 15% above where they were in 2019. Two, structural. E-commerce penetration is up by 700 basis points, and the inventory to sales ratio is roughly 3% above where it was pre-pandemic. Now, we've got detailed models, and the way we understand demand is by breaking down the drivers and then performing specific analytics to understand how that translates to logistics demand. These models would tell us, given these changes, we should expect 1.5 billion sq ft of net absorption over the past four years. So how much have we got? How good are we? Well, we've been pretty much spot on because we understand our customers, we understand how they structure their supply chains, and we understand what these changes mean for their logistics networks. Now, you might be saying, "That's all well and good, but that's in the past." How does this influence our view of the future? And the thing to understand here is that these changes, that happened in a very short amount of time, have permanently changed the complexion of economic growth in this country and therefore, logistics real estate demand. So how do we get there? What we find is that COVID and the changes I just talked about have a permanent multiplier effect on demand, and we get there by breaking down all the components of GDP growth. I think we all know GDP is roughly 70% consumption, and goods consumption, in particular, is the backbone of logistics real estate demand. Because of demographics and the impact of remote work, goods consumption is going to grab more share of wallet in the future than it did in the past, as you can see on the slide. Second change, the world is more uncertain today than in the past. I think we can all think of half a dozen examples easily, and we'll need to hold more inventory for every unit of sale going forward. Finally, the way we shop has permanently changed, and so that 700 basis points here means 22% of every good we buy happens through online channels. And so if we just say that this, this state today, none of these change, what would that mean for logistics real estate demand? And our models would tell us that each one of these has a permanent increase in the amount of logistics real estate needed to support that segment of economic growth. So that when you take the change in the complexion and distribution of economic growth and apply the demand effect for logistics real estate, every unit of GDP growth is going to require 20% more logistics real estate to support it in the future relative to where we were prior to the pandemic. So that means long-term averages for demand just aren't going to cut it. Now, these changes aren't done. So like I said, that was holding all these drivers stable. The future of retail is still playing out, as Dan previewed this morning, and the future of retail is service levels. Multiple modalities is part of that, and you can see on the page that e-commerce is still gaining share for all of our markets around the globe. That's important for logistics because online retailers and an online e-fulfillment supply chain requires 3x the amount of logistics space relative to brick-and-mortar. Now, my team has been studying this since 2015, and we've been surprised that this ratio has remained really stable, even as actually brick-and-mortar supply chains have become more logistics real estate intensive, too, for rapid replenishment purposes. All this goes to say that the reasons underneath this are sticky, and we expect this multiplier effect to continue to influence demand for space going forward as e-commerce gains more share. The future of the supply chain is resilience. This is a bet on a less uncertain world going forward, and the fact that just in time isn't going to be a viable model through the long term. We see supply chain leaders are still having problems today, and while inventory hold is one way to accomplish this, you might also see it through sourcing diversification, ports of entry diversification, and for select industries, moving around your manufacturing facilities. That has implications for aggregate demand that are positive, as well as specific locations. The future of retail and the future of supply chain are still playing out.... That's going to increase demand going forward. So what about supply? What about capacity growth? Is there going to be enough new supply to meet all of this demand? Well, first, I want to talk about how we think about supply, and Hamid already previewed that it's very knowable. Our team, as part of our proprietary data sets, tracks groundbreakings project by project. So we have clear visibility into the upcoming deliveries and where the pipeline stands today. On the page, you can see quarterly starts and quarterly completions, including a forecast, in millions of sq ft. This is for the U.S. Europe looks very similar, although their pullback happened about a quarter or two earlier. What you can see most clearly is that there's been a 65% drop in starts. This is development economics changing with the rise of interest rates. What that means for us is as we forecast fundamentals going forward, we can have high confidence that completions will also hit a steep cliff in the second half of 2024. They're going to hit that cliff right as demand starts to increase again. All of this goes to say there's clear visibility between our deep understanding of demands, driven by analytics and understanding our customers, and supply, given our granular project-by-project tracking that will give us high confidence in the future outlook for market fundamentals. Now, you might be saying, "What about supply after this mini cycle, when interest rates may be normalized?" Well, there are some structural trends here. This will be the last one I talk about, and as you hear, we're very integrated, so it's already come up today. Structural barriers to supply are rising. What you can see on the page is a map of the Inland Empire. Damon already talked about what an important logistics market this is, and what I'm showing is slightly different. Highlighted in blue are municipalities that have enacted moratoriums on warehouse development. In green are where they've been proposed, and in orange are places where they've enacted other types of regulations, specifically intended to reduce the amount of land available for logistics development. The gray dots are projects that are currently under construction. And the point here is, if these moratoriums become permanent, if resistance rises in such a way that it ultimately limits the amount of new supply, it's going to affect some areas that have been key markets for growth of our customers. Places where you can build, and they can expand, and you can have those great facilities like the one Damon showed. Now, you might be saying, "Yeah, but this is California. They love regulation." I can say that because I'm from there. But what about everywhere else? Is this just a California thing? Again, my team is global, and we've been tracking this around the globe. We see these types of regulations cropping up in Europe, in New Jersey, in New York, in Maryland, Chicago, and even, and I'm not kidding, folks, Dallas. And so that's how you know it's really a trend, and it's something we expect to rise in a structural way going forward. That means over the long term, logistics real estate is going to be harder to develop, it's going to be more expensive, and for our customers, that means there'll be upward pressure on pricing. So that's the long term. Let's go back to the short term, because I talked about our near-term views on demand, and what we see is high visibility into supply. Take them together, and obviously, you have our vacancy rate outlook. On the page, this is for the U.S. Again, Europe looks very similar. That line is even a bit lower. What you can see is that vacancy rate, yes, it's rising. We're coming off an incredibly strong period, but where it's going to peak is more than 100 basis points lower than the long-term average. This isn't a recessionary forecast. I've been calling this a mini cycle because it's really about new supply coming online and then being absorbed, and having a clear view into the cliff coming for new supply that's going to allow vacancy rate to fall very quickly in the second part of this forecast. Scott mentioned sometimes we get asked to talk to customers, too, and my advice to them, based on this outlook, is I tell them to act quickly, because the availability they might have now, the choice they might have now, is not going to last long. And with that, comes a pricing increase. Hamid already previewed this. Our view for market rent growth across the globe is roughly a 4%-6% CAGR over the next three years. The U.S. will match that number, as it's the biggest logistics market. And how do we get there? To form our view on rent growth, we really look at two primary drivers. The first is replacement cost to rents, and today they are sky high. They're sky high because construction costs increased, and they haven't come down yet in most markets. Europe might be a slight exception there. Required returns on investment because of interest rates... Sorry, interest rate increases have also come up dramatically. So that puts upward pressure on markets with a lot of new supply because replacement cost rents are high. But we also look at market conditions, and given rising barriers to supply, this has actually been a more powerful lever in recent history. On the page here, you can see a three-year view. As Hamid rightly pointed out, year-to-year and quarter-to-quarter can be volatile, but these patterns and relationships really hold when you extend the lens a little bit. So we've got a three-year view of average vacancy and cumulative rent growth. And what you can see is a clear linear pattern, and our 2026 forecast falls very much on that trend line. If not, it's maybe even a little conservative. So with all that taken together-... I wanna boil down the mini cycle to four numbers I want you to remember. The first is that 65% drop in starts. This is really important because, again, we have clear visibility into the rebalancing of logistics market conditions and retightening. The second is the 1.2x demand multiplier. Every unit of economic growth, because of the past changes, is going to require 20% more logistics real estate. The third is that vacancy is going to peak at less than 6%. Taken together, that supports our forecast for 4%-6% market rent growth going forward. I'd like to bring you back to the story. I'm not gonna reread this, you know these facts. But underneath the surface, what we're seeing is a greater differentiation in performance by location. As you add all these up, the focus on revenue generation and service levels, the need for resilience, the structural barriers to supply, it's such a unique time to take advantage of these conditions and partner with customers to build the newer, more data-driven, more flexible, more greener supply chains of the future. And so as I think about the logistics story and how you possibly measure and benchmark value creation potential going forward, I think you need to remember these points and that location matters. Portfolio quality matters, and everything you've heard today about layering things on top of that, just amplifies the success of a portfolio well aligned with customer needs. So with that, I'm gonna bring up Tim to close out the day. Thank you. All right. Hey, everybody. I'm gonna take us out today. My name is Tim Arndt. I know, of course, most everybody in this room. It's great to see you here today. I'm the Chief Financial Officer of the company. This is actually my fourth time presenting at an AMB or Prologis Investor Day. So I've drawn the short straw a handful of times here, but I'm actually very excited to take us through this last section. I'm gonna spend our time at first, just on the capitalization of the company. We'll spend some time on the balance sheet and the Strategic Capital business, literally the foundation of this company. Then I'll spend time going through just the initiatives and strategies you heard about all day, what it amounts to in terms of how we're thinking of our outlook and growth from here. Before I do that, I wanna just give my reflections on what I think the day has meant. We began this morning talking about how we're building the premier logistics real estate portfolio. I say we're building because we are not ever done. That's the message that should have come through from Joseph and Carter. We're continuing to procure land, expand the portfolio, dispose of assets. We're relentless. And in that same regard, it's engendered this passion for the customer. And so then, you then heard about customer centricity, what it's begun to do for the customer, but also for Prologis, how that's translated into outperformance and growth for us. Then we spent some time talking about how this is transferred into new businesses and new opportunities for us to add cash flows and revenues for the company in Energy, Ventures, the Essentials business. Then lastly, this afternoon, our time with Chris and Melinda, harnessing all the data, all of our learnings, making all of these processes and investments better and stronger. And for me, as I synthesize all that, what it means is that we're driving growth here continually at this company. That's probably the one thing I would really like to have you walk away from the day believing and understanding. You know, incredibly, we've been together, five hours or so today, and I don't think we've talked about the lease mark- to- market. Some kind of record. But the lease mark- to -market is... We're certainly happy to have it. It's gonna give us a lot of growth from here, but it's actually passive growth at this point. It's, it's a product of everything we've bought and built and operated up to this point, but we're just gonna enjoy that source of growth. So what the day has been about is a more active elements of growth, all the things that we pursue to say, "What are the seeds that we are laying now to add on to that growth from here?" So you see, I'm gonna start here on the balance sheet, some credit ratings here. I want you to notice not just the strong ratings from Prologis, but also our Strategic Capital vehicles. I'll talk about that in just a moment. I was the treasurer of the company for about 10 years before taking my current spot, and I was actually in debt capital markets at my predecessor company. So I've been in debt capital markets surrounding real estate for about 25 years now. That company I was at in the mid- to late 1990s, I learned you finance real estate, 70% or 80% loan-to-value. That company is not around anymore, but we learned some pretty important lessons at AMB and Prologis through the GFC, about a more proper capital structure for real estate. We said then we wanted to not just fix the balance sheet, but we wanted to have the number 1 or 2 balance sheet of all REITs... recognizing a company like Public Storage, you know, approaches capitalization differently. And I am proud to say that we've achieved that, and I can say that with 100% confidence, say it very objectively, just by looking at nothing more than credit spreads. Because we can read rating agency reports or other analyst reports, but the real vote comes from the people putting down the money and saying, "Well, whose credit am I willing to pay the most for?" And that's been Prologis for many years running now. Now, that's not just born out of being risk-averse or careful on the balance sheet. That's a piece of it, but we also have long said we wanna be very opportunistic in what we can do with a balance sheet like that. And a great example of this came up in the second quarter when Dan Letter came to me and said, "Tim, I have a $3.1 billion portfolio from Blackstone. I'd like to bring it down. The good news is, you got six weeks to figure it out." But it, no problem. No problem. I was thankful because we had been expanding credit lines, keeping a lot of debt capacity available to the company, and so we closed the real estate transaction. We actually went out into the long-term markets, locked up the financing, locked up the entire spread between what the IRR of the investment was and ultimately, its capital structure. If you think about it, did you notice that in the second quarter or the third quarter, our liquidity was drained or our credit metrics got askew? Not at all. In fact, if I go ahead here, here's some credit metrics at the end of the third quarter. To start, debt to EBITDA, loan-to-value, et cetera. I wanna highlight one thing at the bottom here. This is a ratio you don't think a lot about, probably, fixed charge coverage ratio. This is how much EBITDA do we have above our fixed charges. The reason I am highlighting it is about 10 years ago, when we were going through our plans on how do we wanna strengthen this balance sheet and make it one of the best balance sheets, we were focused on the company that had the best balance sheet 10 years ago. The conversations I would have with investors and rating agencies at the time was, even though they had credit ratios much like these, what was called out was this: excess nominal EBITDA coverage. The agencies would say, "Well, yeah, you have, you have ratios similar to this premier balance sheet, but that balance sheet had $3 billion more EBITDA than what was required to address their fixed charges." Incredibly, and I haven't checked in on this number lately, frankly, we have $6.25 billion of EBITDA getting generated beyond our fixed charges. That's what makes this balance sheet completely different. I'll, I'll be honest, I get a little, a little, amused, I'll say, when I read an analyst report or some kind of report that says, "Well, all these balance sheets are pretty much the same. They have similar ratios." They're not at all. This is what makes it actually very, very different. What does it do for us? Let's look at two things. Weighted average interest rate, we're still sitting below 3%. This is a function of that low credit spread, a very favorable line, but also the way that we procure non-dollar currencies around the globe. Many of you are familiar with our strategies there. But this 2.9% weighted average interest rate wouldn't matter much without significant terms. So look at the other side of this. As you measure this up against some of these other REITs, we have the longest term remaining on this. That's worth something. You know that you can underwrite the value of this low-cost debt for such a long period of time. Now, I'll shift and talk about another very important part of the capital structure, which is our Strategic Capital business. It's where actually, at my time at AMB in 2004, when I joined, same year as Dan, I started in what was then called the Private Capital Group. One of the first things we were doing was forming the US LF fund that we have today. That's our flagship vehicle. Strategic Capital is basically the combining of LP capital, either public or private. They co-invest with us in our real estate ventures around the globe, and it does some important things for us. First, it's obvious it just provides significant amount of the capital that we need to fund a $200 billion portfolio. The $60 billion would represent more AUM than is in the other logistics competitors amongst REITs. Strategic Capital, and this is where I really got intrigued with the business, it heightens returns. If you haven't run these models, if you just take an 8% unlevered IRR, as an example, at a property level, if you run it through a prototypical Strategic Capital model, where our capital investment is reduced, but we earn asset management fees, property management fees, there can be an acquisition fee, promotes. Promotes aren't in this math. But when you run it through that model, you see it heightens returns by about 200 basis points. It diversifies risk for us in two ways. One is we take our capital here, and we leverage it essentially 3-to-1. Our ownership in our Strategic Capital vehicles is about 30%, and so we're buying three times the buildings. We're exposed to three times the markets, the customers. It greatly diversifies the portfolio on that basis. Also, many of you know, on the FX basis, if we take the $200 billion of assets that we have, and we consider that 75% are in the US, but 25% are not, that's $50 billion exposed to currencies outside of the US. It's very important to our customer business, as Scott and Damon highlighted. But how do we choke off that FX risk? Well, you can see a big first piece of it is owning the non-US assets in these vehicles and having other capital exposed to that, brings our share of that exposure from 75% to 86%, which we bring fully up to 96% after you consider how we finance these assets with debt at the corporate level, favoring non-dollar debt currencies. The last thing that Strategic Capital does for us is probably the most important: it drives capital recycling. If we step through this, Joseph this morning talked about our development activities. I imagine that we will develop about $4 billion per year. That's a good round number for us to use as we go through some examples here in this last section. And on that basis, our prototypical model is to develop on our own balance sheet in the U.S., Japan, Europe, Mexico, and, and offer these assets once stabilized, and once the value has been created to our Strategic Capital vehicles, where they then want to buy the asset, they're trying to grow their real estate investments, and it gives us an opportunity to recycle in this way. Imagine that we have a $100 million start, construction start here. We hold the land, we entitle it, we build the building, we lease it. We'll assume it has a 25% margin, becomes worth $125 million at the end of that process, and we offer it. We don't put it, but we offer it to one of the vehicles, and they, I think, almost on every occasion, say, yes, they'd like to buy that asset. And for simple math, let's assume that in this vehicle where it's offered, Prologis has a 20% interest today. So we'll retain our 20% interest in the asset. That's worth $25 million of continued ownership of the asset, and then we get $100 million back following that, which becomes the capital we need for next year's development. And this is our capital recycling model. Now, I would like to have you think about this in the, in this additional way. So when we are underwriting new assets, and Joseph spoke about this, in our investment committee, we don't look at new investments on a leveraged basis or with acknowledgment of what the fees may be if this asset winds up in a fund. Every asset comes to investment committee on a completely unleveraged basis, needs to stand on its own, needs to be compliant with our strategy. But the fact is, when we buy these assets, they come to my corner of the building, where we can evaluate, well, pump through the full balance sheet and financial model, what is the return on invested capital? These assets that are outside the United States, where in a few cases, you can see that unleveraged IRR is lower than what's available in the United States, by right of a few important differences, namely, that we have a more intensive use of Strategic Capital outside the US. We tend to develop more in these regions proportionately than we do in the US, and we also are able to procure lower cost debt in these regions than we have available to us in the United States. When you run it through, you have a place like Japan, which you might say, "I love Japan, but why are you guys in Japan? It's the lowest initial yield. There's no growth. It's a 5 IRR unleveraged." But you see, it becomes the highest IRR business that we actually operate in. It gives us tremendous access to a value creation engine. It's one of our best development regions, and also building a very healthy stream of asset management fees and cash flows beyond. I feel this is an underappreciated, probably not very well understood, of how all of this fits together, but hopefully, this is an illuminating perspective. Now, you should say, you know, great for all of that. What has it actually done for you? Well, if we just close out this discussion, we can see, well, in the last 5 years, we can pick most any period, our earnings growth has outperformed other logistics REITs, REIT indices, the broad index, and dividend growth the same. You know, dividends, we raised the dividend in 2022 by 25%. I think people were wondering, was that going to be able to be sustained? Is that all to promote? What's going on? We raised it again 10% this year. We have very strong coverage. You'll see by the end of this discussion that our earnings growth is going to lay foundation for pretty strong dividend growth from here. And so, of course, on this measure, up to date, we're leading as well. So this is definitely a business model that does deliver. I mean, you'd mention this in Q&A. So this is just what has our FFO per share been since the merger, and it's highlighting a few times that we held an analyst day, what we said our, our forecast, our expectations for growth would be. You see a few ranges here, 7%-8%, 8%-9%, matched up against the actual in each of these periods and what the outperformance has been. And what is this outperformance? Well, it's from all these active areas of, of growth again. It's from new funds, it's from M&A that clearly we've been very engaged in, it's in financing strategy, it's in a low overhead structure, and now new business lines, as you heard about so much today. This is what leads to all this outperformance. Incredibly, this opening FFO per share is more than tripled by 2023. So I often think about this when we'll get asked: Well, is Prologis now too big to grow? You know, every M&A deal, we say, "Well, now is it too big to grow? Well, now is it too big to grow?" Well, I think it's a sort of silly question in the context of real estate, because real estate growth stems from the same place, which is really market rent growth at the end of the day, which is independent of owning one building or 10 buildings or 1,000 buildings. That's gonna be the primary driver. So then you need to then think about, well, what else can I do on top of that baseline growth, beyond owning the best portfolio, to add additional growth? And that's what we've done here. So I'll pause and just reorient us. I'm gonna shift to how do we wanna think about these four business lines from here? Talk a little bit about how they perform, just to level set, but then focus on the outlook. Just beginning with operations, this is just another look at some of the statistics that were shared earlier. Carter had a different perspective on this, but this is just plain and simple, net effective, same-store growth, average net effective rent change, up against the other logistics peers in any time period we've outperformed. Now, let's get to that lease mark-to-market. I just wanna have one kind of level-setting conversation on how we think about the lease mark-to-market. What you're looking at here, this is a chart, it begins back in 2018, runs out to 2026. The dark bar at the bottom is in-place NOI, as it would have looked in 2018, had we owned all the portfolios that we own today then. Which is a long way of saying, like, Duke is in 2018, okay? We just said, "What is the stabilized NOI that sat there in 2018? And back then, what was the lease mark-to-market, which I think it was in the mid-teens, and that's represented in the light blue bar. And so this is a chart that's trying to tell the story of, well, how do two things happen? One, you realize NOI as you roll leases, but then potential NOI continues to grow with each year as well from market rent growth. Going back to the comment, that's ultimately what drives everything here. And you see, you begin to realize a bit, but then you grow more. And in 2020, we realize some more, and we grow more. In 2021 and 2022, the potential grew greatly. As we know, market rent growth in those years was unbelievable, really. And in 2023, what I think is interesting about this perspective on 2023, is that we haven't even realized half of what has grown in potential up at this point, while having all this tremendous same-store and earnings growth behind us. If we then take Melinda's forecast of 4%-6%, we take the midpoint of 5 and say, "Well, what is the potential gonna do from here?" Maybe a slower growth rate, but the same-store is gonna be very strong. We'll look at that in just a moment. And the chart says one other thing, which is, at the end of 2026, the lease mark-to-market's gonna be in the low 30s%, something on that order. Meaning that the following three years are gonna have pretty robust and strong same-store growth there as well to the end of the decade. This is a perspective on lease mark-to-market I want us to share, because sometimes I think it's viewed as if the lease mark-to-market is gonna erode quickly, and growth will drop quickly, and it's not at all the case. So let's look at the outlook in operations. We're gonna look at same-store growth, just what we're holding out for the next three years. We'll start with net effective. So this is our view of net effective three-year same-store growth. This is what it will average in the next three years, 7.5%-8.5%. That's bookended by the market rent growth ranges that Melinda took us through, of 4%-6%. It's got an allowance on how we think vacancy or occupancy will change over this term. I'll, I'll go back to that at the end of the slides. I will clarify, for any doubt, that this is including the amortization of the fair value lease adjustments within Duke, which should have you think, well, cash is gonna be much better. Well, yes, it is. We think it'll be 9%-10% average over this next three-year period. Ultimately, that's gonna drive dividends and many of the cash flow-based models that you all will run. Now, let's talk about development. I wanna start here in terms of how we delivered with a different perspective on development. This is a graphing, plotting out our value creation by year, and I wanna put it in more financial terms that you will all probably appreciate, which is, well, what has that value creation been per equity cap in this case? You could also think about in terms of enterprise value. It's another twist on, well, are you too big to grow? Think about our equity cap over this time period. Well, we've been delivering value creation through development on the order of 2% this entire time, uneroded by the growth in the balance sheet. So I think we've got a very good track record here. This is an important perspective on it. The question you should have is: well, what's the outlook from here? This view of the land bank, this is just a different twist. You've heard about it a few times today. This is carving up, where is this land bank between the US, outside the US, and how does it, divided between owned land, optioned land, and covered land play? Out of curiosity, the land bank that we're carrying, we would see at about 130% of book value today. It was once worth 2 x book, we had reported, but land values have come down, but we'd still see ourselves as above book. But more important than any of that is that we have $40 billion, you've heard a few times today, to build out on this land bank. So as you think about, well, can you deliver all that value creation? I harken back to maybe 8-10 years ago, as we were defining what we wanted the balance sheet to be, how we wanted to think about risk measures, how much land should we carry? We used to premise that we should have 2-4 years' worth of land in our land bank, that many years of development and starts. We've got 10 years here if we want to assume $4 billion. That's incredible visibility into all the value creation that I'm trying to tell you have a very good track record to deliver. Now, there will be a logistics component. We've talked about a higher and better use component. There's an energy component here. A lot of what we're doing in energy, whether it's storage or in solar, is its own form of value creation as well. So I think we will be able to keep up that long track record in relation to our overall size of our balance sheet. Let's talk a little more about Strategic Capital. In terms of how we've performed, growth in third-party AUM, which is really the driver of earnings at the end of the day. Most of our asset management fees and then downstream promotes, but more importantly, the base fees are gonna be based on what is AUM in a fair market value basis. So over this time period, since the merger, that growth has been 13%. And I wanna pause and say this has been very good for the LPs as well. Got a chart here just showing the performance of these four of our Strategic Capital ventures against either NPI or IPD in the U.S. and Europe. We've marked this up to the end of 2021, because in 2022 and 2023, valuations between different operators got interesting, shall we say. So it's pretty incomparable, I would say, but very good outperformance for the funds themselves. If you wanna think about, well, what is the growth from here? Well, there's gonna be three drivers. One is gonna simply be valuations uplift within, within the funds, appraisals, and write-ups of the assets themselves. I think it's safe to assume that discount rates and yield requirements are relatively stable from here, if not declining. We've certainly had an easing in risk-free rates in, most parts of the world. I know not everybody shares that view, but if that were the case, and we have 4%-6% annual market rent growth, as Melinda just took us through, I think you can almost draw one to one. Well, that ought to drive values in a similar range. So that would be the first component of growth. The second would be contributions. We will be contributing assets. We assume we will contribute new assets into the vehicles on the order of $2 billion-$3 billion per year, which has a 3%-5% CAGR. And then we'll have third-party acquisitions as well. Net of dispositions, a small component of this, but another 2 points out of that, which ought to safely land us in a 2%-12% CAGR on the AUM growth within this vehicle. And as I meant... Or these vehicles, I should say. And as I mentioned, these fees are gonna be based on that growth, and then it'll be further leveraged from G&A growth. I would say the EBITDA out of this business will not be at this rate, I assure you, and so the EBITDA growth should be even stronger. And then lastly, let's talk about Essentials. Now, there's not a similar kind of financial track record to look at here on Essentials. I can tell you what it's done in the last few years. We can touch on that, but if we just assume that we're starting from here, and you think about the numbers that Susan presented earlier, she gave you an outlook out to 2030 in terms of the revenue generation, the NOI, the capital investments. These are some more breadcrumbs on, well, what's gonna happen in each of the next three years? And this is a little of what you will need to begin modeling this out for yourselves. I think there will be a lot of questions that we look forward to answering. But note the table is divided between cumulative balances and then annual amounts. Note the difference there. So in the cumulative category, we're just saying, well, where are you building to in terms of these megawatt additions? You see in 2025, as you look at solar and storage, that gives you the range and where we expect to be on our 1 GW goal. You see MW of charging, megawatts of the charging business. This is the EV business and how it begins to ramp across 2025 and 2026, and then the NOI cumulative at these bases, on this basis across these three years. And then annually, you can see ranges on the amount of capital investment. Investment tax credits. So Susan mentioned this. This is a very important part of energy investments in the U.S. I would say it's, you know, in the first step necessary to making these investments work. In their absence, probably there wouldn't be a delivery of new green power, and power prices would adjust, and it would all come back again. But in the meantime, these credits are available. You see what we expect to generate in investment tax credits in each of these years, and you see a net amount of capital investment in that year. There is a lag between when we invest capital and when the investment tax credits are generated. It deals with when the assets have permission to operate. And then I'm also listing off to the side here a few things that you wanna think about, which is, yes, the NOI I presented here, the tax credits I've just laid out, these tax credits are a direct reduction of our corporate income tax expense that we incur every year. To the extent we have credits that are in excess of our current taxes, which can definitely be the case, there are limitations on how much they can be utilized. There are other avenues for monetization of these credits, such as outright selling them, which we're doing a little bit of today just to get the wiring working, or there's alternative structures such as tax equity partnerships, other things we're exploring. So we will monetize these one way or the other. You need to think about that this capital investment are assets that will depreciate. There was a question earlier about how do we think about the terminal value of these investments? Well, we think about it as going to zero ultimately. Despite what Hamid described as there are efforts to extend those lives in our underwriting, in that 12%-14%, we presume that these assets have lives, but that goes on in the GAAP accounting as well, because these are not real estate investments, so it doesn't get added back to FFO. Finally, of course, in your modeling, you're gonna fund the capital investment in some way. To help you do all this, you are not meant to read this table, but I'm just sharing with you, in the first quarter, we're gonna add disclosure to our supplemental about all of these energy assets. So you can see what is in place, what are the megawatts. You'll have some rules of thumb on what megawatts are related to revenues, and then also what is the under construction portfolio. Very similar to our development pipeline that you see on the real estate side. What's under construction of these energy assets? How much has been funded? What's the total investment? And we'll likely have information about the investment tax credits and yield expectations as well. There's many breadcrumbs, I think, coming your way between Susan's chart, the chart I had up prior to this, and then the supplemental, for you to begin to underwrite a bit better what this business will look like in the long term. In terms of our overall outlook, I want to flash a few things up here. I just want to start level setting with 2021-2023, the last three years, the growth rate from 2020. Market rent growth averaged 18% across this period. I'd say most of that rent growth, as we just discussed, has not yet come through the P&L. We had average occupancy 97%, cash same store 8.5%, net effective of about 7.5%. That all gave us bottom-line earnings growth of 12.4%, which roughly 1.5 points of that was from M&A, Duke, in this period. So without that M&A, you'd be at, what? 10.9%. In 2024, we describe how we're gonna think about market rent growth. We're gonna leave that to the longer-term averages. So we'll just focus on an occupancy expectation here. We do expect occupancy will normalize, but still a very strong level here at 96.5%-97.5%. And then cash same store from 8%-9% next year, net effective from 7%-8%. Once again, that's factoring in the amortization of the fair value lease adjustments from Duke. So this is the amount that will ultimately translate to earnings, coming down to an 8%-10% growth rate next year, 2024. Across the three years, we'll use Melinda's 4%-6% market rent growth range. I see a lot of people taking pictures right now. You see occupancy continuing to continue to normalize here, and then the same store ranges that we discussed earlier. These are the three-year averages, high and low, 9%-10% on a cash basis, and 7.5%-8.5% net effective, coming down to a 9%-11% CAGR expected over the next three years. I think this is the highest range we've presented at one of these analyst days, and Hamid expects us to outperform this range. I expect us to outperform this range. I can't tell you how just now, but I believe we will. If we wanted to see what would this be without any further rent growth, you can look down at the cash same-store and net effective numbers. They drop by about 50 basis points. Very hard to move this number. What would move it further would be more severe occupancy drops. We can acknowledge that, but if we just say no market rent growth from here, you're gonna get substantially the same-store growth that we've already been expecting, and earnings growth would move similarly. So I think what you're seeing here is very resilient growth, very long-term growth. If we hit the upper end or even the midpoint of this range, we will be talking about 15 years of 10% growth from the time of our merger in 2011, if we extend this out another 3 years. I think that's what driving growth means for this company. With that, I think we are gonna move into Q&A here, with Hamid, Chris, and Dan. Thank you. Yeah. Come in. I'll go here. You go. go. You're in the middle. In the middle. Let's go. By the way, there was no M&A in those numbers. It looks like they're ready to go. ... You don't want. You guys are all sick of hearing me. Whereas we all know. Okay, great. All right, so we have to cut off Q&A at 3:10 P.M., so we'll try to go quick and get some of the people from online, and then in the room. Okay, there's one I missed. It was Camille last, from the last time, and this is going back to the solar business, so I'm gonna start with that. Can you expand on the revenue opportunity for your solar business? Looking at revenues per megawatt, it looks like it's doubling. So what supports the outlook? Well, with scale, we get leverage. Yeah, that's a big piece of it. And, Camille, you know, I think to everybody here, as I just mentioned, I know when you asked that question, we hadn't presented a lot of what we've now had up on the screen. I do really think that you're gonna be able to trace these ratios. What is the investment per megawatt look like? You can do that to trade-- to use Susan's bridge of what is the total investment going to be per megawatt and the total addition of all those megawatts. You can do it now with revenues. You can see how that traces in each of the next three years. So I expect everybody is going to go back and do that, probably have some follow-up questions, which we'll do some handholding as you, you know, get onboarded into this new business. Tim, I'll stick with you. Another person in the room emailed me a similar type of question: Can you make those earnings streams, REIT streams, or as you go from the $37 million in NOI to $800 million in NOI, will the tax bill ramp? And are there tax incentives? Well, there's tax incentives on the investment side of this, so that's clear, and that's probably in the U.S., as I mentioned. And that's just think of that as taking maybe a $100 million investment down to $60 million, right? If we're gonna receive, let's, in that example, $40 million of tax credits, and you get that tax credit immediately. Now, you have a lower basis for the revenue stream, and that's what translates ultimately to this 12%-14% IRR. This is a business that is taxable, yes. Well, hold on, let me expand. There is a portion of it that will go into the FFO. That's the roof rent and the space rent that the energy business pays to the real estate business. That is FFO, that's lease revenue. It's another surface of the building. No problem. We have not gotten into those details in this presentation, but that $800 million, not all of it, is taxable income. As to the extent of the taxable income, of course, we can shield some of it, but at that point, it will. It, my belief is that it's gonna get so big that we're gonna have to spin it off, and I think it will keep going. So my hope is that we'll get into a taxable situation quicker. That just means we have a much more successful business. But the real estate business will keep collecting the rent, so. Great. In the room? Jon Peterson. All right, Tim, so I took a picture. I was one of the people with a camera because I need- Yeah. -to get off the screen. So maybe just if we could stick with the Essentials business, the 9%-11% FFO per share growth. I know you, you gave some other numbers, and we could probably back into it. How many basis points of that is the Essentials business? I think roughly 75-100 basis points of that growth will come from these essential businesses over that 3-year period. I think when we were up here last, Tom was presenting, and he talked about the Essentials business then in 2019, Tom Olinger. We had estimated that it would be about 50 basis points at the time. Now, we know much more about the businesses, and I would highlight, if you think about how much larger the company has become in the interim, not just by right of M&A, but by right of all the significant earnings growth, to have built upon what we thought it was gonna be 4 years ago, is a pretty incredible outcome. Craig? Tim, to go back to the same-store NOI growth for 2024, I noticed it looked like from your 2023 guidance to 2024 from average occupancy, you guys are only coming down about 37.5 basis points, but your same-store NOI growth is coming down north of 125. So is there something we should think about from a cash rent spread from 2023 and 2024 on a blended basis that's bringing that down more than the occupancy would? The difference between the two? Yeah, look, we have braced for a little bit. We have had incredibly low free rent for a while. If you track this in our supplemental, free rent as a percentage of lease value, it's at an all-time low now, I think, below 2%. We are bracing that maybe there will be more free rent, and next year there could be a transition year on free rent, and then we would be at more normalized level, thereafter. So there's a small assumption that I think is broadly the difference between the two. If you look at the three-year, you see a 150 basis point spread. That's pretty much just this amortization, fair value, lease adjustments from Duke. But we just have one transition year that we wanna brace for, in the short term. Tom, here. Thank you. I mean, I know you commented on how hard it is to predict rent growth, totally understand that. But in the chart that Melinda put up before, it looked like the inflection point between rent growth and rent contraction was something in the 6.5% vacancy rate. It looks like you'd be getting up again closer to that end of 2024 into 2025. As we think about that 4%-6% rent growth prediction, how backended is that? Are we looking half or less of that early in this next three-year cycle with more of it coming as the vacancy rate drops? ... Or are there some things that are still sitting out there in the market today that could help carry that through 2024 from a rent growth perspective? I have no idea. Because I'm just not gonna get in the business of predicting rental growth annually or quarterly. I think we made that mistake last year, we're not gonna do it. Because we're always wrong. I mean, why should I tell you something that I know it's gonna be wrong? But pretty confident about three years, and honestly, I think one factor that has not been in Melinda's analysis, which I think is pretty significant, is replacement cost rent growth. And that, I think, will put an arrow up on that rental number. Because nobody. First of all, people can't get the financing to start. Secondly, if they did, the construction cost would be such that it would be prohibitive for them to start development and have a margin and not get those rental costs. So I, unless people are rational, which sometimes they can be, I don't think, I think the arrow is up. George? Just kind of want to expand on that question. The chart that Melinda showed showed a pretty significant V-shaped recovery in demand in the second half of 2024, and I guess, what is that view predicated on? I think that's more a question of the scale of the graph than the sharpness of the V. I think we are thinking about a normalized demand, which I think, Chris, is like mid-200 million sq ft for the markets that we track. And it was in the mid-300s in the good days, maybe even high 300s, and it fell to the low 200s at its lowest point. But it's in that... I would say 2023, my guess, is 200-ish, and next year is probably 250-ish, more back end load. I'm gonna ask one that came in from webcast. Tim, this is for you. I know the 2024 FFO is ex promote, but are you still expecting no promotes in 2024, and a slightly negative promote on an effective basis after prior promote amortization? Yes and yes. We have a couple of promote opportunities. They will be small in any event, by right of just how big the AUM is and, and where, where those vehicles are. So I wouldn't expect anything of size there. And yes, we're bearing the normal amortization as we, as we have been. How to think about that per quarter or for the year? It's $0.02-$0.03 per quarter. We can get a more precise number. Mm-hmm. Jamie? Great, thank you. I noticed you didn't include acquisitions revenue in the actual guidance. A couple questions. So I guess two questions. One is, can you just talk more about the landscape, you know, more leveraged buyers that you've been competing with over the last decade or seem to be out of the market? Do you feel like this is the time to really, you know, put the throttle down and do as much as you possibly can before they come back? And then secondly, as you think about, you know, all the data you gave us on what you're doing on data intelligence and how you're improving all these assets, does it expand the number of portfolios that you would look at today versus, say, three or four years ago before you were improving assets so much? I think most of us would think you've pretty much bought everything there is to buy in the REIT market. But, you know, do all your initiatives maybe expand that, that group? Well, let me be delicate about how I answer it. There is no portfolio that I'm aware of in the domestic public markets that would be interesting to us strategically. And I say that pretty emphatically. It's just... I can't think of one. Are there private portfolios that could be very attractive? Yes, they are. And I think we're going through a generational change, where some of those may result in OP deals or otherwise. And frankly, these advantages that we put up here are evident in the marketplace and are evident to the owners of those private assets as well. It's not just for you guys, but... I think eventually people will realize that making more money is maybe more important than preserving some particular person's job, so I think we'll have opportunities. Chris? Yeah. Chris, I have one for you that's come in through webcast. In 2024, what end markets do you anticipate the weakest and strongest growth? Which markets? End markets. Which number of markets? I would just say what markets I think—what are you looking for? Yeah. So I'd start by saying the global outperformance is clear, particularly in Mexico. Also, we're seeing it in places like Germany and the Netherlands. So there's clear outperformance globally. We have seen a little bit more sameness this year, a little bit more homogenization, and I think certainly by the back half of next year, we'll see some of the coastal markets, if not all the coastal markets, begin to outperform again. Okay. Steve? Up here, third row. You talked on the data center side about, you know, hopefully monetizing those assets. Is, is that more of a one-off basis, or would you look to actually create a fund similar to, you know, PELF in the U.S. and Europe, and kind of keep that as part of the AUM, or would you really look to sell them off holistically? If you took a poll of our executive committee, I would be in the minority, which is that until we can prove that we can really run it more efficiently and really create value, we should sell it to people that can. But if we get really good at operating these things, that's a for now decision, not a forever decision, but in the foreseeable future, I wouldn't start a data center fund. Anthony? Hi. You talked a lot about incremental restrictions on development impacting supply growth going forward. How does that impact your ability to do development? How much does your development rely on incremental entitlement, and how is Prologis better at navigating these issues than other developers out there? Yeah, we talk a lot about the rising barriers to supply, and I challenge everybody to pay attention to planning commission meetings. The reason why is, we're all exposed to this risk as it relates to building new product out. Now, we're very mindful of that as it relates to our $4 billion of raw land that we have on the balance sheet. It seems like a week doesn't go by where there's some new legislation on the docket in California, right? So we quickly take that, and we see how it would impact us. We have built all sorts of internal capabilities. We've really been building. We've been focusing on a government affairs team. Our government affairs team is at the forefront of challenging a lot of these issues, creating partnerships with the communities that would be affected adversely by some of these regulations. So, again, we're all at risk. This is not going away. It's gonna take more resources, more internal capabilities, more cost, and that's where I brought up earlier, too. We just got to be much more patient. Entitlement time frames are going to be expanded. The people that vote on a lot of these issues in these communities don't have backgrounds in law or real estate or whatever it may be. So we're out there trying to educate. We're trying to put our money, or we're trying to, I guess, invest in these communities before we even show up to say that we're looking for a permit. We've got our Community Workforce Initiative. We're five, six years into that. We have other efforts we're doing through ESG as well, just to plant these seeds, and we're not doing it just as Hamid, I've heard him say, to go to heaven, right? We're planting these seeds because we know we want... Well, first of all, we do want to do good things in these markets, but we're also in the business of building more of this product to be where our customers want to be. And it's not gonna get easier. We're very focused on it, and we'll see where we are two, three years from now, what sort of internal capabilities we've built to continue to stay ahead of that. If you think it's hard for us, how hard do you think it is for the merchant developer who builds and sells in that marketplace and moves on? And really, really, I mean, I wasn't kidding about this planning commission meeting. If you guys wanna develop asymmetrical information over your competitors, spend less time with us and spend more time in these planning commission, planning commission meetings instead of property tours. Honestly, I mean, you'll learn. It will open your eyes what kind of discussions happen at 1:00 A.M. in these, in these things. Kevin? Thanks. Just going back to the data center and energy investments. For data centers, you mentioned $78 billion, 20 sites identified. I guess, what other external factors have to firm up for those things to be realizable? You know, for example, rent per kilowatt, does that have to firm up with the demand pretty identified? And similar question for your energy investments on the $6 billion. Does that rely on electricity costs staying where they are? Does it rely on political science to stay steady? Just trying to see what things can change these. Yeah, on the data center side, the first part of your question, there's insatiable demand. The governing factor is the ability to get power. I mean, just the simple availability of power. These things are big refrigerators, and they burn a lot of power, and it's, we're not building new power plants. The grid is undersized. There are all kinds of complications with getting power to these facilities, so that's the real governor. On the other stuff, it's blocking and tackling, and it's more a matter of prioritizing. We can see easily 10, 15, 20 years of projects out there. All of them are doable, and all of them are doable even without significant subsidies. Now, we do get the subsidies, but they're, the price of producing renewable power has really fallen off and is competitive. We need to prioritize them because we can't attack everything all at once. So it's more of our capacity or the industry's capacity to be able to put this on without driving up the price of construction, if you will. Caitlin? Maybe just on the core business and the demand side, you showed the example earlier of that build-to-suit development site, where I think it was Home Depot, Lulu, Vans, and maybe Amazon, just like repeat business. So can you give some more context on, like, to what extent you think your customers are built out, or what gives you confidence that the logistics needs are gonna continue to grow? Well, the second part is easy. We're talking to them every day, and they tell us what their needs are, and they don't usually broadcast that pretty widely, because, for competitive reasons, because a lot of them are looking at the same places to develop, and they don't wanna show their cards. As to what percentage of our pipeline is build-to-suits with those particular customers on a repeat basis, do you have the number on that? I don't have the number on that. It's high. It's not the majority, but it's high. No, it's... Right. Exactly. ... I, if I had to pick a number, I would say 40% are with repeat customers. By the way, Amazon, which gets a lot of attention, which I remind everybody, like we said a year and a half ago, nothing happened other than our stock price going down 30% that day, nothing happened. They're becoming a very insignificant part of that overall picture. It's the other retailers that are trying to catch up. John Kim, up here, second row. Chris, John, yeah. While you were presenting today, the Fed indicated they were going to hold rates steady, they cut it by three times next year. What was used in your forecast as far as interest rate movements? And on the demand side, how sensitive is demand to interest rates? Could there be an acceleration of demand earlier than expected in your projections? On the rate side, we tend to be conservative on rates. We're not following the, the curve fully in terms of SOFR. And then on, on base rates, I probably have base rates on long-term financing, 25, 50 basis points north of what you would see today, so that probably puts a high for 10-year Treasury, for example, on the, on the rate side. I think it's gonna end up really high. Yeah, our assumptions. Yeah, conservative. And then on the demand side, as far as, inventory? Maybe I can talk about this. It is not so much the calculus of is the 10-year today, we'll do the deal at 3.6 and won't do the deal at 3.4. It's more a state of mind of the CEOs that are pulling the trigger on these capacity additions, because it's not the $100 million building that we're building for them, but it usually goes with a network configuration decision that's multiple DCs. And by the time they fit it out, it's multiples of that investment. So oftentimes, you're looking at billion-dollar type investments, and people get nervous when we're in an environment where rates have gone up 350-400 basis points in the period of a year. Never happened before. So I think it will take a little for the psychology to at least normalize, if not get positive. And, and I think a lot of this demand... Remember, this demand is tied to structural growth in e-commerce. E-commerce hasn't stopped growing because of the Fed. That demand is just piling up, and I think it's gonna manifest itself into reversion to the mean when, when people's confidence level reverts. But it's a guess. I don't know. Hamid, I wanna make sure I get this question in from the webcast: How is the energy consumption from data centers aligned with net zero goal? Well, data centers are big consumers of power, no question about it, so it makes our ability to net zero goals more difficult. And I could give you an easy answer and say, "Well, that's one of the reasons we wanna sell them," but that wouldn't be a really good answer, because that means we just get them off our books and somebody else's books. The good news is that data center power is produced generally in a centralized basis, and transportation-driven use, cars, diesel, trucks, that's a really much harder problem to solve because you gotta solve it in a lot of different places. In terms of generation capacity, you can solve it in a centralized basis. So that's one issue. The second issue is that there are some emerging technologies that I referred to this morning, like SMRs, that are not here today, not in the U.S. They are in China, actually. And other innovations that lead to producing power in a modular way, on-site or nearby, in microgrids that sort of skips over the whole problems with the grid and the generation capacity. So those would be the issues. But it makes the job tougher, for sure. I have another one that's been waiting for me to ask, from the webcast. Does Prologis have plans to expand into India? Past tense. Well, I think we mentioned that. We, we expanded, in-- We actually opened up in India. We, meaning AMB, Prologis, both opened up in India in 2007, and concluded that we couldn't do business based on some real transactional experience, which wasn't fun. But we've been going back every couple of years and looking at the market, and we do believe that we can do business today. We think it is an opportunity, and what I'm about, about to say is an editorial, but I really believe that people are a little too enamored with India and a little too bummed out about China. And I think that will revert to a more, even level for, for the two of the two countries. Great. I'm gonna stop the Q&A. Thank you, all. I'm gonna hand it back to Hamid to, to close us out. Well, great. Thank you for sharing the better part of the day with us. I hope, you learned some things. I hope it, Rose, at least gave you a better perspective to some of the newer aspects of our business. I think we laid out some objectives about Prologis being a bit of a different, real estate company, and the, and the metrics really-- I mean, a couple of times my colleagues referred to our peers in the business. I honestly don't think our peers in the business are in the industrial logistics business. I think they're other companies and other kinds of businesses. We hope we won't disappoint you. You know, we've got a lot invested in this track record of getting in front of you and actually talking about pretty specific numbers and projections and all that kind of stuff, and so far, the track record, knock on wood, has been pretty good, and we hope that we'll maintain it. So thank you for coming.