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Prologis, Inc. (PLD - Free Report) reported third-quarter 2024 core funds from operations (FFO) per share of $1.43, outpacing the Zacks Consensus Estimate of $1.37. This compares favorably with the year-ago quarter’s figure of $1.30.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Reflecting the positive sentiments of investors, shares of the company gained more than 3% during the initial hours of today’s trading session. The quarterly results reflect a rise in rental revenues and healthy leasing activity. However, high interest expenses are an undermining factor. In addition, this industrial REIT increased its 2024 core FFO per share guidance range.
Per Hamid R. Moghadam, the co-founder and CEO of the company, "The bottoming process is underway as our customers navigate an uncertain environment. Looking ahead, the supply picture is improving, and the long-term demand drivers for our business remain strong. Going forward, we find ourselves in an enviable position as the partner of choice for leading global customers, to meet their needs in supply chain, digital and energy infrastructure."
Prologis generated rental revenues of $1.9 billion, missing the Zacks Consensus Estimate by just 0.4%. However, the figure increased from the $1.78 billion reported in the year-ago period. Total revenues were $2.04 billion, up from the year-ago quarter’s $1.92 billion.
Quarter in Detail
In the quarter under review, 50.8 million square feet of leases commenced in the company’s owned and managed portfolio, with 49 million square feet in the operating portfolio and 1.8 million square feet in the development portfolio. The retention level was 75.7% in the quarter.
The average occupancy level in Prologis’ owned and managed portfolio was 95.9% in the third quarter, down from 96.1% in the prior quarter and 97.1% in the year-ago period.
Prologis’ share of net effective rent change was 67.8% in the July-September quarter. In the reported quarter, the cash rent change was 44.1%. Cash same-store net operating income (NOI) grew 7.2%, the same as the previous quarter.
The company’s share of building acquisitions amounted to $1.25 billion, with a weighted average stabilized cap rate (excluding other real estate) of 5.1% in the third quarter. Development stabilization aggregated $784 million, with 5.9% being built to suit, while development starts totaled $392 million. PLD’s total dispositions and contributions were $836 million, with a weighted average stabilized cap rate (excluding land and other real estate) of 4.5%.
However, during the reported quarter, interest expenses jumped 27.1% on a year-over-year basis to $230.1 million.
Liquidity
Prologis exited the third quarter of 2024 with cash and cash equivalents of $780.9 million, up from $598.6 million at the end of the second quarter of 2024. Total liquidity amounted to $6.59 billion at the end of the quarter.
Debt, as a percentage of the total market capitalization, was 23.1% as of Sept. 30, 2024. The company's weighted average interest rate on its share of the total debt was 3.1%, with a weighted average term of 9.2 years.
Prologis and its co-investment ventures issued an aggregate of $4.6 billion of debt in the reported quarter at a weighted average interest rate of 4.6% and a weighted average term of 8.9 years.
Guidance
Prologis increased its 2024 core FFO per share guidance to the range of $5.42-$5.46 from the $5.39-$5.47 range guided earlier. The Zacks Consensus Estimate for the same is currently pegged at $5.42.
The company has revised its average occupancy in the band of 96.00%-96.50%, from the previous guidance of 95.75-96.75%. Also, cash same-store NOI (Prologis share) revised within the range of 6.50% to 7.00%, from the previous guidance of 6.25% to 7.25%.
The company has lowered its outlook for capital deployment (Prologis share) on development starts to $1.75-$2.25 billion, from the prior range of $2.5-$3.0 billion. Spending on acquisitions is projected to be $1.75-$2.25 billion, up from its prior guided range of $1.0 billion-$1.5 billion. Dispositions are estimated at $1.25-$1.75 billion, up from its previous range of $1.0 billion-$1.4 billion.
Prologis currently carries a Zacks Rank #4 (Sell).
We now look forward to the earnings releases of other REITs like SL Green Realty (SLG - Free Report) and Crown Castle Inc. (CCI - Free Report) , both slated to report today after market close. Meanwhile, Cousins Properties (CUZ - Free Report) is scheduled to report on Oct. 24.
The Zacks Consensus Estimate for SL Green’s third-quarter 2024 FFO per share is pegged at $1.21, which implies a 4.7% year-over-year decrease. SLG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Crown Castle’s third-quarter 2024 FFO per share stands at $1.80, which indicates a year-over-year rise of 1.7%. CCI currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Cousins Properties’ third-quarter 2024 FFO per share is pegged at 67 cents, which suggests a year-over-year increase of 3.1%. CUZ currently carries a Zacks Rank #3 (Hold).
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' Q3 FFO Beat Estimates, Rental Revenues Improve Y/Y
Prologis, Inc. (PLD - Free Report) reported third-quarter 2024 core funds from operations (FFO) per share of $1.43, outpacing the Zacks Consensus Estimate of $1.37. This compares favorably with the year-ago quarter’s figure of $1.30.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Reflecting the positive sentiments of investors, shares of the company gained more than 3% during the initial hours of today’s trading session. The quarterly results reflect a rise in rental revenues and healthy leasing activity. However, high interest expenses are an undermining factor. In addition, this industrial REIT increased its 2024 core FFO per share guidance range.
Per Hamid R. Moghadam, the co-founder and CEO of the company, "The bottoming process is underway as our customers navigate an uncertain environment. Looking ahead, the supply picture is improving, and the long-term demand drivers for our business remain strong. Going forward, we find ourselves in an enviable position as the partner of choice for leading global customers, to meet their needs in supply chain, digital and energy infrastructure."
Prologis generated rental revenues of $1.9 billion, missing the Zacks Consensus Estimate by just 0.4%. However, the figure increased from the $1.78 billion reported in the year-ago period. Total revenues were $2.04 billion, up from the year-ago quarter’s $1.92 billion.
Quarter in Detail
In the quarter under review, 50.8 million square feet of leases commenced in the company’s owned and managed portfolio, with 49 million square feet in the operating portfolio and 1.8 million square feet in the development portfolio. The retention level was 75.7% in the quarter.
The average occupancy level in Prologis’ owned and managed portfolio was 95.9% in the third quarter, down from 96.1% in the prior quarter and 97.1% in the year-ago period.
Prologis’ share of net effective rent change was 67.8% in the July-September quarter. In the reported quarter, the cash rent change was 44.1%. Cash same-store net operating income (NOI) grew 7.2%, the same as the previous quarter.
The company’s share of building acquisitions amounted to $1.25 billion, with a weighted average stabilized cap rate (excluding other real estate) of 5.1% in the third quarter. Development stabilization aggregated $784 million, with 5.9% being built to suit, while development starts totaled $392 million. PLD’s total dispositions and contributions were $836 million, with a weighted average stabilized cap rate (excluding land and other real estate) of 4.5%.
However, during the reported quarter, interest expenses jumped 27.1% on a year-over-year basis to $230.1 million.
Liquidity
Prologis exited the third quarter of 2024 with cash and cash equivalents of $780.9 million, up from $598.6 million at the end of the second quarter of 2024. Total liquidity amounted to $6.59 billion at the end of the quarter.
Debt, as a percentage of the total market capitalization, was 23.1% as of Sept. 30, 2024. The company's weighted average interest rate on its share of the total debt was 3.1%, with a weighted average term of 9.2 years.
Prologis and its co-investment ventures issued an aggregate of $4.6 billion of debt in the reported quarter at a weighted average interest rate of 4.6% and a weighted average term of 8.9 years.
Guidance
Prologis increased its 2024 core FFO per share guidance to the range of $5.42-$5.46 from the $5.39-$5.47 range guided earlier. The Zacks Consensus Estimate for the same is currently pegged at $5.42.
The company has revised its average occupancy in the band of 96.00%-96.50%, from the previous guidance of 95.75-96.75%. Also, cash same-store NOI (Prologis share) revised within the range of 6.50% to 7.00%, from the previous guidance of 6.25% to 7.25%.
The company has lowered its outlook for capital deployment (Prologis share) on development starts to $1.75-$2.25 billion, from the prior range of $2.5-$3.0 billion. Spending on acquisitions is projected to be $1.75-$2.25 billion, up from its prior guided range of $1.0 billion-$1.5 billion. Dispositions are estimated at $1.25-$1.75 billion, up from its previous range of $1.0 billion-$1.4 billion.
Prologis currently carries a Zacks Rank #4 (Sell).
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 SL Green Realty (SLG - Free Report) and Crown Castle Inc. (CCI - Free Report) , both slated to report today after market close. Meanwhile, Cousins Properties (CUZ - Free Report) is scheduled to report on Oct. 24.
The Zacks Consensus Estimate for SL Green’s third-quarter 2024 FFO per share is pegged at $1.21, which implies a 4.7% year-over-year decrease. SLG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Crown Castle’s third-quarter 2024 FFO per share stands at $1.80, which indicates a year-over-year rise of 1.7%. CCI currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Cousins Properties’ third-quarter 2024 FFO per share is pegged at 67 cents, which suggests a year-over-year increase of 3.1%. CUZ currently carries a Zacks Rank #3 (Hold).
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.