Prologis Leverages Private Capital for Global Expansion and Fee Income
Prologis has been on a tear since the presidential election. “In our business, the bottoming process across our markets continues to progress,” said Chief Financial Officer Timothy Arndt in the January earnings call for 2024 Q4. “Leasing in our portfolio accelerated following the U.S. election, and the pipeline has started the year at healthy levels.”
The company has vast resources and a $104.1 billion market cap, according to data from S&P Global Market Intelligence. Total revenue in 2024 was almost $8.6 billion and net income was $3.7 billion.
But as PERE recently reported, the company also has had a secret weapon all along: private capital. The two industrial REITs — ProLogis and AMB Property Corporation — that merged to form the current company in 2011 each had a private funds business.
Raising capital is a challenge in commercial real estate. In some segments, things have improved. Multifamily saw core capital fundraising triple in 2024. Generally, though, CRE fundraising has fallen for three years straight. Pension funds, endowments, and institutions have been waiting for clear signs of a market bottom before committing capital.
“So we're very proud of the balance sheet we've built,” Arndt said in the company’s March 4, 2025 presentation at Raymond James & Associates’ 46th Annual Institutional Investors Conference. “We're $200 billion of assets that we have under our management. And what's on the screen here just demonstrates all of the other areas that we run the company in. I think beyond our large portfolio and operations, our other principal businesses are to develop new logistics facilities, which is on a run rate of $4 billion to $5 billion per year.”
“But we also have a large, call it, private capital, private equity, we call it, strategic capital,” Arndt added. "But asset management business, where we run about a third, a little over a third of our assets within specific asset management vehicles. This generates fee income for us and really enables us to lever our capital and have a much larger portfolio around the globe.”
Strategic capital is one of its two reportable segments. Revenue from its strategic capital business in 2024 was $671.9 million. About $92.5 billion — roughly half the AUM — was from that segment.
The company “was one of the first public REITs that had sizable private capital market activity,” Nori Gerardo-Lietz, senior lecturer at the Harvard Business School, told PERE. The facility has given Prologis greater flexibility in investments and transactions than with its public capital.
Source: GlobeSt/ALM