Prologis Stock: Dividend vs Core FFO, Rent Growth, SEGRO Bid

The dividend against Core FFO and AFFO

Prologis raised its quarterly dividend from $1.01 (paid in each quarter of 2025) to $1.07, paid in each of the first two quarters of 2026, a 5.9% increase. Its “Core FFO” is its own definition of funds from operations: it excludes gains on development properties and land, and unrealized currency and derivative items. AFFO is its adjusted measure after straight-line rent, turnover costs and property improvements. The table sets each against the dividend, and the last two lines remove the one item that moved AFFO most.

Four readings of the table.

Dividends and distributions were 65.9% of Core FFO in Q2 2026. That is the cleanest coverage number, and it improved from 69.2%: Core FFO per share grew 11.6% (our arithmetic) while the dividend grew 5.9%. Excluding net promote income, the growth is 8.8% ($1.60 against $1.47), which is the figure we would watch, because promotes come and go. Net promote income was a net expense in 2025 (it was mostly amortization of stock compensation tied to earlier promotes) and a $26.2 million net income in Q2 2026.

AFFO is not a like-for-like year. The AFFO reconciliation starts from Core FFO, which has taken out gains on development properties and land, and then adds those gains back: $79.2 million in Q2 2026 against $10.5 million, and $372.2 million in the half against $37.9 million. After current tax on the sales, $364.1 million of the first-half AFFO of $2,794.9 million came from development gains (our arithmetic). Net development gains are real cash from selling what the company built, and the company expects $600 to $700 million of realized development gains in 2026, but they depend on contribution and sale activity, not on rent. On AFFO without them the dividend took 84.5% of the half, still covered, and on the company's own AFFO, gains included, $742 million was left after dividends ($2,795 million less $2,053 million, our arithmetic) before the development spending described below.

The real estate business carries the dividend. Of Q2 Core FFO per share, $1.54 came from the real estate business line and $0.09 from strategic capital (the fee business). Realized development gains of $0.09 in Q2 and $0.39 in the half sit outside Core FFO, against $0.04 in the first half of 2025. GAAP net earnings were $1.13 a share in Q2 against $0.61, helped by gains on real estate sales ($212.4 million of other disposition gains in Q2) and a swing in currency and derivative items (a $109.7 million gain against a $122.8 million loss).

The guidance moved up, and the dividend has not been tied to it. The July 16 release raised Core FFO guidance to $6.22 to $6.30 from $6.07 to $6.23, and cash same-store NOI growth to 6.75% to 7.25% from 6.25% to 7.00%. The release's guidance section carries the U.K. Takeover Code profit forecast statement for SEGRO; we found no SEGRO contribution described in it. The 10-Q says only that dividends “may be adjusted at the discretion of the Board during the year.” For the full year 2025, Core FFO was $5,561 million against $5,305 million in 2024, up 4.8% (our arithmetic).

Rent change, lease mark-to-market and occupancy

Prologis reports two rent change figures on every lease that started in the quarter against the previous lease on the same space: net effective (the average rent over the lease term, so it includes the contractual bumps) and cash (rent at the start). The five quarters in the Q2 2026 supplemental show the same shape in every series.

• Rent change is well below a year ago but far from zero. Net effective rollover rent change at Prologis share fell from 53.4% to 31.9% in Q1 2026, then rose to 36.9%. The 10-Q says there has been positive rent change “in every quarter since 2013.” The company's own estimate is that “our share of the remaining lease mark-to-market is approximately 17% (on an NER basis),” the amount by which current market rents exceed in-place rents; it was 18% at December 31, 2025 and 17% at March 31, 2026. The 10-K adds that this stayed positive “despite recent quarters of lower or even negative market rental growth.”
• Same-store NOI growth went up while rent change went down. Cash same-store NOI growth was 8.5% in Q2 2026 and 8.8% in Q1, against 4.9% to 5.7% in 2025. Net effective growth was 6.4%. The gap between the two is the difference between straight-lined (net effective) and cash accounting for rent.
• Occupancy is flat near 95%. Owned and managed period-end occupancy was 95.5% at June 30, 2026, up 20 basis points from March 31 (95.3%, our arithmetic from the release), and 95.8% leased. Retention was 72.7% in Q2. Prologis signed over 67 million square feet of leases in the quarter, which it called a record. The weak markets are not hidden: Central Pennsylvania was 84.4% occupied; Southern California, the largest market at 19.4% of Prologis-share NOI, was 96.6%. Outside the U.S. the Prologis-share occupancy was 93.5%, against 95.9% in the U.S.
• One customer is bigger than the next three combined (our arithmetic). Amazon was 5.5% of net effective rent on an owned and managed basis at June 30, 2026 (50.0 million occupied square feet; 5.3% at December 31, 2025), against 1.8% for Home Depot and 1.4% for FedEx. Home Depot, FedEx and DSV together were 4.4%. The top ten customers were 15.2% and the top 25 were 21.6%. The U.S. is 84.0% of Prologis-share NOI.

The lease expiry table shows why the mark-to-market is real: older leases pay less per square foot.

Weighted average remaining lease term, by net effective rent, was 3.7 years (3.9 at Prologis share). On an owned and managed basis 48.2% of rent expires by the end of 2029 (our arithmetic). The 2026 and 2027 rows exclude leases already signed for space that was due to expire then: 47 million square feet of 2026 expirations (3.2% of rent) and 27 million of 2027 (1.8%). The lesson for a holder is that the portfolio's rent growth is lease-by-lease and short-dated: with 3.7 years to run, 14% to 15% of rent expires in each of 2027, 2028 and 2029.

What the SEGRO offer does to a Prologis holder

Everything in this section is from Prologis' own filings; SEGRO's accounts are not among our sources, so we do not estimate SEGRO's earnings, debt or the combined leverage.

What this means for the dividend question this page started with, as arithmetic and not a forecast. The new shares would receive the dividend. At $4.28 a year, 93.9 to 125.2 million shares is $402 million to $536 million a year of additional dividends (our arithmetic), and the 17.25 million shares sold in August are another $74 million (our arithmetic). The company's answer to whether SEGRO's income covers that is the “broadly neutral to minimally dilutive” statement; we cannot test it from the documents we saved. The risk factor Prologis added in its August 4 8-K is plain: “A number of these conditions are outside of our control,” and completion could be delayed or not occur.

The prices in the filings give a sequence, not a cause: $135.47 on June 30, $149.94 on July 21 (the day before the best and final proposal), $144.15 on August 3 and $139.85 for the share sale on August 4. On those prices the annualized $4.28 dividend is 3.16%, 2.85%, 2.97% and 3.06% (our arithmetic). The filings do not give a price for October 15, 2026, and we do not quote one.

Development, data centers and land

The development line in the supplemental changed more than any other in 2026, because of data centers.

• The development portfolio at June 30, 2026 was $7.25 billion of total expected investment on an owned and managed basis, 47.7% leased, with $434.9 million of estimated annualized NOI at stabilization and $1.38 billion of estimated value creation at Prologis share. Data centers were $2.54 billion of it, 35.0% (our arithmetic), against $686 million at December 31, 2025. The 10-Q puts the consolidated figure at 70 properties, 43.2% leased, $2.7 billion invested and $3.0 billion still to spend.
• Data center starts were leased before they started. The supplemental shows 100% leased at start for the $2.03 billion of first-half data center starts; for industrial starts the figure is 6.7% for the U.S. and 32.9% outside it. The power pipeline is 5.8 gigawatts: 1.6 secured (680 megawatts of it under development) and 4.2 in advanced stage.
• Land is $5.07 billion at book and could support $40.6 billion of TEI. That build-out figure was $42.6 billion at December 31, 2025. The 10-Q says land and options support “$35.6 billion ($40.6 billion on an O&M basis)” of newly developed buildings. Selling what it builds to its ventures is how Prologis funds development; contributions and dispositions were $1.69 billion in the half at about a 5.1% cap rate on buildings.
• The yield gap is the business model. The company's estimated stabilized yields on starts are 7.2% to 8.1%, against cap rates of 4.1% to 4.2% on acquisitions and 5.1% on building sales. Estimated value creation, not a realized result, is where the gains come from.

Strategic capital: the fund management fees

Prologis runs 14 co-investment ventures (13 unconsolidated) with its ownership ranging from 15% to 55%, and the 10-Q describes the business as approximately 92% open-ended ventures, long-term ventures and three listed vehicles (Nippon Prologis REIT, China AMC Prologis Logistics REIT and FIBRA Prologis). That is the part of Prologis most like an alternative asset manager, and the part most like the non-traded vehicles on this site.

• The growth is half promote. Revenue rose 39.6% (our arithmetic) but recurring fees rose 8.2%; the $83 million of promotes, 20.6% of the total (our arithmetic), came “primarily during the second quarter of 2026 from an unconsolidated co-investment venture in the Other Americas,” and $49 million of it was left after related expenses. The supplemental carries a caution on the whole business: “Eligibility does not imply likelihood of realization.”
• Fee related earnings are about $274 million a year. The supplemental shows $63.6 million for Q2 and $273.6 million on its annualized basis, from a third-party share of asset management fees of $382.6 million annualized, less $148.8 million of trailing strategic capital expenses and plus transactional fees. Net promote income was $26.2 million for the quarter, negative $10.8 million over twelve months and $194.1 million on a five-year average. Strategic capital was 8.5% of rental plus strategic capital revenue in the half including promotes (our arithmetic); the company says it contributes 5% to 10% of revenues, earnings and FFO excluding promotes.
• Capital is still being raised and committed. Four new ventures were formed in 2026 (two U.S. development vehicles, one stabilized vehicle in Europe and one acquisition vehicle in Asia). Six ventures have $2.53 billion of remaining equity commitments, $931 million of it Prologis' and $1.60 billion from partners. The operating portfolio held by the unconsolidated ventures is $62.4 billion across 548 million square feet; those ventures carry $19.7 billion of debt at 100%.

Debt, liquidity and ratings, before SEGRO

• The fixed rate and the euro debt are the cushion. 97% of the $36.98 billion at par is fixed. By currency, 45.7% of debt is in U.S. dollars (4.2% average rate), 32.4% in euros (2.2%), 8.5% in yen, 6.6% in Canadian dollars, 5.0% in sterling and 1.8% in other currencies. Interest expense in Q2 was $276.3 million against $251.9 million, up 9.7% (our arithmetic); the first-half issuance was $2.2 billion of senior notes at a 4.3% average rate for 8 years, above the 3.3% average on the whole book, so interest cost will keep rising as old low-rate debt rolls unless Core FFO grows faster.
• Maturities are light through 2029. $9.2 billion, 24.9% of debt at par, matures through 2029 (our arithmetic), $1.1 billion in the rest of 2026 and $2.0 billion in 2027. Total liquidity was $7.59 billion: $5.83 billion on the credit facilities and $1.77 billion in cash.
• The SEGRO term loan is the unknown. A term loan of up to £3.575 billion on one-year terms, sized to the cash alternative, plus the August share sale of about $2.4 billion, is how the company lines up the funding. Prologis says it expects to keep the A2/A ratings. We do not have the combined balance sheet, so we do not give a pro forma leverage ratio.

How Prologis compares with a non-traded industrial REIT

Many readers of this page also own or are considering a non-traded industrial REIT. One comparison is supported by a primary source on each side: Ares Industrial Real Estate Income Trust (AIREIT, our review), whose Q2 2026 10-Q is in our file. Prologis' own private logistics vehicles show up in the Form D data in our private REIT roundup.

The cost lines are not like for like. Prologis' G&A is only part of its cost of running the business: property management sits in rental expenses ($1,051 million in the half) and fund management expenses sit in strategic capital expenses ($177 million), so the 12.5% understates what an owner pays; AIREIT's advisory fee is paid to an outside adviser and covers asset management. What the comparison does show is that a listed REIT at 95% occupancy with a 1.28 times cash cover and an AIREIT at 88% with 46.8% cover are in different financial positions, and that one can be sold today at a market price that moves. The other pays at NAV under rules that can change. Our pages on publicly traded versus non-traded REITs and the NAV REIT comparison cover the mechanics, and the Realty Income and W. P. Carey pages do the same for net lease.

What a holder or reader can do with this

This page is analysis of public documents, not investment, legal or tax advice. What the filings let you check yourself:

• Use the right payout. Dividends and distributions were 65.9% of Core FFO in Q2 2026 and 82.1% of AFFO without development gains. Both are covered; the second shows the margin is thinner than the headline AFFO suggests.
• Watch the rent change trend and the mark-to-market together. Rollover rent change of 36.9% and a 17% mark-to-market say the next two years of leases reprice upward; the fall from 53.4% says the size of each step is getting smaller.
• Read the share count as well as the dividend. The August sale added 17.25 million shares and SEGRO could add 93.9 to 125.2 million; a dividend per share that holds is a larger total dividend.
• Know the dated items. The Q3 2026 report has not been filed as of October 15, 2026 (the last periodic filing is the Q2 10-Q of July 29, 2026); the SEGRO scheme needs shareholder votes and a court sanction, with completion expected in the first half of 2027 and a Long Stop Date of August 4, 2027; and the Co-operation Agreement's $1.07 ceiling on Q3 and Q4 dividends is a ceiling, not a promise.
• Size the position and the overlap. Prologis is the second-largest line in the big REIT ETFs (see our REIT ETF holdings page), so an index fund plus a direct holding doubles up; and if you also own a non-traded industrial REIT, the sector exposure is not diversified by owning both.

If a large part of your portfolio sits in one REIT that is about to do a large cross-border deal, a conversation with a qualified adviser about position size and how it fits the rest of your holdings may be worth having.

FAQ

All figures are from Prologis, Inc. (SEC CIK 1045609) filings read on EDGAR on October 15, 2026: Form 10-K for 2025 (accession 0001193125-26-051453); Forms 10-Q for March 31, 2026 (0001193125-26-197850) and June 30, 2026 (0001193125-26-323746, filed July 29, 2026); the Form 8-K of July 16, 2026 with the second-quarter earnings release and supplemental information (0001193125-26-305416); Forms 8-K of June 24, 2026 (0001193125-26-280195), August 4, 2026 on the SEGRO offer and term loan with the Rule 2.7 announcement (0001104659-26-089980), August 4, 2026 on the share sale (0001104659-26-090724) and August 5, 2026 on the underwriters' option (0001104659-26-092072); the prospectus supplement dated August 4, 2026 (0001104659-26-090715); and Ares Industrial Real Estate Income Trust's Form 10-Q for June 30, 2026 (CIK 1625941, accession 0001628280-26-056338). Payout ratios, growth rates, sums, shares of totals, dividend yields on the dated prices and the net development gains added back in AFFO are our arithmetic from those rows; Core FFO, AFFO, same-store NOI, lease mark-to-market and total expected investment are the company's definitions and non-GAAP or supplemental measures. Share prices are those printed in the filings on the dates shown and are not current. This is analysis of public documents, not investment, legal or tax advice.