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Prologis (PLD) Completes 20 Build-to-Suit Projects in 1H

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Prologis Inc.'s (PLD - Free Report) build-to-suit activity remained solid this year, with the company completing 20 such development projects in the first half. These projects included over 7 million square feet and involved an aggregate expected investment of $430 million.

The projects, which are located both within the U.S. and abroad, are made for customers like The Home Depot, Inc. (HD - Free Report) , Bed Bath & Beyond Inc. , Carrier Corporation, Tesco, Wal-Mart Stores, Inc. (WMT - Free Report) , among others.

Further, this industrial real estate investment trust (REIT) commenced 17 build-to-suit development starts during the same period, comprising over 7 million square feet of space and involving a total estimated investment of $620 million.

Notably, this high number of build-to-suit development projects highlights the advantageous location of the company’s land bank, as well as demand from the company's multi-site customers. This is because more than 75% of its build-to-suits starts were with the company's multi-site customers.

The industrial real estate market has been experiencing solid growth, thanks to rising internet retailing and supply-chain consolidation. This, in turn, is generating greater demand for logistics infrastructure and efficient distribution networks. While there is a rising demand for modern logistics facilities with vacancy rates tightening, new supply is still manageable which has been pushing up rents significantly in many of the markets.

Amid this, Prologis is well poised to benefit from its capacity to offer modern distribution facilities in strategic in-fill locations. The company has a sound development expertise and completed 34 build-to-suit projects, aggregating over 12.3 million square feet of space in 2016. Notably, the square footage of the company’s 2016 build-to-suit starts escalated more than 15% over 2015, which is encouraging.

Prologis currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company has been a steady performer, having beaten the Zacks Consensus Estimate in three of the trailing four quarters and meeting in another, with an average positive surprise of 1.90%. Moreover, Prologis enjoyed a historical cash flow growth (3–5 years) of 30.82%, which comfortably exceeded the industry’s growth of 18.01%. Also, its current cash flow growth of 22.54% is ahead of the industry’s rate of 15.75%.

In addition, shares of Prologis outperformed the Zacks categorized REIT and Equity Trust – Other industry over the past three months. In fact, its shares ascended around 5.7%, outperforming the 1.0% decline of the industry.




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