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Prologis' (PLD) Q2 FFO Beats on Solid Rent Growth, '23 View Up
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Prologis, Inc. (PLD - Free Report) reported second-quarter 2023 core funds from operations (FFO) per share of $1.83, beating the Zacks Consensus Estimate of $1.68. The figure also compared favorably with the year-ago quarter’s figure of $1.11.
Results of this industrial REIT, which announced the acquisition of industrial properties from opportunistic real estate funds affiliated with Blackstone worth $3.1 billion in June, reflect robust leasing activity and solid rent growth. The company also raised the midpoint of its 2023 core FFO per share guidance.
Highlighting positive investors’ sentiments, PLD’s shares are trending up during the initial hours of today’s trading session.
Prologis generated rental revenues of $1.65 billion, lagging the Zacks Consensus Estimate of $1.66 billion. The figure, however, increased a whopping 51% from the year-ago period’s tally of $1.09 billion. Total revenues were $2.45 billion, up from the year-ago quarter’s $1.25 billion.
Per Hamid R. Moghadam, the co-founder and chief executive officer of the company, “The continuation of record operating results is a testament to Prologis' premier global portfolio and the enormous, embedded mark-to-market upside that will provide industry-leading, predictable growth for years to come.”
Quarter in Detail
The average occupancy level in Prologis’ owned and managed portfolio was 97.5% in the second quarter. In the quarter under review, 43.3 million square feet of leases commenced in the company’s owned and managed portfolio, with 38.4 million square feet in the operating portfolio and 4.9 million square feet in the development portfolio. The retention level was 70.5% in the reported quarter.
Prologis’ share of net effective rent change was 78.5% in the April-June quarter. This marked an all-time high and was led by the United States at 91.7%. The cash rent change of 48.1%, too, represented an all-time high. Consequently, cash same-store net operating income (NOI) grew 10.7%.
The company’s share of building acquisitions amounted to $166 million in the reported quarter. Development stabilization aggregated $699 million, while development starts totaled $354 million, with 18.6% being build to suit. PLD’s total dispositions and contributions were $557 million.
Liquidity
Prologis exited the second quarter of 2023 with cash and cash equivalents of $531.1 million, up from $522.5 million at the end of the first quarter of 2023.
Debt, as a percentage of the total market capitalization, was 21% as of Jun 30, 2023. The company's weighted average interest rate on its share of the total debt was 2.9%, with a weighted average term of 9.7 years. Prologis and its co-investment ventures issued $7 billion of debt in the reported quarter at a weighted average interest rate of 4.9%, with a weighted average term of 8.4 years.
2023 Guidance Raised
Prologis raised its core FFO per share guidance for 2023 to the range of $5.56-$5.60 from the $5.42-$5.50 guided earlier, suggesting a 2.2% increase at the midpoint. The Zacks Consensus Estimate for the same is currently pegged at $5.48.
The company now estimates cash same-store NOI (Prologis share) between 9.50% and 10.00%, up 37.5 basis points at the midpoint than what was guided earlier. PLD, however, maintained its outlook for average occupancy in the band of 97.00-97.50%.
We now look forward to the earnings releases of other REITs like Crown Castle Inc. (CCI - Free Report) and Alexandria Real Estate Equities (ARE - Free Report) , slated to report on Jul 19 and Jul 24, respectively. Meanwhile, Boston Properties (BXP - Free Report) is scheduled on Aug 1.
The Zacks Consensus Estimate for Crown Castle’s second-quarter 2023 FFO per share stands at $1.98, indicating a year-over-year increase of 10%. CCI currently has a Zacks Rank #3.
The Zacks Consensus Estimate for Alexandria’s second-quarter 2023 FFO per share is pegged at $2.20, implying a year-over-year increase of 4.8%. ARE currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for Boston Properties’ second-quarter 2023 FFO per share is pegged at $1.80, suggesting a year-over-year fall of 7.2%. BXP currently carries a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Prologis' (PLD) Q2 FFO Beats on Solid Rent Growth, '23 View Up
Prologis, Inc. (PLD - Free Report) reported second-quarter 2023 core funds from operations (FFO) per share of $1.83, beating the Zacks Consensus Estimate of $1.68. The figure also compared favorably with the year-ago quarter’s figure of $1.11.
Results of this industrial REIT, which announced the acquisition of industrial properties from opportunistic real estate funds affiliated with Blackstone worth $3.1 billion in June, reflect robust leasing activity and solid rent growth. The company also raised the midpoint of its 2023 core FFO per share guidance.
Highlighting positive investors’ sentiments, PLD’s shares are trending up during the initial hours of today’s trading session.
Prologis generated rental revenues of $1.65 billion, lagging the Zacks Consensus Estimate of $1.66 billion. The figure, however, increased a whopping 51% from the year-ago period’s tally of $1.09 billion. Total revenues were $2.45 billion, up from the year-ago quarter’s $1.25 billion.
Per Hamid R. Moghadam, the co-founder and chief executive officer of the company, “The continuation of record operating results is a testament to Prologis' premier global portfolio and the enormous, embedded mark-to-market upside that will provide industry-leading, predictable growth for years to come.”
Quarter in Detail
The average occupancy level in Prologis’ owned and managed portfolio was 97.5% in the second quarter. In the quarter under review, 43.3 million square feet of leases commenced in the company’s owned and managed portfolio, with 38.4 million square feet in the operating portfolio and 4.9 million square feet in the development portfolio. The retention level was 70.5% in the reported quarter.
Prologis’ share of net effective rent change was 78.5% in the April-June quarter. This marked an all-time high and was led by the United States at 91.7%. The cash rent change of 48.1%, too, represented an all-time high. Consequently, cash same-store net operating income (NOI) grew 10.7%.
The company’s share of building acquisitions amounted to $166 million in the reported quarter. Development stabilization aggregated $699 million, while development starts totaled $354 million, with 18.6% being build to suit. PLD’s total dispositions and contributions were $557 million.
Liquidity
Prologis exited the second quarter of 2023 with cash and cash equivalents of $531.1 million, up from $522.5 million at the end of the first quarter of 2023.
Debt, as a percentage of the total market capitalization, was 21% as of Jun 30, 2023. The company's weighted average interest rate on its share of the total debt was 2.9%, with a weighted average term of 9.7 years. Prologis and its co-investment ventures issued $7 billion of debt in the reported quarter at a weighted average interest rate of 4.9%, with a weighted average term of 8.4 years.
2023 Guidance Raised
Prologis raised its core FFO per share guidance for 2023 to the range of $5.56-$5.60 from the $5.42-$5.50 guided earlier, suggesting a 2.2% increase at the midpoint. The Zacks Consensus Estimate for the same is currently pegged at $5.48.
The company now estimates cash same-store NOI (Prologis share) between 9.50% and 10.00%, up 37.5 basis points at the midpoint than what was guided earlier. PLD, however, maintained its outlook for average occupancy in the band of 97.00-97.50%.
Prologis currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Prologis, Inc. Price, Consensus and EPS Surprise
Prologis, Inc. price-consensus-eps-surprise-chart | Prologis, Inc. Quote
Upcoming Earnings Releases
We now look forward to the earnings releases of other REITs like Crown Castle Inc. (CCI - Free Report) and Alexandria Real Estate Equities (ARE - Free Report) , slated to report on Jul 19 and Jul 24, respectively. Meanwhile, Boston Properties (BXP - Free Report) is scheduled on Aug 1.
The Zacks Consensus Estimate for Crown Castle’s second-quarter 2023 FFO per share stands at $1.98, indicating a year-over-year increase of 10%. CCI currently has a Zacks Rank #3.
The Zacks Consensus Estimate for Alexandria’s second-quarter 2023 FFO per share is pegged at $2.20, implying a year-over-year increase of 4.8%. ARE currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for Boston Properties’ second-quarter 2023 FFO per share is pegged at $1.80, suggesting a year-over-year fall of 7.2%. BXP currently carries a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.