Prologis, Inc. · NYSE:PLD
Prologis — Barclays Global Financial Services Conference 2016
35 slides from Prologis's conference presentation, Sep 12, 2016
Slide 1: Prologis Barclays Global Financial Services Conference
09.12.16 Prologis Barclays Global Financial Services Conference
Slide 2: Forward-Looking Statements / Non Solicitation
Forward-Looking Statements / Non Solicitation This presentation includes certain terms and non-GAAP financial measures that are not specifically defined herein. These terms and financial measures are defined and, in the case of the non-GAAP financial measures, reconciled to the most directly compara
Slide 3: Glossary of Terms
Glossary of Terms FFO | Funds from Operations: Measurement used by us to assess REIT performance; similar to net earnings with adjustments for depreciation and other items AFFO | Adjusted FFO: Measurement used by us to calculate REIT cash flow; adjustments from FFO include subtracting recurring capi
Slide 4: Contents
Contents 10 Section 01 Why Logistics Real Estate 16 Section 02 Our Business Model 23 Section 03 Why Prologis Now 30 Section 04 Heritage & Sustainability Prologis Park Marston Gate, Midlands, United Kingdom
Slide 5: We are Essential to the Global Supply Chain
We are Essential to the Global Supply Chain • World’s leading owner, operator and developer of logistics real estate • We build, lease and operate distribution space to facilitate the flow of goods around the world • Our irreplaceable portfolio is concentrated in key markets at the intersection of g
Slide 6: Prologis at a Glance
Prologis at a Glance 1983 FOUNDED IN ASSETS UNDER MANAGEMENT $65B 666 MSF GLOBAL 100 MOST SUSTAINABLE CORPORATIONS ON FOUR CONTINENTS CREDIT RATING OF NYSE: PLD Baa1/BBB+ S&P 500 MEMBER Note: A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision o
Slide 7: Local Partner to Global Trade
Local Partner to Global Trade 666M 3,347 5,200 Square Feet Buildings Customers U.S. 378 MSF 71% of NOI(1) Europe 179 MSF Asia 19% of NOI(1) 55 MSF 3% of NOI(1) Other Americas 54 MSF 7% of NOI(1) 1. NOI calculation based on Prologis share of the Operating Portfolio 7
Slide 8: We are a Trusted Partner to the World's Best Brands
We are a Trusted Partner to the World’s Best Brands Our Customers and Revenue Reflect a Diverse Cross-Section of Industries • Property usage includes Portfolio Composition by Industry(1) consumer and B2B distribution, e-fulfillment and light assembly Transport & Multi-Industry 3rd 20% Party Logistic
Slide 9: Our Portfolio is Located in the Major Logistics Markets
Our Portfolio is Located in the Major Logistics Markets Cumulative U.S. Gross Leasable Area (GLA)(1) Superior portfolio generates long-term Top 10 Logistics Markets, Ranked by GLA rental rate growth and value creation 80% Barriers for new development include: 56% of our GLA 70% is located in the • P
Slide 10: Why Logistics Real Estate
Section 01 Why Logistics Real Estate Prologis Park Isle d’Abeau, Lyon, France
Slide 11: Unique Benefits of Logistics Real Estate
Unique Benefits of Logistics Real Estate • High risk-adjusted returns and low volatility • Market stability due to short development cycle that enables supply to closely match demand • Low levels of capital expenditures in relation to NOI • Challenging to assemble quality in quantity and difficult t
Slide 12: Logistics Real Estate: A High Performing Asset Class
Logistics Real Estate: A High Performing Asset Class Total Returns Forecast, 2016-2020E 1995-2005 (%, unleveraged pre-fee and before tax) (%) 9 13 12.7 Appreciation 12.2 12.3 12.4 Income 12 8 11 10 7.1 6.8 7 9 Logistics Office Retail Apartment 6.4 6.4 Source: NCREIF, data from Q1 1995 through Q4 200
Slide 13: Demand Drivers for Logistics Real Estate are Secular
Demand Drivers for Logistics Real Estate are Secular Portfolio benefits: Steady Expansion of Consumption Growth of Global Trade Global Consumption, Inflation Adjusted Imports as a % of GDP ($,T) • Logistics real estate is 30% 70 positioned to outperform 60 across cycles 50 25% 40 • Customers invest
Slide 14: E-Commerce – A New Driver of Demand
E-Commerce – A New Driver of Demand E-Commerce Sales Expected to Double Over the Next Five Years E-fulfillment requires 3x the Global E-Commerce Sales Volume and Share of Total Retail Sales logistics space used by brick-and- ($B) 3,500 14% mortar retailers due to: 3,000 12% • Shipping parcels versus
Slide 15: E-Commerce is Reshaping the Retail Landscape
E-Commerce is Reshaping the Retail Landscape Growth in Sales Notable Retail Bankruptcies E-commerce Versus Brick-and-Mortar Retail Over Last Several Years (Index, 100 = 2005 Sales Volume) 500 E-fulfilment is taking market share from 450 traditional brick- CAGR= 14.1% and-mortar 400 retailers 350 300
Slide 16: Our Business Model
Section 02 Our Business Model Prologis Park Cajamar, São Paulo, Brazil
Slide 17: Unique Business Model
Unique Business Model Strong, Interconnected Enterprise Designed for Superior Results Operations + Strategic Capital + Development Generates $1.8B in Produces $165M in Creates ~$375M in annual NOI(1) recurring fees and value from starts promotes(2) annually(3) 71% 68% 65% 35% 29% 32% U.S. Outside th
Slide 18: Operations
Operations We Generate $1.8B in Annual NOI(1) Brazil Circle size is based on pro rata NOI • Our global operating portfolio of 618M square feet spans four continents • Since 2012, occupancy has increased 210 bps to 96.1% and rents have grown 9%, on average annually, over expiring leases • Significant
Slide 19: Strategic Capital
Strategic Capital We Earn $165M in Recurring Fees and Promotes $26B in third-party capital: Third-Party Assets Under Management Third-Party Fees and Promotes(1) As of June 30, 2016 • Increases revenues and further diversifies our geographic reach $17.0B • Enhances return on equity Durable fee • Alig
Slide 20: 15-Year Track Record of Profitable Development
15-Year Track Record of Profitable Development Total Investment Since Merger $24.9B 19.3% $5.3B Total Gross Margin Investment $1.4B Created Gross Value Gross Unlevered IRR(1) 27.1% Gross Margin 19.5% Gross Value Created $4.8B 36.8% Gross Unlevered IRR(1) Net Unlevered IRR(1) 20.4% Net Unlevered IRR(
Slide 21: Development
Development We Develop ~$1.8B in New Buildings Annually(1) We develop to: Development Start Volume and Expected • Meet customers’ needs globally NAV Creation(2) • Deepen our market presence Development drives $1,500M future earnings • Refresh portfolio quality $244M growth as projects stabilize and
Slide 22: Sustainable Cash Flow Growth
Core FFO Growth Sustainable Cash Flow Growth CAGR = 10.0% Per Share $2.55 $2.23 $1.88 Adjusted Funds from Operations (AFFO)(1) $1.74 $1.65 CAGR = 17.9% Per Share 2012 2013 2014 2015 2016E Expected 2016 AFFO of $2.40 - $2.50 Dividend Growth(2) CAGR = 10.7% Per Share $2.19 $1.68 $1.52 $1.32 $1.12 $1.1
Slide 23: Why Prologis Now
Section 03 Why Prologis Now Prologis Torrance Distribution Center, Torrance, California
Slide 24: Power of the Platform
Power of the Platform Sustainable Financial Performance • Recurring, predictable cash flow growth • AFFO and dividend growth CAGRs of 18% and 11% since 2012(1) Robust Fundamentals • Best-in-class portfolio positioned to deliver superior results and outperform across cycles • Complementary strategic
Slide 25: $3.3B of Internal Capacity to Fund Growth
$3.3B of Internal Capacity to Fund Growth(1) Annual Capital Sources Annual Capital Uses (in millions) (in millions) Contribution Proceeds $1,050 Development Spend $1,800 Retained Cash Flow $100 Acquisitions (from Core Operations) $100 (via co-investment ventures) Leverage Capacity $150 (on Value Cre
Slide 26: A Compelling Investment Opportunity
A Compelling Investment Opportunity Among a Select Group of Premier Investor Stories # of S&P 500 Companies Exceeding Threshold S&P 500 Prologis’ Key Financial Metrics EBITDA Margin Expansion 235 3 YR CAGR: 0.9% Adjusted EBITDA Margin Expansion >0.0% Last 3 Years(1)(2) EPS (FFO)(3) 119 3 YR CAGR: 12
Slide 27: Attractive Valuation Among Blue Chip REITs
Attractive Valuation Among Blue Chip REITs(1)(2) Forward Core FFO Multiple Versus Blue Chip Peers(3) • Trading at multiple 0.4x below Intensification of Draghi's "Whatever KTR / Morris Acquisition our long-term average 27x it Takes" speech Euro Crisis Announcement China Slowdown • Trading 0.4x below
Slide 28: Driving Towards a Fortress Balance Sheet
Driving Towards a Fortress Balance Sheet Spreads Have Tightened Below Blue Chips and in Line with A-Rated REITs Bond Secondary Spreads Versus Blue Chip Peers and A-Rated REITs 250 Intensification Draghi's "Whatever KTR / Morris Acquisition 500 of Euro Crisis it Takes" Speech Announcements 400 China
Slide 29: Disconnect Between Debt and Equity Markets
Disconnect Between Debt and Equity Markets Bond Spread and Forward FFO Multiple Differentials: PLD Versus Blue Chip Peers(1) Bond Spread Forward FFO Multiple Differential, bps Our bonds spreads Differential, Turns -200 are tighter than blue 10 chips while our equity -150 is trading at a discount -10
Slide 30: Heritage & Sustainability
Section 04 Heritage & Sustainability Prologis Park Zama 1 + 2, Tokyo, Japan
Slide 31: U.S. Vacancy at All-Time Low
U.S. Vacancy at All-Time Low Logistics Market Fundamentals, U.S. Supply Pipeline vs. Demand by Market (sf in millions and vacancy rate, %) (sf in millions and %)(1) 400 10 0 5 10 15 20 25 30 35 NJ/NY (26%) 8 Balt/Wash (26%) 200 East C&E PA (85%) 6 Atlanta (64%) SoFL (56%) 0 Houston (266%) 4 Central
Slide 32: Europe Remains Early in the Recovery
Europe Remains Early in the Recovery Logistics Market Fundamentals, Europe Supply Pipeline vs. Demand by Market (sf in millions and vacancy rate, %) (sf in millions and %)(1) 100 14 (2) (1) 0 1 2 3 4 5 6 London (88%) 12 UK Midlands (90%) 75 10 Hamburg (117%) Amsterdam (N/A) NE 8 Southern Netherlands
Slide 33: More Than Three Decades of Excellence
More Than Three Decades of Excellence AMB Property Corporation AMB refines its investment The company that is to later Security Capital Industrial 1983 1987 1991 1994 (AMB) formed as an investment strategy over the next two become ProLogis is formed as makes its initial public management business wi
Slide 34: Integrated Approach
Integrated Approach Environmental Stewardship, Social Responsibility and Governance • Recognized as one of the world’s most sustainable companies • Ranked for industry-leading corporate governance for 13 consecutive years among all U.S. REITS • Compensation practices – pay for performance is of para
Slide 35: Prologis
» a’ PROLOGIS.
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