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Prologis, Inc. (PLD - Free Report) reported third-quarter 2022 core funds from operations (FFO) per share of $1.73, beating the Zacks Consensus Estimate of $1.71. The figure jumped a whopping 66.3% from the year-ago quarter’s $1.04.
The results reflect healthy leasing activity with solid rent growth. The bottom line, too, improved.
Rental revenues of $1.15 billion were up from the prior-year quarter’s $1.04 billion. Moreover, the figure surpassed consensus estimate mark of $1.13 billion. The total revenues came in at $1.75 billion, increasing 48% year over year.
This industrial REIT adopted a conservative approach for the near term amid an unfavorable macroeconomic condition and revised its 2022 guidance. In addition to lowering the midpoint of its core FFO guidance by 0.6%, it reduced its guidance for development starts, dispositions and contributions.
Per Hamid R. Moghadam, co-founder and CEO of the company, "We have built our portfolio to outperform and our balance sheet to be resilient throughout cycles - we view this as a time of opportunity. We will remain patient to capitalize on growth opportunities as they emerge."
On Oct 3, 2022, Prologis closed on the acquisition of Duke Realty in an all-stock transaction valued at $23 billion, including the assumption of debt, following the approval of the shareholders of both companies. The buyout provides Prologis scope for additional growth from high-quality properties and more than 500 new customers.
Quarter in Detail
The average occupancy level in Prologis’ owned and managed portfolio was 97.7% in the third quarter.
In the quarter under review, 51 million square feet (msf) of leases commenced in the company’s owned and managed portfolio, with 45.2 msf in the operating portfolio and 5.8 msf in the development portfolio. However, the retention level was 76.4% in the quarter, down from 78.6% reported at the end of the prior quarter.
Prologis’ share of net effective rent change reached an all-time high of 59.7% in the third quarter, which was led by the United States at 67%. The cash rent change was 38.5%. The cash same-store net operating income (NOI), too, touched an all-time high and climbed 9.3%. The growth was led by Europe at 10.6%.
The company’s share of building acquisitions totaled $714 million, with a weighted average stabilized cap rate (excluding other real estate) of 4.2% in the reported quarter. The development stabilization aggregated $1.04 billion, while development starts amounted to $1.14 billion, with 52.8% being built to suit. PLD’s total dispositions and contributions were $129 million, with a weighted average stabilized cap rate (excluding land and other real estate) of 3.7%.
Liquidity
Prologis exited third-quarter 2022 with cash and cash equivalents of $636.3 million, up from $437.5 million at the end of the second quarter. Its liquidity amounted to around $5.3 billion in cash and availability on its credit facilities.
As of Sep 30, 2022, debt, as a percentage of the total market capitalization, was 20.7%. The company's weighted average interest rate on its share of the total debt was 1.9%, with a weighted average term of 9.6 years. The company and its co-investment ventures issued $3.1 billion of debt in the third quarter at a weighted average interest rate of 3.6%.
Revised 2022 Guidance
Prologis revised its 2022 core FFO per share guidance to the range of $5.12 to $5.14 from the $5.14-$5.18 band guided earlier, indicating a 0.6% fall at the midpoint. The reduction in core FFO 2022 guidance was primarily due to lower promote guidance. The Zacks Consensus Estimate is currently pegged at $5.10.
The company retained its guidance for average occupancy in the band of 97.25-97.75%. Cash same-store NOI (Prologis share) is projected at 8.50-8.75% compared with the 8.25-8.75% band guided earlier.
Prologis currently carries a Zacks Rank #4 (Sell).
We now look forward to the earnings releases of other REITs like Alexandria Real Estate Equities, Inc. (ARE - Free Report) and Boston Properties, Inc. (BXP - Free Report) , slated to report on Oct 24 and Oct 25, respectively. Extra Space Storage (EXR - Free Report) is scheduled on Nov 1.
The Zacks Consensus Estimate for Alexandria’s third-quarter 2022 FFO per share is pegged at $2.12, implying a year-over-year increase of 8.7%. ARE currently carries a Zacks Rank of 3.
The Zacks Consensus Estimate for Boston Properties’ third-quarter 2022 FFO per share stands at $1.87, indicating a year-over-year increase of 8.1%. BXP currently has a Zacks Rank #3.
The Zacks Consensus Estimate for Extra Space Storage’s third-quarter 2022 FFO per share is pegged at $2.18, suggesting a year-over-year increase of 17.8%. EXR 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) Tops Q3 FFO & Revenues Estimates, Revises View
Prologis, Inc. (PLD - Free Report) reported third-quarter 2022 core funds from operations (FFO) per share of $1.73, beating the Zacks Consensus Estimate of $1.71. The figure jumped a whopping 66.3% from the year-ago quarter’s $1.04.
The results reflect healthy leasing activity with solid rent growth. The bottom line, too, improved.
Rental revenues of $1.15 billion were up from the prior-year quarter’s $1.04 billion. Moreover, the figure surpassed consensus estimate mark of $1.13 billion. The total revenues came in at $1.75 billion, increasing 48% year over year.
This industrial REIT adopted a conservative approach for the near term amid an unfavorable macroeconomic condition and revised its 2022 guidance. In addition to lowering the midpoint of its core FFO guidance by 0.6%, it reduced its guidance for development starts, dispositions and contributions.
Per Hamid R. Moghadam, co-founder and CEO of the company, "We have built our portfolio to outperform and our balance sheet to be resilient throughout cycles - we view this as a time of opportunity. We will remain patient to capitalize on growth opportunities as they emerge."
On Oct 3, 2022, Prologis closed on the acquisition of Duke Realty in an all-stock transaction valued at $23 billion, including the assumption of debt, following the approval of the shareholders of both companies. The buyout provides Prologis scope for additional growth from high-quality properties and more than 500 new customers.
Quarter in Detail
The average occupancy level in Prologis’ owned and managed portfolio was 97.7% in the third quarter.
In the quarter under review, 51 million square feet (msf) of leases commenced in the company’s owned and managed portfolio, with 45.2 msf in the operating portfolio and 5.8 msf in the development portfolio. However, the retention level was 76.4% in the quarter, down from 78.6% reported at the end of the prior quarter.
Prologis’ share of net effective rent change reached an all-time high of 59.7% in the third quarter, which was led by the United States at 67%. The cash rent change was 38.5%. The cash same-store net operating income (NOI), too, touched an all-time high and climbed 9.3%. The growth was led by Europe at 10.6%.
The company’s share of building acquisitions totaled $714 million, with a weighted average stabilized cap rate (excluding other real estate) of 4.2% in the reported quarter. The development stabilization aggregated $1.04 billion, while development starts amounted to $1.14 billion, with 52.8% being built to suit. PLD’s total dispositions and contributions were $129 million, with a weighted average stabilized cap rate (excluding land and other real estate) of 3.7%.
Liquidity
Prologis exited third-quarter 2022 with cash and cash equivalents of $636.3 million, up from $437.5 million at the end of the second quarter. Its liquidity amounted to around $5.3 billion in cash and availability on its credit facilities.
As of Sep 30, 2022, debt, as a percentage of the total market capitalization, was 20.7%. The company's weighted average interest rate on its share of the total debt was 1.9%, with a weighted average term of 9.6 years. The company and its co-investment ventures issued $3.1 billion of debt in the third quarter at a weighted average interest rate of 3.6%.
Revised 2022 Guidance
Prologis revised its 2022 core FFO per share guidance to the range of $5.12 to $5.14 from the $5.14-$5.18 band guided earlier, indicating a 0.6% fall at the midpoint. The reduction in core FFO 2022 guidance was primarily due to lower promote guidance. The Zacks Consensus Estimate is currently pegged at $5.10.
The company retained its guidance for average occupancy in the band of 97.25-97.75%. Cash same-store NOI (Prologis share) is projected at 8.50-8.75% compared with the 8.25-8.75% band guided earlier.
Prologis currently carries a Zacks Rank #4 (Sell).
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 Alexandria Real Estate Equities, Inc. (ARE - Free Report) and Boston Properties, Inc. (BXP - Free Report) , slated to report on Oct 24 and Oct 25, respectively. Extra Space Storage (EXR - Free Report) is scheduled on Nov 1.
The Zacks Consensus Estimate for Alexandria’s third-quarter 2022 FFO per share is pegged at $2.12, implying a year-over-year increase of 8.7%. ARE currently carries a Zacks Rank of 3.
The Zacks Consensus Estimate for Boston Properties’ third-quarter 2022 FFO per share stands at $1.87, indicating a year-over-year increase of 8.1%. BXP currently has a Zacks Rank #3.
The Zacks Consensus Estimate for Extra Space Storage’s third-quarter 2022 FFO per share is pegged at $2.18, suggesting a year-over-year increase of 17.8%. EXR 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.