) core FFO (funds from operations) per share of 42 cents were in
line with the Zacks Consensus Estimate and 2 cents below the
prior year figure of 44 cents.
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However, total revenue during the reported quarter were $517.6
million, up 13.3% from the prior year period and well ahead of
the Zacks Consensus Estimate of $476 million.
For full year 2012, the company's FFO came in at $1.74 per share,
a cent ahead of the Zacks Consensus Estimate of $1.73 per share
and well ahead of the prior year figure of $1.58 per share. For
full year 2012, total revenue stood at $2.0 billion, which
escalated 38.2% from a year ago and exceeded the Zacks Consensus
Estimate of $1.9 billion.
Quarter in Detail
During the reported quarter, Prologis leased a record of 40.5
million square feet of space across the globe. Total occupancy in
the operating portfolio was 94.0% at quarter-end, up 180 bps
(basis points) from a year ago.
Tenant retention reached 87.3% in the quarter, with tenant
renewals aggregating 25.1 million square feet. Same-store net
operating income (NOI) moved up 0.1% in the reported quarter.
Same-store rental rates on leases signed in the quarter declined
by 2.4% from in-place rents.
Notable Activities During 4Q
Development starts during the reported quarter amounted to $727
million spanning 7.3 million square feet. Of this, $613 million
was Prologis' share. The company monetized $190 million worth of
land for these development starts and its share of value creation
on development starts was $71 million in the reported quarter.
Total acquisitions of $458 million in the reported quarter
included $276 million in buildings with a stabilized
capitalization rate of 7.4% and $182 million for investment in
land and land infrastructure. Of these Prologis' share was $295
Prologis' global development pipeline comprised 22.5 million
square feet at quarter end, with a total expected investment of
$2.1 billion. Of this, Prologis' share was $1.9 billion.
Moreover, the company accomplished $1.3 billion in contributions
and dispositions in the reported quarter, of which more than $1.0
billion was Prologis' share.
Prologis completed around $1.1 billion of capital markets
activity in the reported quarter which included debt financings,
re-financings, as well as pay-downs. Following the quarter end,
the company paid off $141 million of its 1.875% convertible notes
and repaid secured debt worth $319 million.
At quarter-end, Prologis had cash and cash equivalents of $100.8
million and total debt of $11.8 billion, compared with $158.2
million and $12.6 billion, respectively, as of the prior-quarter
For full year 2013, Prologis has provided core FFO guidance in
the range of $1.60 to $1.70 per share, based on same-store NOI
growth of 1.5% to 2.5% (excluding the impact of foreign exchange
movements) and year end occupancy in its operating portfolio
between 94% and 95%.
Prologis is significantly capitalizing on the growing
opportunities in build-to-suit development projects across the
globe. In addition, continued lease-up of development portfolio
like the recent New Jersey deal is considerably helping Prologis
in reducing its operating risks.
Also, the company has been active on spreading worldwide through
joint venture (JV) agreements. However, continued troubles in the
residential sector are weighed on its commercial property
operations and its increasing international presence might
negatively impact the company in times of economic fluctuations
and impair its top-line growth.
Prologis currently holds a Zacks Rank #3 (Hold). Other REITs that
are performing better and are worth a look include
Diamondrock Hospitality Co.
Terreno Realty Corp.
), both carrying a Zacks Rank #1 (Strong Buy) and
) having a Zacks Rank #2 (Buy).
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.