Prologis Stock Rises 20.4% in Three Months: Will the Trend Last?

Prologis Inc. PLD shares have rallied 20.4% in the past three months, outperforming the industry's growth of 3.3%.

This industrial real estate investment trust (REIT) is poised to benefit from its strategically located, modern distribution facilities in key global markets and scale. Prudent buyouts and development and a healthy balance sheet will drive growth. Moreover, the company is also converting some of its warehouses into data centers to capitalize on the growing opportunity in this asset category.

Last month, PLD reported third-quarter 2025 core funds from operations (FFO) per share of $1.49, beating the Zacks Consensus Estimate of $1.44. This compared favorably with the year-ago quarter’s figure of $1.43.

The quarterly results reflected a rise in rental revenues and healthy leasing activity. However, high interest expenses were an undermining factor.

Analysts seem optimistic about this Zacks Rank #3 (Hold) company. The Zacks Consensus Estimate for its 2025 FFO per share has moved marginally northward over the past week to $5.80.

Factors Behind PLD Stock Price Rise: Will This Trend Continue?

Prologis provides industrial distribution warehouse space in some of the busiest distribution markets across the globe. The properties of the company are typically located in large, supply-constrained infill markets in proximity to airports, seaports and ground transportation facilities, which facilitates rapid distribution of customers’ products. The solid demand for Prologis’ strategically located facilities has driven healthy operating performance over the past several quarters. In the third quarter of 2025, 65.6 million square feet of leases commenced in the company’s owned and managed portfolio.

Prologis continues to bolster its presence in high-barrier, high-growth markets through strategic acquisitions and development activities. From the beginning of the year through Sept. 30, 2025, the company’s share of acquisitions amounted to $1.19 billion. During the same period, the company’s consolidated development starts totaled $1.94 billion, of which 68% were build-to-suit projects. For 2025, the company anticipates acquisitions at Prologis share between $1.25 and $1.50 billion. Development starts are expected in the range of $2.75-$3.25 billion.

Prologis maintains a healthy balance sheet position with ample flexibility, which poises it well to capitalize on long-term growth opportunities. As of Sept. 30, 2025, this industrial REIT had a total available liquidity of $7.5 billion. As of the same date, the company's weighted average interest rate on its share of the total debt was 3.2%, with a weighted average term of 8.3 years. Debt to adjusted EBITDA was 5.0X. In addition, the company’s credit ratings as of Sept. 30, 2025 were A2 (Outlook Positive) from Moody’s and A (Outlook Stable) from Standard & Poor’s, enabling the company to borrow at an advantageous rate.

Moreover, the data center industry is currently experiencing significant growth, driven by the demands of the evolving needs of today’s digital economy, cloud and AI applications. To capitalize on this growing opportunity, Prologis is focusing on both warehouse conversions and ground-up developments. As per the company’s September 2025 Investor Presentation, it has deployed a capital investment of $0.9 billion for data centers under development with 300 MW capacity.

Solid dividend payouts are arguably the biggest enticements for REIT shareholders, and Prologis remains committed to that. In the last five years, Prologis has increased its dividend five times, and its five-year annualized dividend growth rate is 12.66%. Given the company’s solid operating platform, opportunities for growth and a decent financial position compared with the industry, this dividend rate is expected to be sustainable over the near term.

Key Risks for Prologis

The choppiness in the industrial real estate market, with subdued demand, remains a concern for Prologis. Moreover, high borrowing expenses amid still elevated interest rates add to the company’s woes.

Stocks to Consider

Some better-ranked stocks from the broader REIT sector are VICI Properties VICI and W.P. Carey WPC, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for VICI Properties’ 2025 FFO per share is pegged at $2.37, up 4.9% year over year.

The Zacks Consensus Estimate for W.P. Carey’s 2025 FFO per share stands at $4.92, up 4.7% year over year.

Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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