SAN FRANCISCO—Locally based Prologis Inc. fourth quarter results showed core funds from operations per diluted share was $0.48 for the fourth quarter compared with $0.43 for the same period in 2013. For the full year 2014, Core FFO per diluted share was $1.88, an increase of 14% over 2013.
"As we closed out the year, our global occupancies continued to climb and development leasing reached its highest level in seven years," says Hamid R. Moghadam, chairman and CEO of Prologis. "The outperformance is a direct result of our long-term strategy of operating in infill markets where global trade and consumption intersect."
According to analyst firm RBC Capital Markets LLC, the firm's results topped expectations aided by continued US industrial strength along with elevated TTM investment and refinancing savings. SS growth and leasing were healthy though spreads narrowed while development starts were elevated, the firms says. Finally, initial “Core FFO” guidance for 2015 was offered ahead of expectations (+0.06/share), as mentioned above, which RBC says “should lift shares though underlying SS forecasts suggested limited acceleration.”
Prologis ended the quarter with 96.1% occupancy in its operating portfolio, an increase of 100 basis points over the same period in 2013 and 110 basis points over the prior quarter. The quarterly increase was principally driven by a 160 basis point increase in spaces under 100,000 square feet and a 140 basis point increase in the company's European portfolio.
In the fourth quarter, the company leased 41.7 million square feet (3.9 million square meters) in its combined operating and development portfolios, which includes 8.9 million square feet (0.8 million square meters) of properties under development. Tenant retention was 85.5%.
Rent change on rollovers was positive for the eighth consecutive quarter, with GAAP rental rates on signed leases increasing 6.2%. In the Americas, GAAP rental rates on signed leases increased 11.5%.
During the fourth quarter, same store NOI for the owned and managed portfolio increased 4.1% on a GAAP basis, resulting in full year 2014 same store NOI growth of 3.7%. On a Prologis' share basis, same store NOI (GAAP) increased 4.9% during the fourth quarter.
"The global nature of our platform allows us to deploy capital where we see the highest risk-adjusted returns," adds Moghadam. "In the US, where market conditions are very strong and values are high, we were a net seller of non-strategic holdings. In Europe, the focus has been on net deployment where we acquired quality assets in target markets at a discount to replacement costs."
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
