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.
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