Prologis, Inc. (NYSE:PLD) Q3 2019 Earnings Conference Call - Final Transcript
Oct 15, 2019 • 12:00 pm ET
Welcome to the Prologis Q3 Earnings Conference Call. My name is Michelle and I will be your operator for today's call. [Operator Instructions]
I would now like to turn the call over to Tracy Ward. Tracy, you may begin.
Thank you, Michelle. Good morning everyone. Welcome to the Prologis third quarter earnings call. If you have not yet downloaded the press release, it's available on our website at prologis.com under Investor Relations.
This morning, you will hear from Tom Olinger, our Chief Financial Officer and also joining us for the call is Hamid Moghadam, Gary Anderson, Chris Caton, Mike Curless, Ed Nekritz, Colleen McKeown and Gene Reilly.
Before we begin our prepared remarks, I'd like to state that this conference call will contain forward-looking statements under Federal Securities laws. These statements are based on current expectations, estimates and projections about the market and the industry in which the company operates as well as the beliefs and assumptions of management. Most of these factors are referred to in Prologis' 10-K or SEC filings. Additional factors that could cause actual results to differ materially include but are not limited to the expected timing and likelihood of the completion of the transaction with IPT, including their ability to obtain the requisite approvals of their stockholders and the risk that conditions to the closing of the transaction, may not be satisfied. Forward-looking statements are not guarantees of performance and actual operating results may differ.
Finally, this call will contain financial measures such as FFO, EBITDA that are non-GAAP measures and in accordance with Reg-G, we have provided a reconciliation to those measures in our earnings package.
With that, I'll turn the call over to Tom. And, Tom will you please begin.
Thomas S. Olinger
Thanks, Tracy. Good morning everyone and thank you for joining our call today. We had another outstanding quarter. Customer sentiment remains positive and we see no meaningful impact on our business from uncertainties surrounding trade. Our proprietary operating metrics reflect healthy demand showing deal gestation conversion rates are positive and in line with last quarter as our customers improve their supply chains and response to consumer demand for ever faster delivery times.
US market fundamentals are strong. I'd like to share our assessment of third quarter market statistics as we've seen more divergent viewpoints than normal. We see historically low vacancy in the mid 4s, with supply and demand balanced at 75 million square feet each. Rents have outperformed and as a result, we are raising our 2019 US rent growth forecast from 6% to 7%, leading to an 80 basis point increase in our global rent forecast to 6.5%.
Activity across Europe remains healthy. In the UK while overall demand is solid and our build-to-suit pipeline is very active, we are highlighting the Midlands as a supplier risk. We continue to forecast 2019 rent growth on the continent to be the highest in more than a decade. Fundamentals in Japan are improving with vacancy in Tokyo at less than 3% and Osaka at