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Prologis' (PLD) Q2 FFO & Revenues Top Estimates, View Up
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Prologis, Inc. (PLD - Free Report) reported second-quarter 2020 core funds from operations (FFO) per share of $1.11, beating the Zacks Consensus Estimate of 99 cents. Results also compare favorably with the year-ago figure of 77 cents.
This better-than-expected performance was driven by decent growth in rental income. Occupancy level was healthy. The company also reported 23 cents of net promote income in the quarter as against no such income in the prior-year period.
Prologis generated rental revenues of $944.4 million, which registered 34.8% growth from the prior-year quarter. The figure also surpassed the Zacks Consensus Estimate of $927.3 million. The company also revised its full-year core FFO per share guidance northward compared with the one issued in April.
According to Hamid R. Moghadam, chairman and CEO of the company, "While e-commerce is clearly a tailwind, demand is broad-based across a variety of categories — a trend we saw accelerate in June."
The company’s chief financial officer also noted that though the economic impact of COVID-19 remains unknown, its proprietary data, pace of rent collections, as well as dialogue with customers gives “a more positive outlook for the back half of the year”.
Quarter in Detail
At the end of the reported quarter, occupancy level in the company’s owned-and-managed portfolio was 95.7%. During the second quarter, 42 million square feet of leases commenced in the company’s owned-and-managed portfolio, with 39 million square feet being in the operating portfolio and roughly 3 million square feet in the development portfolio. Retention level was 80.9% in the quarter, denoting an expansion of 540 basis points from the prior quarter.
Prologis’ share of net effective rent change was 22% during the April-June quarter, driven by the United States at 27.7%. Cash rent change was 9.6%, while cash same-store net operating income (NOI) registered 2.9% growth.
Amid the macroeconomic uncertainty, Prologis’ share of building acquisitions amounted to $8 million, with a weighted average stabilized cap rate of 7.6% during the quarter. Development stabilization aggregated $333 million, while development starts totaled $66 million, with 100% being build-to-suit. Furthermore, the company’s total dispositions and contributions came in at $304 million, with weighted average stabilized cap rate (excluding land and other real estate) of 6%.
Liquidity
The company exited the June-end quarter with cash and cash equivalents of $549.1 million, down from the $807.9 million recorded at the end of first-quarter 2020. However, combined with availability from other lines, Prologis ended the quarter with $4.6 billion in liquidity. Debt, as a percentage of total market capitalization, was 20% at quarter end.
The combined investment capacity of Prologis and its open-ended vehicles, at levels in line with their current credit ratings, is well above $13 billion. Prologis and its co-investment ventures accomplished $1.6 billion of debt activity during the quarter, at a weighted average rate of 1.8% and a weighted average term of nearly 13 years. Moreover, at quarter end, the company's weighted average rate on its share of total debt was 2.3%, with a weighted average remaining term of 9.1 years.
Outlook
Prologis projects 2020 core FFO per share at $3.70-$3.75 compared with the prior guidance of $3.55-$3.65. The Zacks Consensus Estimate for the same is currently pegged at $3.59.
It forecasts year-end occupancy of 95-96% compared with the 94.5-96% guided earlier. Cash same-store NOI (Prologis share) is projected in the range of 2.5-3.5% compared with the 1.75-3.25% expected earlier.
Moreover, the company projects $500-$600 million of building acquisitions compared with the $450 million projected earlier, while development starts are expected to be $800-$1,200 million as against the prior estimate of $500-$800 million for this year.
We now look forward to the earnings releases of other REITs like SL Green Realty Corp. (SLG - Free Report) , Alexandria Real Estate Equities, Inc. (ARE - Free Report) and Boston Properties, Inc. (BXP - Free Report) . While SL Green is slated to report second-quarter earnings on Jul 22, Alexandria Real Estate Equities and Boston Properties have earnings release scheduled for Jul 27 and 28, respectively.
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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It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
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Prologis' (PLD) Q2 FFO & Revenues Top Estimates, View Up
Prologis, Inc. (PLD - Free Report) reported second-quarter 2020 core funds from operations (FFO) per share of $1.11, beating the Zacks Consensus Estimate of 99 cents. Results also compare favorably with the year-ago figure of 77 cents.
This better-than-expected performance was driven by decent growth in rental income. Occupancy level was healthy. The company also reported 23 cents of net promote income in the quarter as against no such income in the prior-year period.
Prologis generated rental revenues of $944.4 million, which registered 34.8% growth from the prior-year quarter. The figure also surpassed the Zacks Consensus Estimate of $927.3 million. The company also revised its full-year core FFO per share guidance northward compared with the one issued in April.
According to Hamid R. Moghadam, chairman and CEO of the company, "While e-commerce is clearly a tailwind, demand is broad-based across a variety of categories — a trend we saw accelerate in June."
The company’s chief financial officer also noted that though the economic impact of COVID-19 remains unknown, its proprietary data, pace of rent collections, as well as dialogue with customers gives “a more positive outlook for the back half of the year”.
Quarter in Detail
At the end of the reported quarter, occupancy level in the company’s owned-and-managed portfolio was 95.7%. During the second quarter, 42 million square feet of leases commenced in the company’s owned-and-managed portfolio, with 39 million square feet being in the operating portfolio and roughly 3 million square feet in the development portfolio. Retention level was 80.9% in the quarter, denoting an expansion of 540 basis points from the prior quarter.
Prologis’ share of net effective rent change was 22% during the April-June quarter, driven by the United States at 27.7%. Cash rent change was 9.6%, while cash same-store net operating income (NOI) registered 2.9% growth.
Amid the macroeconomic uncertainty, Prologis’ share of building acquisitions amounted to $8 million, with a weighted average stabilized cap rate of 7.6% during the quarter. Development stabilization aggregated $333 million, while development starts totaled $66 million, with 100% being build-to-suit. Furthermore, the company’s total dispositions and contributions came in at $304 million, with weighted average stabilized cap rate (excluding land and other real estate) of 6%.
Liquidity
The company exited the June-end quarter with cash and cash equivalents of $549.1 million, down from the $807.9 million recorded at the end of first-quarter 2020. However, combined with availability from other lines, Prologis ended the quarter with $4.6 billion in liquidity. Debt, as a percentage of total market capitalization, was 20% at quarter end.
The combined investment capacity of Prologis and its open-ended vehicles, at levels in line with their current credit ratings, is well above $13 billion. Prologis and its co-investment ventures accomplished $1.6 billion of debt activity during the quarter, at a weighted average rate of 1.8% and a weighted average term of nearly 13 years. Moreover, at quarter end, the company's weighted average rate on its share of total debt was 2.3%, with a weighted average remaining term of 9.1 years.
Outlook
Prologis projects 2020 core FFO per share at $3.70-$3.75 compared with the prior guidance of $3.55-$3.65. The Zacks Consensus Estimate for the same is currently pegged at $3.59.
It forecasts year-end occupancy of 95-96% compared with the 94.5-96% guided earlier. Cash same-store NOI (Prologis share) is projected in the range of 2.5-3.5% compared with the 1.75-3.25% expected earlier.
Moreover, the company projects $500-$600 million of building acquisitions compared with the $450 million projected earlier, while development starts are expected to be $800-$1,200 million as against the prior estimate of $500-$800 million for this year.
Prologis currently carries a Zacks Rank #2 (Buy). 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
We now look forward to the earnings releases of other REITs like SL Green Realty Corp. (SLG - Free Report) , Alexandria Real Estate Equities, Inc. (ARE - Free Report) and Boston Properties, Inc. (BXP - Free Report) . While SL Green is slated to report second-quarter earnings on Jul 22, Alexandria Real Estate Equities and Boston Properties have earnings release scheduled for Jul 27 and 28, respectively.
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.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>