Greetings, and welcome to the Prologis First Quarter 2025 Earnings Conference Call. This conference is being recorded. It is now my pleasure to introduce Justin Meng, Senior Vice President and Head of Investor Relations. Thank you, Justin. You may begin.

Thanks, everyone. Good morning and thank you for joining the call. Prologis had a very strong quarter, leasing 58 million square feet, nearing a record, broke ground on several build-to-suit developments with key customers, and expanded our power capacity by 400 megawatts to meet the growing demand for data centers, representing a 13% increase. We exceeded our expectations in earnings and occupancy. Prior to April 2, industrial fundamentals were showing improvement and if it weren't for the recent uncertainty stemming from global tariffs and their impacts, we would have adjusted our expectations for 2025 upwards. As it stands, we have decided to keep our earnings guidance unchanged as there are no definitive policy conclusions to warrant a different plan, and our thorough stress test on core FFO reinforces the current range. Although the recent instability could disrupt logistics and supply chains, it will undoubtedly impede decision-making. Many companies are now reevaluating their sourcing and selling strategies. In discussions with customers, they echoed similar feelings, simultaneously indicating an urgent need for flexible inventory solutions in this changing environment. The range of possible outcomes is broad. We are facing potential recession risks or possibly a quick resolution. It's crucial to note that Prologis is built to withstand various market conditions. We possess a global presence with a diversified rent roll. Our revenues are contractual with either fixed or inflation-linked escalations. Our solid balance sheet provides unparalleled access to global capital, and we maintain strong partnerships with many of the largest institutional investors in our strategic capital business. This positions Prologis as a preferred partner for our customers, particularly during challenging times. Before we dive into the quarter’s specifics, I would like to share three overarching thoughts. Firstly, a fragmented world will necessitate more warehouse space, not less. Secondly, the current situation validates our long-term strategy of investing in markets where goods are consumed rather than produced. Thirdly, our company was intentionally built to not only endure market disruptions but to seize opportunities as they emerge. In terms of our quarterly results, core FFO, including net promotes, was $1.42 per share, while excluding net promotes it was $1.43 per share, both exceeding our forecasts. At the end of the quarter, occupancy was 95.2%, which was slightly down from year-end but better than anticipated due to strong retention. The change in net effective rent for the quarter was 54%, while on a cash basis it was 32%. Consequently, net effective and cash same-store growth for the quarter stood at 5.9% and 6.2%, respectively. Our net effective lease mark-to-market at the end of the quarter was 25%, with most of the decline resulting from increased in-place rents. This figure translates to an additional $1.1 billion in incremental NOI after capturing another $105 million during the quarter. Regarding capital deployment, we launched approximately $650 million in new developments, surpassing our forecasts, with nearly 80% of the activities related to build-to-suits with lease terms averaging 16 years. We have consistently characterized our build-to-suit pipeline as robust, and recent decisions highlight the genuine need for space, even though overall volumes have been subdued due to a lack of confidence. We currently have over a dozen deals actively in discussion, and we have recently signed two additional transactions totaling 1.1 million square feet post-April 2. The pace this year has significantly outstripped typical trends. In our data center division, we have moved 400 megawatts of power to the advanced stage category after reaching agreements with utilities for projects in a Tier 1 market, bringing our total in this category to 2 gigawatts, in addition to the 1.4 gigawatts of power that is already fully secured. Our engagements with utilities and hyperscalers have been very fruitful, and we anticipate reporting start activity for the second quarter. As of quarter-end, we have over 900 megawatts of solar and storage capacity either operational or under development, bringing us closer to our 1 gigawatt goal for the year. Given the pressing need for additional energy production in both the U.S. and globally, we are optimistic about the long-term potential of this growing business. Concerning our balance sheet, we raised approximately $400 million in new capital for our flagship open-ended funds, although we faced a similar level of redemptions, resulting in a net neutral capital raise. Our debt issuance for the quarter was relatively modest, with $550 million raised at a weighted average rate of 4.1%, including a Canadian bond transaction that helps mitigate currency exposure. Our balance sheet remains strong, as evidenced by the upgrade from Moody's to an A2 rating this quarter, making Prologis one of only two public REITs to hold an A-flat rating from both agencies. Now, let’s discuss the operating environment before and after April 2. The uptick in leasing following the election maintained throughout the quarter, showing increased proposal volumes and conversions. We experienced heightened engagement with our global customers and increased activity notably in transportation, food and beverage, consumer products, and electronics. Each week, we monitored any slowdown in interest or leasing pace following a strong fourth quarter. Although our pipeline numbers remained unaffected, early tariff threats and rising uncertainty mid-quarter did suggest a potential slowdown in decision-making. Moving on to an update from the last two weeks, the situation announced on April 2 has clearly outstripped our early predictions, complicating the environment. Even with some tariffs paused or resolved, customers lack a consistent framework for planning their businesses. We've had conversations with over 300 customers, including insights from two customer advisory boards representing over 20% of our rent roll. Their feedback indicates that customers are taking swift action to manage tariff volatility, often accelerating shipments when feasible. They are also rerouting volumes and urgently need overflow space, leading them to seek short-term flexibility often found in 3PLs. Usage of 3PL's flexible spaces has risen, with one notable provider reporting an increase in utilization from 83% to over 90%. Customers are also evaluating alternatives like free trade zones and bonded warehouses. Those in the food and beverage sectors, industrial manufacturing, and essential consumer products are more insulated and operating with confidence, while customers dealing with goods produced in China face significant uncertainty. Although price increases to consumers will be passed through where feasible, margins will be under pressure. Consequently, planning horizons are becoming shorter, and flexibility is vital, especially as customers share concerns about a recession impacting consumption and demand. The varied feedback serves as a reminder that many of our customers source domestically and are less affected, while others can adapt or even seize advantages from the current situation. Regardless of the scenario, our team is responding decisively to partner with our customers to meet their needs. In the past two weeks, we signed around 80 leases totaling over 6 million square feet, representing roughly a 20% drop from our usual pace, and we anticipate further slowing, but this still indicates an active market. Looking ahead, we expect to see increased inventory levels as businesses stockpile to build resilience. E-commerce may capture more market share as product availability becomes critical in consumer shopping decisions. Global markets, including Canada, India, and Brazil, especially within our portfolio, are anticipated to benefit, with Mexico also gaining attention for increased interest post-April 2. Port markets may see immediate inventory buildups, but establishing how or if trade flows will adapt will require time. Nevertheless, we remain optimistic about the long-term outlook for markets with sizable population centers and significant supply constraints, which we will be sharing additional research on in the coming days. We believe that inflationary impacts of tariffs will likely enhance the value of hard assets, replacement costs, and rents. Regarding our guidance, as previously indicated, our first-quarter results and outlook would have suggested tightening and an increase in guidance, including earnings. However, given current circumstances, we chose to keep most areas unchanged, aside from capital deployment. We are adjusting our development start guidance to a range of $1.5 billion to $2 billion, reflecting a reduction in our expectations for speculative development until visibility improves. Our combined contribution and disposition guidance has also decreased to a range of $400 million to $1 billion, again due to uncertainties in capital markets and fundraising. Consequently, we are lowering our development gain guidance to a range of $100 million to $250 million. We are raising our G&A guidance to a new range of $450 million to $470 million, partially due to capitalization impacts from lower development activities. Other areas of our previous guidance remain unchanged, with core FFO, including net promotes, still projected between $5.65 and $5.81 per share, and core FFO, excluding the promote expense, expected to range from $5.70 to $5.86 per share. We carefully evaluate our guidance, and thorough stress testing indicates that earnings could land at the lower end of our projection range. We will reassess in the second quarter, but we are confident in our resilience. In conclusion, we manage this company with discipline, adhering to the principle of closely connecting with customers and investing capital wisely. Such times do not require drastic changes to our strategy. We will remain attentive to our customers' needs, leveraging our balance sheet effectively. We will capitalize on our strengths to secure build-to-suit opportunities in logistics and data centers. We will continue to utilize all that our platform offers in terms of profitable adjacent businesses to support our customers, and above all, we will empower and rely on our dedicated team whose expertise and commitment are the bedrock of our success. I will now turn the call over to the operator for your questions.

Good afternoon, everybody. Tim, I appreciated your commentary on interactions with customers over the past 2 weeks, and appreciate how much is changing on a day-to-day basis. But the other side to the industrial equation isn't just customers and their supply chains, it's demand, which is ultimately driven by consumption. Are there lessons from prior downturns, you obviously mentioned the dot-com, the GFC, but also from kind of the first round of tariffs during the first Trump administration that can serve as a guide for the current environment, maybe in terms of what you're looking for to kind of judge consumption and demand? And also, what are the risks to consumers going forward?

Well, let me take a stab at that. Hamid here. Clearly, if we get into a recession environment, consumption will take a hit. But I don't think you're looking to our call for predictions about whether we're going to have a recession or not, there are better sources you can go for that. But certainly, our business and any other business in a recessionary environment will suffer. You handicap that probability. We're not really qualified to do that. But with respect to the relationship between consumption and GDP growth, that relationship has remained constant for decades now. It's about 70% in the U.S., and it's lower than that in other emerging countries and coming up, increasing. So I'm pretty confident that consumption in the long term will trend up. And during a recession, it will take a hit. Now as to the 2017 tariffs, I think we've shared this with you before. I can't tell you what happened to consumption. Basically, nothing happened to consumption. That I can tell you. I don't remember the exact numbers. But what I can tell you is that since that date, U.S. production of things that are consumed in the U.S. went up 2% in real terms. What was made in China went up by 2%. Overall, consumption went up in the 20s in the mid-20s. So where did that increase come from? It came from China plus 1 and Mexico and to a lesser extent, Europe. So certainly, we've seen some of these trends change the picture and the origins of manufactured goods. But again, as we've said many, many times, where they're consumed is what we care about, and they didn't really do anything where they're consumed or how much they're consumed.

I guess, Tim, just wanted to maybe focus a little bit on the leasing, the commencements and then I know that you had talked about occupancy dropping kind of in the early part of the year and then rebuilding in the back half of the year. But the occupancy drop, at least versus our estimates, was a bit wider than what we were looking for. I know you don't provide a quarterly lease expiration schedule; you kind of just provide the annual. But maybe just help us bridge the gap on the kind of spot occupancy decline in the quarter? And then maybe how do you think about occupancy cadence over the course of the rest of this year versus maybe where you were a couple of months ago?

Thanks, Steve. Yes. So look, the other side of the equation that you need to consider in looking at an occupancy drop in any time period is what's the role that's coming up. So we had a disproportionate amount of leases rolling in the first quarter. So while I would describe our retention as pretty good at 73%. Just a lot rolling there and that caused the drop. I'd characterize the drop as not dissimilar from history and very much in line with our expectations. As for the second part of your question, in the stress test that we looked at or let me go back a quarter, our prior guidance, imagine that we were going to lose some occupancy over the course of the year and build back up by the end of the year. One of the main changes in the stress test is that we are going to lose that occupancy as planned and even more, and it's going to basically stay at that level until the end of the year, and that's reflected when we looked at the stressed scenario.

Just going back to sort of the stress test and thinking about sort of the specific tenant groups, particularly 3PLs and sort of their impact in the Inland Empire West. Just sort of curious, just real-time, how you guys are thinking about that group and what sort of the assumptions that are being baked in.

It's Chris. I'll jump in. So what I think you're talking about and is worth covering here is simply this category of Asian 3PLs. This is a category that faces new risks. But to keep it in perspective, the U.S. business of these Asian 3PLs is just a little over 1.5% of our rent. Now policy is still evolving, and let's not speculate here. But as you come to your own views, a few things to keep in mind. One, these customers are growing in response to just general e-commerce growth as well as stateside inventory fulfillment models. These companies have found a product market fit and product will need to flow. These companies have also taken steps to mitigate risk. They're pulling forward inventories. They are diversifying their sources, their production sources and they're also growing their domestic customer footprint. Ultimately, their performance is going to be subject to how policies evolve from here, and we will keep you informed as the situation changes.

Yes. The other thing I would add to that is that if you just try this on your own go on some of the big e-commerce sites and try to buy some phone chargers for your iPhone or iPad or pretty much anything of that ilk. And you'll see that it's sold out and don't know when we're going to get some more. So the demand is clearly there. But the challenge is getting the inventory in to fulfill that demand. So I think the underlying demand is pretty good.

I guess, there's been recent news about Amazon being back in the market. Can you talk a little bit about what that means for overall demand, how that can impact the overall industry? And if how that has influenced pricing power in the past and that can have an impact this time?

Thanks, Michael. This is Dan. We have definitely seen Amazon in the market. As a matter of fact, we've signed some pretty good deals with them this year. And we're seeing the overall e-commerce segment of our customer base very strong right now back to high teens, 20% of our overall leasing. So really pleased with what we're seeing from them.

Too soon for anybody thinking about putting something in the market or selling something, certainly the last 2 weeks have not been the time to execute that strategy. So I think these things will take a while to play out. And depends on how bad things get. There are 2 things going on. One, there's pressure on rents, obviously. And second, I don't know where the 10-year is going to go, and cap rates are kind of correlated with that. So I think most people in this environment are going to wait and see for some clarity. But depending on how bad this thing gets, it could be 6 months, maybe 9 months before you start seeing some opportunities. And let's not speculate about how bad it's going to get or whether this is going to be a blip. I don't know. I mean it changes every day.

Maybe just on lease gestation. I know it was above average in 4Q and then it was up again in 1Q, which makes sense. But can you go through some more of what you're hearing from customers and potential customers with respect to kind of who is making decisions today? What's driving them versus who's dragging out that decision-making timeline? And what could make them ultimately make a decision and then the group that might just say for now, we're standing on the sidelines?

It's Chris. I'll take a stab at that. So first, you're reading the statistics correctly, gestation was elevated in the quarter. So that's really happened stance and mix in the first quarter. So there's going to be some seasonality as it relates to December and November deals that just take a bit longer with the holidays. And also the trend we discussed as it relates to preelection opportunities landing that continued into January, lifting the number. We think it will continue to remain elevated. There is a range of customers that are talking to us that have growth requirements. They have a need for space and they just need a clear economic backdrop, tariff backdrop to make decisions. But there are a handful of customers making decisions. Some are responding to supply chain volatility and bringing in goods urgently for their own tactics.

Yes. I think you see that in the 3PL utilization rates because that's the first place you're going to go. And remember, a lot of these people have been delaying decision mode for a number of years. And if their underlying businesses are solid, they can't do that anymore. Perhaps the most surprising thing that I've seen is that even in the last 2 weeks, we signed a lot of leases and we've signed build-to-suits. And these customers could have just said, okay, let's punt on those until we have clarity. So I'm actually very encouraged. And you can't take 2 weeks and extrapolate too much, but actually in those 2 weeks, the number of build-to-suits that we have signed are significantly larger in terms of square footage and rent than what we normally signed for a 2-week period going back a couple of years comparing. But it's 2 weeks, so who knows. But there are definitely people out there making decisions. And I wouldn't be surprised if the vast majority are going to try to delay it as much as possible. But water is building behind the dam. It's going to break at some point.

I wanted to clarify the stress test scenarios. Could you provide more details? You mentioned your thoughts on occupancy in a downturn. Can you share where market rent ended up for the quarter, along with the net absorption in your market? Also, considering those other components, what are their positions in the stress test regarding the low and high ends?

I'll explain the stress test details, and Chris can address what occurred during the quarter. During the global financial crisis, we observed a market occupancy decline of 170 basis points in the first year. We incorporated that, along with the existing decline we were experiencing, and it was sustained through year-end. Market rents decreased by 18%, which we included in our forecast and accounted for immediately rather than over several months. Additionally, regarding bad debt, our experience during the crisis indicated a rate of 56 basis points. However, we've accounted for a higher level by using parts of our portfolio that reflect closer to 75 basis points on an annualized basis. Overall, we believe we have taken a rigorous approach.

So on conditions in the quarter, we saw an absorption of 21 million square feet. We saw global decline of 1.5%. Almost all of that, by the way, was Southern California globally, excluding Southern California rents only dipped about 50 basis points with many markets flat or rising.

Yes. And the thing I want to make sure everybody understands here. We are not setting up a new range. This is not a prediction. We just wanted to know what's the worst thing that can happen. Of course, the worst thing that can happen is nuclear war and this is all academic. But going back and looking at the last 4 or 5 major downturns and taking the worst on every parameter on every independent variable, combining it together and then adding some basically still gets us to the bottom of the range. But please, this is not a prediction. We are incapable of making a prediction in this environment. And there is no data, and we have more of it than anybody can power us to confidently predict anything for you. So we just wanted to know how bad it could get.

Do you have a lens on what the level of import tariffs your average customer could possibly bear? I know there's a wide range of customers, but this is a high-level question. And I'm not sure if the 10% tariff is a win for your customers? Or does it have to be at 5%, just any kind of thoughts you can share?

Yes. This is purely speculation because we haven't discussed these types of tariffs in a long time. My impression is that given how this policy was introduced, many people were ready for something around 10%. However, if you surveyed our typical customers around April 2, many would have likely said they expected it to be much higher. With the pause, there seems to be a sense of relief. I believe the economy can handle a 10% tariff, but it will affect how inventories are managed and sourced. Looking further ahead, I would predict that Mexico will significantly benefit from this situation, along with Brazil, while we will likely see impacts from China as well. Surrounding countries in Asia may experience a higher burden. As for Europe, I expect it to either stay stable or decline slightly, especially since Germany, a major exporter, focuses primarily on internal combustion cars, which are likely to face challenges. That’s my perspective on what might unfold, but anything can happen.

I wanted to follow up on the comment that a disconnected world requires more warehouse space. Could you just elaborate on that remark and how you arrived at that conclusion?

Yes, Vince, let me share an experience. I was in Brazil when Brexit was announced. By the time I boarded the plane and arrived in San Francisco, the market had already reduced the value of our U.K. portfolio by more than its entire worth. I was inundated with questions about what would happen next and my expectations for our U.K. business. The market had effectively written off more than 100% of the value of our U.K. operations and the stock during that 10-hour flight. What transpired? Over the next 3 or 4 years, the demand for inventory rose both in the U.K. and across the continent because the supply chains that had been streamlined throughout Europe needed to be reconstructed separately for the continent and the U.K. This required a greater amount of space. This illustrates what occurs during such transitions. Notably, during this period, occupancy remained at 99% in the U.K. These situations do not always unfold as the media suggests. We believe that when faced with uncertainty, the duplication of a finely tuned supply chain will lead to increased inventory, and consequently, the need for more space to accommodate it.

Can you talk a little bit more about any change you might be seeing in demand from your fund investors, how they're thinking about their allocation to the industrial sector overall and current pricing and I guess, whether you'd expect to see increasing redemption requests in the funds in the coming quarters?

We were experiencing strong interest and inquiries leading up to April 2, more than at any time since 2022. After April 2, people seem to be waiting to see the impact of the denominator effect. This isn't just about real estate; it's about its share of the overall portfolio. With the stock market down significantly, even though real estate allocations may increase, the total dollars available for real estate could decline. Many institutions have perhaps overcommitted to private asset classes like venture capital and private equity, and the liquidity returning from those investments is likely to be limited. There are fewer IPOs expected in this uncertain environment, and liquidity events are becoming rarer. Therefore, it’s really this denominator effect that will dictate how much money is available, rather than the interest in industrial real estate, which has been performing well.

How do you see UPS downsizing the Amazon exposures impacting your next couple of years?

Our business with UPS has continued, and we've done actually some pretty significant leases with them lately. So I don't know. That's not something that's come up in our discussions.

Just looking at the smaller spaces below 100,000 square feet, that 92% occupancy seems a bit lower versus the other sizes. I guess that was a bit surprising. Can you maybe provide color on that and maybe markets that are seeing that space seeing more challenges than others? Just trying to understand usually that type of space, I thought it is a bit less supply and would have been faring a little bit better. Just want a bit more color.

Thanks, Samir. That 100,000 square foot and less customer base is typically actually the lowest occupancy you see if you look quarter-over-quarter in our supplemental. There's nothing unusual this quarter or last quarter that would suggest there's any issue there. As it relates to markets where there may be issues.

Yes, I'll jump in. So the strongest markets, first off, are global. Being international is great in this environment, whether it's Europe, whether it's Latin America, whether it's Japan. As it relates to the American markets, we've seen a broadening of strength across categories. So the Southeast has been and the Sunbelt has been resilient, whether it's Seattle, Nashville, Houston and increasingly, Dallas. And we're also seeing an inflection and improvement in the Midwest. So pick a market like Indianapolis. That's one that's really moved a lot in the last year.

Yes. One more thing, Samir, is the smaller spaces actually have shorter lease terms. So that's where you see a lot more churn. And certainly, if you look at that customer base, it's going to be the smaller businesses that may have more of an impact. So we're paying very close attention to it, but we're just not seeing anything today.

Yes. And they have lower credit by and large. They're small customers with lower credit. So in if you believe in a recession scenario, that sector is going to get hit more. But you said something that's really important. I do agree that replacement costs for that product is significantly higher than values today. So there is some protection on the supply of smaller spaces. They're very expensive to build. And while I'm on that topic, let me answer a question that hasn't come up, which is that in this environment, and its inflationary effect, we are seeing replacement costs go up significantly. And with the 10-year backing up, the yield requirements on development has gone up significantly. So the combination of those 2 means that the replacement cost rents that will justify new construction are now much higher than they were a month ago. And I think that bodes well for the long-term supply picture here, less supply. Thank you, Samir.

The 6.2% cash same-store NOI in the first quarter was quite strong compared to your annual guidance for 4.5%. Can you just walk us through what your expectations are for the cadence throughout the rest of the year?

Well, it's going to be influenced mostly by occupancy from here. That's a stat that's pretty volatile to the quarter. year-over-year, I'll say, differences in free rent for leases that are commencing within the quarter. So it can be volatile for that net effect of both are going to be largely a function from here of the year-over-year occupancy changes, which we've already made clear, we think, in our base case, that was going to march down and in our stress case, still the case and a little more so.

Yes. The main driver of that is the mark-to-market. Basically, it's not, at this point, a change in near-term increases in rent and occupancies are tough to predict, but a program of Bet are probably going to come down a little bit if this thing continues.

I had a more basic leasing question. So how long does it typically take from an industrial lease to be signed versus when it actually commences? So if activity was pretty healthy in the first quarter and slowed down 20% in April, and I understand it's only 2 weeks so far. When could that actually start to impact lease amendments in your overall occupancy? I mean, are we talking about this being a 2Q type issue? Or is it more like a 3Q type issue?

I'll give you a couple of facts here and others may jump in. This is Chris. So renewals can be signed well in advance anywhere from 3 months to 12 months, depending on the size of the lease. And then new lease commencements can be really rapid. We've had a handful of customers want to move in, in a couple of weeks. Up to order of magnitude maybe 45 days. So it really depends on the mix in terms of new versus renewal and also the size.

Yes, new buildings, it takes longer because they've got to build it out.

Going back about a month ago, Hamid, you discussed in the Bloomberg interview that the change in tone has slowed in the past couple of weeks prior to the interview, not really reflected in the data, but that has happened. So I guess my question is, if the tariff uncertainty is resolved, will demand completely recover to where it was earlier this year? Or were there other reasons tenants were acting more cautiously pre-April 2?

No other reason that I can think of. And by the way, if I knew the answer to your second question, I would ask you, where do you think the market is going to end up at the end of the year? I don't know. I mean short term, it's very hard to predict these things. That's why I don't even try. But long term is what we're focused on in the ramp here, and the path to that long term can take many different directions.

I wanted to revisit the net absorption data you mentioned. Chris, you indicated that in the first quarter, it was $21 million, down from $27 million the previous year, which you said wasn't a strong number. As a result, you reduced the net absorption forecast for the year. I'm trying to figure out if it's appropriate to compare that number year-over-year because, based on that, it seems the first quarter for the overall market wasn't as strong as last year. I'm uncertain about what this indicates in relation to PLD having what you believed was a better leasing quarter overall, yet the market may not be reflecting that.

I think you answered the question for me. I completely agree with the way you positioned that, which is, yes, the first quarter is seasonal. It's a seasonally light quarter. So the $21 million annualizes to around $105 million, $110 million there can absolutely be variability in the numbers, as I think you postulated in your question. I think more important to us is the conversation we're having with our customers and their growth requirements and their growth outlook. So that's how we made our assessment.

Last year, we did not have an election, which meant many leasing decisions that might have led to actual leasing and occupancy in the first quarter were instead made in the fourth quarter, creating significant uncertainty at that time. This uncertainty was absent in the previous year. We previously viewed absorption throughout the year as a consistent trend, but now it has stabilized a bit and is less extreme. However, typically, the normal seasonal trend shows that absorption, occupancy, and leasing of space tend to increase as the year progresses.

Let me add one more point here. Actually, something Prologis can control. We had about 12% of our rent roll rolling this year. We actually have put 7% of that in the bank already. So we're about 60% our way through that with only 5% of that left to go. So we're in pretty good shape at this point here.

I just want to clarify that there is a base case and a worst-case scenario. In your base case, you mentioned that leasing volumes decreased by 20% in the last few weeks. I’m trying to understand what level of leasing activity you anticipate in your base case or guidance regarding potential increases or decreases in leasing through the end of the year.

Look, I described It's hard to a number on that because ultimately, we reflected in the occupancy drop that we think is going to be more severe and stay low, as I mentioned. That's a mix of both lower retention as well as a slower pace of new leasing. And the way we tested all that was put it through some ranges. So it's just one of those things that is unknowable, but I think the end result, which ultimately drives occupancy, same-store earnings, we've got covered in the stress test.

So that was the last question. So to close out, I just want to make a couple of remarks around the fact that no doubt we're in a very fluid environment right now. The good news is we are built for this. And I really want to thank our teams out there for their execution and focus. Thanks for joining the call, and we'll speak to you next quarter.

And the first question comes from Tom Catherwood with BTIG. So that was the last question. To wrap up, I want to make a few comments about the current fluid environment. The positive aspect is that we are well-prepared for this. I want to express my gratitude to our teams for their execution and focus. Thank you for joining the call, and we will talk to you next quarter. The first question comes from Tom Catherwood with BTIG.

Good afternoon, everybody.