Greetings and welcome to the Prologis Second Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Abhishek Castilla, Director of Investor Relations. Thank you. You may begin. Thanks, Molly, and good morning, everyone. Welcome to our Second Quarter 2025 Earnings Conference Call. The supplemental document is available on our website at prologis.com under Investor Relations. I'd like to state that this conference call will contain forward-looking statements under federal securities laws. These statements are based on current expectations, estimates, and projections about the market and the industry in which Prologis operates, as well as management's beliefs and assumptions. Forward-looking statements are not guarantees of performance, and actual operating results may be affected by a variety of factors. For a list of those factors, please refer to the forward-looking statement notice in our 10-K or other SEC filings. Additionally, our second quarter earnings press release and supplemental do contain financial measures such as FFO and EBITDA that are non-GAAP. In accordance with Reg G, we have provided reconciliation to those measures. I'd like to welcome Tim Arndt, our CFO, who will cover results, real-time market conditions, and guidance. Hamid Moghadam, our CEO, Dan Letter, President, and Chris Caton, Managing Director, are also with us today. With that, I will hand the call over to Tim. Thanks, Abhishek. Good morning, everybody, and thank you for joining our call. The second quarter exceeded our expectations, reflecting the strength and versatility of our team and portfolio in a challenging environment. Against a backdrop of subdued net absorption and a modest rise in market vacancy, we outperformed our occupancy expectations and the markets, delivered meaningful rent change and same-store growth, and achieved another strong quarter in build-to-suit activity, including continued momentum in our data center business. If we were to sum up the mindset of many of our customers, particularly our largest ones, we'd say that they are increasingly looking past the headlines in what has been an evolution of their thinking over the last few months as those headlines constantly change. While net absorption has been muted, new leasing is occurring, and customer interest is promising as reflected in the aggregate size of our leasing pipeline. That same momentum is also apparent in our build-to-suit activity, which continues to grow and is well-diversified across geographies and customer segments. At the same time, the supply pipeline is depleting, and development starts in our markets remain low, setting the stage for favorable conditions as demand improves. This, together with the over 20% spread we see between market and replacement cost rents, are important precursors to the next cycle of market rent growth. Turning to our results, core FFO, including net promote income, was $1.46 per share, and excluding net promotes was $1.47 per share, each ahead of our forecast. Occupancy ended the quarter at 95.1%, down just 10 basis points sequentially, and further widening our outperformance to the market, now at 290 basis points. We continue to unlock our lease mark to market by delivering strong rent change across the global portfolio. During the quarter, we monetized an additional $75 million of NOI through rent change, which was 53% on a net effective basis and 35% on cash. The net of this puts our lease mark to market at 22% at quarter end. Net effective and cash same-store growth during the quarter were 4.8% and 4.9%, respectively. As a reminder, fair value lease adjustments, which are non-cash and driven from the purchase accounting related to our 2022 and 2023 M&A, continue to drag our net effective same-store and bottom line earnings growth by approximately 100 basis points. In terms of capital deployment, we started over $900 million in new development starts, nearly 65% of which was build-to-suit activity across seven additional projects in both the U.S. and Europe. Beyond this activity, we have signed agreements for an additional three build-to-suits post-quarter end. Our build-to-suit starts for the first half total $1.1 billion, which is the largest start to a year that we have ever had. The strong demand by some of our biggest customers underscores our observation that many of them are moving beyond the noise and making significant capital investments into their business. $300 million of the starts relate to an incremental investment in our ongoing data center development in Austin, Texas, with a top hyperscaler. In addition to our growing development volume, we continue to procure power, adding another 200 MW to our advanced stages category, bringing that total to 2.2 GW. As a reminder, we have an additional 1.1 GW fully secured, plus 300 MW currently under construction. Finally, in our energy business, we continue to make steady progress toward our goal of 1 GW of solar production and storage by year-end, with nearly 1.1 GW either in operation or under development today. While recent legislative changes in the U.S. will reduce the incentives for new projects over time, we expect the consequential upward pressure on energy prices to uphold returns. On a go-forward basis, we still see meaningful opportunity in the U.S. and remain committed to and are excited about the broader global potential of our distributed energy platform, which is expanding in its capabilities and offerings. On the balance sheet, we close on $5.8 billion in financing activity, which included the $3 billion recast of one of our three Prologis Global Credit Lines at a reduced spread. This facility contributes to the over $7 billion of liquidity we held at quarter end. We also expanded our commercial paper program this quarter, adding a EUR 1 billion facility, which should generate an additional 40-60 basis points of savings in line with our experience in the U.S. Our strategic capital business saw net outflows in our open-ended vehicles during the quarter of approximately $300 million. Beyond our existing vehicles, our teams are at work developing new offerings more representative of the breadth of our activities, which we look forward to reporting further on in coming quarters. Let me now spend a few moments describing our markets and experience with customers this quarter. To level set, market rents declined approximately 1.4% during the quarter, and values were essentially flat. In the U.S., net absorption was subdued at 28 million sq ft, and market vacancy ticked up 10 basis points to 7.4%. Operationally, we continue to see customers recalibrating, not retreating, and remaining active in signing leases, even if at a slower pace. While the full quarter of activity was modestly below normal, leasing velocity did accelerate over the months of the quarter, with June indeed the strongest. As has been the case for some time, renewal activity has been very healthy while new leasing remained slow. We're not surprised by the dynamic given the larger investment and more deliberate nature of new leasing, but we're encouraged by a series of data points across our proprietary metrics and customer dialogue, which suggests that demand is piling up and could improve greatly with some clarity out of policy and the effect it's having on the backdrop. Of those data points, first would be from the sentiment implied by our leasing pipeline, which stands at 130 million sq ft, reaching historically high levels in recent weeks. We see it as reflecting both a significant interest and need for space, as well as a lengthening of the time and decision-making, which we expect to see show up in future quarters through longer gestation timing as deals get made. It's also clear that utilization, both of gray space and within 3PL capacity, is rising. Our build-to-suit pipeline remains full, with over 30 projects representing more than 25 million sq ft in active dialogue. This level of activity underscores how larger customers, with the resources and scale to think long-term, are being strategic, consolidating operations, and positioning for growth. Finally, our broader customer dialogue simply reflects an emerging bias towards action, summarized well by one prominent user describing the exhaustion of adapting to shifting tariffs and concluded that they need to just run their business and will, "Figure out the tariff details when there is some clarity." All told, while we expect conditions to remain choppy over the next few quarters, the market is holding up reasonably well. Looking ahead, consistent policy and settled trade arrangements will certainly help and be a key determinant of the overall pace of net absorption. Turning to guidance, in contrast to the uncertainty we faced in early April, we now see enough stability in the balance of the year to narrow and increase our guidance. Average occupancy at our share will range between 94.75% and 94.25%. Rent change should remain strong through the second half and average in the low to mid-50s for the full year. Same-store NOI growth will range between three and three-quarters and 4 and a quarter% on a net effective basis and 4 and a quarter-4 and three-quarters% on a cash basis. We are maintaining our G&A guidance of $450 million - $470 million and increasing our strategic capital revenue guidance to a range of $570 million - $590 million. In capital deployment, we are largely holding the range for net sources and uses in the year, but increasing guidance within the offsetting categories. Most notably, we are increasing development starts at our share to a new range of $2.25 billion - $2.75 billion, which is reflective of the additional data center start not previously guided, as well as improved visibility in logistics starts due largely to our build-to-suit success. We expect to keep up a historically higher mix of build-to-suits over the balance of the year. As a reminder, future data center starts are not a component of this guidance. We are also increasing our combined disposition and contribution guidance to a range of $1 billion - $1.75 billion, again at our share. In total, our GAAP earnings guidance calls for a range of $3 - $3.15 per share. Core FFO, including net promote expense, will range between $5.75 and $5.80 per share, while Core FFO, excluding net promote expense, will range between $5.80 and $5.85 per share, a $0.045 increase from our prior guidance. The higher midpoint is predominantly due to higher NOI and strategic capital revenues. To close, we're encouraged by the steadiness of the quarter and the leading action taken by many of our customers who continue to build out their supply chains amid ongoing macro uncertainty. While headlines remain noisy, the underlying activity in our portfolio reflects a market that is active and moving forward. In that context, well-located logistics real estate has proved to be a strategic asset, especially on our platform. As broader economic uncertainty begins to clear, we remain confident in the long-term trends driving our business. Our strategy is grounded in serving customers at the center of consumption, the constant in all of this, and our team continues to execute at a very high level. With that, I will turn the call over to the operator for your questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing these star keys. To allow everyone a chance to ask a question, we ask all participants in the queue to ask only one question. One moment, please, while we pull for questions. Our first question comes from the line of Ronald Camden with Morgan Stanley. Please proceed with your question. Great. Congrats on a strong quarter. I think the release noted that the pipeline, the leasing pipeline, had reached historically high levels. So I'd just love to hear a little bit more about. Just what the post-liberation day impact has been, sort of any categories to call out. If you could tie that commentary to the decision to increase development starts and acquisitions, how you're feeling about sort of the outlook. Thanks. The pipeline's promising, even amid some of the subdued decision-making, like Tim described. The pipeline's up 19% year on year. One of the hallmarks here is diversity. We see good balance and good growth across different deal stages. That's both early proposals as well as more mature negotiations. We also see good balance and growth across different deal types. That's both renewal and new. We also see good diversity across different customer industries. Where is some of the differentiation? One of the main hallmarks of this growth is concentrated growth above 100,000 sq ft. There are more larger customers in the pipeline. Tim also talked about 3PLs engaging in a greater way. They are working through their spare capacity and in some leading markets really beginning to need more space. Ron, on the development start front, that $1 billion increase includes the $300 million data center start that Tim mentioned in the script, and the remainder is about half build-to-suit and half spec. We have a very strong build-to-suit pipeline right now we are working through. It is much larger than it has been over the last couple of years. You heard we had a pretty strong signing. Actually, we had a record number and amount of signings there of $1.1 billion in the first half so far and a handful so far already before the call here in July. Overall, we have $41 billion of opportunity in our land bank. Most of the spec you're going to see is going to be outside of the U.S. That's Japan, India, Brazil, Latin America, or excuse me, Mexico. In the U.S., you will see maybe a couple of starts in the Southeast or maybe infill coastal markets. Thank you. Our next question comes from the line of Steve Sackler with Evercore ISI. Please proceed with your question. Yeah, thanks. Good morning. Tim or Hamid, I don't know if you could provide just maybe a little bit more color on sort of the cadence of leasing. I realize April was kind of a dark time when you guys reported Q1, but could you maybe give us a sense of just the pace of leasing, kind of just trying to think kind of one Q into then kind of the April, May, June, and what did that exit velocity look like in June heading into July? Steve, this is Dan. I'll start and maybe get some color from one of the other guys here. Take you back to 90 days ago. On the call, we actually talked about volume being 20% down from normal. This was two weeks after April 2nd and the tariff surprises. Call that maximum uncertainty time. We actually quoted that number to highlight how much volume was actually happening despite the tariff surprises. Unfortunately, I think that did create some confusion. That's not a stat that we're going to continue to give. Looking at too short of a duration over a quarter is not really indicative of a trend. What we saw happen throughout the rest of the quarter was acceleration through May and June, and the quarter ended up only down about 10% from normal. Just in terms of what we're seeing over the last couple of weeks, Tim shared the color in his remarks. We really try to zoom out and look at a wider range of metrics. It is lease signings, like you asked. It's also the pipeline, like we just covered. It's the build-to-suit dialogues. It's the customer engagement. We really take a full-picture approach to be sure we're giving you a complete update. Thank you. Our next question comes from the line of Caitlin Burrows with Goldman Sachs. Please proceed with your question. Hi, everyone. I guess I was wondering if you could give some more details on the guidance. So Tim, you mentioned that higher NOI and strategic capital drove the midpoint FFO guidance increase. But I guess with occupancy expectations unchanged despite the stronger 2Q, it also seems like pricing is kind of in line with expectations. So any more details on that, kind of what's better than previously expected? Sure. I mean, the environment, for one, has just calmed pretty significantly since April. We also have a shorter number of months left in the year, obviously. So we have improved visibility that gives us a lot of confidence in the guidance, both the increase and also reflected in the narrowing. I referred to some outperformance in the quarter. If you recall back to April, we also cited outperformance there, even though we opted to leave guidance in place at that time given the headline. A few of those pennies were permanent to the year, is the point there. The remainder coming out of NOI is reflected in same store despite the same midpoint, which is really, once again, narrowing of the range, expressing more confidence. Within that 50 basis point range, our belief is that we're just going to land at the stronger end of it by the end of the year. Thank you. Our next question comes from the line of Michael Goldsmith with UBS. Please proceed with your question. Good afternoon. Thanks a lot for taking my question. Customer dialogue and data points seem to be supportive of demand building, but you also said that you expect conditions to remain choppy over the next few quarters. How are you thinking about the timing of the growing pipeline translating to signed leases? Is there anything in particular that it would take to kind of convert this pipeline into signed leases? Thank you. Hi, it's Chris. I'll jump in, and some of the other guys may as well. Look, decision-making remains deliberate. We see the pipeline building. Tim described a dynamic of the deals beginning to pile up. When we speak with customers, this is really about clarity on the macro front. When we look at the headlines, when we look at economist forecasts, there's caution in the back half of the year. We will see this play out over the balance of the year. That is what we are really paying attention to. Look, we have been in a condition of constant uncertainty. I know that is a favorite word in the financial industry, but having done this for a long time. Last year, it was all about Ukraine and whether the Fed was going to cost, I guess going back 18 months. That was the uncertainty. When the election was settled, there was a lot of excitement about pro-business policies and the like. Basically, you had April 2nd and Liberation Day. I mean, it is very, very difficult to predict anything for any length of time. With every passing day, there is more water building up behind the dam. We are seeing evidence of this with the largest customers. They just can't basically go to sleep without taking more space. So that's what you're seeing is their ability to defer is getting reduced with every passing day. Thank you. Our next question comes from the line of Tom Catherwood with BTIG. Please proceed with your question. Thank you. And good afternoon, everybody. Maybe Tim or Chris, hoping you could help us square up the leading indicators. Space utilization is moving higher and proposals are up. Lease gestation is down. But the IBI activity index dropped to the lowest level since the first quarter of 2023. What is driving the bifurcation between these metrics and kind of how should we think of them as an indicator going forward? Yeah, you do need to take a sort of full-picture view of all these different metrics. And given the volatility Hamid just described, they're each going to depict different things. Also, please keep in mind, some are retrospective and some are prospective. You ask after some of our customer survey data that you see in the supplemental there, I think they're doing a good job of describing the landscape. For example, utilization that built in the quarter, 85%, up 50 basis points, that's a meaningful increase and is approaching a two-year trend. This is reflecting both growth in the supply chain as well as some inventory build. At the same time, the IBI activity index measures that velocity, the product moving out. That has moved lower, and it's consistent with the softer economic climate, this uncertainty. The third point, which we've already covered on the call, is simply the pipeline building and customers measuring how they make decisions in this landscape. Thank you. Our next question comes from the line of Craig Mailman with Citi. Please proceed with your question. Hey, good afternoon. I just want to kind of circle back, Hamid, your comment and just some of the other comments on the call about conversations with tenants where the water's building, the dam is getting more full. On the one hand, you have the tariff uncertainty. On the other hand, you had the OBBB bill pass, which is stimulative. You have some accelerated depreciation there, right? You have some offsetting forces. Your leasing pipelines are at the highest rate it's ever been. At what point do you think a larger percentage of tenants just become comfortable being uncomfortable with the uncertainty and have to run their business? Really, that log jam starts to break? I'm just trying to get a sense as we head into the back half of this year and into next year, right. How this could trend, particularly from a net absorption perspective, where even with things kind of being uncertain and choppy, you guys held average occupancy steady. You're through part of your expiration schedule. It sounds like on the build-to-suit side, the new leasing side, you're starting to get some momentum. I don't want it sounds like you guys are trying to maintain some discipline around setting expectations. If you had to kind of couch it on the high and the low end of your probabilities of things really accelerating here in the second half into first half of next year, kind of where do you peg that given all the conversations that you're having with tenants? I think I understand the question. Basically, I'll speak for myself. I don't really care about the next quarter or the following quarter because it's so dependent on what comes out of Washington. People make these decisions in the short term based on emotion. What I do know is that we have a very significant mark-to-market. I know that there is a shortage of labor coming up in the construction industry because of the immigration policies. I know the government is spending a lot of money on chip plants, putting extra pressure on demand for construction. All this data center stuff, and all this stimulus that's going to come in from ITCs. To make a long story short, I'm very comfortable when we take two, three, four years out, given the escalation in replacement costs. Rates are not going to go through the floor. Rates times replacement costs gives you the. Rents that you expect in the long term. I do not know what the path to that will be over the next quarter or two. It is just not the way we run our business. Maybe you guys are giving us more credit about having that clarity than we deserve. I feel great about the business. I think every bit of business that is delayed is going to translate to more business in the future. One other concept I will throw out at you, and those of you who have been listening to us for probably too long have heard this. In good markets, people are 10-15% more optimistic. In markets that are choppy or risky, they are 10-15% more pessimistic. That is a 30% swing. That immediately goes the other direction when two tenants compete for the same space and one of them loses out and then loses out again. FOMO is a big factor about people's confidence to move on. Generally, I've found that people take more comfort in being among other people making the same sort of decision than being somewhat contrary. Equally long answer to your question, but there you have it. Thank you. Our next question comes from the line of Ki Bin Kim with Truist Securities. Please proceed with your question. Thank you. Good morning. In regards to the 136 million sq ft of leasing proposals, I was wondering if you could provide some more color around it. For example, how much of that is renewal versus net incremental demand? Historically, what has your conversion rate been in this kind of proposal basket? Ultimately, I'm just trying to gauge, going back to the building, level of water behind the dam, how much that could actually net impact per lot just going forward. Let me give you a perspective, and then the other guys can throw in the more specifics around it. I think of leasing as having three components. One is renewal leasing, and that tends to be very, very strong in times of higher uncertainty because the best, easiest decision to do is to make do with what you have and just kick the can down the road until you really have to make a decision. That part of our business is much stronger than normal. There is new leasing, which is somebody all of a sudden deciding that they need more space because they did not think about it two years earlier to go after a build-to-suit. That business is slower than normal, for sure, because if every time you move, you have to buy new equipment, new racking, refitting your space, probably hiring some new employees. It is a very expensive proposition. In a choppy environment, you are going to do less of that than just kicking the can down the road. There is finally build-to-suit activity, which, I am going to go on a limb and say this is the strongest it has been in my career. People who can plan in the long term are also, I think, thinking the way I'm thinking about it, which is they're looking out a couple of years by the time these projects are fully operational. They look at the factors driving the long-term health of their business, like e-commerce and things like that, and they're feeling good about it. The only part of our business that's slow is leasing of spec space. Hey, it's Chris. I'll just jump in on some of the details. I'd also point you to my earlier remarks on the pipeline, talking about it's up 19%, and there's really good balance. The growth rates are sort of similar across multiple of these metrics, whether it's new versus renew, whether it's early proposals versus mature negotiations. I talked about size being a difference. That's one area where larger deals just take longer to come together. You're going to see that represent an outsized share. That does not take anything away from the fact that the larger scale requirements are the things that are really lifting the market today. The build-to-suit market. Yes. Thank you. Our next question comes from the line of Vikram Malhotra with Mizuho. Please proceed with your question. Thanks for taking the question. Good afternoon. Maybe just for me, the question just stepping back. I understand sort of quarter-to-quarter stuff, but just looking out sort of two, three years. With, call it, 7.5% vacancy, the choppiness you've referenced. In this environment, what scenario do you see sort of rents inflecting or real rent growth? What do you think sort of a normalized net absorption is for the industry? I'm just sort of wondering, given we've seen a massive increase, I should say, a decent tick up in vacancy. I'm just trying to whether the inflection is this month or next year. I'm just trying to figure out how you think about the next two, three years, given where vacancy is, and do we actually see pricing power? Yeah. I think vacancy rate of 7.4% is pretty close to where you're going to see the peak in this cycle. Absent some calamity. We may have another two or three quarters of bouncing around 10 basis points here or there. I think you're essentially most of the way to where you're going to end up between the high threes where the trough was and the mid-sevens, let's call it, where I think this is going to end up. As to when you really get pricing power is where that number comes down to around 5%. That's historically been the magic number. By the way, 7.4% is almost the median vacancy rate since 2000. Just think about this. Putting aside COVID years with supercharged, what should we call it, e-commerce absorption, 7.4% is a norm in this business, pretty much. In fact, to be precise, 44% of the time, the vacancy rate in the last 25 years has exceeded 7.4%. We are just spoiled by having come out of an environment where we've seen high 3% vacancy rates, and by the way, high 3% unemployment rates. Now we're kind of really getting wigged out because unemployment is in the low fours and vacancy rates are in the sevens. This is pretty normal. I think when we come down to 5%. We're going to get really good pricing power, above inflationary pricing power. I mean, Chris will walk you through our best guess, but I kind of think of it as a business that grows at 1.5 - 2%. In a normal economy, when you do not have all kinds of noise coming out of different places, it should take a year or two for it to normalize to 5%, which is the equilibrium vacancy rate, because we can predict deliveries pretty closely. Really, the only variable is demand. I do not know exactly what the demand numbers are going to be, but at some point, they are going to center around the norm, which is about 250 million sq ft. They are not going to go to 375 million where it was during COVID because that was driven by a one-time, really big shift. I think you heard me talk about it at that time. We got six years of growth in six months. We're still growing off of those higher numbers, but I can't think of another situation where we're going to get six years of growth in six months. Mid-200s. A year or two, you're going to get pricing power. And when you do, it's going to be really above inflation in the short term because the pipeline hasn't started. Construction costs have been going nuts, and I think they're going to continue to go up. There you have it. Thank you. Our next question comes from the line of Nick Fillman with Baird. Please proceed with your question. Hey, good morning out there. Maybe just Tim, question on bad debt. I think in June, you referenced that that was trending better than expectations on that end, but maybe just an update here through 2Q, just kind of with the macro uncertainty. Anything you're seeing, whether it be in the space size or the type of business where tenants are having a little bit of credit issues. Thanks. Yeah. That was relatively in line with the first quarter. It is elevated. We're probably bouncing between 35-40 basis points where I think our history is closer to 20 or even a little below. The other reference point on all that is the height that we've seen during the GFC, which was up into the 50s. I'll expect something on the order of 40 over the balance of the year as we still watch tenant health, which we are keeping a very close eye on. With regard to particular industries, I mean, nothing that I would really build a thesis around. It's some larger customers at times. I feel like there's a little bit of a balance to Southern California, a little bit of a balance to larger users, home-oriented, but not enough to really break out into its own category. I think the strong retailers are on the offensive. I think probably in the retail sector, you've got the biggest difference between winners and losers. Winners are just taking share. One other thing about credit losses that's important to keep in mind. This is the first cycle I've seen where this is happening in that the mark-to-markets have been so large that the defaults that we've had, every single one—actually, I shouldn't say every single one—but in aggregate, have been NPV positive, not negative, because. Our opportunity to capture the higher market rent earlier than we thought makes up for more than the downtime that we experience. Yeah, maybe a short-term earnings impact, but it's not a value impact or even a long-term earnings impact. Thank you. Our next question comes from the line of Blaine Heck with Wells Fargo. Please proceed with your question. Great. Thanks. Hamid, I thought your answer to Craig's question earlier was helpful. Hopefully, I got this right that you talked about the differential between those markets where tenants are comfortable and those that are choppy and how FOMO can change that very quickly. I guess, are there any specific geographical markets that you think could flip most significantly from being choppy to getting more competitive and maybe how quickly that could happen? I think. Chris is going to give you the names, but by definition, it's the markets that have strong long-term fundamentals and have taken the biggest hit in the short term, i.e., Southern California. Because a lot of people kind of like two quarters ago thought Southern California was going to fall into the ocean and everybody was going to go out of business. There was very little FOMO, whatever the opposite of FOMO was. There was a lot of that. I think once a couple of people start losing deals in Southern California and they see the stuff coming through the ports, it ain't going to come from Kansas. I can tell you that. It may not come from China, but it's going to come from somewhere else. I don't want to pick on Kansas. I think as soon as they see that, then lose a couple of deals, I think you'll see that market bounce because it's bouncing off of an exaggerated bottom. By definition, that would be a big bounce. Chris, do you want to add? I think maybe another part of this question is, what are the really good markets today? Excellent. Yeah. No, I'd underline the point that we see secular outperformance in these high-barrier geographies, and they can really move quickly. What are the outperforming, what are the underperforming geographies? For sure, international is the theme, whether it's Europe, whether it's Latin America. In particular, the consumption centers there, like a Mexico City and a São Paulo. Then turning to the United States, we've had this. Those being good. Those being good. Thank you. Yes. We'll, in some cases, already are doing this hockey stick, for example, in Brazil, a favorable hockey stick. In the United States, we still b are going through this transition period, this sort of post-pandemic normalization, where the interior markets outperformed last year remains a trend this year. What's changing are a couple of things. Number one, not all coastal markets are created equal. SoCal is weak, but Southern Florida, Washington DC, are examples of greater resilience. Across some of the United States, we've seen better stability in the Midwest, so geography like Indianapolis had to contend with excess supply, and it's working through it. Across the Sun Belt, there's been some excess supply, but we're seeing those markets work through it as well. Dallas comes to mind. The leading submarkets there are really firming. You're starting to see a transition across a range of markets. I think Houston and Nashville are pretty strong. Absolutely. I left those out. Houston, Nashville, Atlanta. Thank you. Our next question comes from the line of Mike Miller with JP Morgan. Please proceed with your question. Yeah. Hi. I guess thinking with markets, do you think any tariff dynamics will cause you to pivot back to some of the regional markets that you sold out of following the AMB merger? Ever? Probably. The one that we did come back to, I'm not sure was a great idea, to be perfectly frank with you, which was Savannah. We kind of ended up back in there with the merger. It was not a conscious decision. We thought about it hard, about whether we should stay in or not stay in, and we decided to stay in. I think our earlier decision was actually the right one. I think it's not fundamentally a long-term strong market, notwithstanding it's a very strong and well-run port. That's nothing. I mean, that's less than 0.1% of our business that I can think of that way. I don't think so. We've been in and out of Tampa a couple of times. I think we're feeling better about Tampa these days than we did before. We've been in and out of Minneapolis a couple of times. We're not going back in. Dan, what do you think? `No, I think we're in 31 markets in the U.S. We're in about 75 consumption centers globally. I think that accounts for about 78% of the world GDP in those markets. I think we're in the right markets, and we're going to stay focused there. Thank you. Our next question comes from the line of Samir Canal with Bank of America. Please proceed with your question. Thank you. Good afternoon, everyone. I guess along the same lines of the last question, Dan, you took up your acquisition guidance. Maybe talk about broadly the opportunities you are seeing on the transaction side, anything you can provide on pricing, and even from an underwriting standpoint, like what are you underwriting for occupancy and rent growth over the next few years, given the tariff uncertainty, etc. Thanks. Yeah. You know what's been interesting is just how resilient the overall transaction market has been, especially since April 2. There's a lot of capital that was sitting on the sidelines. It's out there very active right now, chasing right down the fairway, high-quality, well-located assets with a higher wall than people were looking for over the last couple of years. What we've been focusing on really is more value-add acquisitions. We're not interested in chasing those core returns down into the low sevens, which is where we're seeing them today. Our teams are turning over opportunities 150, 200 basis points better than that, whether it be a broken development or just some vacancy. Certainly not as many opportunities as I would hope for. Our focus on the deployment front is really, like I said earlier, it's data centers, it's build-to-suits, and then some spec where the market fundamentals make sense. Yeah. The only other thing I would add to what Dan said is that in Europe, the returns are in the low sixes actually. That market is even more expensive than the U.S. market. IRRs. Thank you. Our next question comes from the line of Vince Tabone with Green Street. Please proceed with your question. Hi. Good morning. Cast same-store guidance implies growth will decelerate to about 3.5% in the back half versus mid-5% growth in the first half. Can you just discuss what's driving that deceleration, just given spread and occupancy trends are pretty solid and it would seem the building blocks would seem to imply growth would be stronger than 3.5% in the back half. I guess what's the kind of what's the headwind in the back half? You can just kind of provide any color there would be helpful. Yeah. Hey, Vince. It's really about comps in the end. One note before getting into that detail is while rent change remains very strong, if you look back at the levels of rent change that we've had the last two or three years, it is coming in at lower amounts. Those contributions to same-store growth will normalize, let's call it but. More specifically, the back half of this year will have more of an occupancy drag compared to 2024 than the first half did. We also have some one-time items scattered around the back half, which deal with unfavorable comps where we had some strong one-time income in 2024 that will not be repeating this year. There is recovery noise in there. It is actually a reason I would encourage you—I understand the analysis you performed, but you do need to widen out to a full year most times to get a full picture, and I would point you to our guidance there. Yeah. The other thing, Vince, that is going on is that we have put away a lot of the uncertainty in the second half. We already know the answer to those questions for second-half deals. Obviously, there's a lot of mark-to-market to a lot of these deals that drives same-store NOI, but most of those have been captured or locked in. For this year, a bigger portion of the second half than, obviously, at the beginning of the year for the first half. That's another dynamic. Thank you. Our next question comes from the line of Brendan Lynch with Barclays. Please proceed with your question. Great. Thanks for taking my question. Hamid, your commentary on market vacancy was helpful. In terms of your portfolio, Asia occupancy was up quarter to quarter, but the other regions were down. Can you update us on your expectations for a second-half inflection in occupancy and any considerations for the specific regions? China's definitely, I think, past bottom and is getting better. Yeah, the numbers there can move around a lot because occupancy, I do not actually know exactly what it is, but probably has a high eight, low nine depending on the market you look at. There is the biggest opportunity for pickup there, and it has been in the dumps for the last three years. Japan is much more stable and predictable, but China has moved down quite a bit. The point is the China numbers do not actually move our numbers because of our share. That market, I am feeling better about. Yeah. Hamid's point, I will just pile on, is also the same point that it is small, which is also a reason that its occupancy can appear a bit more volatile. We have had some good success this last quarter getting chunks of the portfolio leased up, and that describes its increase. Thank you. Our next question comes from the line of Jon Petersen with Jefferies. Please proceed with your question. Oh, great. Thank you. Maybe a slightly different topic here, but as we see more automation in warehouses, I understand that this requires more power than legacy warehouse use cases. Can you talk about how prevalent those higher power demands are in just space demands today and how you guys are managing it in this power-constrained environment, as you guys know from your data center business? The number that I carry around in my head that's approximately correct is that the power demands of a regular warehouse, not a temperature-controlled warehouse, are about 5 kilowatt-hours per sq ft. We think with full automation and EV charging of forklifts and maybe some light trucks, over time, that can get to 25. That's a pretty significant 5x type of increase. Everybody talks about data centers being an issue and demand on the load of the system, but automation, as you point out, is going to be also a very big driver. Yeah, I know the EV business is kind of slow these days, and policy has changed quite a bit. Look at the rest of the world. That business is growing very rapidly everywhere else, just not here because of policy. That is a third leg of that demand driver, if you will. So, I think everything points to the price of electricity going up and the utilization of electricity increasing in pretty much everything. Maybe I'll pile on here. We're way in front of this. We've actually launched a new behind-the-meter energy generation solution. This is actually stemming from the expertise that we've gained through this mobility business with microgrids, actually. This is not a revenue-generating business yet. We've got a big pipeline, and it's a very strategic growth area for us. It's really bridging the gap as the utility continues to struggle through exactly what Hamid just described here, which is keeping up with the demand for both logistics and data centers. Thank you. Our next question comes from the line of Nicholas Yulico with Scotiabank. Please proceed with your question. Hi. This is Greg McGuinness. I'm with Nick. We're just hoping to dig a bit more into the source of demand that you're seeing. Who are the end users right now? How's that compared to the last few years of demand? On the build-to-suit side, is that a similar makeup of tenant demand? Why do you think they're choosing build-to-suit over currently vacant space? Hi, it's Chris. I'll jump in. I think Dan will have some remarks as well. As I look across customers that are active, the hallmark here is diversity. There are a couple of categories we've been talking about that are part of this demand growth, this demand acceleration. Things we've been talking about like basic daily needs, so think food and beverage. We've also been talking about the importance of e-commerce and the retailers taking share. We are seeing increased incidents of sort of light manufacturing, light assembly requirements. Those are the sort of obvious drivers we've been talking about in the past. Less obvious, we've had very active dialogue and leasing with auto customers, which might surprise you. It's more on the spare parts or the replacement parts and tire side of the business as consumers maintain an aging vehicle fleet. I already discussed looking at different companies, the 3PL component is beginning to work or has begun to work through that spare capacity and is beginning to need more space. As to the makeup of the build-to-suit pipeline and what we've signed this year, these are large customers. These are Fortune 500 customers that can see through the short-term noise, and they're making long-term decisions. The buildings themselves are actually all pretty big. We're seeing them really focus on large buildings, even million, million five plus. There is not a lot of spec sitting out of the market for buildings of that size. Of course, it becomes locational. There may be vacancy on one side of the country, and they need to be in other locations. We're finding our 14,000 acres of land that we own or control is a differentiator for us there. We're capitalizing and taking more than our fair share. Thank you. Our next question comes from the line of AJ Peek with KeyBank Capital Markets. Please proceed with your question. Hi. It's Todd with AJ. Question for you, Tim. You mentioned net absorption was 28 million sq ft in the quarter. I think that compared to 21 million sq ft in the first quarter, so 49 million so far in the first half. Do you have an updated view for the full year? And then, Dan, on the 3PLs, can you provide a little bit more detail about 3PL leasing activity in the quarter and comment how you see leasing demand trending for 3PLs going forward in the near term? You've got your numbers right. Year-to-date net absorption is 49 million sq ft. Let's pause and reflect. That's a really good result given the uncertainty that's played through the marketplace over the last six months. Now, as we talked about in the back half of the year, it's prudent to monitor that uncertainty, that macro caution. I think full-year numbers should land in the 75 - 100 million sq ft range. Yeah. On the 3PL front, we are hearing from our customers, and we're seeing in the pipeline that they're making their way through this gray space and looking for incremental space. We're seeing this mostly from the larger 3PLs. Many of them are unfazed by all the noise in the macro picture, but we're definitely hearing the confidence, and we're seeing that pipeline grow. 3PLs accounted for about a third of our leasing in the second quarter, which is slightly down from the prior two quarters, but those were two quarters in a row of records. Thank you. Our next question comes from the line of John Kim with BMO Capital Markets. Please proceed with your question. Thank you. I was wondering if there were any changes to terms of leases signed in the second quarter since Liberation Day in terms of annual escalators or TIs and free rent. We have not noticed much on commencements, which was disclosed, but other than term maybe coming down a bit. I also wanted to see if you had any commentary on the $28 million of termination income and whether or not you expect more in the second half of the year. Sure. With regard to terms, I mean, if you see the lease terms provided in the supplemental, you'll see a lower number there in the context of months. That's mostly a reflection of mix because if you look above there, you'll see a lighter volume of development leasing in there. I haven't seen anything abnormal develop with regard to overall lease term length. We've been saying that concessions are normalizing, which does continue. You also see that reflected in the materials this morning. With regard to the lease termination fee income, we typically have on the order of $5 million to $10 million of such income in any quarter. This quarter was a little bit higher. I would remind you, as you're looking at an item like that, you're seeing one side of it. What you do not see is there is resulting vacancy clearly, which winds up impacting the balance of the year. Those kinds of knock-on effects are all reflected in our guidance. That was an unusually high item in the quarter. It was forecasted and contemplated in our previous guidance. Everything with regard to same-store and earnings will be in good shape for the balance of the year. Yeah. Those payments are exactly what I was talking about in comparison to any downtime that we may experience through tenant defaults and all that. That number, unlike other cycles, I think is going to continue to be positive in a good way. Thank you. Our last question comes from the line of Jamie Feldman with Wells Fargo. Please proceed with your question. Great. Thank you for taking the question. Hamid, you listed a long list of. Prior fears of the last 18 months or so that have gone away. As you talk to your, as everyone talks to their clients today, economists are calling for a much better 2026. What do you think the key overhangs are on decision-making and just people getting more aggressive? You had mentioned kind of the dam and water building up behind the dam. What do you think the overhangs are that need to go away or that people are optimistic about in terms of much better times ahead and leasing more space and growth? FOMO. I think if you have people that are pulling the trigger on big capital improvement or capital expenditures, they're going to take comfort by seeing other people make the same decisions. People want to be in companies just like investors want to beat the index. People want to be in good companies. I think that dynamic will shift from being very conservative to being much more aggressive. I think there's still a degree of worry out there as to are we in an inflationary environment or are we not? The tariffs would argue that you're in an inflationary economy, but the numbers haven't come through that way. There's a lot of confusion right now. That's why I think it is nearly impossible to predict things quarters in advance. I know you want us to, but it's kind of hard to do it. Anything I should tell you, you should ignore anyway. I'm feeling really good about the long-term prospects of the business. That brings us to the end of the call. I just want to acknowledge our teams globally for the focus throughout the quarter and delivering such solid results. Thank you all for joining the call today, and we'll talk to you all very soon. Thank you. This does conclude today's conference, and you may disconnect your line at this time. We thank you for your participation. You may now disconnect your line.