Prologis Powers Through Challenging Market Conditions to Achieve Record-Breaking Leasing Performance
Prologis, a leading global industrial real estate company, has demonstrated remarkable resilience in the face of challenging market conditions, delivering an exceptional fourth quarter performance that exceeded expectations. The company's robust leasing activity, strategic capital recycling, and commitment to data center development have solidified its position as a leader in the industry.
During the quarter, Prologis signed a record-breaking 60 million square feet of leases, showcasing the company's ability to adapt to changing market dynamics. This achievement is all the more impressive given the backdrop of intense competition and shifting customer requirements. The company's leasing pipeline has started the year on a healthy note, with interest diversifying across customer profiles, size requirements, and markets.
Prologis' Core FFO (Funds From Operations) came in at $1.42 per share for the quarter, excluding Net Promote Income, while including net promotes, it was $1.50 per share. The company's full-year results ended on a high note, representing 8.4% growth over 2023 and placing it in the 86th percentile of all REITs. Average occupancy remained strong at 95.8% for the quarter and 96.3% for the year.
Net effective rent change during the quarter was a healthy 66%, with annualized NOI (Net Operating Income) adding over $340 million to the company's coffers. The net effective lease mark-to-market finished the year at 30%, representing an additional $1.4 billion in incremental NOI. Notably, both net effective and cash same-store growth were a respectable 6.6% and 6.7%, respectively.
Prologis' capital recycling efforts were equally impressive, with the company contributing $2 billion of assets to its strategic capital ventures during the quarter. This brought the full-year total to over $3.3 billion, demonstrating the company's ability to self-fund and generate returns regardless of market conditions. The company raised over $1.7 billion across the platform, driving growth in third-party AUM (Assets Under Management) by over 7%.
The sale of Prologis' Elk Grove data center in Chicago was a notable highlight, showcasing the company's capabilities in data center development. The property was sold at very attractive economics, with Prologis earning a value creation fee of $112 million that wasn't included in prior guidance due to uncertainty and timing. This transaction demonstrates the company's comprehensive approach to data center development, which includes secured power and advanced procurement stages.
With 1.4 gigawatts of secured power and 1.6 gigawatts in advanced stages of procurement, Prologis has set itself up for success in the burgeoning data center market. The company's vision is to develop a staggering 10 gigawatts of potential across its portfolio over the next decade.
