The world’s leading logistics real estate investment trust (REIT) Prologis Inc. (NYSE: PLD) noted in its third-quarter earnings report that demand is improving across several sectors of the economy. On Tuesday, the San Francisco-based company posted core funds from operations (FFO) of 90 cents per share, 2 cents ahead of the consensus estimate.
“Activity in our portfolio is robust and broadening — a reflection of increased demand in the quarter across multiple sectors, the adoption of e-commerce and the need for higher levels of inventory,” said Prologis Chairman and CEO Hamid R. Moghadam. “We remain focused on addressing customer pain points through our investments in data, labor solutions, technology and innovation.”
The company saw a 28.4% year-over-year increase in new leases commenced at 48.8 million square feet, with the occupancy rate dipping 90 basis points to 95.6%. Lease retention fell 810 basis points from the second quarter to 72.8%.
Prologis raised 2020 guidance for core FFO modestly to $3.76 to $3.78 per share from $3.70 to $3.75. New development starts were increased to a range of $1.6 billion to $2 billion, from the $800 million to $1.2 billion guide provided in the second quarter, a level still under pre-pandemic expectations. Building acquisitions are now expected to range from $700 million to $800 million.
“Our outlook continues to improve based on results, leasing and lower credit losses. Year-over-year Core FFO growth is sector leading at 13.7% at the midpoint, excluding promotes, while keeping leverage flat,” said Prologis CFO Thomas S. Olinger.
Shares of PLD are up more than 1% in pre-market trading.
The company will host a call at noon EDT to discuss these results with analysts. Stay tuned to FreightWaves for continuing coverage of Prologis’ earnings results.