Prologis(US:PLD) ZACKS·2025-10-09 15:41Core Viewpoint - Adding Prologis, Inc. (PLD) to an investment portfolio is advisable due to its strong fundamentals, solid growth prospects, and strategic initiatives in converting warehouses into data centers to leverage the growing demand in this sector [1][9]. Financial Performance - Analysts have raised the 2025 and 2026 FFO per share estimates, indicating bullish sentiment, with the 2025 estimate now at $5.77 [2][7]. - Prologis' shares have increased by 7% over the past three months, outperforming the industry growth of 0.2%, suggesting potential for further appreciation [2]. - The company reported 52.1 million square feet of leases commenced in Q2 2025, with a retention level of 74.9% [4]. Growth and Development - Prologis is focusing on strategic acquisitions and development, with $1.15 billion in acquisitions and $1.49 billion in development starts in the first half of 2025 [5][8]. - The company anticipates a year-over-year increase of 7.5% in rental revenues for 2025 and 4.9% for 2026 [4]. Market Positioning - Prologis is converting select warehouses into data centers to capture the growing AI-driven demand, which is seen as a significant growth opportunity [9][10]. - The company is strategically located in high-demand distribution markets, enhancing its operational performance [3]. Financial Strength - Prologis has a robust balance sheet with $7.1 billion in liquidity and favorable credit ratings (A2 from Moody's and A from S&P) [11]. - The company's cash flow growth is projected at 14.8%, significantly higher than the industry average of 2.68% [12]. - Prologis has increased its dividend five times in the last five years, with a five-year annualized growth rate of 12.66%, indicating a commitment to shareholder returns [13].