Prologis has increased the midpoint of its 2024 core funds from operations (FFO) guidance, signaling a positive outlook as the company surpassed third-quarter projections for this key metric, despite rental revenue falling short of analysts' expectations. The logistics real estate investment trust now anticipates full-year core FFO in the range of $5.42 to $5.46, a refinement from the previous range of $5.39 to $5.47.
According to a Capital IQ survey, analysts are estimating an average core FFO of $5.42 for the current year. Chief Executive Hamid Moghadam expressed optimism about the company's future, stating, "The bottoming process is underway as our customers navigate an uncertain environment. Looking ahead, the supply picture is improving, and the long-term demand drivers for our business remain strong." For the third quarter, Prologis reported core FFO of $1.43, an increase from $1.30 a year prior, exceeding the $1.38 average estimate from analysts on Capital IQ.
Prologis shares rallied by 3.7% in Wednesday trading, reflecting positive consumer sentiment. Truist Managing Director Ki Bin Kim remarked that the results overall were "slightly better than expected," backing a buy rating with a target price of $137 on the stock. He noted that core FFO was bolstered by improved fund fees and reduced tax liabilities.
The company’s total expenses remained flat at $1.25 billion. The rental revenue reached $1.90 billion for the three months ending September 30, up from $1.78 billion the previous year, although it fell short of the $1.91 billion market estimate. Meanwhile, total revenue increased to $2.04 billion from $1.91 billion. The average occupancy rate during the quarter settled at 96.1%, down from 97.5% in the same period of 2023 and lower than 96.3% in the preceding quarter.
The REIT's rent change for the third quarter dropped to 67.8% from 84% year-over-year on a net effective basis and decreased to 44.1% from 54.2% on a cash basis. Price: 126.98, Change: +5.59, Percent Change: +4.60.