Prologis Boosts Outlook on Record Quarterly Earnings
The logistics-property giant is building and buying warehouses even as interest rates rise and logistics demand falters A Prologis site at Port Reading, Carteret, NJ. Prologis is the world’s largest industrial property company with 1.2 billion square feet in 19 countries. Photo: Prologis By Will Feuer July 18, 2023 9:22 am ET Industrial-property giant Prologis raised its earnings outlook for the year after posting record profits and sales amid higher interest rates and signs of wavering demand in broader warehousing markets. The San Francisco-based landlord, the world’s largest industrial property company with 1.2 billion square feet in 19 countries, is targeting full-year earnings attributable to common shareholders of $3.30 a share to $3.40 a share, up from its prior
A Prologis site at Port Reading, Carteret, NJ. Prologis is the world’s largest industrial property company with 1.2 billion square feet in 19 countries.
Photo: Prologis
Industrial-property giant Prologis raised its earnings outlook for the year after posting record profits and sales amid higher interest rates and signs of wavering demand in broader warehousing markets.
The San Francisco-based landlord, the world’s largest industrial property company with 1.2 billion square feet in 19 countries, is targeting full-year earnings attributable to common shareholders of $3.30 a share to $3.40 a share, up from its prior guidance of $3.10 a share to $3.25 a share.
Core funds from operations are expected to be $5.56 a share to $5.60 a share, up from prior guidance of $5.42 a share to $5.50 a share. Prologis said it now expects cash same-store net operating income to rise by 9.5% to 10%, up from prior guidance for growth of 9% to 9.75%.
The upgraded outlook came as the company said Tuesday it doubled its net earnings in the quarter ending June 30 to $1.22 billion, or $1.31 a share, compared with $610 million, or 82 cents a share, in the same quarter a year ago. Core funds from operations came to $1.83 a share, topping the $1.67 a share that analysts were expecting, according to FactSet.
Total revenue jumped to $2.45 billion from $1.25 billion last year, topping analysts’ expectations of $1.72 billion.
Average occupancy in Prologis’s owned and managed portfolio slipped to 97.5%, down from 98% in the previous quarter.
Shares rose 2.4% to $131.00 in premarket trading.
The growth came as broader measures suggest warehouse demand is easing following a surge in construction and leasing in the past three years driven by e-commerce growth.
Real estate services firm Cushman & Wakefield
said this month that the average national vacancy rate for industrial real estate in the U.S. jumped from 3.5% in the first quarter to 4.1% in the three months ending June 30. U.S. employment in the warehousing and storage has retreated sharply since reaching a record high in June 2022.Prologis has been flexing its strong balance sheet by expanding its sprawling worldwide network of distribution centers and storage sites in part through several big acquisitions.
Prologis said last month it would buy a portfolio of U.S. industrial space totaling nearly 14 million square feet from Blackstone for $3.1 billion. It acquired rival Duke Realty in 2022 in a deal valued at $23 billion.
The company said that it along with its co-investment ventures issued $7 billion of debt at a weighted average of 4.9% and a weighted average term of 8.4 years.
“Our balance sheet has given us unparalleled access to debt markets around the globe, providing us with the ability to fund our ongoing development platform, as well as make accretive investments in a market where most players are stretched,” said Chief Financial Officer
Timothy D. Arndt.Write to Will Feuer at [email protected]
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