Prologis sees further contraction of logistics real estate markets in the second quarter and raises its forecast



Prologis Inc… (NYSE: PLD) reported on Monday that logistics real estate markets continued to contract in the second quarter. The San Francisco-based logistics real estate investment fund reported operating income (FFO) of $ 1.01 per share in the pre-market quarter, up 2 cents per share.

“The demand for logistics space is high and diverse, and operating conditions remain the healthiest in our 38-year history,” said Hamid R. Moghadam, Chairman and Chief Executive Officer. “The number of vacancies in our markets is at an all-time low, contributing to record increases in rents and prices.”

The company reported a 96% increase in occupancy by 30 basis points over the same period last year, up 60 basis points from the first quarter. By the end of the second quarter, 97.2% of the portfolio was leased.

Net effective rent change increased 31.5% while being held at 70.8%, “in line with the company’s strategy of achieving high rent change.” Prologis reports that rental space increased 16.7% to 49 million square feet during this period.

Table: Prologis Key Performance Indicators

Prologis raised its forecasts for the rest of the year. Net income forecast for the year was raised 9.1% to a new range of $ 3.08 to $ 3.14. FFO baseline expectations increased 1.8% to an average of $ 4.04–4.08, ahead of the current consensus estimate of $ 4.01.

The company also raised expectations regarding its capital allocation. The amounts to be spent on development stabilization (+ 9.5%), development start (+ 10.3%) and acquisition of buildings (+ 14.3%) were increased to US $ 6.3 billion at the midpoint of the respective ranges …

“We have raised our forecasts across the board again and now expect Core FFO to grow 12.8% annually, excluding promotions, and free cash flow after dividends of about $ 1.3 billion,” said Chief Financial Officer Thomas Olinger. “Our prospects are equally promising, underpinned by our nearly 17% market spread; a portfolio of land with a development potential of about $ 18 billion; and an industry-leading balance sheet. “

The company will host a teleconference Monday afternoon to discuss these results with analysts. Stay tuned to FreightWaves for further coverage of the Prologis earnings report.

Prologis Ventures is an investor in FreightWaves.

Click to see more of Todd Maiden’s articles on FreightWaves.

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