Prologis PLD is slated to report its first-quarter 2025 results on April 16, before the opening bell. In anticipation of the announcement, industry analysts and investors are eager to assess the company's performance and prospects in the current economic climate.

In the last reported quarter, this leading industrial REIT reported a surprise of 8.70% in terms of core funds from operations (FFO) per share. The quarterly results reflected a rise in rental revenues and healthy leasing activity. However, high interest expenses are an undermining factor.

Over the trailing four quarters, Prologis beat the Zacks Consensus Estimate in terms of FFO per share on three occasions and met on the other, with the average beat being 3.46%. This is depicted in the graph below:

Prologis, Inc. Price and EPS Surprise

Prologis, Inc. price-eps-surprise | Prologis, Inc. Quote

US Industrial Real Estate Market in Q1

Per a Cushman & Wakefield report, in the first quarter of 2025, the U.S. industrial real estate market showed resilience despite tariff uncertainty, with steady demand. Vacancy rates continued to rise, while rent growth moderated. The development pipeline thinned, with quarterly deliveries hitting a four-year low.

The first quarter saw net absorption of 23.1 million square feet (msf), matching the level recorded during the same period last year. However, it was down from 42.4 msf observed in the fourth quarter. The shift toward higher-quality space remains ongoing, with the newest industrial space gaining occupancy, while older facilities with limited functionality experience more move-outs than move-ins.

The overall vacancy rate increased 30 basis points (bps) quarter over quarter to 7% in the first quarter and marked the highest level since 2014. This was largely due to vacant speculative deliveries coupled with some occupier dispositions. However, after several years of exceptionally tight conditions, vacancy has normalized to align with the long-term average —signaling a shift toward a more balanced market environment.

Amid softer market conditions, asking rents have started to flatten. While industrial rents are still growing at a healthy year-over-year pace of 4.3%, an increasing number of markets saw declines this quarter. As a result, the national average rent has remained flat at $10.11 per square foot since the end of 2024.

The development pipeline continues to shrink as quarterly deliveries hit a four-year low. In the first quarter of 2025, 72.6 msf of new industrial buildings completed construction, reflecting a 41% year-over-year decline and marking the third consecutive quarter of declining completions. Speculative assets accounted for 72% of the total square footage delivered.

Factors to Note Ahead of PLD’s Q1 Earnings Release

Prologis is strategically positioned to navigate the current industrial real estate landscape, capitalizing on its portfolio of premium assets in key locations. Its emphasis on targeted acquisitions and developments is likely to have contributed to strong first-quarter revenues, enabling the company to capitalize on market opportunities and remain resilient in the face of ongoing challenges.

Prologis is likely to have utilized its industry-leading cost efficiency and robust balance sheet to drive growth initiatives. As a top player in the industrial REIT sector, the company’s access to capital at favorable rates strengthens its financial position. Throughout the review period, Prologis is likely to have showcased strong liquidity and financial stability, reinforcing its market leadership.

Projections for PLD

The Zacks Consensus Estimate for first-quarter revenues is currently pegged at $1.94 billion, which indicates a 5.89% year-over-year increase. 

Our estimate for average occupancy is 95.5%, which implies an 80 bps decrease from the prior quarter. The same-store net operating income is expected to rise 3.7% year over year. We expect interest expenses to be up 13.3% year over year in the first quarter.

Prologis’ activities during the to-be-reported quarter were not adequate for gaining analysts’ confidence. The Zacks Consensus Estimate for the first-quarter FFO per share has been unrevised at $1.38 in the past month. However, it implies a 7.81% increase year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

What Our Quantitative Model Predicts for PLD

Our proven model predicts a surprise in terms of FFO per share for Prologis this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is the case here.

Prologis currently carries a Zacks Rank of 3 and has an Earnings ESP of +0.21%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks That Warrant a Look

Here are two other stocks from the broader REIT sector, Host Hotels & Resorts, Inc. HST and Cousins Properties Incorporated CUZ, you may want to consider as our model shows that these also have the right combination of elements to report an FFO beat this quarter.

Host Hotels & Resorts is slated to report quarterly numbers on April 30. HST has an Earnings ESP of +2.03% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cousins Properties is slated to report quarterly numbers on May 1. CUZ has an Earnings ESP of +0.35% and carries a Zacks Rank of 2 at present.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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