Prologis' Q2 FFO Beat Estimates, Rental Revenues Rise Y/Y

Core Insights - Prologis, Inc. (PLD) reported second-quarter 2025 core funds from operations (FFO) per share of $1.46, exceeding the Zacks Consensus Estimate of $1.41 and up from $1.34 in the same quarter last year [1][11] - The company's shares rose over 3% in early trading, reflecting positive investor sentiment driven by increased rental revenues and strong leasing activity, despite high interest expenses [2] Financial Performance - Prologis generated rental revenues of $2.04 billion, surpassing the Zacks Consensus Estimate of $2 billion and increasing from $1.85 billion year-over-year [3] - Total revenues reached $2.18 billion, up from $2 billion in the prior year [3] - The average occupancy level in Prologis' owned and managed portfolio was 94.9%, unchanged from the previous quarter but down from 96.1% year-over-year [5] Leasing and Occupancy - In the quarter, 51.2 million square feet of leases commenced, with a retention level of 74.9% [4] - Prologis' share of net effective rent change was 53.4%, with cash rent change at 34.8% [5] Development and Acquisitions - The company reported building acquisitions of $335 million with a weighted average stabilized cap rate of 5.7% [6] - Development stabilization totaled $192 million, with 5.3% being built to suit, while development starts amounted to $846 million, with 62.7% being built to suit [6] Interest Expenses and Liquidity - Interest expenses increased by 20.9% year-over-year to $251.9 million [7] - Prologis ended the quarter with cash and cash equivalents of $1.07 billion, up from $671.1 million at the end of the previous quarter, and total liquidity of $7.1 billion [8] 2025 Guidance - The company narrowed its 2025 core FFO per share guidance to $5.75-$5.80 from a previous range of $5.65-$5.81, with the Zacks Consensus Estimate at $5.70 [12] - Average occupancy guidance was revised to 94.75%-95.25% from 94.5%-95.5% [12] - Capital deployment outlook for development starts was increased to $2.25-$2.75 billion from $1.50-$2.00 billion [13]