Prologis Inc. (PLD) is the largest US industrial REIT by far, owning about 1.3 billion square feet of real estate in 20 countries. For context, the second-largest US industrial REIT in the sector is Public Storage (PSA), with a market cap of around $50.9 billion, less than half that of Prologis, writes Ben Reynolds, editor of Sure Dividend.
The company has a diversified rental collection base, comprised of more than 6,700 individual tenants. Prologis was founded in 1983 and is based in San Francisco.
On Feb. 21, Prologis raised its dividend by 5.2% to a quarterly rate of $1.01. On April 16, Prologis posted its Q1 results for the period ended March 31. For the period, rental revenues grew by 9.4% to just under $2 billion. Strategic capital revenues rose to $141 million. Total revenues increased by 9.4% year-over-year to $2.14 billion.
Core FFO/share rose by 10.9% to $1.42, driven by robust operational performance and value creation from development stabilizations. However, interest expenses climbed by 20% to $231.8 million, reflecting a slightly higher average interest rate and additional borrowings used to fund the company’s active development and acquisition activity.
Still, Prologis’ debt as a percentage of its gross market cap remained healthy at 25.7%. Its weighted average borrowing rate remained steady at 3.2%. Finally, Prologis’ weighted average remaining lease term stood at 3.9 years.
The company kicked off 2025 with solid execution, highlighted by 65.1 million square feet of lease commencements and $240 million in value creation from development stabilizations. The company also noted cautious customer behavior due to macro worries, but emphasized the long-term strength in fundamentals like limited new supply and rising construction costs.
Management also reaffirmed previously introduced guidance for FY 2025, continuing to forecast FFO/share between $5.65 and $5.81. We have utilized the midpoint in our estimates, which implies a year-over-year growth of 3%.
Recommended Action: Buy PLD.
