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Real Estate

12 Months Ended

Dec. 31, 2021

NOTE 4. REAL ESTATE

Investments in real estate properties consisted of the following at December 31 (dollars and square feet in thousands):

	Square Feet				Number of Buildings
	2021		2020		2021		2020		2021		2020
Operating properties:
Buildings and improvements		444,413		441,336		2,310		2,261	$	32,159,514	$	31,489,943
Improved land										12,294,246		12,017,676
Development portfolio, including land costs:
Prestabilized		6,325		6,076		16		24		710,091		553,266
Properties under development		28,638		22,004		83		61		2,019,249		1,329,345
Land ⁽¹⁾										2,519,590		1,606,358
Other real estate investments ⁽²⁾										3,302,500		3,387,740
Total investments in real estate properties										53,005,190		50,384,328
Less accumulated depreciation										7,668,187		6,539,156
Net investments in real estate properties									$	45,337,003	$	43,845,172

(1)	At December 31, 2021 and 2020, our land was comprised of 6,227 and 5,304 acres, respectively.

(2)

Included in other real estate investments were: (i) non-strategic real estate assets acquired that we do not intend to operate long-term; (ii) real estate assets that we intend to redevelop into industrial properties; (iii) land parcels we own and lease to third parties; and (iv) costs associated with potential acquisitions and future development projects, including purchase options on land.

At December 31, 2021, we had investments in real estate assets in the U.S. and other Americas (Brazil, Canada and Mexico), Europe (Belgium, the Czech Republic, France, Germany, Hungary, Italy, the Netherlands, Poland, Slovakia, Spain, Sweden and the United Kingdom (“U.K.”)) and Asia (Japan and Singapore).

Acquisitions

The following table summarizes our real estate acquisition activity, excluding the Liberty Transaction as discussed in Note 3, for the years ended December 31 (dollars and square feet in thousands):

	2021 ⁽¹⁾		2020 ⁽²⁾		2019
Number of operating properties		31		150		22
Square feet		6,760		21,874		1,405
Acquisition cost of net investments in real estate, excluding land ⁽³⁾	$	1,590,457	$	2,820,692	$	633,923

Acres of land		2,684		830		1,269
Acquisition cost of land	$	1,452,686	$	439,773	$	440,892

(1)	In 2021, we acquired additional ownership interest in unconsolidated other ventures from our partners and began consolidating the real estate assets.

(2)

On January 8, 2020, our two U.S. co-investment ventures, Prologis Targeted U.S. Logistics Fund, L.P. (“USLF”) and Prologis U.S. Logistics Venture, LLC (“USLV”), acquired the wholly-owned real estate assets of Industrial Property Trust Inc. (“IPT”) for $2.0 billion each in a cash transaction, including transaction costs and the assumption and repayment of debt (the “IPT Transaction”). As we consolidate USLV, the number of operating properties, square feet and acquisition cost for the properties acquired by USLV are included in the consolidated acquisition activity.

(3)

The acquisition cost of net investments in real estate includes other real estate investments of $525.5 million, $206.1 million and $302.9 million during the years ended December 31, 2021, 2020 and 2019, respectively. Other real estate investments are not included in the number of operating properties and square feet.

Dispositions

The following table summarizes our dispositions of net investments in real estate which include contributions to unconsolidated co-investment ventures and dispositions to third parties for the years ended December 31 (dollars and square feet in thousands):

	2021		2020		2019
Dispositions of development properties and land, net ⁽¹⁾
Number of properties		41		41		31
Square feet		16,482		14,482		10,027
Net proceeds	$	2,629,750	$	1,693,557	$	1,533,055
Gains on dispositions of development properties and land, net	$	817,017	$	464,942	$	467,577

Other dispositions of investments in real estate, net⁽²⁾⁽³⁾
Number of properties		97		61		66
Square feet		20,806		10,562		15,816
Net proceeds	$	2,536,622	$	1,264,692	$	1,492,212
Gains on contributions and dispositions, net	$	772,570	$	252,195	$	255,219
Gains on partial redemptions of investment in an unconsolidated co-investment venture ⁽⁴⁾	$	-	$	-	$	135,022
Total gains on other dispositions of investments in real estate, net	$	772,570	$	252,195	$	390,241

(1)	The gains we recognize in Gains on Dispositions of Development Properties and Land, Net are primarily driven by the contribution of newly developed properties to our unconsolidated co-investment ventures and occasionally sales to a third party.

(2)	In 2021, we sold our ownership interest in an unconsolidated other venture.

(3)

In 2019, we formed Prologis Brazil Logistics Venture (“PBLV”), a Brazilian unconsolidated co-investment venture, with one partner. We contributed an initial portfolio of real estate properties to PBLV consisting of 14 operating properties totaling 6.9 million square feet and 371 acres of land. We received cash proceeds and units for our 20% equity interest.

(4)	In 2019, we redeemed a portion of our investment in a European unconsolidated co-investment venture.

Leases

As a Lessor

We lease our operating properties to customers under agreements that are classified primarily as operating leases. We recognize the total minimum lease payments provided for under the leases on a straight-line basis over the lease term. Our weighted average lease term remaining was 51 months based on square feet for all leases in effect at December 31, 2021.

The following table summarizes the minimum lease payments due from our customers on leases for space in our operating properties, prestabilized and under development properties, other real estate investments and assets held for sale or contribution at December 31, 2021 (in thousands):


2022	$	3,160,098
2023		2,990,115
2024		2,605,766
2025		2,223,715
2026		1,791,256
Thereafter		6,462,209
Total	$	19,233,159

These amounts do not reflect future rental revenue from the renewal or replacement of existing leases and exclude reimbursements of operating expenses and rental increases that are not fixed.

As a Lessee

We had approximately 120 and 130 land and office space leases in which we were the lessee at December 31, 2021 and 2020, respectively, which primarily qualify as operating leases with remaining lease terms of 1 to 88 years at December 31, 2021. Our lease liabilities were $448.4 million and $487.0 million at December 31, 2021 and 2020, respectively.

The following table summarizes the fixed, future minimum rental payments, excluding variable costs, for leases that had commenced at December 31, 2021, with amounts discounted by our incremental borrowing rates to calculate the lease liabilities of our leases (in thousands):


2022	$	49,740
2023		47,453
2024		46,823
2025		43,293
2026		30,708
Thereafter		580,056
Total undiscounted rental payments		798,073
Less imputed interest		349,628
Total lease liabilities	$	448,445

The weighted average remaining lease term for these leases was 28 and 34 years at December 31, 2021 and 2020, respectively. We do not include renewal options in the lease term for calculating the lease liability unless we are reasonably certain we will exercise the option or the lessor has the sole ability to exercise the option. The weighted average incremental borrowing rate was 3.2% and 3.4% at December 31, 2021 and 2020, respectively. We assigned a collateralized interest rate to each lease based on the term of the lease and the currency in which the lease was denominated.