Summary

  • Prologis, Inc. is a leading logistics real estate company in the world headquartered in San Francisco, California and established in 1983 (as AMB Property Corporation). Current Prologis, Inc. is a result of merger between AMB and SCI (changed its name to Prologis in 1998) in 2011.
  • As of December 2022, the company owned about 1.2 billion square feet of property, 5,495 buildings serving approximately 6,600 customers around the world in North America, South America, Europe, and Asia.
  • Prologis has reported total revenue of $5,973.69 million in 2022 and $4,759.44 million a year earlier. Total operating income for the years are $3,467.54 million and $3,206.99 million, respectively. Net earnings attributable to common stockholders are $3,358.79 million and $2,933.57 million, respectively.
  • Total revenue of the company during the first quarter of 2023 is $1,769 million which was $1,219 million during the same period a year earlier. Net earnings attributable to common stockholders during these periods are $463 million and $1,149 million, respectively.
  • As of April 2023, 52 weeks price range of the company stock has been $174.54 to $98.03. Trailing P/E of the stock is 28.86 times, price/sales (ttm) is 16.67 times, profit margin is 53.54%, return on assets (ttm) is 2.21%, and return on equity (ttm) is 7.44%.

Brief Company Overview

prologis logoPrologis, Inc. (NYSE:PLD) is a leading logistics real estate company in the world established in 1983 by Douglas Abbey, Hamid Moghadam and T. Robert Burke. The company is headquartered in San Francisco, California and it belongs to the REIT - Industrial industry employing 2,466 employees as of December, 2022. Prologis is a global leader in logistics real estate with properties under its management and development in 19 countries across four continents. As of December 2022, the company owned about 1.2 billion square feet of property, 5,495 buildings serving approximately 6,600 customers around the world in North America, South America, Europe, and Asia.

Prologis owns, develops, operates and maintains logistics facilities. Its service portfolio includes property management, capital deployment, leasing and opportunistic disposition. The business of Prologis, Inc. comprises two operating segments - Real Estate (Rental Operations and Development) and Strategic Capital. The company was established in 1983 as AMB Property Corporation. In 1991, the company that is to later become ProLogis is incorporated as Security Capital Industrial Trust (SCI). In 2011, AMB Property Corporation and ProLogis merged and retained the name Prologis - the merger made the company the largest industrial real estate company in the world. Hamid R. Moghadam is the current Chairman & CEO of the company as of April, 2023.

As of April 2023, 52 weeks price range of the company stock has been $174.54 to $98.03. Trailing P/E of the stock is 28.86 times, price/sales (ttm) is 16.67 times, profit margin is 53.54%, return on assets (ttm) is 2.21%, and return on equity (ttm) is 7.44%.

Recent Developments

  • On October 3, 2022, Prologis acquired Duke Realty Corporation and Duke Realty Limited Partnership. The acquisition is valued at approximately $23 billion.1
  • The company declared for the first quarter of 2023 dividend of $0.87 per share of the company's common stock, payable on March 31, 2023 and a dividend of $1.0675 per share of the company's 8.54% Series Q Cumulative Redeemable Preferred Stock, payable on March 31, 2023. Prologis Board of Directors approved 10% increase in quarterly common stock dividend on February 23, 2023.2
  • According to Oxford Economics, Prologis Properties facilitate goods equal to nearly 3% of the world's GDP and house 1.1 million jobs.3

Financial Highlights

Q1'23 Financial Highlights

Total revenue of the company during the first quarter of 2023 is $1,769 million which was $1,219 million during the same period a year earlier. Net earnings attributable to common stockholders during these periods are $463 million and $1,149 million, respectively. Adjusted EBITDA attributable to common stockholders is $1,430 million and $1,210 million, respectively. Weighted average common shares outstanding at the end of March 2023 is 951,624 thousand and earnings per shared during this quarter (diluted) is $0.50.

Annual Financial Highlights

The company generates revenue from its three business segments namely real estate (which is divided into further two subdivision - rental revenues, and development management), and strategic capital segment. The real estate operating segment principally includes rental revenue and rental expenses recognized from the company's consolidated properties. Cost of the company's property management and leasing functions are allocated to this segment. The strategic capital segment operating segment includes revenues from asset management and property management services performed, transactional services for acquisition, disposition and leasing activity and promote revenue earned primarily from the unconsolidated co-investment ventures. Revenues associated with the Strategic Capital Segment fluctuate because of changes in the size of the portfolios through acquisitions and dispositions, the fair value of the properties and other transactional activity including foreign currency exchange rates and timing of promotes. These revenues are reduced by the direct costs associated with the asset and property-level management expenses for the
properties owned by these ventures.

In the year 2022, the company has generated $4,913 million from rental revenues, as compared to $4,148 million a year earlier and $21 million and $20 million for the years respectively from the development management and other revenue segment. From the strategic capital segment the company has generated $1,040 million as compared to $591 million a year earlier. Thus, from the real estate segment net operating income is $3,688 million in 2022 as compared to $3,105 million a year earlier. And net operating income from the other segment is $736 million and $384 million from the segments, respectively.

Total revenues of the company during 2022 is $5,973.69 million, up from $4,759.44 million a year earlier. Operating income after gains on real estate transactions during the years are $3,467.53 million and $3,206.99 million, respectively. Net income attributable to common stockholders after deduction of preferred stock dividend is $3,358.79 million in 2022 and $2,933.57 million a year earlier, an increase of 14% year over year.

The company had an investment portfolio in real estate of $81,623.39 million as on December 31, 2022 which was $53,005.19 million a year earlier. Cash position of the company stands at $278.48 million on December 31, 2022 which was $556.12 million a year earlier. The company has in its equity 1,279 shares of $0.01 preferred stock at stated liquidation preference of $50 per share at December 31, 2022.

Net cash provided by operating activities during 2022 is $4,126.43 million and $2,996.04 million a year earlier. Net cash used in investing activities of the company is $4,499.06 million 2022 and $1,990.06 million year earlier. Net cash provided by financing activities in 2022 is $115.79 million as compared to net cash used in financing activities $1,008.32 million.

Business Overview

Prologis predominantly invest in logistics facilities. The properties of the company are typically used for distribution, storage, packaging, assembly and light manufacturing of consumer products. The vast majority of the operating properties of the company are used by their  customers for retail and online fulfillment and business-to-business transactions. The company generally leases their properties on a long-term basis - the average term for leases commenced in 2022 being 69 months.4 The company has another form of investment - co-investment ventures. In the O&M portfolio of the company, included are consolidated and unconsolidated co-investment ventures that hold investments in real estate properties, primarily logistics facilities, that the company also manages. The unconsolidated co-investment ventures are accounted for under the equity method. The amounts included for the unconsolidated ventures are reflected at 100% of the amount included in the ventures’ financial statements as calculated on a GAAP basis, not the company's proportionate share.

business overview building

The business of Prologis, Inc. comprises two operating segments - Real Estate (Rental Operations and Development) and Strategic Capital.

Real Estate Segment: Rental Operations

Rental operations comprise the largest component of Prologis's operating segments and generally contribute 85% to 90% of their consolidated revenues, earnings and FFO. The company collects rent from their customers through operating leases, including reimbursements for the majority of the property operating costs. For leases that commenced during 2022 within the consolidated operating portfolio, the weighted average lease term was 69 months. Prologis expects to generate internal growth by increasing rents, maintaining high occupancy rates and controlling expenses. The primary driver of revenue growth, outside of the Duke Transaction, depends on rolling in-place leases to current market rents when leases expire.

Real Estate Segment: Development

Given the scarcity of modern logistics facilities in Prologis's target markets, the development business of the company provides the opportunity to build to the requirements of their current and future customers while deepening market presence. Successful development and redevelopment efforts provide significant earnings growth as projects are leased, generate income and increase the value of the Real Estate Segment. Generally, the company develops properties in the U.S. for long-term hold and outside the U.S. for contribution to their unconsolidated co-investment ventures.

prologis real estate

Strategic Capital Segment

This segment of Prologis allows it the partner with many of the world's largest institutional investors. The business is capitalized principally through private and public
equity of which 95% is either in perpetual open-ended or long-term ventures, and two publicly traded vehicles (Nippon Prologis REIT, Inc. in Japan and FIBRA Prologis in
Mexico). The company align its interests with its partners by holding significant ownership interest in all of its eight unconsolidated co-investment ventures (ranging from 15% to 50%). This structure allows Prologis to reduce its exposure to foreign currency movements for investments outside the U.S.

This segment produces durable, long-term cash flows and generally contributes 10% to 15% of recurring consolidated revenues, earnings and FFO of Prologis, all while requiring minimal capital other than the investments in the ventures. The company generates strategic capital revenues from unconsolidated co-investment ventures, principally through asset management and property management services. Asset management fees are primarily driven by the quarterly valuation of the real estate properties owned by the respective ventures. The company earns additional revenues by providing leasing, acquisition, construction management, development and disposition services. In certain ventures, Prologis also have the ability to earn revenues through incentive fees (“promotes” or “promote revenues”) periodically during the life of a venture, upon liquidation of a venture or upon stabilization of individual venture assets based primarily on the total return of the investments over certain financial hurdles. The company plans to grow this business and increase revenues by increasing assets under management in existing or new ventures. The majority of strategic capital revenues are generated outside the U.S.

Company History

The story of Prologis began in 1983 when Douglas Abbey, Hamid Moghadam and T. Robert Burke (joined in 1984) established AMB Property Corporation. The company amb logofocused on investing in office, industrial and community shopping centers on behalf of major institutional investors. During the savings and loan crisis the company started refining its investment strategy by exiting office markets and focusing on industrial and shopping centers in infill trade areas. AMB launched its first private equity fund in 1989 focusing on industrial and retail properties. In 1997, AMB closes its initial public offering, raising more than $2.8 billion in assets. During the same year the company established its first European office in Amsterdam. In 1999, AMB exits community shopping center investments to focus on industrial properties in targeted markets. AMB launches its international expansion program focused on trade-centric locations in Mexico, Europe and Asia in 2002. AMB forms the first open-end commingled fund by an REIT in 2002 - AMB Institutional Alliance Fund III. It also establishes new business lines, including direct development and additional private capital products, over the next two years. In 2009, AMB completes its equity offering, fortifying the balance sheet and securing projected capital needs through 2012. In 2010, AMB forms Mexico Fondo Logistico, the first of its kind industrial venture for Mexican pension funds (AFORES). AMB forms a €470 million Joint Venture in 2011 with Allianz Real Estate, marking Allianz Real Estate’s largest joint venture and biggest foray into the logistics space at that time. In 2011, Prologis and AMB complete a merger of equals to create the preeminent global industrial real estate company, with more than $40 billion of assets under management and a platform of logistics and distribution facilities on four continents.

prologis EU presence

In 1991, the company that is to later become ProLogis is incorporated as Security Capital Industrial Trust (SCI). SCI made its initial public offering in 1994 on the New York Stock Exchange (NYSE). The company became one of the most prolific developers in the industrial sector The company then makes its first international expansion by acquisitions in Mexico in 1996. SCI officially changes its name to Prologis in 1998 and acquires Meridian Industrial Trust for $1.5 billion. In 1999, Prologis forms its first property fund, Prologis California ($556 million), and the Prologis European Property Fund. In 2001, Prologis announces its entry into the Japanese market. A year later, Prologis forms the Prologis Japan Properties Fund ($1 billion) with the Government of Singapore Real Estate. Prologis was added to the S&P 500 in 2003 and during the same year the company announced its entry to the Chinese market. In 2004, Prologis acquires Keystone Industrial Trust for $1.5 billion. The company forms its first joint venture in China with Suzhou Logistics Center Co. Ltd. Prologis completes a merger with Catellus in 2005 - a North American industrial development company for $5.3 billion. Prologis became a Fortune 1000 company in 2006 and The Prologis European Properties Fund completes initial public offering on the Euronext exchange in Amsterdam. In 2009, Prologis sells its China operations and its 20% interest in Japan Property Funds to GIC Real Estate for $1.3 billion.

After the merger of Prologis and AMB Property Corporation in 2011, Prologis assumes 100% control of Prologis European Properties (PEPR) ahead of schedule in 2012, thus liquidating the fund. Assets received include 210 facilities covering 48.4 million square feet (4.5 million square meters) across 11 countries. The later histories of the company includes IPO of Nippon Prologis REIT, Inc. in 2013, closure of Prologis European Logistics Partners Sarl with and initial acquisition of 195 Class-A properties, IPO for FIBRA Prologis in 2014, acquisition of the real estate assets and operating platform of KTR Capital Partners (KTR) and its affiliates, upgradation of Prologis, L.P.'s senior unsecured rating to A3 from Baa1 by Moody's in 2016, upgradation of S&P Global Ratings to A- from BBB+ in the same year, completion of all-stock acquisition of DCT Industrial Trust for $8.5 billion in 2018, acquisition of the wholly owned real estate assets of Industrial Property Trust for approximately $4 billion in cash in 2020, all-stock acquisition of Liberty Property Trust for $13 billion in the same year, all-stock transaction of Duke Realty for approximately $23 billion in 2022.

  1. ^ https://www.prologis.com/news-research/press-releases/prologis-closes-acquisition-duke-realty
  2. ^ https://www.prologis.com/news-research/press-releases/prologis-board-directors-approves-10-percent-increase-quarterly-common
  3. ^ https://www.prologis.com/news-research/press-releases/oxford-economics-prologis-properties-facilitate-goods-equal-nearly-3
  4. ^ https://ir.prologis.com/financials/sec-filings/content/0001564590-23-001902/0001564590-23-001902.pdf
Tags: US:PLD USA
Created by Md. Touhidul Islam on 2023/04/19 12:16
     
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