Prologis (PLD) Q2 FFO & Revenues Grow Y/Y, 2022 View Up
Prologis, Inc. PLD reported second-quarter 2022 core funds from operations (FFO) per share of $1.11, up 10% from the year-ago quarter’s figure of 1.01 cents.
Rental revenues of $1.09 billion were up from the prior-year quarter’s $1.01 billion. Total revenues came in at $1.25 billion, up from the year-ago quarter’s $1.15 billion.
Results reflect improvement in average occupancy and rent growth.
However, PLD narrowly missed the Zacks Consensus Estimate for core FFO per share of $1.12. The consensus mark for revenues was pegged at $1.10 billion.
This industrial REIT issued an upbeat 2022 guidance. Reflecting positive sentiments, shares of PLD appreciated 3.17% in today’s pre-market trading session following the earnings release.
Per Hamid R. Moghadam, co-founder and chief executive officer of the company, "As conditions normalize, we are still seeing healthy demand that rivals past peak cycles and, informed by our proprietary data insights, we expect strong demand for our properties to continue."
Quarter in Detail
The average occupancy level in Prologis’ owned and managed portfolio was 97.6% in the second quarter.
In the quarter under review, 51.3 million square feet of leases commenced in the company’s owned and managed portfolio, with 43.6 million square feet in the operating portfolio and 7.7 million square feet in the development portfolio. The retention level was 78.6% in the quarter, up from 75.4% reported at the end of the prior quarter.
Prologis’ share of net effective rent change was 45.6% in the April-June quarter, which was led by the United States at 54.0%. Cash rent change was 27.5%, while cash same-store net operating income (NOI) grew 8.2%, which was also led by the United States at 9.0%.
The company’s share of building acquisitions amounted to $846 million, with a weighted average stabilized cap rate (excluding other real estate) of 3.9% in the reported quarter. Development stabilization aggregated $817 million, while development starts totaled $1.67 billion, with 25.6% being built to suit. PLD’s total dispositions and contributions were $218 million, with a weighted average stabilized cap rate (excluding land and other real estate) of 3.2%.
Liquidity
Prologis exited the second quarter of 2022 with cash and cash equivalents of $437.5 million, down from $1.9 billion at the end of the first quarter. Its liquidity amounted to $5.2 billion in cash and availability on its credit facilities.
As of Jun 30, 2022, debt, as a percentage of the total market capitalization, was 18.5%. The company's weighted average interest rate on its share of the total debt was 1.8%, with a weighted average term of 9.7 years. The company and its co-investment ventures issued $5.1 billion of debt in the second quarter at a weighted average interest rate of 1.4%.
Raised 2022 Guidance
Prologis revised its 2022 core FFO per share guidance to the range of $5.14 to $5.18 from the $5.10-$5.16 band guided earlier, indicating a 5.6% increase at the midpoint. The Zacks Consensus Estimate, pegged at $5.15, lies in this range.
The company expects average occupancy in the band of 97.25-97.75%, up 38 basis points at the midpoint. Cash same-store NOI (Prologis share) is projected at 8.25-8.75% compared with the 7.25-8.00% band guided earlier.
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 International Corp. CCI and Alexandria Real Estate Equities, Inc. ARE slated to report on Jul 20 and Jul 25, respectively. Equity Residential EQR is scheduled on Jul 26.
The Zacks Consensus Estimate for Crown Castle’s second-quarter 2022 FFO per share stands at $1.79, indicating a year-over-year increase of 4.68%. CCI currently has a Zacks Rank of 3.
The Zacks Consensus Estimate for Alexandria’s second-quarter 2022 FFO per share is pegged at $2.06, implying a year-over-year increase of 6.74%. ARE currently carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Equity Residential’s second-quarter 2022 FFO per share is pegged at 85 cents, suggesting a year-over-year increase of 8.97%. EQR currently carries a Zacks Rank of 3.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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