PLD - Embedded Expectations Analysis - 2021 08 23
Prologis, Inc. (PLD:USA) currently trades at a recent high relative to UAFRS-based (Uniform) earnings, with a 52.0x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about their growth targets, the sustainability of leasing demand, and their Strategic Capital business.Specifically, management may lack confidence in their ability to meet all-time high rent forecasts, achieve their net promote income target, and reach their international market growth goals. In addition, they may be overstating the scale and profitability of their Strategic Capital business, the extent of customer competition for space, and the strength of growth trends in the leasing space. Also, they may lack confidence in their ability to sustain cash flow and EBITA growth, maintain current in-place to market rent spreads, and preserve record rent and value growth. Moreover, they may have concerns about the sustainability of demand for lease signings and proposals, land supply issues in Europe, and the expansion of their land bank and development program.
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.
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