Prologis Q3 FFO Beats Estimates, Rental Revenues Rise Y/Y

Prologis, Inc. PLD reported third-quarter 2025 core funds from operations (FFO) per share of $1.49, beating the Zacks Consensus Estimate of $1.44. This compares favorably with the year-ago quarter’s figure of $1.43.Reflecting investors’ positive sentiments, shares of the company gained more than 4.5% 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.Prologis generated rental revenues of $2.05 billion, missing the Zacks Consensus Estimate of $2.10 billion. However, the figure increased from the $1.90 billion reported in the year-ago period. Total revenues were $2.21 billion, up from the year-ago quarter’s $2.04 billion.Per Hamid R. Moghadam, co-founder and CEO of Prologis, "Our record leasing this quarter underscores the strength and resilience of our platform. With a solid pipeline, improving customer sentiment and limited new supply, the logistics market is setting up for the next inflection in rent and occupancy growth — one of the most compelling setups I've seen in 40 years."PLD's Q3 in DetailIn the quarter, 65.6 million square feet of leases commenced in the company’s owned and managed portfolio. The retention level was 77.2% in the quarter.The average occupancy level in Prologis’ owned and managed portfolio was 94.8% in the third quarter, down from the prior quarter’s 94.9% and the year-ago period’s 95.9%.Prologis’ share of net effective rent change was 49.4% in the July-September quarter. In the reported quarter, the cash rent change was 29.4%. Cash same-store net operating income (NOI) grew 5.2% compared to 4.9% in the previous quarter.The company’s share of building acquisitions amounted to $48 million, with a weighted average stabilized cap rate (excluding other real estate) of 6.2% in the third quarter. Development stabilization aggregated $604 million, with 23.4% being built to suit, while development starts totaled $446 million, with 63.9% being built to suit. PLD’s total dispositions and contributions were $71 million, with a weighted average stabilized cap rate (excluding land and other real estate) of 5.4%.However, during the reported quarter, interest expenses jumped 12.2% on a year-over-year basis to $258.3 million.PLD's LiquidityPrologis exited the third quarter of 2025 with cash and cash equivalents of $1.19 billion, up from $1.07 billion at the end of the second quarter of 2025. Total liquidity amounted to $7.5 billion at the end of the quarter.Debt, as a percentage of the total market capitalization, was 26.5% as of Sept. 30, 2025. The company's weighted average interest rate on its share of the total debt was 3.2%, with a weighted average term of 8.3 years.Prologis and its co-investment ventures issued an aggregate of $2.3 billion of debt in the reported quarter at a weighted average interest rate of 4.2% and a weighted average term of 5.7 years.2025 Guidance by PLDPrologis increased its 2025 core FFO per share guidance to the range of $5.78-$5.81 from the $5.75-$5.80 range guided earlier. The Zacks Consensus Estimate for the same is currently pegged at $5.77.The company’s average occupancy remains unchanged in the band of 94.75% and 95.25%. Meanwhile, cash same-store NOI (Prologis share) was revised within the range of 4.75% to 5.25% from the previous guidance of 4.25% to 4.75%.The company has increased its outlook for capital deployment (Prologis share) on development starts to $2.75-$3.25 billion, from the prior range of $2.25-$2.75 billion. Dispositions are estimated at $750-$1000 million, up from the previous range of $500-$750 million. Spending on acquisitions is revised to $1.25-$1.50 billion from the previous range of $1-$1.25 billion.Prologis currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Prologis, Inc. Price, Consensus and EPS Surprise Prologis, Inc. price-consensus-eps-surprise-chart | Prologis, Inc. QuoteUpcoming Earnings ReleasesWe now look forward to the earnings releases of other REITs, such as Welltower WELL and Vornado Realty Trust VNO, which are slated to report on Oct. 27 and Nov. 3, respectively.The Zacks Consensus Estimate for Welltower’s third-quarter 2025 FFO per share is pegged at $1.29, which implies a 16.2% year-over-year increase.The Zacks Consensus Estimate for Vornado Realty Trust’s third-quarter 2025 FFO per share is pegged at 55 cents, which suggests a year-over-year increase of 5.8%.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.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. 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(WELL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks