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Prologis' (PLD) Q4 FFO In line, Down Y/Y; Revenues Beat

Prologis, Inc.PLD came up with fourth-quarter 2016 core funds from operations ("FFO") per share of 63 cents, in line with the Zacks Consensus Estimate. The bottom-line figure for the year-ago quarter was 64 cents.

For full-year 2016, core FFO came in at $2.57 per share, in line with the Zacks Consensus Estimate. This is up 15% from the year-ago figure. The annual year-over-year rise can be attributed to a better operating environment.

The company posted revenues of $620.1 million, which beat the Zacks Consensus Estimate of $600 million. However, it came in lower than the year-ago number of $643.2 million.

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Higher Occupancy & Rent Change

At the end of the fourth quarter, occupancy level in the company's operating portfolio was 97.1%, expanding 20 basis points year over year.

During the fourth quarter, Prologis signed 39 million square feet of leases in its owned and managed portfolio, compared with 40 million square feet in the year-ago period.

Prologis' share of net effective rent change was 16.0% in the reported quarter, compared with 12.4% a year ago, driven by 23.2% growth in the U.S. Cash rent change was 7.0% compared with 2.9% in the year-ago quarter.

Its share of net effective same-store net operating income (NOI) registered 3.2% growth, compared with the 6.6% increase reported in the prior-year period, driven by 5.6% growth in the U.S. Cash Same Store NOI climbed 4.4% compared with 4.5% in the year-ago period.

Dispositions and Development Starts On Track

In the fourth quarter, Prologis' share of building acquisitions amounted to $127 million, development stabilization aggregated $674 million, while development starts totaled $717 million. Further, its total dispositions and contributions were $934 million.

Liquidity Profile Strengthened

Prologis ended the quarter with over $4 billion of liquidity. The company exited the fourth quarter with cash and cash equivalents of $807.3 million, up from $264.1 million at the end of 2015.

2017 Guidance

Prologis provided core FFO per share guidance for full-year 2017. The company projects core FFO per share in the range of $2.60-$2.70.

Net effective same store NOI - Prologis share - is expected to grow at 4-5% in 2017.

Our Take

With companies opting for supply chain consolidation amid an e-commerce boom, heightened urbanization and a wider customer base, demand for logistics infrastructure and efficient distribution networks has been increasing, providing huge growth opportunities. Yet, earnings dilutive effects of dispositions, supply increase and interest rate issues are concerns for Prologis.

ProLogis, Inc. Price, Consensus and EPS Surprise

ProLogis, Inc. Price, Consensus and EPS Surprise | ProLogis, Inc. Quote

Prologis currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

We now look forward to the earnings releases of the other REITs like Avalonbay Communities Inc. AVB , Boston Properties Inc. BXP and Simon Property Group, Inc. SPG , which are slated to report results next week.

Note: All EPS numbers presented in this write up represent funds from operations ("FFO") per share. 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.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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