Prologis, Inc. PLD reported first-quarter 2025 core funds from operations (FFO) per share of $1.42, outpacing the Zacks Consensus Estimate of $1.38. This compares favorably with the year-ago quarter’s figure of $1.28.

Reflecting investors’ positive sentiments, shares of the company gained more than 2.5% during the initial hours of today’s trading session. The quarterly results reflect a rise in rental revenues and healthy leasing activity. However, high interest expenses are an undermining factor. In addition, this industrial REIT reaffirmed its 2025 core FFO outlook.

Prologis generated rental revenues of $1.99 billion, beating the Zacks Consensus Estimate of $1.94 billion. The figure increased from the $1.83 billion reported in the year-ago period. Total revenues were $2.14 billion, up from the year-ago quarter’s $1.96 billion.

Per Hamid R. Moghadam, the co-founder and CEO of the company, "In the near term, policy uncertainty is making customers more cautious. But over the long term, limited new supply and high construction costs support continued rent growth. We're confident in the strength and resilience of our business."

PLD's Quarter in Detail

In the quarter, 65.1 million square feet of leases commenced in the company’s owned and managed portfolio. The retention level was 72.9% in the quarter.

The average occupancy level in Prologis’ owned and managed portfolio was 94.9% in the first quarter, down from 95.6% in the prior quarter and 96.8% in the year-ago period.

Prologis’ share of net effective rent change was 53.7% in the January-March quarter. In the reported quarter, the cash rent change was 32.1%. Cash same-store net operating income (NOI) grew 6.2% compared to 6.7% in the previous quarter.

The company’s share of building acquisitions amounted to $811 million, with a weighted average stabilized cap rate (excluding other real estate) of 4.2% in the first quarter. Development stabilization aggregated $925 million, with 64.5% being built to suit, while development starts totaled $646 million, with 78% being built to suit. PLD’s total dispositions and contributions were $188 million, with a weighted average stabilized cap rate (excluding land and other real estate) of 4.0%.

However, during the reported quarter, interest expenses jumped 19.9% on a year-over-year basis to $231.8 million.

PLD's Liquidity

Prologis exited the first quarter of 2025 with cash and cash equivalents of $671.1 million, down from $1.32 billion at the end of the fourth quarter of 2024. Total liquidity amounted to $6.52 billion at the end of the quarter.

Debt, as a percentage of the total market capitalization, was 25.7% as of March 31, 2024. The company's weighted average interest rate on its share of the total debt was 3.2%, with a weighted average term of 8.7 years.

Prologis and its co-investment ventures issued an aggregate of $549 million of debt in the reported quarter at a weighted average interest rate of 4.1% and a weighted average term of 8.0 years.

2025 Guidance

Prologis reaffirmed its 2025 core FFO per share guidance in the range of $5.65-$5.81. The Zacks Consensus Estimate for the same is currently pegged at $5.71.

The company expects average occupancy to be between 94.5% and 95.5%. Cash same-store NOI (Prologis share) is projected in the range of 4-5%.

The company has lowered its outlook for capital deployment (Prologis share) on development starts to $1.50-$2.00 billion, from the prior range of $2.25-$2.75 billion. Dispositions are estimated at $250-$500 million, down from its previous range of $1.0 billion-$1.5 billion. However, spending on acquisitions is reiterated within $750 million-$1.25 billion.

Prologis currently carries a Zacks Rank #3 (Hold).

Prologis, Inc. Price, Consensus and EPS Surprise

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

Upcoming Earnings Releases

We now look forward to the earnings releases of other REITs, such as Digital Realty Trust DLR and Highwoods Properties HIW, slated to report on April 24 and April 29, respectively. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

The Zacks Consensus Estimate for Digital Realty’s first-quarter 2025 FFO per share is pegged at $1.72, which implies a 3% year-over-year increase. DLR currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Highwoods Properties’ first-quarter 2025 FFO per share is pegged at 82 cents, which suggests a year-over-year decrease of 7.9%. HIW currently carries a Zacks Rank #3.

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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