Prologis Inc Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
Prologis' Q3 2025 earnings call highlighted record leasing, strong rent change, and advancements in the data center business, alongside increased guidance for same-store NOI growth and development starts. The call also addressed customer sentiment, market conditions, and capital deployment strategies.
Key financial results:
Core FFO, including net promote expense, was $1.49 per share. Excluding net promotes, core FFO was $1.50 per share.
Occupancy grew to 95.3%, an increase of 20 basis points.
Rent change during the quarter was 49% on a net effective basis and 29% on a cash basis.
The lease mark-to-market ended September at 19%, reflecting the capture of another $75 million of NOI during the quarter and a further $900 million of NOI as leases roll.
Net effective and cash same-store growth during the quarter were 3.9% and 5.2%, respectively.
Business segment results:
The data center business moved another 1.5 gigawatts of additional capacity to advanced stages.
Prologis is one of the largest owners of utility-fed power available for data centers, with 5.2 gigawatts of power either secured or in the advanced stage.
The energy business delivered 28 megawatts of solar generation and storage in the quarter.
Current energy capacity is 825 megawatts, on track to deliver on the 1 gigawatt goal by year-end.
Capital allocation:
Closed on $2.3 billion in financing activity across the REIT and funds, including a €1 billion raise at 3.5%.
In-place cost of debt is at 3.2% with more than eight years of average remaining life.
Had modest net inflows for the quarter across open-ended funds.
Exploring additional capitalization strategies to fully capture the data center opportunity.
Industry trends and dynamics:
Demand is improving, occupancy has formed a base, and rents are progressing through their bottoming process.
In the US markets, an estimated 47 million square feet of absorption for the third quarter held market vacancy steady at 7.5%.
The construction pipeline is depleting, and starts are below pre-COVID levels.
Market rent declines have been slowing, just over 1% this quarter.
E-commerce penetration is now 24% of US retail sales.
Competitive landscape:
Prologis' curated portfolio and platform outperformed the US by 290 basis points.
Global scale continues to serve customers, with real estate in 20 countries across the world's most dynamic markets.
Macroeconomic environment:
Customer sentiment is better, with strengthening customer sentiment, improved leasing velocity, and continued success in build-to-suit activity.
Larger occupiers are pursuing reconfiguration consolidation strategies with a shift toward network optimization, rather than contraction.
Growth opportunities and strategies:
Build-to-suits will represent over half of the development volume for the full year.
Signed an additional nine build-to-suits this quarter, driving the total to 21 so far for the year and amounting to $1.6 billion of total expected investment.
Every megawatt that can be delivered over the next three years in data centers is already in dialogue with customers.
Taking a deliberate and disciplined approach consistent with the build-to-suit strategy in data centers.
Integrating solar storage and off-grid energy solutions with real estate.
Financial Guidance and Outlook:
Average occupancy at the company's share is unchanged at the midpoint of 95%.
Rent change will average in the low-50s for the full year.
The range for same-store NOI growth is increasing to 4.25% to 4.75% on a net effective basis and 4.75% to 5.25% on a cash basis.
Increasing G&A guidance to a range of $460 million to $470 million.
Increasing strategic capital revenue guidance to a range of $580 million to $590 million.
Increasing development starts at the company's share to a new range of $2.75 billion to $3.25 billion.
Increasing combined disposition and contribution guidance by $500 million to a range of $1.5 billion to $2.25 billion at the company's share.
GAAP earnings are guided to range between $3.40 and $3.50 per share.
Core FFO, including net promote expense, will range between $5.78 and $5.81 per share, while core FFO excluding net promote expense will range between $5.83 and $5.86 per share, a $0.02 increase from prior guidance.