Prologis Inc. (PLD) has been capitalizing on global growth opportunities, making notable investments in the U.S., China, Europe, Japan and Latin America in the recent quarters. Recently, this industrial real estate investment trust (REIT) inked two build-to-suit deals in Europe for a total space of 594,000 square feet.
Earlier, the company acquired a portfolio of 23 Class-A distribution centers across 3 European nations, namely the Czech Republic, Poland and Slovakia as well as signed a build-to-suit deal for a logistics facility in Sendai covering 281,400 square feet.
Also, Prologis Park Ryton in the U.K. has been selected by Jaguar Land Rover for setting up its special vehicles operations technical center, reflecting the strong demand for the company’s properties.
Moreover, driven by higher rental income and strategic capital earnings, Prologis reported better-than-expected results for the second quarter of 2014. The company reported core FFO per share of 48 cents, which was 2 cents above the Zacks Consensus Estimate and 7 cents ahead of the year-ago quarter figure. The company also raised the midpoint of its full-year 2014 core FFO outlook.
Amid a larger customer base, rise in e-Commerce application and supply-chain consolidation, there is an increasing demand for high-quality logistics facilities in the markets of Europe, the U.S. and Latin America. But with new construction starts still slow at picking up pace, rents are increasing significantly in many of the markets. Prologis, with its solid capacity, is well leveraging this demand-supply imbalance. The company’s strategic efforts have also driven an improvement in liquidity.
However, with the Fed tapering its stimulus program, interest rates are expected to rise in the long term. This is a growing concern as it would adversely affect the company’s financing costs, margin and FFO. This, in turn, may negatively impact the company’s dividend payout, which we believe is arguably one of the most important attractions of investing in REITs. Prologis also faces significant competition from other REITs and private institutional funds.
Echoing similar sentiments, over the last 30 days, the Zacks Consensus Estimate for 2014 climbed 0.5% to $1.84 per share while that for 2015 remained unchanged at $1.98 per share. Prologis currently carries a Zacks Rank #3 (Hold).
To gain a deeper insight into Prologis, you can refer to our updated research report issued on Sep 23, 2014.
Other Stocks to Consider
Investors interested in the REIT industry may consider better-ranked stocks like DCT Industrial Trust Inc. (DCT), Extra Space Storage Inc. (EXR) and Gladstone Commercial Corp. (GOOD). All these stocks hold a Zacks Rank #2 (Buy).
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment