Greetings, and welcome to the Prologis Third Quarter 2025 Earnings Conference Call. At this time, participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, a reminder that this conference is being recorded. It is now my pleasure to introduce your host, Justin Meng, Senior Vice President, Head of Investor Relations. Thank you. You may begin.

Thanks, Jamali, and good morning, everyone. Welcome to our third 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, Inc. 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, refer to the forward-looking statement notice in our 10-Ks or other SEC filings. Additionally, our third quarter earnings press release and supplemental do contain financial measures such as FFO and EBITDA, that are non-GAAP. And in accordance with Reg G, we have provided a 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, Justin. Good morning, and thank you for joining our call. The third quarter marked another period of solid performance with many encouraging signs across our business. We had a record quarter for leasing with signings of nearly 62 million square feet and an uptick in portfolio occupancy and another very strong quarter in rent change. We see a more positive tone across the platform with strengthening customer sentiment, improved leasing velocity, and continued success in build-to-suit activity, which taken together suggests the market has found footing and the stage is set for an inflection in occupancy and rent. Momentum also extended to our data center business. This quarter, we moved another 1.5 gigawatts of additional capacity to our advanced stages. Now with 5.2 gigawatts of power either secured or in this advanced stage, Prologis, Inc. is one of the largest owners of utility-fed power available for data centers. Translating this to dollars would amount to $15 billion of investment as powered shell and as much as four times that if delivered in a turnkey format. For this reason, we've begun the exploration of additional capitalization strategies to fully capture the opportunity. Our ability to combine real estate, power access, customer relationships, and capital provides the foundation for one of the most significant value creation opportunities in our history, and we are well-positioned and laser-focused on its execution. With that as a backdrop, let's turn to our results. Core FFO, including net promote expense, was $1.49 per share and excluding net promotes was $1.50 per share, each ahead of our forecast. As noted, we had a record leasing quarter supported by a clear pickup in new leasing, which had been below historical levels for some time, but is now rounding out together with healthy renewal activity and heightened build-to-suit demand. As a result, occupancy grew over the quarter to 95.3%, an increase of 20 basis points. In flight to quality persists to our curated portfolio and platform, evidenced by our 290 basis points of outperformance in the U.S. Rent change during the quarter was 49% on a net effective basis and 29% on cash, highlighting the durability of our lease mark to market, which will provide meaningful rent change over the coming years even at spot rents. The lease mark to market ended September at 19%, which reflects the capture of another $75 million of NOI during the quarter and a further $900 million of NOI as leases roll. Putting it all together, net effective and cash same-store growth during the quarter were 3.9% and 5.2%, respectively. In terms of capital deployment, we had a lighter quarter of development starts with expectations for a strong fourth quarter due to the specific timing of transactions. Two-thirds of our volume in the fourth quarter in the third quarter was in build-to-suits with large global customers, many of whom rank in our top 25. We signed an additional nine build-to-suits this quarter, driving the total to 21 so far for the year, and amounting to $1.6 billion of total expected investment. Beyond that, this pipeline continues to grow with dozens of viable deals on PLD-owned land, an outcome of our close customer relationships and strategic land bank. We expect build-to-suits will represent over half of our development volume for the full year. Finally, our energy business delivered 28 megawatts of solar generation and storage in the quarter. With 825 megawatts of current capacity, we are on track to deliver on our one-gigawatt goal by year-end. Interest from customers remains robust against the backdrop of increasing energy prices and forecasted shortages in power. We continue to integrate our solar storage and off-grid energy solutions with our real estate, another example of how Prologis, Inc. continues to evolve with and for our customers. On the balance sheet, we closed on $2.3 billion in financing activity across the REIT and funds, which included a very successful €1 billion raise at 3.5%. Our global access to capital remains one of the defining strengths of our franchise with an in-place cost of debt at just 3.2% and more than eight years of average remaining life. In our strategic capital business, we had modest net inflows for the quarter across our open-ended funds as investors began to reengage following several uneven quarters. But at the same time, we're excited by our progress on new vehicles that are drawing strong interest and position us well for the next phase of growth in this business. We look forward to sharing more on this in the fourth quarter. Turning to our customers. Sentiment is clearly better as informed by our day-to-day discussions across the globe as well as in focused strategic dialogue like that in our customer advisory board held late last month. Beyond improved decision-making, larger occupiers are pursuing reconfiguration consolidation strategies with a shift toward network optimization rather than contraction. In keeping with a typical real estate cycle, we'd expect smaller and medium-sized enterprises to follow suit. Out of interest, e-commerce penetration, now 24% of US retail sales, has expanded since COVID and continues this march higher as a meaningful and secular driver of demand with 52 unique names transacting this quarter. In terms of operating conditions, overall, we see demand improving, occupancy has formed a base, rents are progressing through their bottoming process. In our US markets, we estimate 47 million square feet of net absorption for the third quarter, holding market vacancy steady at 7.5% we expect it to top out. Meanwhile, the supply picture remains favorable as the construction pipeline depletes and starts are below pre-COVID levels. Market rent declines have been slowing just over 1% this quarter, also evidencing the market shift. Our strongest markets in the U.S. continue to be across the Southeast and Texas with solid absorption in Houston, Dallas, and Atlanta. The tone in Southern California is also improving, although rents remain soft, leasing activity has turned up both in LA and the Inland Empire. Consistent with our prior view, we expect SoCal to lag the broader inflection in operating conditions in the near term but outperform over the long term. Our platforms outside The U.S. are certainly a bright spot. Latin America again delivered excellent results where Brazil and Mexico together have been providing the highest same-store growth in our portfolio. Europe has maintained higher occupancy and more moderate rent decline relative to The U.S. And our Japan portfolio maintains its track record of exceptional occupancy overcoming the higher market supply of recent years. With real estate in 20 countries across the world's most dynamic markets, our global scale continues to serve customers and the benefits of this diversification are evident in our performance. Finally, on data centers, demand for our product has been exceptional. Every megawatt we can deliver over the next three years is already in dialogue with customers. We're taking a deliberate and disciplined approach consistent with our build-to-suits strategy. And by staying close to customers and their evolving needs, we have strong conviction in the depth of our pipeline and look forward to announcing on a handful of starts in the coming quarters. Turning to guidance as we move into year-end. Average occupancy at our share is unchanged at the midpoint of 95% and rent change will average in the low 50s for the full year. The range for same-store NOI growth is increasing to 4.25% to 4.75% on a net effective basis and 4.5% to 5.25% on a cash basis. We are increasing our G and A guidance to a range of $460 million to $470 million and also increasing our strategic capital revenue guidance to a range of $580 million to $590 million. In capital deployment, we are increasing development starts at share to a new range of $2.75 billion to $3.25 billion. And as a reminder, previously announced data center starts are included in this guidance. We are also increasing our combined disposition and contribution guidance by $500 million to a range of $1.5 billion to $2.25 billion at our share. In total, our guidance for GAAP earnings to range between $3.40 and $3.50 per share, core FFO, including net promote expense, will range between $5.78 and $5.81 per share while core FFO excluding net promote expense will range between $5.83 and $5.86 per share, a $0.02 increase from our prior guidance. To close, the outlook for Global Logistics is strong, and the demand for data centers and distributed energy systems is robust, all of which underpins our confidence in the long-term and absolutely unique opportunity for our business. Our focus remains on disciplined growth, operational excellence, and leaning in on these long-term trends. These priorities have been central to Prologis, Inc. since its founding and continue to shape every decision we make. And as we reflect on the leadership that built this company, and the enduring culture that Hamid has created, we do so with a deep sense of commitment and continuity. The foundation of excellence is strong, the strategy is clear, and the opportunities ahead are significant and unmatched. Thank you, and I'm going to pass the call over to Dan to close out our prepared remarks before turning to Q&A.

Thanks, Tim. Before we move to questions, I wanted to take a moment to recognize today marks Hamid's last earnings call as our CEO. This is his 112th call since we went public back in 1997. It's really hard to sum up everything he's accomplished in just a few words. We've all learned so much as part of the school of AMB and Prologis, Inc. under his leadership. And it's truly been a one-of-a-kind experience. Over more than four decades, Hamid has built something special. A company that leads our industry, sets the standard for innovation, and puts people, culture, and customers first. He's created a platform that's second to none, built on vision, courage, and the ability to see around corners. For me, it's been a privilege to watch him lead, to see how he balances ambition with humility, and how he pushes all of us to think bigger and move faster. Hamid, on behalf of all of us at Prologis, Inc., thank you for your leadership, your trust, and for everything you've done to make Prologis, Inc. what it is today. You will likely never fully comprehend the impact you've had on the people in this room, this company, or this industry over the last 42 years. We're all grateful, and we're excited for what's ahead with you as executive chairman. With that, operator, we're ready for questions.

Thank you. We will now conduct a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 to remove yourself from the queue. And for participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from the line of Jon Petersen with Jefferies. Please proceed with your question.

Great. Thanks, and congrats on the quarter. Hard to top Dan's commentary there, but Hamid, thanks for all your honest commentary over the years. Really enjoyed starting earning season with your call for the last 112. I guess I haven't been around for all 112, but for a lot of them. If I could start with a question on data centers, right at the top, you said you're exploring additional capitalization strategies. Can you talk more about what that might look like? If you're looking at exploring, establishing a fund to buy out properties upon completion, or maybe more of a development fund, maybe just generally what your comfort level is on owning and operating data centers beyond development at this point. Thank you.

Thanks, Jon. Let me start and then maybe Tim will pile on here. But it might be helpful for me just to lay out what's going on in our data center business right now. We've talked a lot over the last couple of years about building an experienced and dedicated team from the industry. And we've been very successful in doing that, and we're going to continue to build the team into 2026. We also have incredible operational synergies between our core business and this data center team. With our procurement platform, you look at our distributed energy business now, just really significant synergies. And then this pipeline that we have is huge. It's really significant. 1.4 gigawatts of power and it's secured or under construction stage. Or the 3.8 gigawatts, in the advanced stages. So really incredible what this team has done in a very short period of time. We are continuing with the same strategy we've been sharing along the way, which is build-to-suits, with these hyperscalers. And it's really amazing just the active discussions and conversations and lease dialogue with these customers across our entire pipeline. As Tim mentioned in the script, every megawatt we can deliver over the next three years is already accounted for in conversation. So we have a big tailwind behind us there. And then if you think about our land bank, our 14,000 acres of land that we own or control, you look at our 6,000 buildings in these infill locations and think about how well we are set up for not only the current wave of AI demand but the next wave which will be inference. So these are big numbers and we have taken the next step of starting an exploration over what the universe of opportunities are, what is the art of the possible for us, in the data center business and capitalization. So we don't have any specifics to share with you now, but we hope to in the coming quarters.

And I will just pile on with one thought, Dan. It's just that in the interim, the balance sheet is obviously very capable of taking out a large volume of projects. We have almost $2 billion under construction in this last year or two, which we can easily grow given the scale and rating of the balance sheet.

Thank you, Jon. Operator, next question.

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 and congratulations, Hamid. My question is on the net absorption during the period. I think, Tim, you called out 47 million, which is a pretty material acceleration from the prior two quarters. So is there a way to think about how much of that was kind of pent-up demand from the uncertainty earlier in the year versus, like, what is kind of, like, the sustainable run rate? And then also just, you know, if you could talk a little bit about the cadence of leasing through the quarter so we can get a sense of if it's accelerating.

So, yeah, you're right. Net absorption, 47 million square feet. Yeah. There's some catch-up there from the second quarter. Parsing that, parsing the market statistics, is not something that we can do. We can look at our own leasing activity and there's a clear turning point in demand. There's a clear move higher. And so some of it is catch-up, but there's just a clear step higher. And this is revealed in a variety of things, including our pipeline, which remains full. And I just for context, as you make an assessment of these numbers, know that we think roughly 60 million square feet is a normal velocity, a quarterly velocity for the demand to improve in the coming quarters. Thank you, Michael.

Thank you. Our next question comes from the line of Steve Sakwa with Evercore ISI. Please proceed with your question.

Yeah. Thanks. Good morning. And, Dan, I echo many of the comments that you made about Hamid and really wish you luck moving forward. Maybe just following up on Michael's question about the supply and demand. As you look out over the next year or so, would it be your expectation that supply and demand are kind of largely in equilibrium? Or do you think they're still a little bit tilted more to supply outpacing demand? And I guess what are those expectations then for market rent growth as you look out over the next twelve months?

Thanks, Steve. Let me start, and I'm going to pass it over to Chris. The way you need to think about this right now is we're in a classic real estate cycle. Demand is strengthening. And we're seeing these large customers make decisions. That's the real big early sign of a recovery. And as supply remains low, as Tim mentioned in the script, it's below pre-COVID levels. And with occupancy and rents bottoming out, that's a good sign for what's to come. But, yeah, Chris can give you some more specifics.

Yeah. Absolutely. So, Steve, the key missing ingredient here was this new direction in demand emerged over the third quarter. And so we had roughly 95 million square feet of net absorption year to date, and we think the full-year number will be roughly 125 million square feet. So it's on a path of improvement that will emerge. How that plays through in '26? We think vacancy rates are topping out around this level. And that's based on, you know, working under construction pipeline. Stands today, which is 190 million square feet. And so we'll see deliveries decline into 2026. A lower hurdle for net absorption to begin to cause the market to tighten. And how demand comes through in the marketplace will be a product both of the pipeline we have today and the macro environment that emerges over the next ninety days and over the course of the year.

Thank you, Steve. Operator, next question.

Thank you. Our next question comes from the line of Ronald Kamdem with Morgan Stanley. Please proceed with your question.

Hey. Great. Congrats on Hamid as well. Very impressive. I guess my question was just, you know, you guys are calling for an inflection point here. In occupancy, in rent, and so forth. I just was hoping you could sort of double click and talk about sort of the different tenant categories, what you're seeing on the ground, then any sort of markets that are standing out like Southern California? Thanks.

Sure. It's Chris. So demand has clearly turned a corner. I hope you're hearing that. And the market is in an inflection point, an inflection period here. This comes from greater breadth and depth of our customer discussions and their willingness to make decisions. We're seeing it in leasing volumes as we described, including better new leasing, which had been quieter. And in our sustained elevated pipeline and lease proposals. As we look at market contours and the contours of our pipeline, I'd say it's substantially similar to the color we gave you ninety days ago. So there's good activity across early proposals and more mature negotiations. In terms of both new and renewal activity. And across a range of markets, the one area that stood out to us was still clear strength in the larger size categories. So that's clear above half a million square feet, but it's also broadening down to say over 250,000 square feet. So there is a move higher. As Tim described, the strength of our business is international in nature, so let's not lose that point. It's really, across all the geographies he named. And then in The United States, it's really in the Sunbelt.

Thank you, Ron. Operator, next question.

Thank you. Our next question comes from the line of Craig Mailman with Citi. Please proceed with your question.

Thanks. It's Nick Joseph here with Craig. And just to echo everyone else, congrats, Hamid, and best of luck. Just going back to the data center, kind of comments. I understand the value creation on the development side. How are you thinking about the normalized growth rate of data centers versus industrial, just from an owned perspective?

Well, I'll take the first part of that at least. I mean, I think if you think about so far what we have been doing on the exit side of these assets, selling them then we're contemplating a sell-down, which will be maybe substantially the same thing. The way we think about its contribution to the growth rate is really the reinvestment of that value creation back into the core business. You know, if we think about that in our logistics development portfolio, just to give you a rule of thumb, where we let's pick $5 billion as a run rate of development, investment and logistics ought to contribute about 150 basis points of additional growth per annum. So you could use that to benchmark a similar concept to the value creation you might expect we'll generate in this business.

Thank you, Nick. Operator, next question.

Thank you. Our next question comes from the line of Caitlin Burrows with Goldman Sachs. Please proceed with your question.

Hi. I guess, congrats, Hamid, on everything, and given it's your last call, I guess there's something you wanna be able to talk about on the call. So I was wondering on the press release, you mentioned that you believe one of the most compelling setups for logistics, rent and occupancy in the past four years. I feel like we've talked about it a bunch, and everybody's talked about turning the corner, but everybody likes to hear your views. So wondering, last quarter, you mentioned that market rents growth could happen in 2027. Wondering if that's still your view, and is it just I guess, when we think of, like, more details on that comment in the press release, is it, setup for 2027 as opposed to, like, something more near term? I feel like it piqued some interest. So wondering if you discuss a little bit.

Sure, Caitlin. Here's the way I look at all of these cycles, including recovery from the global financial crisis and other things. At the end of the day, it is the rate of return and replacement cost that drive long-term rents. So we have a bogey out there. I don't know whether it's six months out, a year out, or two years out. I really don't know. But I know when the market stabilizes, it will stabilize at a much higher level than today's rent. So really, what you and we and everybody else has to handicap is what is the catch-up slope from where we are today to that higher trend line which is gonna grow over time with inflation and all that. But that trend line is significantly above today's rents. We can argue how much and, you know, I think it's about 40% over in place. And probably 20 to 25% above market rents today. But we can debate that. But you know, depending on how long out you assume for that, it will affect your growth rate, but those growth rates will be really high. And let's assume that it takes another quarter or two before we get on that trajectory. It doesn't matter because during a quarter or two, we lease relatively small amounts of space and those marginal differences in rent don't matter much. What ultimately matters to the earning power of this company, which I acknowledge may be past the window that you guys are most interested in. Or may not. That is what excites me about this business.

Thank you, Caitlin. Operator, next question.

Thank you. Our next question comes from the line of Vikram Malhotra with Mizuho. Please proceed with your question.

Morning. Thanks so much, and Hamid, really going to miss you on these calls. Hopefully, we hear from you in some other shape or form. Hopefully, you'll perhaps you'll start a blog or a podcast, which will be helpful. But congratulations and wishing you all the best for your next move. Maybe just a quick I just wanna clarify one thing, and then my question really is, you've talked a lot about bottoming. You said market vacancy is likely bottoming given Prologis, Inc. typically outperforms. I'm sort of wondering what your view is on the direction of Prologis, Inc.'s occupancy into Q4 specifically. And know, broadly next year and what that means for rent growth in Prologis, Inc.'s markets. And then just to clarify, Hamid, you mentioned, you know, on Caitlin's question, I just wanted to get a bit more specific on the next year or so that the biggest opportunity you see you know, specifically, is it more in vacancy? Is it more in rent growth? Or is there something else you're thinking about bigger picture in terms of the opportunity? Thanks so much.

Hey. Hey, Vikram. I'll start. Good multipart question there. Well done. On occupancy, you can unpack our average occupancy guidance. Obviously, it provides a range of outcomes given just there being a quarter left. But look, I'm reasonably confident we're gonna sustain around this level. It'd be a consistent commentary with what we said about the market. And we'll be looking for opportunities to build from there, going into 2026.

You asked about the market landscape. I think that was question two. And as it relates to the rent forecast, let me describe how hard it is to have an inflection conviction at this point. At an inflection point. And so let's just level set. Market vacancies, seven and a half percent today. Gonna hang around this level for a while, for a couple quarters, let's say, and improve through '26, later in '26. And that's gonna be a product of the supply that's coming in the marketplace. By the way, development starts are 75% below peak and running 25% below pre-COVID levels. And demand ran 47 million square feet in the quarter, and has a potential to improve over the course of the coming year, but perhaps not quite get back to normal just given the broader macro landscape, notwithstanding the momentum we have with our customers. And so the thing that I think you'll see on rent growth, without giving you a specific number, is the weakness, the softer markets, are dissipating. And there's a wider range of better and stronger markets, and that's gonna really evolve over the course of the next year.

Let me just pile on one more thing before Hamid comments on whether or not he's gonna start a blog or a podcast. No. Okay. You got that answer already. But going into 2026, our priorities remain the same. If you look at our build-to-suit pipeline right now, it remains robust, and we're having a phenomenal year with build-to-suits, 21 deals signed. 75% of that volume has already started this year. You expect to see the rest of it start through the end of the year. And we're in conversations on nearly 30 million square feet of new deals. So really excited about that. It's by far the best incremental return on our investment. And then you look at our data center business. Data center business is significant and gonna continue to invest and keep that a high priority. And then, if you, also, we're gonna have started spec in 18 markets this year. And I can see that actually opening up a bit more especially as Chris mentioned internationally. And then even in several pockets around The United States. So plenty of priorities and big things to look into '26 and be excited about. Thank you, Vikram. Operator, next question.

Thank you. Our next question comes from the line of Samir Khanal with Bank of America. Please proceed with your question.

Yeah. And thanks a lot. I guess congratulations from our side as well, Hamid. Tim, can I ask you to provide more color on the customer sentiment you talked about, the strengthening in your opening remarks? Clearly, there is a tariff news you get, you know, pretty much on a weekly basis creates the volatility? But are customers now at a point where, you know, they think this is sort of the new normal and are more comfortable making long-term decisions as we think about sort of this inflection in occupancy? Thanks a lot.

Yeah. Samir, this is Dan. Yes is the answer to your question. Customers have definitely become more desensitized to the short-term noise as they look at making long-term decisions. It's great to see these well-capitalized large companies leading the way because we typically see the small and medium businesses follow suit here. So overall, they need to make these long-term decisions and can no longer be held back. Thank you, Samir.

Thank you. Our next question comes from the line of Nick Thillman with Baird. Please proceed with your question.

Good morning out there and congratulations, Hamid. I guess kind of looking at the overall we understand demand is kind of getting back to its long-term average. Starts coming down. Tim, I just kind of wanted to hear a little bit on just credit risk, and private credit. I guess are you seeing anything in the portfolio that might give you a little bit of pause when you're looking at just kind of vacancy peaking here and then the ability to build occupancy, any sort of risk within the portfolio or broader market in general?

No. I would say not in the way you're asked. I mean, bad debt expense is elevated. We've been talking about that over the course of the year and even coming into the year pre-tariffs. We had an expectation for a little bit elevated level may have expected in the thirties at the beginning of the year, and our experience is probably gonna be forties in terms of basis points on revenue. Well below some of the higher numbers we had seen in past crises. And, you know, we've taken the opportunity in this last cycle where you know, it's very challenging to get space, and we could do more around customer selection. And credit and did a great job improving the overall credit health of the portfolio, and I think that shows up in these statistics.

Thank you, Nick. Operator, next question.

Thank you. Our next question comes from the line of Vince Tibone with Green Street. Please proceed with your question.

Hi. Good morning, and congratulations again, Hamid, from the entire Green Street team on a great career. And then just yeah. I have one more question on the data center business. I just would like, you know, like to understand how much data center development you'd be comfortable starting. And, again, given you're having, you know, under construction at any given point in time. But just trying to get at, like, how quickly you could potentially realize the large value, you know, value creation potential from the data center land bank? Like, what's the constraint from doing, you know, 3 plus billion of data center starts in a given year? It seems like demand is there and the power is secured. So I'd love to just kind of get a sense of what the realistic pace of starts or how you're really thinking about that dynamic.

Hey, Vince. It's Tim. I don't know that I see a limit. 3 billion is a very easy number, honestly, to handle. I think, you know, if we were talking about a speculative program, that's where we would have a lot of consternation about what's the appropriate number and getting out on a limb. Our approach here on build-to-suits together with the debt capacity in our balance sheet, the liquidity, the takeout options we're exploring, we're not constraining ourselves. And that's why we're very active in pursuing, I hope it's getting underscored here, the incredible amount of energy we have now gathered. And the volume of customer conversations that we're having is also very high. So we're gonna see volumes come through. Preparing for them. And we're ready for them.

Yeah. And, Vince, the way I think about it is power will be the constraint. Going forward. It won't be capital. Thank you, Vince. Operator, next question.

Thank you. Our next question comes from the line of Blaine Heck with Wells Fargo. Please proceed with your question.

Great. Hamid, congrats on all your success. Best of luck, and I hope we can stay in contact. You guys talk a little bit about your updated thoughts on the transaction market and acquisition opportunities and whether you've seen any movement in cap rates or pricing in general as the ten-year has showed some moderation more recently?

Thanks, Blaine. The transaction market's been surprisingly resilient. As a matter of fact, volumes in '25 are up about 25% year over year. So we're seeing a lot more out there. Overall pricing is pretty consistent. Market cap rates in the low fives and then I would say IRRs in the low to mid-sevens, obviously, on low location and product type and maybe one of the biggest drivers is how much Walt is left. People are more focused on shorter-term Walt today than before. Thank you, Blaine.

Thank you. Our next question comes from the line of Mike Mueller with JPMorgan. Please proceed with your question.

Yeah. Hi. Thanks. Congrats, Hamid, as well, and best of luck. I guess the question, can you talk about the pace of spec development leasing today and if you're seeing notable improvement there recently as well?

Hey, Mike. It is getting better. Yeah. We, you know, we would typically seven to eight months, I would say, on the lease time across spec. That did extend probably over twenty-three, twenty-four by a month, a month and a half on average, and we're slowly seeing that come back to its historical norm. So yes.

Thank you, Mike. Operator, next question.

Thank you. Our next question comes from the line of Nicholas Yulico with Scotiabank. Please proceed with your question.

Thank you. So, you know, just looking at the rent change that you guys quote, the cash net effective rent change mark to mark on leasing that happens in the quarter, it's you know, came down over the past year and was just hoping you could break out maybe some of the impact of that from, you know, one, just cycling through now some tougher, you know, lease expiration comps maybe, you know, COVID leases, you know, in impacting that number? And then also on, you know, the renewals, if you could just talk about if you know, since your retention's up, occupancy's starting to pick up, if you've been running a sort of occupancy first type strategy where you're willing to negotiate more on, renewals and know, that's impacted mark to market. And, you know, as we think about, this potential for inflection here in your portfolio, You know, is there some help that comes to the mark to market number because of, any of these factors changing? Thanks.

Yeah. Let me start with the prospect of rent change and kind of how the lease mark to market is gonna sustain. You know, even the fact that that's come down to 19% this quarter, I'm quoting that effective here is 22% last quarter. It's really important to contrast that with what our rent changes, though, in the immediate. Which is in the low fifties, as I mentioned. So it does really highlight a wide potential for rent changes off of that average. And this is also an opportunity to remind you to take a look at our expiration schedule available in the supplemental. We cast out what the expiring rent is over the next five years. You can unpack from that same schedule what we see as market rent and see positive rent change in the forties is what you'll get mathematically next year. You'll see in the thirties, the following twenties, and the following. That's without any further market rent growth. In fact, all the way through that expiration schedule, you'll see uplift. So I think that is a not perfectly understood or appreciated story, so I'm glad you honed in on that. With regard to pushing rents, I think was sort of the second part of your question. We are. You know, you may recall in years past, we've talked about an active measurement we take where we kind of watch the teams and understanding how many deals are being lost. Due to rents. In the go-go days, 21, '22, we are looking to see a meaningful number there. We want to see that aggressiveness in negotiations. And that ground down to about zero. Maybe in '23, some of '24. We're starting to see that lift up again, which is showing the courage as some of the market conditions tighten. To lean in on those conversations and push rents again. It's gonna happen in different markets at different paces, but it is beginning.

Thank you, Nick. Operator, next question.

Thank you. Our next question comes from the line of Brendan Lynch with Barclays. Great. Thank you. I wanna echo everyone's congratulations to Hamid. I think there'll be case studies written on your career and the company built for decades to come. In terms of my question, talk about a third of your customers serving basic daily needs, about a third serving cyclical demand. And about a third catering to more structural trends like e-commerce. Could you talk about where you're seeing the biggest changes in leasing and which of these buckets have more or less strength at present?

Sure. It's Chris. I'll jump in. So where are the areas of biggest strength? I think for sure e-commerce is part of the story. It's running at nearly 20% of new leasing. So that's an area of strength. That's a global phenomenon. That's a range of markets phenomenon. It's also particularly, infill as service levels continue to improve. So e-commerce would be part of that story. And then I would say stable growth businesses, so your food and beverage, your medical companies, these are companies who are investing in their supply chains to improve service levels and also manage their costs. They're looking at their networks. They're looking at their labor spend and managing their cost. And so there's a supply chain investment there. Then the question would be maybe where's where is their softness? And I would offer there is some cyclical spending categories that are subdued. So I look at the auto space, I also look at housing-related categories. So for example, furniture. Those are areas where perhaps high interest rates have led to less robust growth in those industries generally, and so we have fewer requirements coming in from those categories.

Thank you, Brendan. Operator, next question.

Thank you. Our next question comes from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed with your question.

Hi. Good morning. Thanks so much, and congrats, Hamid. Best of luck. I wanted to ask about the revised guidance. It implies a sequential decrease in core FFO of about $0.06 at the mid. Just curious if you can discuss some of the moving pieces that we should be thinking about some of the puts and takes heading into the fourth quarter. And as we think about 2026.

It's a one of the, you know, there's a few elements here, and it gonna point to the need to rely on the kind of the full year to step back. A lot of what occurred in the in the third quarter were some timing really in two categories I'd highlight. One is in the timing of sales of investment tax credits. These are credits you may recall that are generated out of our solar and energy business. We generate more credits than we can use on our own return. We sell excess credits. That happens upon the completion and stabilization of particular projects, and that timing across quarters can be uneven. We had a particularly large quarter of that in the third quarter, and you may have seen that represented in the other income line in our P&L. That is no change to our full-year forecast. That's fully expected on the full year. It's just the lumpiness between quarters. So between that and the other larger area would just be G and A. We'll lighter G and A quarter due to the timing of some particular items. It'll be a little bit heavier in the fourth quarter. Those two things, when normalized, explain what looks like a deceleration. And, you know, if you're trying to unpack kind of a run rate looking ahead of 2026, I've used more of the second half of the year versus the fourth quarter. It will tell you a little bit more. You know, on that point, as we look ahead to 2026, I'd call back to, you know, the building blocks that we've talked about in the past of what long-term earnings ought to look like for Prologis, Inc., which is high single digits. We get there through not just the base of same-store growth, but after leveraging that with our financial and operating leverage, piling on the value creation to accretion we spoke about earlier, and the contributions from the essentials businesses. These are all the things that keep you there. Into 2026, that's all in play with two headwinds to continue to be mindful of. One would just be about the march up on interest rates here that is still present. You know, with the long average remaining life we have in our debt portfolio, it'll be moderate, but it is kind of anti-accretive to the bottom line if you think about it in that way, and that will still be in play for us. And the other thing that is will be occurring as we go through this transition and capital deployment. You know, last year, 2024, was our lightest year of development starts since our merger, which is really kind of incredible to think about. So its contributions at stabilization, which will be broadly in 2026 to that growth rate are nearly absent. They'll be quite low. At the same time that we're really excited about the capital we're gonna be reinvesting into not only just logistics, but also data center. So that deployment drag is, as we've called it in the past, will be a bit more present next year. I think a simpler way of thinking through all of that might just be that a lot of the way we're looking at '26 right now feels like the way we were looking at '25, one year ago. So hopefully that helps.

Thank you, Todd. Operator, next question.

Thank you. Our last question comes from the line of John Kim with BMO Capital Markets. Please proceed with your question.

Hey. Congrats to Hamid certainly on the Mount Rushmore. We wheat fields in her book. But I'd like to ask about the direction of same-store NOI given your guidance for the year. It implies basically that, that slows down to about 3.5% in the fourth quarter despite occupancy improving. I wanted to see if that was a realistic figure for you. And, also, if you can remind us how you treat solar income in same-store. Is it part of your same-store results given they are additive to existing assets?

Yeah. John, you know, as a statistic you guys can't see from our disclosure is what is this average occupancy within the same-store pool itself. And given our M&A and a lot of changes to what comprises same-store it can be a markedly different number at times. And in that regard, the average occupancy in that pool a year ago was quite high actually. And so we have that comp to work against here in the fourth quarter, and that's really what you're probably seeing in the deceleration. Rent change is really what I would stay focused on. And that's gonna remain very, very strong. Yeah. Solar revenues and their expenses do appear in NOI. They are very small at this stage. I would highlight and relatively flat probably across years. Their growth rate is not as significant as what hope to see in the logistics front.

Thank you, John. Operator, final question please.

Thank you. Our last question comes from the line of Craig Mailman with Citi. Please proceed with your question.

Hey, guys. Thanks for the follow-up here. And Hamid, echo everyone say you'll be missed and best of luck in the next chapter. And I guess since I'm the last question, I'll try to pop two in here. Just a clarification on Nick's earlier question about how you guys think about the growth rate for the data center side. I guess we were thinking more same-store growth of a hyperscale portfolio versus that of an industrial portfolio from an owned perspective and how you guys think about that as you're evaluating these different structures to potentially hold deals longer or in perpetuity, and then the second question, Tim, I know in the past you've talked about the gap between new lease signings and when they actually commence. And so I'm just kind of curious from an average occupancy perspective, with the reacceleration of leasing you had here kind of the third quarter and hopefully into the fourth, when we should really start to see that average occupancy inflect quickly back up into 95% and because I guess everyone's asking about same-store and earning and that would be in my view, probably a big piece of that acceleration.

Okay. Craig. So I think that the way you're framing some of the growth discussion around data centers is just not how we're thinking about it. You know, going back to I guess it was Nick's comments. We really do think about the value creation reinvestment back into our core business. I recall comments on this back at our investor day in 2023, and we've stuck with that. Now we may retain some interest as we've been talking a lot about here. But in that regard, then its contributions to base rent and same-store growth will be relatively small. Right? Because we'll just have a small proportionate share of those earnings. And, you know, I think it also highlights I'm not sure if this was intimating your question, but we wouldn't look at our willingness to stay in the business or grow it more or less based on its same-store growth profile. You know what I mean? That's an earnings concept. That's a gap concept. We're gonna look at all of these investments from a total return and value creation perspective. That's what you see in our strategy. You wanna hit occupancy? Hey, Craig. I'm going to understand your question on returning to 95% is really a market question given where the company is leased. So just to be clear, the market is seven and a half percent vacant today, and we see it hanging here for a period of several quarters, let's say, and improve through '26, later in '26. And that's gonna present recovery opportunity. I want to make a long-term comment on that market vacancy. We enter this new phase of the market at a substantially lower market vacancy as compared to prior cycles. We're talking about hundreds of basis points of superior starting point as compared to the prior cycles. And so that's gonna set up the market for the rent dynamic and the optimism that Hamid shared earlier.

Thank you.

And ladies and gentlemen, we have reached the end of the question and answer session. I'll now turn the call back over to management for closing remarks.

Thank you. This is Hamid, and thank you, And so many of you said so many nice things in this forum and elsewhere. In the last couple of weeks. Before I wrap it up, I just wanted to share a brief personal note with you guys as my role as CEO. Yes. It has been forty-two years, twenty-seven of which have been a public company and 112 calls. I guess Warren Buffett has beat me on longevity, but since he doesn't do calls, I'm gonna have this record on calls for a while. But when we started this business in '83, it was a tiny startup. The world was just a very different place in terms of our industry. Today, Prologis, Inc. is one of the most valuable property companies in the world. And the business has become highly professionalized and has grown in its scope and global footprint. To witness that arc and to have had the privilege of leading this company through it all, it's been surreal. We've navigated financial crises, geopolitical shocks, and more than a few once-in-a-lifetime events. Sometimes it feels like one of those every quarter. But here's the truth. Our success has very little to do with me. It's been really the result of working with great colleagues, great partners, service providers, investors, loyal customers, and of course, a generation of you analysts and your many questions, many pesky questions because it made us better. That and a little good fortune and maybe a few good decisions along the way have been what has made this company what it is today. What I'll remember is not the deals or the numbers but really the people and the culture. And that's what the foundation and the secret sauce to this company. So I'm stepping aside with complete confidence and I better be that way since more than half my net worth is invested in this company. So I take this transition very seriously. And I know that our next chapter is in the hands of an exceptional leader supported by a terrific team. They embody the same vision and values that have always defined and driven Prologis, Inc. These are the people who make Prologis, Inc. even will take Prologis, Inc. even further. I really believe, and I want to underline this, and I say it every year almost. That the best years of Prologis, Inc. are still ahead of it. We are building a company of enduring excellence. It's been our mission, and I know we'll continue to guide everything we do. So to all of you, colleagues, customers, investors, analysts, and the press, thank you for your trust, your candor, and your partnership. It's been an honor of my professional life to lead this company. And I couldn't be prouder of where we are and where we're going. Okay, Dan. And the team will speak to you next quarter, and I may be the questions then. Thank you. Goodbye.

Thank you. This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation. Have a great day.