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Prologis' (PLD) FFO and Revenues Surpass Estimates in Q4
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Prologis, Inc. (PLD - Free Report) reported fourth-quarter 2022 core funds from operations (FFO) per share of $1.24, beating the Zacks Consensus Estimate of $1.21. The figure climbed 10.7% from the year-ago quarter.
The quarterly results reflect better-than-anticipated revenues driven by healthy leasing activity and solid rent growth. In addition, this industrial REIT issued its 2023 outlook.
Prologis generated rental revenues of $1.59 billion, up from the prior-year quarter’s $1.07 billion. Moreover, the figure surpassed the Zacks Consensus Estimate of $1.41 billion. The total revenues came in at $1.75 billion, increasing 37.2% year over year.
Per Hamid R. Moghadam, co-founder and CEO of Prologis, “Our results underscore the strength of our business in the face of a slowing economy. Despite the challenging economic environment, we are focused on serving our customers through the scale and quality of our portfolio, our growing Essentials offerings, and dedication of the best team in the business.”
For 2022, the company reported core FFO per share of $5.16, up 24.3% from the prior year. The figure also beat the Zacks Consensus Estimate of $5.13. Rental revenues of $4.93 billion increased 18.4% year over year and also exceeded the consensus mark of $4.76 billion.
Quarter in Detail
The average occupancy level in Prologis’ owned and managed portfolio was 98% in the fourth quarter, rising 30 basis points from the previous quarter.
In the quarter under review, 42.5 million square feet (msf) of leases commenced in the company’s owned and managed portfolio, with 36.9 msf in the operating portfolio and 5.6 msf in the development portfolio. Moreover, the retention level was 82.4% in the quarter, up from 76.4% reported at the end of the prior quarter.
Prologis’ share of net effective rent change came in at 50.6% in the fourth quarter, which was led by the United States at 55%. The cash rent change was 32.4%. The cash same-store net operating income (NOI) was 9.1%. The growth was led by the United States at 9.6%.
The company’s share of building acquisitions totaled $181 million, with a weighted average stabilized cap rate (excluding other real estate) of 5.9% in the reported quarter. The development stabilization aggregated $820 million, while development starts amounted to $846 million, with 50.8% being built to suit. PLD’s total dispositions and contributions were $310 million, with a weighted average stabilized cap rate (excluding land and other real estate) of 4.2%.
Liquidity
Prologis exited fourth-quarter 2022 with cash and cash equivalents of $278.5 million, down from $636.3 million at the end of the third quarter. Its liquidity amounted to around $4.1 billion in cash and availability on its credit facilities.
As of Dec 31, 2022, debt, as a percentage of the total market capitalization, was 20.1%. The company's weighted average interest rate on its share of the total debt was 2.5%, with a weighted average term of 9.1 years. The company and its co-investment ventures issued $1.1 billion of debt in the fourth quarter at a weighted average interest rate of 3%.
2023 Outlook
Prologis provided its 2023 core FFO per share guidance in the range of $5.40-$5.50. The Zacks Consensus Estimate for the same is currently pegged at $5.56.
The company expects average occupancy to lie between 96.5% and 97.5%. Cash same-store NOI (Prologis share) is projected in the range of 8.5-9.5%.
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) , slated to report on Jan 25. Alexandria Real Estate Equities (ARE - Free Report) is scheduled on Jan 30.
The Zacks Consensus Estimate for Crown Castle’s fourth-quarter 2022 FFO per share stands at $1.83, indicating a year-over-year increase of 3.4%. CCI currently has a Zacks Rank #3.
The Zacks Consensus Estimate for SL Green’s fourth-quarter 2022 FFO per share is pegged at $1.49, suggesting a year-over-year fall of 1.9%. SLG currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for Alexandria’s fourth-quarter 2022 FFO per share is pegged at $2.13, implying a year-over-year increase of 8.1%. ARE currently carries a Zacks Rank #2 (Buy).
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
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Prologis' (PLD) FFO and Revenues Surpass Estimates in Q4
Prologis, Inc. (PLD - Free Report) reported fourth-quarter 2022 core funds from operations (FFO) per share of $1.24, beating the Zacks Consensus Estimate of $1.21. The figure climbed 10.7% from the year-ago quarter.
The quarterly results reflect better-than-anticipated revenues driven by healthy leasing activity and solid rent growth. In addition, this industrial REIT issued its 2023 outlook.
Prologis generated rental revenues of $1.59 billion, up from the prior-year quarter’s $1.07 billion. Moreover, the figure surpassed the Zacks Consensus Estimate of $1.41 billion. The total revenues came in at $1.75 billion, increasing 37.2% year over year.
Per Hamid R. Moghadam, co-founder and CEO of Prologis, “Our results underscore the strength of our business in the face of a slowing economy. Despite the challenging economic environment, we are focused on serving our customers through the scale and quality of our portfolio, our growing Essentials offerings, and dedication of the best team in the business.”
For 2022, the company reported core FFO per share of $5.16, up 24.3% from the prior year. The figure also beat the Zacks Consensus Estimate of $5.13. Rental revenues of $4.93 billion increased 18.4% year over year and also exceeded the consensus mark of $4.76 billion.
Quarter in Detail
The average occupancy level in Prologis’ owned and managed portfolio was 98% in the fourth quarter, rising 30 basis points from the previous quarter.
In the quarter under review, 42.5 million square feet (msf) of leases commenced in the company’s owned and managed portfolio, with 36.9 msf in the operating portfolio and 5.6 msf in the development portfolio. Moreover, the retention level was 82.4% in the quarter, up from 76.4% reported at the end of the prior quarter.
Prologis’ share of net effective rent change came in at 50.6% in the fourth quarter, which was led by the United States at 55%. The cash rent change was 32.4%. The cash same-store net operating income (NOI) was 9.1%. The growth was led by the United States at 9.6%.
The company’s share of building acquisitions totaled $181 million, with a weighted average stabilized cap rate (excluding other real estate) of 5.9% in the reported quarter. The development stabilization aggregated $820 million, while development starts amounted to $846 million, with 50.8% being built to suit. PLD’s total dispositions and contributions were $310 million, with a weighted average stabilized cap rate (excluding land and other real estate) of 4.2%.
Liquidity
Prologis exited fourth-quarter 2022 with cash and cash equivalents of $278.5 million, down from $636.3 million at the end of the third quarter. Its liquidity amounted to around $4.1 billion in cash and availability on its credit facilities.
As of Dec 31, 2022, debt, as a percentage of the total market capitalization, was 20.1%. The company's weighted average interest rate on its share of the total debt was 2.5%, with a weighted average term of 9.1 years. The company and its co-investment ventures issued $1.1 billion of debt in the fourth quarter at a weighted average interest rate of 3%.
2023 Outlook
Prologis provided its 2023 core FFO per share guidance in the range of $5.40-$5.50. The Zacks Consensus Estimate for the same is currently pegged at $5.56.
The company expects average occupancy to lie between 96.5% and 97.5%. Cash same-store NOI (Prologis share) is projected in the range of 8.5-9.5%.
Prologis currently carries a Zacks Rank #3 (Hold). 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 Crown Castle Inc. (CCI - Free Report) and SL Green Realty (SLG - Free Report) , slated to report on Jan 25. Alexandria Real Estate Equities (ARE - Free Report) is scheduled on Jan 30.
The Zacks Consensus Estimate for Crown Castle’s fourth-quarter 2022 FFO per share stands at $1.83, indicating a year-over-year increase of 3.4%. CCI currently has a Zacks Rank #3.
The Zacks Consensus Estimate for SL Green’s fourth-quarter 2022 FFO per share is pegged at $1.49, suggesting a year-over-year fall of 1.9%. SLG currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for Alexandria’s fourth-quarter 2022 FFO per share is pegged at $2.13, implying a year-over-year increase of 8.1%. ARE currently carries a Zacks Rank #2 (Buy).
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.