The global leader in logistics real estate, today reported fourth quarter results for 2023.
Net earnings per diluted share was $0.68 for the fourth quarter of 2023 compared with $0.63 for the fourth quarter of 2022. Net earnings per diluted share for the year ended December 31, 2023 was $3.29, compared with $4.25 for the prior year.
Core funds from operations (Core FFO)* per diluted share was $1.26 for the fourth quarter of 2023, compared with $1.24 for the same period in 2022. Core FFO, excluding Net Promote Income (Expense)* per diluted share for the fourth quarter of 2023 was $1.29 compared with $1.23 for the fourth quarter of 2022. For the full year 2023, Core FFO per diluted share was $5.61 compared with $5.16 for the same period in 2022. Core FFO, excluding Net Promote Income (Expense)* per diluted share for the full year 2023 was $5.10 compared with $4.61 for the full year of 2022.
“We closed 2023 adding another year of exceptional performance. I couldn’t be more proud of our team,” said Hamid R. Moghadam, co-founder and CEO, Prologis. “While uncertainties remain in the economic and geopolitical environment, we are positive about the outlook for 2024. We remain focused on executing the strategy outlined at our recent Investor Forum to drive significant value from our global scale and continue to be a best-in-class partner to our customers.”
OPERATING PERFORMANCE
| Owned & Managed | 4Q23 | Notes |
| Average Occupancy | 97.1 % | |
| Leases Commenced | 43.7MSF | 36.8MSF operating portfolio and 6.9MSF development portfolio |
| Retention | 73.1 % | |
| Prologis Share | 4Q23 | Notes |
| Cash Same Store NOI* | 8.5 % | |
| Net Effective Rent Change | 74.1 % | Lower due to geographic mix |
| Cash Rent Change | 51.8 % | |
DEPLOYMENT ACTIVITY
| Prologis Share | 4Q23 | FY 2023 |
| Acquisitions | $495M | $733M |
| Weighted avg stabilized cap rate (excluding other real estate) | 5.6 % | 5.4 % |
| Development Stabilizations | $1,227M | $3,151M |
| Estimated weighted avg yield | 6.2 % | 6.3 % |
| Estimated weighted avg margin | 22.5 % | 29.1 % |
| Estimated value creation | $276M | $917M |
| % Build-to-suit | 54.9 % | 44.1 % |
| Development Starts | $2,042M | $3,397M |
| Estimated weighted avg yield | 6.9 % | 7.0 % |
| Estimated weighted avg margin | 26.5 % | 27.4 % |
| Estimated value creation | $541M | $931M |
| % Build-to-suit | 48.6 % | 53.0 % |
| Total Dispositions and Contributions | $507M | $1,608M |
| Weighted avg stabilized cap rate (excluding land and other real estate) | 4.7 % | 4.5 % |
BALANCE SHEET STRENGTH & LIQUIDITY
“We had another strong year of earnings with annual growth in Core FFO of nearly 11%, excluding promotes. Since our merger 12 years ago, the earnings and dividend growth CAGRs have been approximately 10%, while reducing leverage by over 30 percentage points,” said Timothy D. Arndt, chief financial officer, Prologis. “We are very well-positioned to drive continued superior growth. The strength of our global portfolio, differentiated customer offerings, and significant balance sheet capacity bring a high degree of resiliency to our long-term growth profile.”
During the fourth quarter, Prologis and its co-investment ventures issued an aggregate of $286 million of debt at a weighted average interest rate of 2.0%, and a weighted average term of 4.0 years. For the full year, Prologis and its co-investment ventures issued $12.3 billion of debt at a weighted average interest rate of 4.5% and a weighted average term of 9.6 years.
At December 31, 2023, debt as a percentage of total market capitalization was 20.5%, and the company’s weighted average interest rate on its share of total debt was 3.0%, with a weighted average term of 9.1 years and no significant debt maturities until 2026.
FOREIGN CURRENCY STRATEGY
Prologis hedges its exposure to foreign currency fluctuations by borrowing in the currencies in which it invests and using derivative financial instruments. At December 31, 2023, 96% of Prologis’ equity was in USD and forecasted earnings for 2024, 2025 and 2026 are 98%, 98% and 97%, respectively, in USD or hedged through derivative contracts.
2024 GUIDANCE
Prologis’ guidance for net earnings is included in the table below as well as guidance for Core FFO*, which are reconciled in our supplemental information.
“At the midpoint, we project Core FFO growth, excluding promotes, of over 9.0%, and Cash Same Store NOI growth to be 8.5%, reflecting the strength of our premier portfolio and its considerable lease mark-to-market.” Arndt added, “We are confident in our ability to outperform in any future environment given our embedded rent upside, development-ready land bank and significant liquidity.”
