Prologis (PLD) Q3 Revenues Beat On Higher Rents, FFO In Line
Zacks Investment Research | Oct 17, 2017 03:08AM ET
Prologis, Inc. (NYSE:PLD) reported third-quarter 2017 core funds from operations (“FFO”) per share of 67 cents, in line with the Zacks Consensus Estimate. The company experienced improved operating environment in the reported quarter, but it did not recognize any promote income.
In the prior-year period, Prologis had reported core FFO per share of 73 cents. Excluding promote income, the figure came in at 59 cents. Net effective rent change improved in the third quarter, but period-end occupancy was slightly down from the year-ago period.
Further, this industrial real estate investment trust (REIT) narrowed its core FFO per share outlook for full-year 2017.
The company generated revenues of $602.9 million, comfortably beating the Zacks Consensus Estimate of $570.4 million. However, the figure compared unfavorably with the year-ago tally of $704.6 million.
Quarter in Detail
At the end of the third quarter, occupancy level in the company’s owned and managed portfolio was 96.3%, contracting 30 basis points (bps) year over year. Nevertheless, the occupancy in the U.S. portfolio expanded 40 bps from the prior-year quarter.
During the quarter under review, Prologis signed 41 million square feet of leases in its owned and managed portfolio compared with 46 million square feet recorded in the year-ago period.
Prologis' share of net effective rent change was 22.7% in the reported quarter compared with 15.0% recorded a year ago. The figure was led by the U.S. portfolio, which recorded impressive growth of 31.9%. Cash rent change was 10.6%, as against 5.7% in the year-earlier quarter.
Net effective same-store net operating income (NOI) registered 4.1% growth compared with 5.6% increase reported in the comparable period last year. This was driven solely by releasing spreads and led by 6.0% growth reported in the U.S. portfolio. Cash same-store NOI climbed 6.1% compared with 6.6% reported in the year-ago period, reflecting 8.0% growth in the U.S. portfolio.
In third-quarter 2017, Prologis' share of building acquisitions amounted to $20 million, development stabilization aggregated $548 million, while development starts totaled $432 million. Further, the company’s total dispositions and contributions came in at $779 million.
Liquidity
Prologis ended the third quarter with more than $4.0 billion of liquidity. In addition, the company reported a decrease in leverage to 23.9% on a market capitalization basis, while debt-to-adjusted EBITDA improved to 4.3x.
Finally, the company exited third-quarter 2017 with cash and cash equivalents of $568.7 million, up from $271.4 million recorded at the end of the prior quarter.
Outlook Narrowed
Prologis narrowed its core FFO per share outlook for full-year 2017. The company now projects core FFO per share in the range of $2.79-$2.81, against $2.78–$2.82 guided earlier. The Zacks Consensus Estimate for the same is currently pegged at $2.81.
Get The News You Want
Our Take
Prologis is well poised to benefit from its capacity to offer modern distribution facilities at strategic in-fill locations amid a continued shift toward e-commerce and supply-chain strategy transformations. Nonetheless, increase in supply of new facilities and mounting competition from other market participants remain concerns.
Prologis currently carries a Zacks Rank #2 (Buy). You can see Zacks Investment Research
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.