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    PLD
    Earnings call· Mar 2026(Q1 FY26)

    Prologis Q1 FY26 earnings call PLD

    Apr 16, 2026 Source

    Executive summary

    Prologis, Inc. Q1 FY26 — Record Leasing and Data Center Expansion

    Prologis delivered a strong Q1 FY26, marked by record leasing activity and significant expansion into data center development, leveraging its land bank and strategic capital partnerships. Despite geopolitical uncertainties and elevated concessions in some markets, the company raised its full-year FFO outlook, reflecting resilient demand and disciplined execution across its global platform. The focus remains on compounding growth through logistics, digital infrastructure, and energy initiatives.

    Highlights

    5

    • Achieved record leasing with 64 million square feet of signings in Q1 FY26.

    • Occupancy of 95.3% exceeded expectations, leading to a raised full-year outlook.

    • Initiated $2.1 billion in development starts, including $1.3 billion in data center build-to-suits.

    • Expanded strategic capital platform with $1.6 billion JV with GIC and $1.2 billion JV with La Caisse.

    • Core FFO (excluding promote) of $1.52 per share, ahead of expectations, with full-year guidance raised by 80 basis points at midpoint.

    Concerns

    4

    • Geopolitical uncertainty from the Middle East conflict introduced risks of higher energy prices, inflation, and interest rates.

    • Net effective rent change was more muted at 32% in Q1 FY26, primarily due to market mix.

    • Lease mark-to-market declined to 17% on a net effective basis, though the rate of decline has slowed.

    • Concessions remain elevated, with free rent ticking up to 7.3% of lease value, influenced by softer conditions in the West.

    Guidance & targets

    13
    CategoryTargetConfidence
    Average occupancy
    95% to 96%
    medium materiality
    High
    Net effective same-store NOI growth
    4.75% to 5.5%
    high materiality
    High
    Cash same-store NOI growth
    6.25% to 7%
    high materiality
    High
    Strategic capital revenue
    $660 million and $680 million
    medium materiality
    High
    G&A
    $510 million and $525 million
    low materiality
    High
    Development starts
    $4.5 billion to $5.5 billion
    high materiality
    High
    Development starts - Data Center allocation
    approximately 40%
    high materiality
    High
    Acquisitions
    $1 billion and $1.5 billion
    medium materiality
    High
    Combined contribution and disposition activity
    $3.5 billion and $4.5 billion
    medium materiality
    High
    Net earnings per share
    $3.80 and $4.05
    high materiality
    High
    Core FFO per share (including net promote expense)
    $6.07 and $6.23
    high materiality
    High
    Core FFO per share (excluding net promote expense)
    $6.12 and $6.28
    high materiality
    High
    Full year net effective rent change
    approach 40%
    medium materiality
    High

    Operational metrics

    20
    Core FFO per share (including net promote expense)
    $1.50
    Q1 FY26

    Ahead of expectations.

    Core FFO per share (excluding net promote expense)
    $1.52
    Q1 FY26

    Ahead of expectations.

    Retention rate
    nearly 76%
    Q1 FY26

    Remained very strong.

    Development starts
    $2.1 billion
    Q1 FY26

    Total new development starts.

    Development starts (logistics)
    $850 million
    Q1 FY26

    Portion of total development starts allocated to logistics.

    Development starts (data center)
    $1.3 billion
    Q1 FY26

    Portion of total development starts allocated to data centers, pre-leased on a long-term basis to leading technology companies.

    Speculative logistics starts percentage
    approximately 75%
    Q1 FY26

    Reflecting improving fundamentals and confidence in new supply.

    Installed solar capacity
    1.3 gigawatts
    Q1 FY26

    Total installed capacity after completing 42 projects during the quarter.

    Assets sold or contributed
    $1.2 billion
    Q1 FY26

    Included activity within U.S. Agility Fund and seed assets for new venture with GIC.

    Prologis Ventures investment
    $300 million
    Cumulative

    Total investment across more than 50 companies by Prologis Ventures.

    U.S. markets absorbed square feet
    45 million
    Q1 FY26

    Solid result on a seasonally adjusted basis, slightly ahead of forecast.

    U.S. construction pipeline as percentage of stock
    1.7%vs 10-year average of 2.6%
    Q1 FY26

    Favorable, aiding the U.S. vacancy rate.

    Global market rent growth
    30 basis points
    Q1 FY26

    First increase in 2.5 years.

    Cap rates on market rents (core assets)
    around 5%
    Q1 FY26

    For assets with strong locations, functionality, and credit.

    Unlevered IRRs (core assets)
    mid-7s
    Q1 FY26

    For assets with strong locations, functionality, and credit.

    Third-party equity raised
    $2.6 billion
    Last 2 quarters

    Raised through new ventures, aligning capital with growing investment opportunities.

    New financing raised
    $5.5 billion
    Q1 FY26

    Includes $3 billion recast of a credit facility.

    Credit facility spread
    63 basis points
    Q1 FY26

    Lowest of any REIT.

    Large format (500k+ sq ft) leased percentage
    98%
    Q1 FY26

    Nearly sold out across the globe at that size.

    Data center suppliers share of new leasing
    10%vs less than 5% a year ago
    Q1 FY26

    Growing demand driver, with an even greater share in the forward-looking pipeline.

    Industry KPIs

    9
    MetricValueDetails
    Lease mark to market17%%
    Quarterly leasing volume64 millionsquare feet
    Bad debt credit loss levelunusually low
    Turnover costs and concessions7.3%%
    Market fundamentals rent growth30 basis pointsbps
    Leasing spread net effective basis32%%
    Development starts dollar value and mix$2.1 billionUSD
    Same store noi growth cash vs net effective6.1% net effective; 8.8% cash%
    Data center conversion optionality on the land b5.6 gigawattsGW

    Orderbook & backlog

    2
    Data center power pipeline under LOI1.3 gigawattsQ1 FY26

    All power pipeline in some level of discussion; represents potential for over $15 billion of investment.

    Data center power pipeline secured or advanced stages5.6 gigawattsQ1 FY26

    stabilization of another 150-megawatt facility during the quarter

    Represents utility load, approximately two-thirds of which will be critical power.

    Deals & partnerships

    3
    GICJoint Venture$1.6 billion

    New venture to develop and hold U.S. build-to-suit opportunities. Seed assets contributed during Q1.

    La CaisseJoint Venture$1.2 billion

    Expansion of relationship through a pan-European venture focused on both development and acquisition strategies.

    nullAcquisition Vehicle

    New acquisition vehicle launched in Japan.

    Risks & headwinds

    4
    Geopolitical uncertainty (Middle East conflict)Recent weeks, ongoing

    Higher energy prices and renewed pressure on inflation and interest rates.

    Mitigation: Operating with heightened awareness, monitoring data and customer insights; structural drivers of growth remain in place.

    Slower customer decision-makingCurrent

    Marginally slower decision-making

    Mitigation: No meaningful evidence of pullback to date; 2026 business plans are unchanged for most customers.

    Muted net effective rent changeQ1 FY26

    32% in Q1 FY26

    Mitigation: Primarily driven by market mix (40% of roll in West region); full year expectation for 40% remains unchanged.

    Elevated concessions / free rentQ1 FY26

    Free rent ticked up to 7.3% of lease value

    Mitigation: Influenced by softer conditions in the West; expected to normalize as occupancies build, targeting around 3% of lease value.

    Q&A highlights

    6

    Asked about the slightly lower leasing spread in Q1 and how Prologis balances occupancy versus pushing rents for the rest of the year.

    Tim Arndt explained that the Q1 net effective rent change of 32% was impacted by market mix, with 40% of roll-over in the softer West region. He noted that the strategy is deal-by-deal and market-by-market, pushing rents in tight markets while preserving occupancy in others.

    “Ron, yes, the quarter, I mentioned there was some mix going on in the numbers you see about 40% of the role by happen stands happen to be in our West region in the U.S. where we have some softer conditions and lower lease mark-to-market, as you're aware.”

    asked by Ronald Kamden · answered by Timothy Arndt

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 Performance Highlights

    Prologis reported a solid first quarter for 2026, with core FFO (excluding net promote expense) reaching $1.52 per share, surpassing expectations. The company achieved record leasing activity, signing 64 million square feet, and ended the quarter with 95.3% occupancy, which was above internal forecasts. These operational strengths contributed to an upward revision of the full-year FFO guidance by 80 basis points at the midpoint.

    02

    Strategic Expansion into Data Centers

    A key focus for Prologis is the expansion into data center development, with $1.3 billion of the $2.1 billion in Q1 development starts allocated to data center build-to-suits. The company highlighted significant customer interest, noting 1.3 gigawatts under LOI and 5.6 gigawatts of energy secured or in advanced stages. This strategic move leverages Prologis's land bank, power access, and development expertise to capture a growing share of the digital infrastructure market.

    03

    Capital Formation and Partnerships

    Prologis successfully expanded its strategic capital platform, closing commitments for three additional vehicles. This included a $1.6 billion joint venture with GIC for U.S. build-to-suit opportunities and a $1.2 billion pan-European venture with La Caisse. These partnerships, along with others, have raised over $2.6 billion in third-party equity, demonstrating strong investor demand and enabling capital-efficient growth across diverse investment opportunities.

    04

    Market Fundamentals and Rent Dynamics

    The company observed an inflection point in market fundamentals, with demand strengthening and vacancy rates topping out. Global market rents grew 30 basis points in Q1, the first increase in 2.5 years, and are expected to continue growing unevenly. While net effective rent change was 32% in Q1 due to market mix, the full-year expectation remains at 40%. The lease mark-to-market stood at 17%, representing $750 million of embedded NOI.

    05

    Geopolitical Backdrop and Customer Behavior

    Management acknowledged the increased economic uncertainty from the Middle East conflict, potentially impacting energy prices and interest rates. However, they noted that customer decision-making, while marginally slower, has not shown meaningful evidence of pullback, with 2026 business plans largely unchanged. Leasing activity, proposal volumes, and the build-to-suit pipeline continue to indicate strong underlying demand.

    06

    Supply Chain Innovation and Ventures

    Prologis celebrated the 10-year anniversary of Prologis Ventures, its corporate venture capital arm, which has invested $300 million across over 50 companies. This initiative provides insights into emerging technologies and solutions in the supply chain, helping the company stay ahead of disruption and drive innovation. This strategic investment in technology complements its core real estate business.

    AI-generated summary of the company’s earnings call. Not investment advice.