Thank you and good day, everyone. Welcome to the Prologis Fireside Chat. I'm Michael Goldsmith, the U.S. REITs analyst at UBS. I am pleased to introduce Dan Letter, President and CEO of Heron, and Tim Arndt, CFO of Prologis, the world's leading industrial real estate company in the industrial space for the last 40 years. The company owns 1.3 billion sq ft of industrial warehouse property across 20 different countries, and we're truly honored to have them here today. As a reminder, if you have a cell phone, please turn it off. We don't want any disruptions. Before we start, I'm required to read a legal disclaimer. As a research analyst, we are required to provide certain disclosures related to the nature of our own relationship with UBS. Any company in which we express our view on the call today is available at ubs.com/disclosure. Alternatively, please reach out to the provider after the presentation. Dan, Tim, thanks so much for speaking with us today. Maybe for those who are new to the story, can you provide a brief overview of the company and highlight what differentiates Prologis? Yeah, sure. Thank you. You hit upon some of the highlights there. We are the global leader in logistics real estate. We own 1.3 billion sq ft, nearly 6,000 buildings in 20 countries. Those countries are responsible for about 78% of the world's GDP. When you think about Prologis, think about really four businesses that we're in. We're in our operating business. That's the 1.3 billion sq ft of operating assets. We have a development business, a very large development business. We have a 22-23 year history, developed almost $50 billion worth of product at nearly a 30% margin. A significant track record on the development side. We have a $41 billion development opportunity embedded in our land bank, where we own or control 15,000 acres of land globally. That does not include another component that we've recently moved into, which is data centers. With the platform that we have, with the development portfolio that we have, we have a very large data center pipeline, and we see that pipeline in the long term about 10 GW. Today, we have 1.4 GW of power secured. We have another 2 GW of power in its advanced stages. We see, again, a 10-GW pipeline there that would be on top of that $41 billion worth of development opportunity. In addition to our development business and our operating business, we have an asset management business we call Strategic Capital. We have $63 billion of third-party capital that we manage. Interestingly, this business is often overlooked, but actually, the fees from that business actually pay for the overhead of our company. It is a very significant business for us, and that is a growing and exciting business for us. The fourth piece of our business, the fourth leg of the stool, I call it, is what we call Essentials. Essentials is really all things non-real estate. That includes our energy business. We have 1.3 billion sq ft of flat roofs, where we have a very robust solar program on that. By the end of this year, we'll have 1 GW of power that we're generating on site. We also have a mobility business around that and other emerging businesses in the Essentials, where we call it operating essentials, which is all the products our customers use to operate their warehouses. We're at the front end of that, helping them solve their issues as it relates to ramping up and moving out of the buildings. That's a really exciting new business that's gaining a lot of momentum. As we put together the building blocks to have a deeper discussion, maybe you can highlight what are the key drivers of industrial warehouse demand and what makes this a good property type? Yeah, sure. So think about the supply chain, a $2.4 trillion industry, right? Warehouses are essential to the supply chain, and we have the largest, highest-quality portfolio in the world. Beyond just the traditional consumption that drives warehouse demand, there are really two secular drivers that we believe should be very durable to provide inflation-plus growth for our business. The two drivers are e-commerce. When you think about e-commerce, e-commerce actually uses three times the warehouse space as a traditional retailer. We have all sorts of research on that. I recommend you read that. It's on our website. This is something that has held up for the last 10 years, and we see this as a durable tailwind for the industry. On top of that, scarcity. Barriers to entry in this business are getting harder. They've been hard. They've been growing. Those barriers have been growing, and since COVID, it's gotten even more difficult to build an infill portfolio like ours close to the consumption centers around the globe. Maybe we can move to the current demand environment for the industrial market. Can you walk us through how things changed around the leading up to the election, around the election, through the early part of the year until Liberation Day and where it sits right now? Yeah, I can take that, Michael. I might even go a little bit prior to that. If we think about early COVID, the story in logistics was how many of our customers and users wanted to build up resiliency in their supply chain. We saw that occur in our markets. In 2022, 2023, we saw market occupancy grow to 97%. That resiliency was being built. Somewhere in 2023, as the economy got a little closer eye from our customers, they were starting to turn away from that resiliency and start to use much more of that space they had built for their growth. It's a long way of saying we had seen absorption then slow down in the back half of 2023 and into 2024. Utilization has now been rising within our buildings. We're looking for that. That'll spill over into true net absorption out in the marketplace, and we'll see occupancies rise in our markets thereafter. It was more acute leading up to the U.S. election. That was a time where there was much more choice between the candidates and the administration, much different outlooks on tariffs. We did see decision-making begin to slow there, say, in the second and third quarter of 2024. The point of all that is, following the election, because at least there was some visibility and more certainty in what might transpire, we saw a release of leasing activity. In the fourth quarter of last year, we had our all-time highest quarter of signed leasing at 61 million sq ft. The first quarter of this year was a similar number. It kind of just tells a story of how uncertainty can weigh on things. Now we have a situation that, following what was a really strong first quarter for us and felt like we were on our way towards the inflection that we were looking for in the market, a new source of uncertainty emerged with the round of tariffs that we saw on April 2. Today, I think the good news of that is we see a lot of interest. Our proposal activity is strong, normal to strong, I would call it. That is how many people are interested in leasing space. It is just the decision-making aspect of it. Coming out the other end of that leasing pipeline process has been slower, and we see that as probably more related to those customers of ours. We estimate this is around 15% of our use that are much more tied to global trade versus regional consumption. We are pleased. We've been describing the last couple of days that we're actually relatively pleased with the level of activity we see out there. We've been calling it better than feared, but things are definitely slow right now, awaiting some resolution on tariffs. With the dynamics around tariffs evolving, based on your conversation with tenants, what are they looking for to translate that underlying demand into signed leases? Interesting, just piling on Tim's comments here. It's not a uniform story, actually. We're still leasing quite a bit of space, actually. It's good to see the activity. The leasing that's getting done, it's really categories like e-commerce or those that source domestically that are not beholden to global trade. You see that in food and beverage. You see that in just everyday household goods, healthcare products, and what have you. We're seeing that in both leasing and actually build-to-suit demand this year has been really strong so far this year. That's really across the U.S., Europe, and Latin America, actually. Many others are taking this wait-and-see approach. They're just looking for more clarity. They're not necessarily caring about what that tariff number is. They just need to know when we're going to have some certainty. The good news is that the leasing pipeline continues to grow, and we see that pent-up demand. With the supply backdrop where it is, we think that's a good situation for coming out of this short-term noise. You have a global portfolio. How does that serve you during times of uncertainty? Can you walk through the health of some of the markets? Yeah, I can probably take that from two angles, Michael. The first would just be thinking about the stock price, what's going on. I think supply chain-related stocks, as a result of all the tariff noise, have understandably reacted. I think, on one aspect, those that are logistics companies, warehousing companies, where we have five to 10-year leases. We have a strong embedded lease mark-to-market. The volatility that we can wind up seeing in our annual earnings, our dividend growth, et cetera, is actually very low as compared to other components of the supply chain that might have more volatile daily kind of pricing. We have been drawing that out for investors to just take note of because I think we have a lot within our portfolio that's going to actually sustain stable earnings and growth clearly to the other side of all of this tariff resolution. That's for one. For Prologis uniquely, you mentioned a global portfolio. I think it is something that is often underappreciated and lost by some investors in evaluating different logistics players because we have just a much more diversified table of options between markets and business lines for the earnings and the growth. We have leading results in all that regard, but on a more diversified base. That is what the global platform affords us. Supply growth has come down, which should help some of the dynamics. At the same time, you cut back on your development expectations for 2025. What would get you more excited about development here? This is a good place to draw on. I would say replacement cost rents is one thing that really guides when you might expect to see more development activity. We think about three rents in our business. There is the in-place rent of our portfolio. You can open up our supplemental and observe that number. We very frequently tell you and investors what the lease mark-to-market is for one, which is just a measure of how much higher our market rents than those in-place rents today. For logistics, and this goes back to my prior comment, in our portfolio, it is about 25% higher. That is a lot of embedded growth, very visible in our portfolio. A third measure of rent is then replacement cost rents. Beyond what is present and available in the market right now, given the cost of land and what it takes to build a building in our markets, what yield, what rent would a developer require to build that next building? That rent is another 20% higher than market. If you put all that together, the total distance between what we have in place and that replacement cost rent is about 50%. That is a lot of visible embedded growth ahead of us. The problem is there is that gap. Dan mentioned a $41 billion investment opportunity in our land bank, and yet last year we built about $1.5 billion of logistics. This year is about the same. That's a real proof point on, yeah, I guess rents must not be sufficient that somebody like Prologis, who's capable of building maybe $5 billion-$7 billion a year, is doing so little. The rents just aren't there. It doesn't sound like good news, but what it means from a market force dynamic is that as we have a little bit more occupancy built in the markets and there's some scarcity and development is going to be compelled for that reason, that's going to take hold, and we'll see market rents get closer to those replacement cost rents. Can you comment on what you're seeing in the transaction market right now and how pricing is behaving with volatile interest rates? Yeah, sure. I would say the market, the transaction market has been surprisingly resilient even over the last couple of months since April 2. We've looked at about 200 deals recently, and we've only seen about 20 of those deals, about 10% of them, drop out for whatever reason may be. Maybe there's a vacancy issue or just the quality of the real estate is not where the interest is right now. If you're right down the fairway, you get a pretty deep bid sheet. Sweet spot, $50 million - $150 million of one-off assets or maybe portfolios in the $300 million range are getting a lot of activity. Anything outside of that, it's pretty quiet, but been really, really surprised to see how durable the market's been. After first quarter earnings, and Tim started to talk about this a little bit, but you reaffirmed your 2025 earnings guidance. Can you talk on some of the factors that give you that confidence that earnings can remain stable this year despite kind of all this noise and volatility? Yeah, I think it starts with our expectations on the year. Just going back to January, we had already expected a little bit of a choppier year. We saw demand recovering and an inflection point in the year. If you unpack our average occupancy guidance, for example, many investors and analysts understood that Prologis expects occupancies to dip anyway. Because we had that expectation, we were set up for the year. We were traveling through the first quarter with a good pace that we actually thought that we would upgrade some of that operating guidance, likely the earnings guidance, as Liberation Day, as we will call it, kind of set in. We took a look at everything. There is so much uncertainty, it was hard to establish a new base case of what those earnings would be. Instead, many of you know what we chose to do was just look at whether the range, how it would react in a stress case. We tried to go out and we built a super crisis, if you will, by just examining all the past points of economic stress and how were logistics markets impacted. The worst of those turned out to be the GFC. We kind of modeled, well, what were those impacts? How much occupancy was lost? How much bad debt did we incur? Took that into our forecast, found that it was all absorbed between the strong first quarter that we had already had and then our expectations for the year that the ranges were probably fine where they were. We left the range. As I mentioned today, we would say so far better than feared. Excellent. Prologis has been opportunistic around the data center space. I know Dan's super excited about this. What has been your progress in the business? What do you see as the long-term strategy related to data centers? Yeah, sure. I brought this up a little bit on the front end. Look at the raw material we're starting with, nearly 6,000 buildings, 15,000 acres worth of land that we own at logistics basis, right? With the insatiable demand we've seen in data centers, we're always going to look for the highest value for any of our real estate. We've had some recent success converting logistics buildings to data centers. We're actually converting some of the land that we intended to build logistics on, moved to data centers, just much higher value. That has been pretty exciting. We've got great customer relationships there. We have deep customer relationships with four or five hyperscalers. We've got deals going with a number of them around the world. If you think about the tier one markets in the U.S. or the FLAP D markets in Europe, these are the markets in which we own our portfolio. This strategy for us long-term is it could evolve, but as it is right now, we're building these, we're stabilizing them, and we're selling them. We're taking those profits and we're putting it back into our logistics business. Right now, we have 1.4 GW of power that's secured. We're under construction, 2 GW right behind it. That pipeline, as I mentioned earlier, is 10 GW. This is a real big business for us. A few people have mentioned to us in the last couple of days, we don't talk about it enough. We don't highlight how big of an opportunity that is. It puts us as one of the biggest players in this space globally. That's earnings neutral, right? It's limited impact on earnings, but you are generating capital, which could then be invested in other ways. It's immediately earnings neutral, but you'll see it when we reinvest. When you invest into. Putting profits into the business, yeah. Got it. On the essentials business, that's a key differentiator for tenants. Can you explain what you're doing here? How does this drive customer loyalty and how you can get paid for that in the process? Yeah, there's really three broad areas within the Essentials business. One would be the solar business that Dan already described. That's a profitable capital investment business for us on its own, but obviously providing an avenue to green energy for our customers, which, despite what we might all be thinking as we read the headlines, is still very much in demand, especially in places like Europe, et cetera. That's a strong business on its own. We provide that offering. Mobility, EV charging is another aspect of it. The third is what we just call the operating essentials component, which is a different take. If you think about Dan mentioned $2.4 trillion of total spend on the supply chain, warehouse rent is about 3%-5% of that number. There's a lot of spend, much of it we will never have access to. That's acknowledged. It's labor, it's transportation, it's other things. There are very regular investments that our customers make as they move in and even out of our facilities and putting in racking, forklifts, security, Wi-Fi equipment, all kinds of things that we've recognized on our scale as we're just a large procurer of these kinds of materials on our own as a developer that we can aim some of this purchasing power and help our customers at the same time. The vision here is to create a strong, profitable business on its own. It is EBITDA positive. It's a contributor. It's small in scale right now. At worst, I think we kind of look at it like if it is something that just deepens the hook with our customers and makes us more of a landlord of choice, that's a great outcome as well. I think it's early innings on all three of the businesses, but really going to continue to differentiate us over time. Dan, as you transition into the CEO role next year, what is your vision for the company? You have heard in these first six, seven questions, we have very ambitious plans at Prologis. We have a very sound strategy. Many of these strategies, we are barely scratching the surface. This Essentials business that Tim just mentioned, strategic capital has a lot of exciting opportunity. Of course, growing our operating business and executing our development platform. When it comes down to it, my focus is on execution. My top three priorities are going to be execution, execution, execution. We have the right team in place and I am really excited to see where we can take these businesses. It is not something that there is a playbook for. Nobody else in the industry is doing everything that we are doing. That is where you are going to get that hyper focus. Maybe the other priority that I have is to continue to grow and ensure the culture around innovation at this company flourishes. It has been there since I started here over 21 years ago. You can very well bet that that will continue as a very key component of our strategy. I have a final wrap-up question, but I think we can take a couple of questions from the audience. Yes. With the Essentials business, it seems like you all prioritize vertical integration in a lot of areas where you're part of the logistics solution that you provide. With the data center aspect being used as a cash generator for the logistics part, are you all considering data centers as a way to create more services for your logistics clients and use it as a vertical instead of just using it as a cash cow to push into the logistics aspect of your business? I'll just repeat the question in case anyone didn't hear, but it was about, is data centers, can that provide value to your customers similar to some of the other verticals in the essentials business? I'd say quickly, I'm jotting that down as the next idea we can talk about maybe this time next year. It's creative, but we haven't gone down that path at this point. We're trying to stick to our knitting. We have a great development team. We've been building data center capabilities to grow the development business on the data center front. Maybe we'll learn more and we'll dive into it if we think that we have a right to be in that space. Yeah. The only thing I might build on that we'd try at times would just be getting close. It is a relationship like Amazon. It's not exactly the thrust of your question there, but obviously our largest customer, but it can be a very large customer, hopefully for us here on the data center side. There is going to be some synergies and relationships like that. Two years ago, did you do a CTEX focus rather than just a domestic exposure in that type of spend? It looks like we might be in a period when Zola might be a beach camps long-term for a little while. Is that in any way affecting your strategic view about the business growth over the next two years? I would say no. If I take your question, and the question was sort of as how might FX almost impact where you want to be. We source capital for our non-U.S. regions in each jurisdiction, both debt and equity. I think you made reference to the fact that we have used a lot of non-dollar debt overseas to insulate the parent company from volatility and FX. I hope some of you who follow us for years have noticed that. We do not get knocked around in our earnings or our stock price as the dollar is moving up and down because of that insulation. Our investment decisions are based more on, let's just say, the left side of the balance sheet. What is the asset? What is the market? What is our strategy here? Then we capitalize it as FX neutral as possible. Yeah. Yeah. You mentioned strategic capital being an increasingly important part of the business. I think about the broader real estate landscape. We've seen a ton of investment manager consolidation in the last 24 months. Just thinking about GLP, ESR, has Prologis considered participating in some of that consolidation through that strategic capital business? I have one thought on that, maybe Dan will pile on. Look, a lot of that play, as I've sat and watched it from a distance, is there's a lot of multiples arbitrage going on in that business. It's a lot about AUM growth. I don't want to say at any cost, but it's gobbling up a lot of AUM, which is almost antithetical to what Prologis does. We care very deeply about the assets that we're owning. We want to own them for 40, 50 years for our customers, for what's the best logistics portfolio. We see those things. Sometimes they're shown to us for consideration, but it's not really consistent with our thesis. Maybe a good one to wrap up on is just if you had any closing remarks that you'd like investors to walk away from this presentation with. Sure. These are uncertain times. A lot of noise coming out of D.C. every minute these days. We look at this as an opportunity for Prologis. We're built for this. We have a fortress balance sheet. We have all these growth opportunities. We're very much on the offense right now. We just talked about our build-to-suit business. On the logistics side, our data center business, our energy business, essentials, really excited about those opportunities right now. If you can look past this short-term noise, the fundamentals in our business are great. We have this pent-up leasing pipeline. The supply backdrop, as we've talked about, is in good shape. We think if you can see through this short-term, coming out the other side, it's going to be very good for our business. With that, let's wrap it up. Thank you very much, Dan.