Why Prologis Shares Are Trading Lower Today

Prologis, Inc. PLD shares are trading lower after the company reported first-quarter FY24 results.

Rental revenue of $1.83 billion missed the consensus estimates of $1.87 billion. The company’s average occupancy stood at 96.8%, with a leased 45.0MSF operating portfolio and a 3.1MSF development portfolio.

Core funds from operations per diluted share was $1.28, higher than $1.22 a year ago and in line with the consensus. Net earnings per share rose to $0.63 from $0.50 a year ago. 

During the quarter, Prologis and its co-investment ventures issued an aggregate of $4.1 billion of debt at a weighted average interest rate of 4.7% and a weighted average term of 9.5 years. 

FY24 Guidance Lowered: PLD cut the outlook for net earnings per share to $3.15-$3.35 (from $3.20-$3.45) and core FFO attributable to common stockholders to $5.37-$5.47 (from $5.42-$5.56), and against the consensus of $5.49.

The company now expects average occupancy of 95.75%-96.75% (vs. 96.50%-97.50% earlier) in FY24.

Hamid R. Moghadam, co-founder and CEO, said, “While we had a successful first quarter, we expect net absorption in the upcoming quarters to be lower than our prior expectations and leasing to stay competitive in a handful of our larger, higher-rent markets.” 

“With that, our current view calls for lower average occupancy in the year. Accordingly, we have reduced full-year guidance ranges for occupancy, same-store growth and earnings, but view the adjustments more as a matter of timing as the outlook on new supply remains very favorable.” 

“At the midpoint, we project Core FFO growth, excluding promotes, of nearly 8%, and Cash Same Store NOI growth to be 6.75%. While our Southern California portfolio faces near-term headwinds, we remain very positive about long-term growth and value given the market’s supply barriers and secular forces driving future demand.”

Investors can gain exposure to the stock via Pacer Industrial Real Estate ETF INDS and Fidelity Real Estate Investment ETF FPRO.

Price Action: PLD shares are trading lower by 4.57% to $109.50 on the last check Wednesday.

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