fibra prologis/media/files/p/prologis-fibra/right-col... · 2000 2001 2002 2003 2004 2005 2006 2007...

2015SEPTEMBER 16-17,

FIBRA Prologis BAML 2015 Global Real Estate ConferenceNew York City

Mexico an economic force 3-4

Mexico growth outpaces other emerging markets 5

Industrial real estate allows investors to participate in fastest growing sectors 6

E-commerce: future driver of demand 7

Industrial real estate supply/demand Fundamentals very healthy 8

FIBRA Prologis portfolio 9-10

Limited exposure to peso fluctuation 11-12

High quality, diversified customer base 13

Operating results 14

Distributions: sustainable and responsible 15

Future growth: rents and acquisitions 16-18

Strong liquidity position 19

Great quality investment for a discount 20

Appendix 21

Contents

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3

Mexico: An economic force

MEXICO

3.5% 3.0%

2015-20 Annual Average

GDP Growth Inflation

MexicoFive Year Outlook

• 2nd largest economy in Latin America

• 15th largest in the world

• Growth characteristics comparable to other emerging markets, but with unique ties to U.S. • Increased near-shoring positions Mexico as a growth leader

relative to other emerging markets

• Stable macroeconomic outlook relative to other large emerging economies in Latin America

Source: IMF, Data as of May 13, 2015

Note: size of the bubble reflects 2014 gross domestic product

Note: size of the bubble reflects 2014 gross domestic product

BRAZIL

ARGENTINA

PERU

CHILE

COLOMBIA

VENEZUELA

Latin AmericaFive Year Outlook

4.0%3.2%

2.1%

4.7%

3.5%3.0%

-2.6%

80.6%

1.6%

5.4%

0.2%

21.1%

41. Adjusted for purchasing power parity (PPP) and inflation

Mexico: An economic forceDisposable Income(1)

(US$B)

$897

$1,510

800900

1,0001,1001,2001,3001,4001,5001,600

2000

2003

2006

2009

2012

2015

E

Source: Oxford Economics, Banco de Mexico, Prologis Research

3.8% CAGR

53

139

40

60

80

100

120

140

1970

1980

1990

2000

2010

2020

F

2030

F

Population Growth(people, in millions)

Source: U.S. Census, Prologis Research

1.6% CAGR

Young Population

Source: Oxford Economics, Prologis Research

Durable Goods Spending per Capita (1)

(US$ x 1000)

Source: INEGI, CONAPO, Prologis Research

3

4

5

6

7

2005

2015

E

2025

F

2.0% CAGR

20 10 0 10 20

<15 Yrs

Millennials

Gen X

>55 Yrs

(% of total population)

Male Female

• Demographics support long term growth • Increasing affluence

• Growing consumer population

• Consumer spending shifting to durable goods

• Young population entering the workforce

51 71

49

89

30 28

100100

0

20

40

60

80

100

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

F

Brazil China Mexico U.S.

51. The labor cost of producing one unit of output indexed to the U.S.=100 by The Economist Intelligence Unit.

Mexico growth outpaces other emerging markets

• Desirable manufacturing location• Relatively low labor costs

• Rising productivity

• Increasing transportation costs favor near-shoring

• Diversified exports• Decreasing reliance on oil exports

44

355

0100200300400

1993

1998

2003

2008

2013

Merchandise Trade Exports(US$B)

Source: Banco de Mexico, Prologis Research

Competitive Labor Costs(1)

(overall unit labor costs, index, U.S.=100)

Source: EIU, Prologis ResearchUnited States80%

Other20%

2014 Exports by Country

Source: INEGI

11.0% CAGR

2014 Exports by Industry(% of total)

Source: Banco de Mexico, Prologis Research

- 5

10 15 20 25

Auto & Parts ElectricalEquipment

MechanicalAppliances

Oil

6

1. Purchasing power parity2. "Consumer Household" defined as one with annual income greater than $20,000 US$ (after adjusting for inflation and purchasing power parity).3. Canada is only for Toronto.

Industrial real estate allows investors to participatein fastest growing sectors

Retail Sales(US$B, PPP(1) and inflation-adjusted)

Source: Oxford Economics

423

587

400

450

500

550

600

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

F

2.4% CAGR

• Growth in industrial real estate driven by:• Domestic consumption

• E-commerce

• Industrial production

• Supply chain modernization

• Mexico City is under-developed relative to other US markets

Industrial Production, Gross Value-Added (US$B, inflation-adjusted)

Source: Oxford Economics

361

439

325 350 375 400 425 450

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

F

1.4% CAGR

6

Modern Logistics Stock per Consumer Household(2)

U.S. & Canada(3)

(80 SF/HH)

MEXICO CITY(19 SF/HH)

Source: CBRE, JLL, DTZ, Cushman & Wakefield, Colliers, Oxford Economics, Prologis Research

7

E-commerce: Future driver of demand

E-commerce historically hampered by several factors

• Inferior physical infrastructure, particularly urban roadways

• Low internet penetration ~10 million web customers

• ~66% of population does not have a bank account

Small but rapidly growing

• 2014 e-commerce sales increased by ~22%

• ~20% growth equates to ~550K sf of logistics real estate demand

• 2014 e-commerce sales in Mexico were ~US$2.8B vs ~US$14B in Brazil

Emerging trends drive investment

• Growing interest in Mexico from global e-retailers/logistic services including Amazon, DHL and Walmart

• Mexican companies reaching scale (2014 US$ e-commerce sales):

• Liverpool: $215M

• Nettbee Group: $205M

• Inova: $204M

How Much Real Estate Does a $1B Retailer Need?

Source: Internet Retailer, Forrester Research, Prologis Research

E-Commerce

Retail: 0 SF Logistics: 1,000,000 SF

Brick and Mortar

Retail: 2,500,000 SF

Logistics: 325,000 SF

8Source: CBRE, Prologis Research1. Weighted average of the six markets FIBRA Prologis has properties: Mexico City, Guadalajara, Monterrey, Reynosa, Tijuana and Juarez.

Industrial real estate supply/demand fundamentalsvery healthy

• Construction lags absorption

• Limited supply drives rents and values

• Legal and capital markets systems mirror U.S. providing reassurance and protection for investors

• Juarez and Reynosa build-to-suits minimize exposure

0 1 2 3 4 5 6 7

Mexico City

Monterrey

Juarez

Tijuana

Guadalajara

Reynosa

BTS Development Spec Development Net Absorption, last four quarters

Demand vs. SupplyMSF

Market Fundamentals(1)

91.2%

93.4%

90%

91%

92%

93%

94%

-

5

10

15

20

2011 2012 2013 2014 2015 (F) 2016 (F)

Net Absortion Completions Occupancy

MSF

9Data as of June 30, 2015 Source: CBRE and PLD Research

FIBRA Prologis portfolio

Mexico City

Guadalajara

Tijuana

ReynosaMonterrey

CiudadJuarez

FIBRAPL GLA (MSF)

FIBRA Prologis Occupancy

Market Occupancy

4.2 99.4% 95.8%

FIBRAPL GLA (MSF)


Market Occupancy

3.1 89.3% 96.7%

FIBRAPL GLA (MSF)


MarketOccupancy

3.4 97.8% 90.1%

FIBRAPL GLA (MSF)


Market Occupancy

4.4 94.8% 91.3%

FIBRAPL GLA (MSF)


MarketOccupancy

5.9 98.1% 97.8%

FIBRAPL GLA (MSF)


MarketOccupancy

10.4 95.2% 92.8%

Regional Markets (manufacturing-driven)Ciudad Juarez, Reynosa, Tijuana

Global Markets (consumption-driven)Guadalajara, Mexico City, Monterrey

FIBRAPL GLA (MSF)


MarketOccupancy

19.7 96.5% 94.4%

FIBRAPL GLA (MSF)


MarketOccupancy

11.7 95.0% 92.3%

96%occupancy

31.4 MSF

10* Buildings TR7 and TR8 are not part of FIBRA

FIBRA Prologis

• High quality portfolio

• 79% Class A/A+ buildings

• 63% developed by Prologis

• Average age of buildings is 9 years

• 82% of properties in enclosed parks

• 85% of revenues are USD denominated

• Integrated management team with more than 25 years of experience

• Best corporate governance

• Aligned sponsor with 46% ownership

Tres Rios Industrial Park – Mexico City

Owned by FIBRAPL 1.7 MSF

* Owned by Prologis 0.4 MSF

Total NRA 2.1 MSF

11Data as of June 30, 20151. For the period of 3/31/2005 to 8/31/2015

Portfolio characteristics limit exposure to peso fluctuations

0.0%

41.2%

-20%

0%

20%

40%

60%

2005

Q1

2006

Q1

2007

Q1

2008

Q1

2009

Q1

2010

Q1

2011

Q1

2012

Q1

2013

Q1

2014

Q1

2015

Q1

27.1%

-7.6%

27.7%

8.8%21.3%

47.7%Mexico Election18.9% Devaluation

Global Financial Crisis34.7% Devaluation

Emerging Markets Volatility

26.4% Devaluation

Historical Peso <Appreciation> / Devaluation vs Dollar(1)

(3/31/2015 = 0%)

• 85% of revenue and 98% of equity is dollar denominated

• Natural hedge protects investors against cyclical Peso devaluations

• YTD revenues converted to peso increased 17% vs 3% in dollars when compared with second half 2014.

98.3%

1.7%

USDMXN

Net Equity Exposure

84.7%

15.3%

Revenue Exposure

6/30/201519.9% Devaluation

Source: Bloomberg

12Data as of June 30, 2015

Stable dollar revenues despite currency fluctuation

• 85% of revenues are denominated in dollars

• Manufacturing tenants mostly do business in U.S. dollars

• Mexico City driven by local consumption, so revenue is in pesos

• Limited bad debt expense despite peso devaluations 69%

31%

USDMXN

Based on ABR

Revenue from Customers with Dollar DenominatedLeases

% of Dollar Denominated Revenue by Market

% Tenants with Dollar Denominated Leases with Dollar Denominated Revenues

Accounts Receivables Trend

67%85%

96% 100% 96% 100%

0%20%40%60%80%

100%5.7

2.7

0

3

6

9

Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015

Net AR Bad Debt Expense

Net AR decreased 54%

10%

87% 88%100% 91% 96%

0%20%40%60%80%

100%US$M

3.8%

2.5%2.0% 1.8% 1.7% 1.6% 1.5% 1.5% 1.4% 1.3%

IBM DHL Geodis LG Ryder JohnsonControls

SpringIndustries

GE Celestica Steelcase

Top 10 Customers Comprise 19% of NER


High quality, diversified customer base% of Annualized Net Effective Rent (NER) by Industry

10.0%

9.0%

9.0%

5.0%

4.0%

13.0%

28.0%

22.0%Manufacturing (50%)229

customers

82%of NER from multinational clients Consumption (50%)


High occupancy + rising rents = growing valuePeriod End Occupancy

94.3%

96.0%

91.6%92.8%

88%

91%

94%

97%

Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015

Operating Portfolio Market

7.2%

9.5%

9.3%

4%6%8%

10%12%14%

Q22014

Q32014

Q42014

Q12015

Q22015

Net Effective Rent Change

82.0%

98.0%

93.8%

80%

85%

90%

95%

100%

Q22014

Q32014

Q42014

Q12015

Q22015

Quarterly Q2'15 12 Mo. Average

Weighted Average Customer Retention

4.3%4.7%

3.4%

0%1%2%3%4%5%6%

Q22014

Q32014

Q42014

Q12015

Q22015

Same Store Cash NOI Change

151. Exclude realized exchange gain/(loss) from the VAT collection.

Distributions versus peers: sustainable and responsible

$0.0182

$0.0164

$0.0205

$0.0265

$0.016

$0.018

$0.020

$0.022

$0.024

$0.026

$0.028

Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q32015(E)

Q42015(E)

US$/CBFI

Distribution Growth 45.6%

Quarterly Distributions

69% 65%55% 53% 56%

46%59%

50% 53% 56%

0%

20%

40%

60%

80%

100%

FIBRAPL TERRA FIBRAMQ FUNO Vesta

FFO Margin AFFO MarginSource: company Filings

FFO and AFFO Margins(1)

2Q 2015

11%6% 4% 0%

10%

7%

2%

5%

0%

4%

8%

12%

16%

20%

FIBRAPL TERRA FIBRAMQ FUNO Vesta USIndustrial

REITTurnover Costs Property Improvements

Q2 2015 Cap-Ex as % of NOI

• One of first FIBRAs to provide distribution guidance

• Full-year 2015 distribution will be US$0.10/CBFI or ~95% of forecast 2015 AFFO.

• Distributions increased 45.6% since first full operating quarter distribution post-IPO

• FFO/AFFO spread mainly driven by capital expenditures

• FIBRAPL continuously invests to ensure quality and value of the portfolio

• AFFO includes ALL Cap-Ex

• So, distributions are responsible and sustainable

Source: company Filings


Rising rental revenue delivers growth and value to investors

In Place Rents Below Market Rents

7%

25%

15% 17%12%

24%

0%5%

10%15%20%25%30%

2015 2016 2017 2018 2019 2020 +

Lease Expiry Profile by Annualized Net Effective Rent (NER)

Expiration Profile of Leases Signed during the Financial Crisis (2008 – 2011)(based on NER)

• Market rents have grown faster than current lease rollovers

• 17% of annualized net effective rent from leases signed during financial crisis

• Leases specify annual rent increases of ~2.5% or CPI

-1.4%

-8.6%-10%

-8%

-6%

-4%

-2%

0%

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

10%

44%

12%

22%

9%3%

0%

10%

20%

30%

40%

50%

2015 2016 2017 2018 2019 2020+

17Data as of June 30, 2015.

Future growth through acquisitions

• 44% near-term growth capacity

• Proprietary access to Prologis development pipeline at market values

• Exclusive right to third party acquisitions sourced by Prologis

• 51% of construction in progress (all in global markets) offered to FIBRA Prologis for acquisition in 2015

• Prologis has a 20-year proven track record of value-accretive development

External Growth via Prologis Development Pipeline(MSF)

31.6 3.1 10.8

Current FIBRA Portfolio

Prologis and FIBRAPL

Land Bank

Prologis Construction in Progress

45.5

Based on Buildable SF

5.5 0.6 2.2 1.6 0.9

Mexico City Guadalajara Monterrey Reynosa Juarez

Prologis Land Bank(MSF)

18

Prologis Land Bank: Apodaca Industrial Park, Monterrey


Strong liquidity position• New US$400M unsecured line of

credit

• LIBOR plus 225bps, adjustable on loan to value

• Accordion feature with US$100M capacity

• VAT collected in April used to pay down outstanding balances on former line of credit

1%

46%40%

13%

0%

10%

20%

30%

40%

50%

2015 2016 2017 2018

Encumbered vs. Unencumbered AssetsDebt Expiration Profile

61%

39%

Encumbered Unencumbered

US$ 1.9B

• US$545M fixed-rate debt at par value

• Weighted average term 2.0 years

• Weighted average interest rate 5.6%

• Working toward a flexible balance sheet

$162 $154$53

$150 $150 $400

Q4 2014 Q1 2015 Q2 2015

Cash & VAT Line Availability

$312 $304

$453US$M

Liquidity

US$2.19 US$1.69

US$0.50

Price Trading Discount NAV

Ps. 26.39Ps. 34.30

20Data as of June 30, 20151. Price as of June 30, 2015 of Ps. 26.39/CBFI (US$1.69/CBFI, exchange rate Ps. 15.66 per US$1. 634.5M CBFI outstanding at June 30, 2015.

Great quality investment for a discount

7.4%

7.7%

8.9%

6%

7%

8%

9%

Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015

Valuation Cap Rate % Implied Cap Rate

Quarter End Appraisal Cap Rate vs. Implied Cap Rate

(1) (1) (1)

US$/CBFI 23% discount Trading at 23% Discount to NAV

Investment Properties Net Debt NAV

US$0.79

NAV Composition (US$/CBFI)

US$2.19US$2.98

Appendix

Altos 1, Guadalajara

Arrayanes 1, Guadalajara

El Salto 3, Guadalajara

El Salto 3, GuadalajaraDel Norte 3, Juarez

El Salto 3, GuadalajaraIndependencia 5, Juarez


Alamar 3, Tijuana


Otay 3, Tijuana


Apodaca 11, Monterrey

1. 31

FIBRA Prologis Management TeamLuis Gutiérrez Chief Executive Officer

Mr. Gutiérrez has approximately 27 years of experience in the real estate sector including as President for Latin America for Prologis wherehe is responsible for all Brazil and Mexico related activities including operations, investments, acquisitions and industrial propertydevelopment. Mr. Gutiérrez was co-founder of “Fondo Opción” (formerly G. Acción), the first public real estate company in Mexico, where heacted as Chief Executive Officer and is currently a member of the Executive Committee of Consejo de Empresas Globales. He is also amember the board of directors of Finaccess and Central de Estacionamientos. He also served as President of the AMPIP (The MexicanAssociation of Private Industrial Parks) from 2005 to 2006. Mr. Gutierrez has a Civil Engineering degree from Universidad Iberoamericana andan MBA from Instituto Panamericano de Alta Dirección de Empresas.

Hector Ibarzabal Chief Operating Officer

Hector Ibarzabal has 26 years of experience in the office, industrial, retail, and residential real estate sectors. Mr. Ibarzabal’s experienceincludes real estate structuring, financing and fund raising. As Country Manager and Head of Operations in Mexico for Prologis, Mr. Ibarzabalhas substantial experience managing Prologis’ activities in Mexico, including development, operations and capital deployment. Previous toPrologis, Mr. Ibarzabal was co-founder of G. Accion, a publicly traded real estate company, where he acted as CFO, COO and President. Heis currently a member of the technical committee of Prologis Mexico Fondo Logístico, another Mexican industrial real estate investmentvehicle managed by an affiliate of Prologis, a member of the technical committee of FIBRA Shop and a member of the board of directors ofActinver Fondos and Escala. Mr. Ibarzabal has a Civil Engineering degree from Universidad Iberoamericana and an MBA from IPADE.

Jorge Girault Chief Financial Officer

Jorge Girault, has 21 years of experience in the office, industrial, retail and residential real estate sectors. Currently he is SVP Finance forFIBRA Prologis. His experience includes real estate structuring, financing and fund raising. Mr. Girault has significant experience managingPrologis’ equity and debt raising activities, and is an officer of Prologis Mexico Manager, S. de R.L. de C.V., manager of Prologis MéxicoFondo Logístico, another Mexican industrial real estate investment vehicle managed by an affiliate of Prologis. Mr. Girault started hisprofessional carrier at G. Acción, where he acted as Project Manager, Investor Relations VP and CFO. He is currently a member of thetechnical committee of Prologis Mexico Fondo Logístico and is a part time professor at the Business School of Universidad Iberoamericana.Mr. Girault has an Industrial Engineering degree from Universidad Panamericana and an MBA from Universidad Iberoamericana.

1. 32

Notes and DefinitionsAcquisition cost, as presented for building acquisitions, represents the economic cost and not necessarily what is capitalized. It includes the initial purchase price; the effects of marking assumed debt to market; if applicable, all due diligence and lease intangibles; and estimated acquisition capital expenditures including leasing costs to achieve stabilization.

Development Project includes industrial properties that are under development and properties that are developed but have not met Stabilization.

FFO; FFO, as defined by FIBRA Prologis; AFFO (collectively referred to as “FFO”). FFO is a commonly used measure in the real estate industry. The most directly comparable IFRS measure to FFO is net income. Although the National Association of Real Estate Investment Trusts (“NAREIT”) has published a definition of FFO, modifications to the NAREIT calculation of FFO are common among real estate companies, as companies seek to provide financial measures that meaningfully reflect their business.

FFO is not meant to represent a comprehensive system of financial reporting and does not present, nor do we intend it to present, a complete picture of our financial condition and operating performance. We believe net income computed under IFRS remains the primary measure of performance and that FFO is only meaningful when it is used in conjunction with that measure.

Further, we believe our financial statements, prepared in accordance with IFRS, provide the most meaningful picture of our financial condition and our operating performance.

NAREIT’s FFO measure adjusts net income computed under US generally accepted accounting principles (“U.S. GAAP”) to exclude among other things, gains and losses from the sales of previously depreciated properties. We agree that these NAREIT adjustments are useful to investors as real estate investment trusts (“REITs”) were created as a legal form of organization in order to encourage public ownership of real estate as an asset class through investment in firms that were in the business of long-term ownership and management of real estate. The exclusion, in NAREIT’s definition of FFO, of gains and losses from the sales of previously depreciated operating real estate assets allows investors and analysts to readily identify the operating results of the long-term assets that form the core of a REIT’s activity and assists in comparing those operating results between periods.

As we are required to present our financial information per IFRS, our “NAREIT defined FFO” uses net income computed under IFRS rather than U.S. GAAP. The significant differences between IFRS and U.S. GAAP include depreciation, which is not included in IFRS, and the mark-to-market adjustment for the valuation of investment properties, which is included in the adjustments to derive at FFO, as defined by FIBRA Prologis (see below).

Our FFO Measures

At the same time that NAREIT created and defined its FFO measure for the REIT industry,

it also recognized that “management of each of its member companies has the responsibility and authority to publish financial information that it regards as useful to the financial community.” We believe holders of CBFIs, potential investors and financial analysts who review our operating results are best served by a defined FFO measure that includes other adjustments to net income computed under IFRS in addition to those included in the NAREIT defined measure of FFO. Our FFO measures are used by management in analyzing our business and the performance of our properties and we believe that it is important that holders of CBFIs, potential investors and financial analysts understand the measures management uses.

We use these FFO measures, to: (i) evaluate our performance and the performance of our properties in comparison to expected results and results of previous periods, relative to resource allocation decisions; (ii) evaluate the performance of our management; (iii) budget and forecast future results to assist in the allocation of resources; (iv) assess our performance as compared to similar real estate companies and the industry in general; and (v) evaluate how a specific potential investment will impact our future results. Because we make decisions with regard to our performance with a long-term outlook, we believe it is appropriate to remove the effects of short-term items that we do not expect to affect the underlying long-term performance of the properties. The long-term performance of our properties is principally driven by rental income. While not infrequent or unusual, these additional items we exclude in calculating FFO, as defined by FIBRA

Prologis, are subject to significant fluctuations from period to period that cause both positive and negative short-term effects on our results of operations in inconsistent and unpredictable directions that are not relevant to our long-term outlook.We use our FFO measures as supplemental financial measures of operating performance. We do not use our FFO measures as, nor should they be considered to be, alternatives to net income computed under IFRS, as indicators of our operating performance, as alternatives to cash from operating activities computed under IFRS or as indicators of our ability to fund our cash needs.

FFO, as defined by FIBRA Prologis

To arrive at FFO, as defined by FIBRA Prologis, we adjust the NAREIT defined FFO measure to exclude:

mark-to-market adjustments for the valuation of investment properties; and foreign currency exchange gains and losses from the remeasurement (based on current foreign currency exchange rates) of assets and liabilities denominated in Pesos.

We believe investors are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in planning and executing our business strategy.

1. 33

Notes and Definitions(continued)AFFO

To arrive at AFFO, we adjust FFO, as defined by FIBRA Prologis to further exclude (i) straight-line rents; (ii) recurring capital expenditures; and (iii) amortization of debt premiums and discounts and financing cost, net of amounts capitalized.

We believe AFFO provides a meaningful indicator of our ability to fund cash needs, including cash distributions to the holders of our CBFIs.

Limitations on Use of our FFO Measures

While we believe our defined FFO measures are important supplemental measures, neither NAREIT’s nor our measures of FFO should be used alone because they exclude significant economic components of net income computed under IFRS and are, therefore, limited as analytical tools. Accordingly, these are only a few of the many measures we use when analyzing our business. Some of these limitations are:Amortization of real estate assets are economic costs that are excluded from FFO. FFO is limited, as it does not reflect the cash requirements that may be necessary for future replacements of the real estate assets. Further, the amortization of capital expenditures and leasing costs necessary to maintain the operating performance of industrial properties are not reflected in FFO.Mark-to-market adjustments to the valuation of investment properties and gains or losses from property acquisitions and dispositions represent changes in value of the properties. By excluding these gains and losses, FFO does not capture realized changes in the value of acquired or disposed properties arising from changes in market conditions.The foreign currency exchange gains and losses that are excluded from our defined FFO measures are generally recognized based on movements in foreign currency exchange rates through a specific point in time. The ultimate settlement of our foreign currency-denominated net assets is indefinite as to timing and amount. Our FFO measures are limited in that they do not reflect the current period changes in these net assets that result from periodic foreign currency exchange rate movements.

We compensate for these limitations by using our FFO measures only in conjunction with net income computed under IFRS when making our decisions. This information should be read with our complete consolidated financial statements prepared under IFRS. To assist investors in compensating for these limitations, we reconcile our defined FFO measures to our net income computed under IFRS.

Global Markets include the logistics markets of Mexico City, Guadalajara and Monterrey. These markets are highly industrialized and benefit from proximity to principal highways, airports and rail hubs.

Net Asset Value (“NAV”). We consider NAV to be a useful supplemental measure of our operating performance because it enables both management and investors to estimate the fair value of our business. We have presented the financial results and investments related

to our business that we believe are important in calculating our NAV but have not presented any specific methodology nor provided any guidance on the assumptions or estimates that should be used in the calculation.

Net Effective Rent is calculated at the beginning of the lease using the estimated total cash to be received over the term of the lease (including base rent and expense reimbursements) and annualized. The per square foot number is calculated by dividing the annualized net effective rent by the occupied square feet of the lease.

Net Effective Rent Change represents the change in net effective rental rates (average rate over the lease term) on new and renewed leases signed during the period as compared with the previous effective rental rates in that same space.

Net Operating Income (“NOI”) represents rental income less rental expenses.

Operating Portfolio includes stabilized industrial properties.

Regional Markets include the manufacturing markets of Tijuana, Reynosa and Ciudad Juarez. These markets are industrial centers for the automotive, electronic, medical and aerospace industries, and benefit from the ample supply of qualified labor at attractive costs and proximity to the U.S. border.

Same Store. We evaluate the operating performance of the operating properties we own using a “Same Store” analysis because the population of properties in this analysis is consistent from period to period, thereby eliminating the effects of changes in the composition of the portfolio on performance measures. Included in this analysis are all properties that were owned by FIBRA Prologis as of December 31, 2014 and began operations no later than January 1, 2013. We included the properties that were owned and managed by Prologis or its affiliates beginning January 1, 2013 through the date of FIBRA Prologis’ initial public offering. We believe the factors that impact rental income, rental expenses and NOI in the Same Store portfolio are generally the same as for the total operating portfolio.

Our Same Store measure is a measure that is commonly used in the real estate industry and is calculated beginning with rental income and rental expenses from the financial statements prepared in accordance with IFRS. It is also common in the real estate industry and expected from the analyst and investor community that these numbers also be adjusted to remove certain non-cash items included in the financial statements prepared in accordance with IFRS to reflect a cash Same Store number, such as straight line rent adjustments. As this is a non-IFRS measure, it has certain limitations as an analytical tool and may vary among real estate companies.

Same Store Average Occupancy represents the average occupied percentage of the Same Store portfolio for the period.

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Notes and Definitions(continued)Tenant Retention is the square footage of all leases rented by existing tenants divided by the square footage of all expiring and rented leases during the reporting period, excluding the square footage of tenants that default or buy-out prior to expiration of their lease, short-term tenants and the square footage of month-to-month leases.

Turnover Costs represent the costs incurred in connection with the signing of a lease, including leasing commissions and tenant improvements. Tenant improvements include costs to prepare a space for a new tenant and for a lease renewal with the same tenant. It excludes costs to prepare a space that is being leased for the first time (i.e. in a new development property).

Value-Added Acquisitions (“VAA”) are properties we acquire for which we believe the discount in pricing attributed to the operating challenges could provide greater returns post-stabilization than the returns of stabilized properties that are not Value-Added Acquisitions. Value Added Acquisitions must have one or more of the following characteristics: (i) existing vacancy in excess of 20%; (ii) short term lease roll-over, typically during the first two years of ownership; (iii) significant capital improvement requirements in excess of 10% of the purchase price and must be invested within the first two years of ownership. These properties are not included in the operating portfolio.

Value Creation represents the value that we will create through our development and leasing activities. We calculate value creation by estimating the NOI that the property will generate at Stabilization and applying an estimated stabilized capitalization rate applicable to that property. The value creation is calculated as the amount by which the estimated value exceeds our total expected investment and does not include any fees or promotes we may earn. This can also include realized economic gains from value-added conversion properties.

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The statements in this report that are not historical facts are forward-looking statements. These forward-looking statements are based on current expectations, estimatesand projections about the industry and markets in which FIBRA Prologis operates, management’s beliefs and assumptions made by management. Such statementsinvolve uncertainties that could significantly impact FIBRA Prologis financial results. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,”“estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements, which generally are not historical in nature. Allstatements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to rent andoccupancy growth, acquisition activity, development activity, disposition activity, general conditions in the geographic areas where we operate, our debt and financialposition, are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that aredifficult to predict. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurancethat our expectations will be attained and therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-lookingstatements. Some of the factors that may affect outcomes and results include, but are not limited to: (i) national, international, regional and local economic climates, (ii)changes in financial markets, interest rates and foreign currency exchange rates, (iii) increased or unanticipated competition for our properties, (iv) risks associated withacquisitions, dispositions and development of properties, (v) maintenance of real estate investment trust (“FIBRA”) status and tax structuring, (vi) availability of financingand capital, the levels of debt that we maintain and our credit ratings, (vii) risks related to our investments (viii) environmental uncertainties, including risks of naturaldisasters, and (ix) those additional factors discussed in reports filed with the “Comisión Nacional Bancaria y de Valores” and the Mexican Stock Exchange by FIBRAPrologis under the heading “Risk Factors.” FIBRA Prologis undertakes no duty to update any forward-looking statements appearing in this report.

Forward-Looking Statements

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The material that follows is a presentation of general background information about FIBRA Prologis (the “FIBRA”, “we”, “us” or “our”) as of the date of this presentation.The information in this presentation is in summary form and does not purport to be complete. This presentation is strictly confidential and may not be disclosed to anyother person. This presentation may not be photocopied, reproduced, or distributed in whole or in part to others at any time. No representation or warranty, express orimplied, is made concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of the information presented herein.

This presentation should not be construed as financial, legal, tax, accounting, investment or other advice or a recommendation with respect to any investment. Suchinformation and materials (and the matters contemplated herein) do not constitute (or serve the basis for) an offer to sell or a solicitation of an offer to purchase anysecurities in any jurisdiction. Under no circumstances is this information and material to be construed as a prospectus, supplement, offering memorandum oradvertisement. Neither any part of this presentation nor any information or statement contained therein shall form the basis of or be relied upon in connection with anycontract or commitment whatsoever.

No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the informationpresented or contained in this presentation. Neither we nor any of Prologis, Inc. or its affiliates, advisers or representatives accepts any responsibility whatsoever for anyloss or damage arising from any information presented or contained in this presentation.

This document is only made available to Professional Clients or Eligible Counterparties as defined by the Financial Conduct Authority and to persons falling within theFinancial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001. An investment should only be made by persons withprofessional experience of participating in funds. This document is exempt from the general restrictions in Section 21 of the Financial Services and Markets Act 2000 as itis aimed solely to persons to whom the document can legitimately be communicated. Prologis Private Capital UK Limited is authorized and regulated by the FinancialConduct Authority. FRN 530724.

The use of this document in certain jurisdictions may be restricted by law. You should consult your own legal and tax advisers as to the legal requirements and taxconsequences of an investment within the countries of your citizenship, residence, domicile and place of business.

Non-Solicitation - Any securities discussed herein or in the accompanying presentations, if any, have not been registered under the Securities Act of 1933 or the securities laws ofany state and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under the Securities Act and anyapplicable state securities laws. Any such announcement does not constitute an offer to sell or the solicitation of an offer to buy the securities discussed herein or in thepresentations, if and as applicable.

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