Xem thêm

Is Prologis Stock Worth Investing In?

CEO Khai Intela
Real estate investment trusts (REITs) have long been considered a reliable source of passive income. Despite recent concerns in the industry due to rising interest rates, Prologis (PLD -1.06%) stands out as a REIT that...

Real estate investment trusts (REITs) have long been considered a reliable source of passive income. Despite recent concerns in the industry due to rising interest rates, Prologis (PLD -1.06%) stands out as a REIT that offers potential growth and dividends for investors.

Prologis: Meeting the Growing Demand

With a presence in 20 countries, Prologis owns and operates logistics real estate properties, strategically located in active and high-growth markets. Its focus on meeting the needs of business-to-business enterprises and online retail fulfillment centers has attracted major clients such as Amazon, Home Depot, FedEx, and UPS.

The rise of e-commerce and the need for resilient supply chains have driven the demand for warehouse, storage, and distribution spaces. Prologis has capitalized on these strong trends, resulting in significant growth in their funds from operations (FFO). Over the past decade, Prologis's FFO per share has grown at an impressive compound annual growth rate of 15.6%.

This growth has translated into increasing dividend payments to investors, with Prologis raising its annual dividends per share over the past 10 years. With a compounded annual growth rate of 12%, Prologis becomes an attractive choice for those seeking income generation through their investments.

PLD FFO Per Share (TTM) Chart PLD FFO Per Share (TTM) data by YCharts

Potential Headwinds Ahead

While Prologis has benefitted from robust demand in the past, investors should keep an eye on the supply of logistics facilities entering the market. Developers, driven by strong demand and low interest rates, have been constructing more facilities, adding to the market supply. However, this surge in construction peaked in 2022, coinciding with the rapid rise in interest rates due to inflationary pressures.

The influx of new supply set to come online in 2024 might result in slower rent growth for Prologis. Nonetheless, Prologis management remains optimistic, projecting rent growth of 4% to 6% in the coming years, leading to a 9% to 11% growth in core FFO.

Prologis also boasts a strong balance sheet, enabling it to seize expansion opportunities that drive further growth. In 2022, Prologis completed a $23 billion acquisition of competitor Duke Realty, demonstrating its commitment to strategic expansion.

Is Prologis a Good Investment?

Amid concerns about commercial real estate and the potential impact of higher interest rates, industrial REITs like Prologis are believed to be better positioned and more stable during market downturns by industry experts such as CBRE Group.

Furthermore, there are indications that the period of higher interest rates might be coming to an end. The CME FedWatch Tool projects a potential decrease in the federal funds rate from 5.5% to around 4% by the end of this year, which could positively impact commercial real estate transactions.

Lastly, the continued growth of e-commerce presents a promising outlook for Prologis. The warehousing and storage services market is projected to grow annually by 7.7% through 2030, according to Straits Research. With these favorable conditions, Prologis appears to be a solid stock worth considering for long-term investment.

In conclusion, Prologis's strong market position, impressive growth in FFO, and commitment to seizing growth opportunities make it an appealing choice for investors seeking both income generation and potential long-term gains.

1