Prologis Q2 2026: Core FFO rose 11.6% to $1.63 a share (8.8% excluding promotes) as expiring leases reset 36.9% higher; GAAP EPS nearly doubled to $1.13 on property-sale and hedging gains, and 2026 guidance was raised again.
Revenue
$2.4B
+11.1% YoY
Net income
$1.1B
+86.2% YoY
Diluted EPS
$1.13
+85.2% YoY
Operating margin
51.6%
What happened
Prologis, the world's largest owner of logistics warehouses, reported a sharp jump in GAAP profit for the second quarter of 2026. Net earnings attributable to common stockholders rose to $1,060.8 million ($1.13 per diluted share), up from $569.7 million ($0.61) a year earlier, and total revenue rose 11.1% to $2,425.5 million.
The 86% jump in net earnings overstates how much the underlying business improved. Most of the extra profit came from selling property and from currency and hedging gains, which vary a lot from quarter to quarter. The better measure of the rental business is Core FFO (funds from operations: profit with real-estate depreciation, property-sale gains and currency/derivative swings added back or removed, the standard earnings yardstick for property companies). Core FFO rose 11.6% to $1.63 per diluted share from $1.46. Excluding net promote income (performance fees earned from investment funds Prologis manages, which arrive irregularly), it rose 8.8% to $1.60 from $1.47.
Management raised its full-year guidance for the second time this year. It also reported record leasing of more than 67 million square feet signed in the quarter.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Total revenues
$2,425.5M
$2,183.9M
+11.1%
Rental revenues
$2,177.1M
$2,025.3M
+7.5%
Strategic capital revenues
$241.6M
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Net effective rent change on rollover (Prologis share)
36.9%
53.4%
—
Dividend per share
$1.07
$1.01
+5.9%
Operating margin is operating income as a share of total revenue. Prologis's GAAP "operating income" line includes gains from selling properties, so the table shows the margin both with and without those gains. AFFO is "adjusted" FFO, which also subtracts spending needed to keep buildings leased and strips out non-cash rent accounting. Figures come from the Q2 2026 Form 10-Q and the July 16, 2026 earnings release and supplemental.
Why GAAP profit nearly doubled
Three items that don't repeat evenly explain most of the $491 million increase in net earnings to common stockholders:
Gains on property sales. Gains on dispositions of development properties and land rose to $79.2 million from $10.5 million. Gains on other dispositions of real estate rose to $212.4 million from $47.0 million. Together that is $291.6 million versus $57.5 million a year ago. Prologis builds warehouses, then sells or "contributes" them to the investment funds it co-owns. The 10-Q says the first-half gains came "principally from the contribution of real estate properties and land to unconsolidated co-investment ventures in the U.S. and Europe and sales of properties to third parties in the U.S."
Currency and hedging. The "foreign currency, derivative and other gains (losses)" line was a $109.7 million gain, compared with a $122.8 million loss in Q2 2025, a swing of about $232 million. Prologis hedges its foreign earnings. These are largely mark-to-market moves on the hedges, not operating profit, and Core FFO removes the unrealized part.
Promote income. Strategic capital revenue jumped 64% to $241.6 million. The MD&A says the quarter includes promote revenue of $62 million net of related expenses, earned mainly from a co-investment venture in the Other Americas region. Promotes are performance fees paid when a fund beats its return targets, and they come in irregularly.
Partly offsetting these, income tax expense rose to $108.2 million from $23.4 million (taxes on the property sales), interest expense rose 9.7% to $276.3 million, and G&A (general and administrative overhead) rose 21% to $129.6 million.
Before any property-sale gains, operating income rose 12.2% to $959.7 million. The margin on that basis barely moved, from 39.2% to 39.6%. That is a better picture of the day-to-day business than the headline 51.6%.
The rental business: rents still resetting higher
Rental revenue grew 7.5% to $2,177.1 million. The main driver is Prologis's lease mark-to-market: rents on its existing leases are below today's market rents, so each lease that expires and renews resets higher. The 10-Q says:
Rent on leases that rolled over in Q2 rose 36.9% on a net effective basis (the average rent over the lease term) and 22.3% on a cash basis (starting rent), both at Prologis's share.
Management estimates in-place rents are still about 17% below market. The 10-Q says this means "we expect lease renewals to drive higher rental income over the coming years even without further market rent increases."
Same-store NOI measures growth in rental profit (net operating income: rent minus property costs) from the same set of buildings owned in both periods, which removes the effect of buying and selling. It grew 8.5% on a cash basis and 6.4% on a net effective basis, up from 4.9% and 4.8% a year ago.
The one weak spot is that the rent uplift on rollover is shrinking. Net effective rent change was 53.4% in Q2 2025 and has since run at 49.4%, 43.8%, 31.9% and now 36.9%. Leases signed at the peak of the 2021–2022 rent surge are now the ones rolling, so each renewal adds less than before. Same-store growth rose anyway because occupancy stopped falling. Same-store average occupancy was down 1.2% year on year in Q2 2025 and up 0.1% now.
Occupancy: Period-end occupancy for the owned & managed portfolio (buildings Prologis owns plus those it manages for its funds) rose to 95.5%, up 20 basis points from March 31, 2026. Average occupancy at Prologis's share was 94.9%, compared with 94.8% a year earlier. Customer retention was 72.7%.
Development and data centers
Development is accelerating, and more of it is now data centers. In the first half of 2026, consolidated development starts totaled $3.0 billion of total expected investment, roughly double the $1.5 billion a year earlier. Of that, $2.1 billion was data centers and 84.5% was build-to-suit, meaning a tenant had committed before construction. Developments that reached stabilization (completed and leased) in the half had an estimated 7.2% yield on cost and a 26.2% estimated value-creation margin. At June 30, the development portfolio had $5.7 billion of expected investment and was 43.2% leased. That includes $2.5 billion of data centers with 680 megawatts of power capacity. The earnings release says the data-center power pipeline reached 5.8 GW.
Balance sheet
Prologis issued $2.2 billion of senior notes in the half at a weighted average rate of 4.3%, above its 3.3% average cost of debt. That gap is a slow, persistent drag on earnings as older, cheaper debt matures. Liquidity was $7.6 billion. Debt was 4.7x adjusted EBITDA (a standard leverage measure) and 23.9% of total market capitalization. Credit ratings are A2 from Moody's and A from S&P, both with a stable outlook.
After the quarter: the SEGRO deal
On August 4, 2026, after the quarter ended, Prologis filed an 8-K announcing a firm offer to buy SEGRO plc, the UK-listed warehouse landlord. The offer values SEGRO's share capital at about £14.0 billion, or 1,031.7 pence per share. SEGRO shareholders get 0.0920 Prologis shares per SEGRO share, or can elect cash for up to about £3.5 billion in total, which Prologis will fund with a new committed term loan. If the cash option is fully taken up, SEGRO shareholders would own about 8.9% of the combined company. The deal still needs SEGRO shareholder and court approval under a UK scheme of arrangement.
Prologis also sold 15 million new shares on August 4 for about $2.1 billion of net proceeds, plus about $312 million more when the underwriters exercised their option. It said the money could fund "potential acquisitions such as SEGRO plc." None of this is in the Q2 numbers or the current guidance. The new shares increase the share count now, while SEGRO's rental income only arrives after the deal closes.
Takeaway: Ignore the 85% jump in GAAP EPS. It came mostly from property-sale gains, a hedging swing and a one-off promote fee. The underlying result is Core FFO per share up 8.8% excluding promotes, driven by expiring leases resetting about 37% higher and same-store NOI growth accelerating to 8.5% cash. The risk is that the rent uplift has fallen from over 50% a year ago, so future growth depends more on occupancy, development and now integrating SEGRO.
Guidance and outlook
Management raised its 2026 guidance:
2026 guidance
Previous
Current
Net earnings per diluted share
$3.80–$4.05
$4.40–$4.55
Core FFO per diluted share
$6.07–$6.23
$6.22–$6.30
Core FFO excl. net promotes
$6.12–$6.28
$6.22–$6.30
Average occupancy (Prologis share)
95.00%–95.75%
95.25%–95.75%
Same-store NOI, cash
6.25%–7.00%
6.75%–7.25%
Development starts (Prologis share)
$3.5B–$4.5B
$4.5B–$5.5B
First-half Core FFO was $3.13 per share. The new $6.22–$6.30 range therefore implies $3.09–$3.17 for the second half, roughly flat with the first half. That is consistent with the Q2 promote not repeating. The midpoint rose by $0.11. The guidance assumes constant exchange rates and does not include the SEGRO transaction.
Our read: the 17% gap between in-place and market rents gives Prologis several more years of built-in rental growth. With leverage below 5x EBITDA, it can absorb higher-cost refinancing and a larger development program. What to watch in the Q3 results, due October 15, 2026: whether the rent uplift on rollover holds in the mid-30s, whether period-end occupancy keeps rising from 95.5%, and how management presents the per-share effect of the August equity raise and the SEGRO deal.