Prologis Delivers Record-Breaking Quarter with $1.6 Billion in New Projects and Expanding Capabilities
In a recent conference call, Prologis reported another exceptional quarter driven by strengthening demand, disciplined execution, and the expanding capabilities of their platform.
The company signed a record 67 million sq ft of leases during the quarter, with Dan Letter, CEO, noting that they believe the market is entering its next phase after several quarters of sustained demand. This has given Prologis the flexibility to meet customer demand while creating value through development, with their 14,000 acre land bank representing 240 million sq ft of embedded development opportunity.
Prologis also started $1.6 billion of new projects during the quarter, with their logistics platform creating opportunities well beyond warehouse development. The same land, customer relationships, and operating capabilities that have made them the leader in logistics are enabling their data center and energy businesses, creating two additional long-term growth opportunities for Prologis.
Importantly, the company's power pipeline has expanded to approximately 5.8 gigawatts, representing about $17 billion of powered shell investment potential or up to $87 billion on a turnkey basis. This opportunity has been years in the making, but the company believes they're still in the early innings.
Prologis is also seeing customers increasingly look to them for more than real estate. They're looking for integrated solutions across logistics, energy, and warehouse operations, which Prologis' scale and long-standing customer relationships give them a unique view into. This insight helps the company anticipate demand, shape their development pipeline, and stay ahead of the market.
The company continued to execute on their strategic capital strategy during the quarter, closing their $1.2 billion European joint venture with La Caisse. Prologis remains the partner of choice for investors seeking scale, execution, and access to the highest quality logistics portfolio in the world.
Financially, the company delivered an excellent quarter with Core FFO of $1.63 per share, including net promote income, and $1.60 per share without, each ahead of their expectations. They generated $83 million of promote revenue in the quarter, driven by outperformance from three vehicles, underscoring the performance-driven nature within their strategic capital business.
The company ended the quarter with 95.5% occupancy, a 20 basis point improvement over the first quarter, and rent change on rollover exceeded 36% on a net effective basis, realizing $60 million of incremental NOI. Their portfolio lease mark-to-market remained unchanged from the prior quarter at 17% on a net effective basis, fully replenishing their embedded NOI opportunity of nearly $800 million available without any further market rent growth.
