Prologis Inc. 's ( PLD ) first quarter
2013 core FFO (funds from operations) per share of 40 cents was in
line with the Zacks Consensus Estimate as well as the prior-year
quarter figure.CBRE GROUP INC (CBG): Free Stock Analysis
ReportNAVARRE CORP (NAVR): Free Stock Analysis ReportPROLOGIS INC (PLD): Free Stock Analysis ReportTAUBMAN CENTERS (TCO): Free Stock Analysis
ReportTo read this article on Zacks.com click here.Zacks Investment
Results reflected decent revenues in the reported quarter, and
completion of the Japan-REIT IPO as well as the European joint
venture. Moreover, its strategic measures have helped it to lower
its overall debt level.
Quarter in Detail
Total revenue during the reported quarter was $490.6 million, up
2.3% from the prior-year quarter and well ahead of the Zacks
Consensus Estimate of $471 million.
Prologis leased a record of 35.8 million square feet of space
across the globe. Total occupancy in the operating portfolio was
93.7% at quarter-end, down 30 bps (basis points) sequentially.
Tenant retention was 78.0% while GAAP rental rates on leases signed
climbed 2.0% from in-place rents.
Same-store net operating income (NOI) moved up 0.3%, and 1.8% on
an adjusted cash basis. Notably, the company experienced a positive
rent change on rollover for the first time in 17 quarters.
Notable Activities During 1Q
Development starts amounted to $313 million. Of this, Prologis'
share was $218 million and projected share of value creation upon
stabilization was $39 million. Total acquisitions of $123 million
included $109 in land and land infrastructure, as well as $14
million in buildings. Of these Prologis' share was $96
Prologis' global development pipeline comprised 23.7 million
square feet at quarter end, with total expected investment of $2.0
billion. Of this, Prologis' share was $1.8 billion. Moreover, the
company accomplished $5.3 billion in contributions and dispositions
in the reported quarter, of which $3.3 billion was Prologis'
Prologis completed around $3.0 billion of capital market activity
which included debt financings, re-financings as well as pay-downs.
Subsequent to quarter-end, the company redeemed $482 million of its
outstanding preferred stock.
At quarter-end, Prologis had cash and cash equivalents of $785.4
million, up from $100.8 million as of the prior quarter end.
Moreover, total debt stood at $9.1 billion, down from $11.8 billion
from the prior-quarter end.
Notably, the company's capital market activity along with
substantial disposition and contribution moves helped it to lower
its share of total debt by $2.4 billion. Moreover, the company also
experienced an improvement to its debt as a percent of gross real
estate assets to 37.5% and debt to adjusted EBITDA to 7.52
For full year 2013, Prologis has reiterated its core FFO guidance
at $1.60 to $1.70 per share.
Prologis is trying to capitalize on global prospects. With growth
in e-Commerce, there is an increasing demand for Class-A facilities
and the company stands to benefit as it has the capacity to offer
modern distribution facilities in strategic infill locations.
Moreover, leasing decisions that were earlier postponed due to
volatility in the markets are gradually coming off the shelf.
Its build-to-suit deal in the first quarter with end-to-end
e-Commerce service provider - SpeedFC, a subsidiary of
Navarre Corp. ( NAVR ) and the
transaction with Chinese logistics provider, Deppon are expected to
contribute meaningfully to the company's top line.
Recently, Prologis penned a new build-to-suit deal with Subaru of
America for a distribution center spanning 715,000 square feet in
the Northwest Indianapolis submarket at Prologis Park Lebanon.
Notably, with rising occupancies over the last two years, the
Indianapolis market offers strong growth potential.
Also, the joint venture with Norges Bank Investment Management is
a strategic fit as it will enable the company to substantially
penetrate the industrial real estate market of Europe. Such moves
are expected to augment the company's top line, going
Yet, continued troubles in the residential sector have weighed on
the company's commercial property operations. Its increasing
international presence might have a negative impact in times of
economic fluctuations, impairing top-line growth. Prologis
currently holds a Zacks Rank #3 (Hold).
We look forward to the results of other REITs that are scheduled
to release their first quarter 2013 results tomorrow (Apr 25),
after the market closes. These include CBRE Group
Inc. ( CBG
) and Taubman Centers Inc. ( TCO ).
Note: FFO, a widely used metric to gauge the performance of
REITs, is obtained after adding depreciation and amortization and
other non-cash expenses to net income.