Prologis Reports Solid Performance Amid Challenges in Third Quarter of 2025

Prologis, Inc. (NYSE: PLD) has released its third-quarter earnings report for the period ending September 30, 2025, revealing mixed results amid a vibrant logistics market. While the company saw a net earnings per diluted share decrease of 24.1% to $0.82 compared to the same period last year, the Core funds from operations (Core FFO) posted an increase of 4.2%, reaching $1.49 per diluted share.

Leasing Highlights

In a clear demonstration of its robust position in the logistics sector, Prologis achieved record leasing of 62 million square feet this quarter. This achievement is attributed to sustained demand for warehouse spaces, as retail and e-commerce sectors continue to expand. Hamid R. Moghadam, co-founder and CEO of Prologis, commented on the strong leasing activity, cementing the company's reputation in the logistics realm. He stated, "Our record leasing this quarter underscores the strength and resilience of our platform."

The company is also optimistic about the future, citing improved customer sentiment and limited new supply in the market, which could lead to a favorable environment for rent and occupancy growth. Moghadam added, "...the logistics market is setting up for the next inflection in rent and occupancy growth — one of the most compelling setups I've seen in 40 years."

Expanding Into Data Centers

Notably, Prologis is broadening its foothold beyond traditional logistics facilities. The company has begun investing in data centers to account for the increasing power demands of the digital infrastructure. Dan Letter, president of Prologis, remarked on this strategic shift, explaining, "We are extending our leadership position in logistics to data centers, where we are investing to meet the growing power demands of digital infrastructure." Currently, Prologis has secured or is in the advanced stages of providing a substantial 5.2 gigawatts of utility-fed capacity through advanced power contracts.

Operational Performance

During the third quarter of 2025, the average occupancy for Prologis-owned and managed properties was reported at 94.8%, with a period-end occupancy of 95.3%. The leases commenced for both the operating and development portfolio reached 65.6 million square feet. Additionally, the company's retention rate stood at a robust 77.2%, showcasing its ability to retain existing tenants.

From a financial perspective, Prologis also demonstrated strong operational metrics with a cash same-store net operating income (NOI) growth of 5.2% and an impressive net effective rent change of 49.4%. The increase in cash rent change also reflected 29.4%, adding to the positive financial narrative for the quarter.

Strategic Investments and Capabilities

Prologis highlighted its commitment to strategic capital deployment as part of its operational efficiency. The company made acquisitions worth $48 million while its development stabilizations reached $604 million, with an estimated yield of 6.7%. The total estimated value creation for this quarter was reported at $169 million, underscoring Prologis’ strength in real estate development.

As of the quarter-end, Prologis maintained significant liquidity with approximately $7.5 billion available. The company's balance sheet remains resilient, evidenced by a debt-to-EBITDA ratio of 5.0x and a debt as a percentage of total market capitalization at 26.5%. Furthermore, the weighted average interest rate on company debt was registered at 3.2%, with an average term of 8.3 years.

Future Outlook

For the remainder of 2025, Prologis has provided upward guidance for net earnings per diluted share, now projected to be between $3.40 and $3.50, which reflects the company's anticipation of strong market performance going into the last quarter of the year. This ongoing optimism is bolstered by a solid pipeline of potential leasing agreements and the company's strategic positioning in the logistics market.

In conclusion, Prologis's third-quarter results highlight its resilience and strategic foresight in adapting to market demands, particularly in expanding into data centers. As the company navigates the competitive landscape, its strong financial metrics and operational achievements suggest a promising future as it shapes the logistics industry further.