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Prologis, Inc. (PLD - Free Report) reported first-quarter 2024 core funds from operations (FFO) per share of $1.28, in line with the Zacks Consensus Estimate. This compares favorably with the year-ago quarter’s figure of $1.22.
However, the industrial REIT trimmed its guidance for the full-year 2024 as it prepares for a slower leasing environment in the next quarter or two. Reflecting the negative sentiments of investors, PLD shares are trending down during the initial hours of today’s trading session.
Per Hamid R. Moghadam, the co-founder, chairman and CEO of the company, " While operating conditions are healthy in the majority of our markets, customers remain focused on controlling costs, which is weighing on decision making and the pace of leasing."
He also noted, “A volatile and persistently high interest rate environment, together with mounting geopolitical concerns, contribute to this indecision and its short-term effect on net absorption.”
Prologis generated rental revenues of $1.83 billion, which surpassed the Zacks Consensus Estimate of $1.81 billion. The figure also increased from the $1.63 billion reported in the year-ago period. Total revenues were $1.96 billion, up from the year-ago quarter’s $1.77 billion.
Quarter in Detail
In the quarter under review, 48.1 million square feet of leases commenced in the company’s owned and managed portfolio, with 45.0 million square feet in the operating portfolio and 3.1 million square feet in the development portfolio. The retention level was 74.3% in the quarter.
The average occupancy level in Prologis’ owned and managed portfolio was 96.8% in the first quarter, down from 97.1% in the prior quarter and 98.0% in the year-ago period. Our estimate for average occupancy was 97.2%.
Prologis’ share of net effective rent change was 67.6% in the January-March quarter. In the reported quarter, the cash rent change was 48.2%. Cash same-store net operating income (NOI) grew 5.7%, which was impacted by around 175 bps of one-time items and was down from 8.5% in the prior quarter.
The company’s share of building acquisitions amounted to $5 million, with a weighted average stabilized cap rate (excluding other real estate) of 7.1% in the first quarter. Development stabilization aggregated $517 million, with 43.3% being built to suit, while development starts totaled $273 million. PLD’s total dispositions and contributions were $254 million, with a weighted average stabilized cap rate (excluding land and other real estate) of 4.8%.
However, during the reported quarter, interest expenses jumped 42.1% on a year-over-year basis to $193.3 million.
Liquidity
Prologis exited the first quarter of 2024 with cash and cash equivalents of $500.6 million, down from $530.4 million at the end of 2023. Total liquidity amounted to $5.85 billion at the end of the quarter.
Debt, as a percentage of the total market capitalization, was 21.0% as of Mar 31, 2024. The company's weighted average interest rate on its share of the total debt was 3.1%, with a weighted average term of 9.3 years. The company has no significant debt maturities until 2026.
Prologis and its co-investment ventures issued an aggregate of $4.1 billion of debt in the reported quarter at a weighted average interest rate of 4.7% and a weighted average term of 9.5 years.
Guidance
Prologis lowered its 2024 core FFO per share guidance to the range of $5.37-$5.47 from the $5.42-$5.56 range guided earlier, suggesting a 1.3% decrease at the midpoint. This is lower than the Zacks Consensus Estimate of $5.50.
The company expects average occupancy in the band of 95.75%-96.75%, down 75 basis points (bps) at the midpoint from the prior guidance. Cash same-store NOI (Prologis share) is projected at 6.25% to 7.25%, down from 8%-9% guided earlier.
Capital deployment (Prologis share) on development starts is projected to be $2.5 billion -$3.0 billion, down from its prior range of $3.0 billion-$3.5 billion. The company has kept its outlook for spending on acquisitions unchanged at $500 million-$1.0 billion and dispositions guidance unchanged at $800 million-$1.2 billion.
Prologis currently carries a Zacks Rank #3 (Hold).
We now look forward to the earnings releases of other REITs like Crown Castle Inc. (CCI - Free Report) and SL Green Realty (SLG - Free Report) , both slated to report today after market close. Meanwhile, Alexandria Real Estate Equities, Inc. (ARE - Free Report) is scheduled to report on Apr 22.
The Zacks Consensus Estimate for Crown Castle’s first-quarter 2024 FFO per share stands at $1.71, which indicates a year-over-year decline of 10.5%. CCI currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for SL Green’s first-quarter 2024 FFO per share is pegged at $2.17, which implies a 41.8% year-over-year increase. SLG currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Alexandria Real Estate Equities’ first-quarter 2024 FFO per share is pegged at $2.32, which suggests a year-over-year increase of 5.9%. ARE currently carries a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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Prologis (PLD) Meets Q1 FFO Estimates, Trims 2024 Guidance
Prologis, Inc. (PLD - Free Report) reported first-quarter 2024 core funds from operations (FFO) per share of $1.28, in line with the Zacks Consensus Estimate. This compares favorably with the year-ago quarter’s figure of $1.22.
However, the industrial REIT trimmed its guidance for the full-year 2024 as it prepares for a slower leasing environment in the next quarter or two. Reflecting the negative sentiments of investors, PLD shares are trending down during the initial hours of today’s trading session.
Per Hamid R. Moghadam, the co-founder, chairman and CEO of the company, " While operating conditions are healthy in the majority of our markets, customers remain focused on controlling costs, which is weighing on decision making and the pace of leasing."
He also noted, “A volatile and persistently high interest rate environment, together with mounting geopolitical concerns, contribute to this indecision and its short-term effect on net absorption.”
Prologis generated rental revenues of $1.83 billion, which surpassed the Zacks Consensus Estimate of $1.81 billion. The figure also increased from the $1.63 billion reported in the year-ago period. Total revenues were $1.96 billion, up from the year-ago quarter’s $1.77 billion.
Quarter in Detail
In the quarter under review, 48.1 million square feet of leases commenced in the company’s owned and managed portfolio, with 45.0 million square feet in the operating portfolio and 3.1 million square feet in the development portfolio. The retention level was 74.3% in the quarter.
The average occupancy level in Prologis’ owned and managed portfolio was 96.8% in the first quarter, down from 97.1% in the prior quarter and 98.0% in the year-ago period. Our estimate for average occupancy was 97.2%.
Prologis’ share of net effective rent change was 67.6% in the January-March quarter. In the reported quarter, the cash rent change was 48.2%. Cash same-store net operating income (NOI) grew 5.7%, which was impacted by around 175 bps of one-time items and was down from 8.5% in the prior quarter.
The company’s share of building acquisitions amounted to $5 million, with a weighted average stabilized cap rate (excluding other real estate) of 7.1% in the first quarter. Development stabilization aggregated $517 million, with 43.3% being built to suit, while development starts totaled $273 million. PLD’s total dispositions and contributions were $254 million, with a weighted average stabilized cap rate (excluding land and other real estate) of 4.8%.
However, during the reported quarter, interest expenses jumped 42.1% on a year-over-year basis to $193.3 million.
Liquidity
Prologis exited the first quarter of 2024 with cash and cash equivalents of $500.6 million, down from $530.4 million at the end of 2023. Total liquidity amounted to $5.85 billion at the end of the quarter.
Debt, as a percentage of the total market capitalization, was 21.0% as of Mar 31, 2024. The company's weighted average interest rate on its share of the total debt was 3.1%, with a weighted average term of 9.3 years. The company has no significant debt maturities until 2026.
Prologis and its co-investment ventures issued an aggregate of $4.1 billion of debt in the reported quarter at a weighted average interest rate of 4.7% and a weighted average term of 9.5 years.
Guidance
Prologis lowered its 2024 core FFO per share guidance to the range of $5.37-$5.47 from the $5.42-$5.56 range guided earlier, suggesting a 1.3% decrease at the midpoint. This is lower than the Zacks Consensus Estimate of $5.50.
The company expects average occupancy in the band of 95.75%-96.75%, down 75 basis points (bps) at the midpoint from the prior guidance. Cash same-store NOI (Prologis share) is projected at 6.25% to 7.25%, down from 8%-9% guided earlier.
Capital deployment (Prologis share) on development starts is projected to be $2.5 billion -$3.0 billion, down from its prior range of $3.0 billion-$3.5 billion. The company has kept its outlook for spending on acquisitions unchanged at $500 million-$1.0 billion and dispositions guidance unchanged at $800 million-$1.2 billion.
Prologis currently carries a Zacks Rank #3 (Hold).
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 SL Green Realty (SLG - Free Report) , both slated to report today after market close. Meanwhile, Alexandria Real Estate Equities, Inc. (ARE - Free Report) is scheduled to report on Apr 22.
The Zacks Consensus Estimate for Crown Castle’s first-quarter 2024 FFO per share stands at $1.71, which indicates a year-over-year decline of 10.5%. CCI currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for SL Green’s first-quarter 2024 FFO per share is pegged at $2.17, which implies a 41.8% year-over-year increase. SLG currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Alexandria Real Estate Equities’ first-quarter 2024 FFO per share is pegged at $2.32, which suggests a year-over-year increase of 5.9%. ARE currently carries a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.