Chairman and CEO HamidMoghadam on July 19 downplayed the impact that Britain's planned exit from the EuropeanUnion has had on the company's business to-date and dismissed the event as a long-termnegative for the company's U.K. and EU operations.
"Sofar … the impact of Brexit on our operations has been minimal," the executivesaid on an earnings call. "Our U.K. customers serve mostly domestic consumersand we believe the decision to leave the EU will not materially change the buyinghabits of 65 million people."
Moghadamacknowledged that news out of Europe will likely continue to be a driver of marketvolatility, but he said the company is "confident" on balance with itsEuropean business, with the possible exception of Poland, where "a few merchantdevelopers are overbuilding."
"Theclass A market is where the action and where our portfolio is focused," Moghadamsaid. "Any modest decline in GDP growth will in all likelihood be offset bythe need to carry slightly higher inventories."
Later,Moghadam called the last six months "the best in our company's history,"and Gary Anderson, CEO for Europe and Asia, described the second-quarter resultsout of the company's European portfolio as "some of our strongest results onrecord."
FromJune 23, the day of the Brexit vote, through July 19, Prologis completed 56 leasedeals in Europe totaling "just under" 4.9 million square feet, "with8% positive rent change," Anderson said. Of the total square footage, 1.3 millionsquare feet are in the U.K.
"Demandin Europe still appears to be broad-based and continues to have an emphasis on theautomotive and e-commerce sectors," he said, citing post-Brexit lease dealswith DHL, Schneider Electric, Jaguar, Land Rover, Marks & Spencer and Alibaba."Risk associated with our U.K. NOI has been minimized."
Occupancyin Prologis' European portfolio stands at 95.6%, up 130 basis points year over yearand 70 basis points quarter over quarter, Anderson said. The company's U.K. portfolioleads all regions with a 98.8% occupancy rate and is 100% leased.