5 Key Numbers From Prologis’s Q4 2024 Earnings
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TradingKey - Dividend investors have had a hard time given the higher interest rate environment imposed by the US Federal Reserve (Fed). Of course, interest rate cycles ebb and flow.
Despite rates remaining relatively higher, the Fed is starting to cut them. That means income stocks – like real estate investment trusts (REITs) – become more interesting propositions for those of us looking for steady income.
The biggest REIT in the world is Prologis Inc (NYSE: PLD) and it reported its Q4 2024 earnings on Tuesday (21 January) before the market opened in the US. By the end of the trading day, Prologis stock had soared 7.1%.
Here are five numbers REIT investors need to know from Prologis’s latest quarterly results.
- Core FFO increases 10%
As with any REIT, one of the big metrics is core funds from operations (FFO) as this gives investors a better gauge on the REIT’s ability to generate operating cash flow.
On this front, Prologis posted core FFO per diluted share of US$1.42, up 10.1% year-on-year. However, this was down sequentially from the core FFO of US$1.45 in Q3 2024.
- Occupancy rate drops slightly
The occupancy rate for Prologis’s overall portfolio dropped slightly sequentially to 95.6% at the end of Q4 2024 versus the 96.1% occupancy rate at the end of Q3 2024.
Despite that, co-founder and CEO of Prologis – Hamid R. Moghadam – stated that “post-election, leasing activity has been strong and our ongoing conversations with customers support our expectation that the market is nearing an inflection point”.
That bodes well for REIT investors hoping for a turnaround in the property market globally.
- Acquisitions of US$384 million during the quarter
In terms of adding to its already-large portfolio, Prologis executed on US$384 million worth of acquisitions in Q4 2024. As a result, that took its 2024 total outlay on acquisitions to US$1.92 billion.
That total also happened to be nearly triple what Prologis did in acquisitions in 2023 and suggests the REIT may be starting to see some more interesting opportunities now that rates are starting to decline.
Prologis acquisition activity (US$ millions)
Source: Prologis Q4 2024 earnings presentation
- Liquidity and balance sheet remain robust
As of the end of Q4 2024, Prologis had total available liquidity of US$7.4 billion, up from US$6.6 billion in Q3 2024, and debt as a percentage of its total market cap stood at 25.6%.
The weighted average interest rate on its total debt was 3.2% and the weighted average maturity was 9.0 years – both up just marginally since Q3 2024.
- Solid 2025 guidance from management
Finally, Prologis guided for a relatively solid 2025 in terms of its outlook for the upcoming year. It’s looking for a core FFO, excluding net promote income (or SBC), of US$5.70 to US$5.86, slightly ahead of its Q4 2024 core FFO on an annualised basis.
Prologis CEO Moghadam said that the platform that Prologis offers its clients is “uniquely positioned to seize the opportunities created by favourable trends in our data centre and energy businesses”. That should give investors optimism that the REIT is going to be able to capitalise on these megatrends unfolding in the real estate space.
More than anything, the optimistic outlook and solid quarter saw Prologis stock jump while the market rally during the day also helped. For investors looking for income/growth ideas in the REIT space in 2025, US giant Prologis looks to be one of the top ideas.
