Why Prologis Shares Are Trading Lower Today

Prologis, Inc. (NYSE: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 (NYSE:INDS) and Fidelity Real Estate Investment ETF (BATS:FPRO).

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

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