Report
Valens Research

PLD - Embedded Expectations Analysis - 2019 12 04

Prologis, Inc. (PLD:USA) currently trades at historically high levels relative to UAFRS-based (Uniform) Assets, with a 2.5x Uniform P/B. At these levels, the market is pricing in bullish expectations for the firm, but management may be concerned about warehouse demand, weather, and coastal development.

Specifically, management is confident that e-commerce growth will reduce demand for their warehouses, and they may lack confidence in their ability to provide space where customers desire. Furthermore, they may be exaggerating the rigor of their WACC requirements, and they may be concerned about the impact of weather on their construction schedule. Finally, they may be concerned about U.S. market fundamentals and about the cost of replacing land in their coastal developments.
Underlying
Prologis Inc.

Prologis is a self-administered and self-managed real estate investment trust and is the sole general partner of Prologis, L.P. The company owns, manages and develops logistics facilities, with a focus on the consumption side of the global supply chain. Most of the company's properties in the United States are wholly owned, while its properties outside the United States are primarily held in co-investment ventures. The company has two segments: Real Estate Operations, which represents the ownership and development of operating properties, and includes land held for development and properties under development; and Strategic Capital, which represents the management of unconsolidated co-investment ventures.

Provider
Valens Research
Valens Research

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