Logistics warehouse operator Prologis beat third-quarter consensus expectations and slightly raised its full-year outlook on Wednesday.
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Consolidated revenue of $2.21 billion was 9% higher year over year and ahead of analysts’ expectations of $2.03 billion. Core funds from operations (FFO) of $1.49 were 5 cents higher than consensus.
New leases commenced in the period increased 29% y/y to 65.6 million square feet. Average occupancy fell 110 basis points y/y to 94.8%, but appears to have bottomed, remaining in line with the first two quarters of the year. (Occupancy was 95.3% to close the third quarter.)
“Our record leasing this quarter underscores the strength and resilience of our platform,” said Hamid Moghadam, Prologis co-founder and CEO, in a news release. “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.”
Prologis (NYSE: PLD) slightly raised its full-year FFO guidance to a range of $5.78 to $5.81 per share, which was ahead of a consensus estimate of $5.77 at the time of the print.
The new outlook assumes average occupancy in a range of 94.75% to 95.25% (no change from the second quarter) and development starts between $2.75 billion and $3.25 billion (a $500 million increase at both ends of the range).
The company is expanding its data center portfolio, which could be driving the increase in new starts. It currently has 5.2-gigawatts of utility-fed capacity installed or committed.
Shares of PLD were up 0.7% in premarket trading on Wednesday.
Prologis will host a call at noon EDT on Wednesday to discuss third-quarter results.
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