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Prologis: Demand for Well-Located Logistics Real Estate Is Strong

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San Francisco-based Prologis Inc. recently reported results for the third quarter of 2018 showing that net earnings per diluted share was $0.60 compared with $1.63 for the third quarter of 2017. The prior period included $585 million or $1.08 per diluted share of higher gains on dispositions. Core funds from operations per diluted share was $0.72 compared with $0.67 for the same period in 2017.

“Demand for well-located logistics real estate is strong, with customers prioritizing proximity to consumers to offset supply chain costs such as labor and transportation,” said Hamid R. Moghadam, chairman and CEO, Prologis. “Market rent growth in Europe continued to accelerate, and we believe it may surpass that of the U.S. in 2019.”

Moghadam added, “The integration of the DCT Industrial acquisition on August 22 is complete. We’ve hit the expected run rate of $80 million per year of immediate savings and the team is now focused on realizing the revenue and platform synergies associated with this transaction.”

As previously revealed, Prologis issued approximately $1.3 billion of yen- and euro-denominated bonds during the quarter. The company has reduced its weighted average interest rate to 2.7 percent and extended its weighted average remaining term to 6.3 years.

The company ended the third quarter with leverage of 22.5 percent on a market capitalization basis, debt-to-adjusted EBITDA* of 4.4x and $3.5 billion of liquidity.

“Our cash same store NOI results are in line with our sector-leading guidance,” said Thomas S. Olinger, chief financial officer, Prologis. “At the midpoint of our 2018 guidance, our annual Core FFO* growth will have averaged more than 9 percent, excluding promotes, and more than 8 percent with promotes over the last two years. Looking ahead, we remain well-positioned to deliver superior growth given the rental upside embedded in our portfolio and our ability to create value from the build-out of our land bank.”

According to analyst firm, BTIG, Prologis maintained momentum in 3Q with positive internal growth and external growth and BTIG maintains the “Buy rating” for Prologis at this time.


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