Earnings Highlight

TradingKey - Revenue: Prologis reported Q2 2025 revenue of $2.18 billion, surpassing market expectations of $2.03 billion, with a year-over-year increase of 9%. Strong leasing demand and high rental rates drove revenue growth, reflecting the company’s high-quality asset portfolio and market leadership. Continued leasing activity and rent increases are expected to further strengthen the revenue base.

Earnings Per Share (EPS): EPS was $0.61, below market expectations of $0.71, down 33.7% year-over-year, primarily due to reduced non-recurring gains and foreign exchange fluctuations.

Core FFO: Core Funds From Operations (FFO) per share reached $1.46 in Q2 2025, exceeding expectations of $1.41, with a 9% year-over-year increase. New leasing volume grew 10% to 5.12 billion square feet, with stable occupancy and robust customer demand.

Same-Store NOI: Same-store Net Operating Income (NOI) grew 4.9%, reflecting strong performance from existing properties. Robust rent growth (53.4%) and stable occupancy (95.1%) were key drivers. If leasing demand persists, same-store NOI is expected to improve further.

Occupancy: Ending occupancy remained stable at 95.1%, exceeding expectations. The leasing pipeline reached a record high, driven by active customer signings, e-commerce, and supply chain optimization demand. High occupancy is expected to support stable cash flow and NOI growth going forward.

Net Effective Rent Change: Net effective rent change reached 53.4%, highlighting the company’s strong pricing power. Robust demand for logistics real estate, driven by e-commerce and a high-quality asset portfolio, was a key factor. Sustained rent growth is expected to further boost FFO and NOI.

Development and Acquisition Activity: Development starts totaled $846 million (fully pre-leased), and acquisitions amounted to $335 million, reflecting strong market demand. Pre-leased developments reduce risk, while build-to-suit projects meet customer needs. These activities are expected to provide long-term momentum for revenue and FFO growth.

Future Outlook

Prologis provided clear guidance for its 2025 financial and operational performance, demonstrating confidence in future growth. The company expects core FFO of $5.75-$5.80 per share (including net promote income) or $5.80-$5.85 (excluding net promote income), and GAAP EPS of $3-$3.15, indicating sustained profitability growth. Operationally, occupancy is projected at 94.75%-95.25%, rent growth is expected in the low to mid-50% range, and same-store NOI growth is forecasted at 3.75%-4.25% (net effective) or 4.25%-4.75% (cash), reflecting strong demand and stable performance of existing properties.

In development and capital activities, Prologis plans to initiate $2.25-$2.75 billion in development projects, including high-potential areas like data centers. Strategic capital income is expected to be $570-$590 million, with asset dispositions and contributions projected at $1-$1.75 billion. These initiatives demonstrate the company’s ability to capitalize on value-add opportunities through flexible capital allocation.

Looking ahead, Prologis anticipates short-term market volatility but remains optimistic about long-term growth. Sustained demand from e-commerce and supply chain optimization will continue to drive the logistics real estate market. The company notes that once policies (e.g., tariffs) become clearer, pent-up demand will likely be released, further stimulating growth. Additionally, current market rents are approximately 20% below replacement cost rents, providing room for future rent increases, which should further enhance FFO and NOI growth.

Prologis, Inc. 2025 Second Quarter Earnings Preview

Market Expectations   

TradingKey - Prologis, Inc. (PLD) is expected to release its Q2 2025 earnings results before the market opens on July 16, 2025, followed by a conference call at 9:00 AM Pacific Time to discuss the performance. Below are the market's expectations for Prologis' key financial metrics for the second quarter:

· Revenue Expectation: Prologis is projected to report total revenue of $2.03 billion for Q2 2025, representing a 1.5% increase from $2.00 billion in Q2 2024.

· EPS Expectation: The expected GAAP earnings per share (EPS) for Q2 2025 is $0.71, reflecting a 22.83% decrease from $0.92 in Q2 2024.

· Core FFO Expectation: Core Funds From Operations (FFO) is anticipated to reach $1.41 per share for Q2 2025, a 5.2% improvement from $1.34 per share in Q2 2024.

Key Investor Focus Areas

· Demand and Occupancy Trends: Demand for logistics and warehousing space remains a core driver of Prologis' performance. Investors should closely monitor the company's Q2 occupancy rates, particularly in comparison to its full-year guidance range of 94.5% to 95.5%. Recent market data suggests potential fluctuations in industrial real estate demand due to macroeconomic uncertainties. Details on occupancy trends in the earnings report will provide critical insights into the stability of Prologis' property portfolio and the strength of market demand.

· Rent Growth and Leasing Activity: Rent growth is a key factor driving Net Operating Income (NOI) and Funds From Operations (FFO). Investors should focus on Q2 net effective rent growth, as well as progress in lease renewals and new leasing activity. These metrics will directly reflect Prologis' pricing power in key markets and its ability to navigate competitive pressures.

· Development Project Progress: Prologis’ development activities are a vital component of its long-term growth strategy. Based on the company’s Q1 2025 guidance, full-year development stabilizations are expected to range between $1.9 billion and $2.3 billion, with development starts projected at $1.5 billion to $2.0 billion. Investors should pay attention to Q2 development starts and stabilizations, as well as their potential contributions to future revenue and asset value. These metrics will highlight the company’s execution in expanding its property portfolio.

· Impact of Macroeconomic Conditions: The current high-interest-rate environment and inflationary pressures pose challenges to Real Estate Investment Trusts (REITs) by increasing financing costs and impacting asset valuations. Investors should examine how Prologis manages rising borrowing costs through its balance sheet and focus on management’s discussion during the earnings call regarding interest rate trends and strategies to address economic uncertainties.

· Strategic Initiatives: In recent years, Prologis has expanded its focus on data centers and sustainability initiatives, such as converting logistics warehouses into data centers to capture emerging market demand. Investors should monitor the progress of these strategic initiatives in Q2, including the scope and execution of related investments and their potential impact on future Funds From Operations (FFO) and asset value.

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