Prologis delivered stronger-than-expected third-quarter results on Thursday, raising its full-year forecast for new developments once again as demand for logistics real estate remains supported by e-commerce, advanced manufacturing and data centre supply chains.
The San Francisco-based logistics property investment trust, listed on the New York Stock Exchange under the ticker PLD, reported consolidated revenue of $2.39 billion for the quarter. That represented an 8% increase year over year and exceeded analysts’ consensus estimates by 8%.
Core funds from operations (FFO) reached $1.60 per share, up 11 cents from a year earlier and 3 cents above market expectations.
Prologis recorded 60 million square feet of signed leases during the period. Leases that commenced totalled 55.9 million square feet, however, representing a 15% decline compared with the same quarter last year.
Occupancy continued to improve. The company’s average occupancy rate rose by 30 basis points year over year to 95.1%, placing it 10 basis points above the level reported in the second quarter.
The net effective rent change across Prologis’ multiyear lease portfolio stood at 38%, bringing the company close to its full-year target of 40%.
Chief Executive Officer Dan Letter said customers were operating with leaner inventories and that excess capacity across their distribution networks had largely been absorbed. He also pointed to healthy demand linked to online retail, advanced manufacturing and the expansion of the data centre supply chain.
| Prologis | Q3/26 | Q3/25 | Y/Y Gross Change | Y/Y % Change |
|---|---|---|---|---|
| Occupancy % | 95.1% | 94.8% | 30 bps | 0.3% |
| Leases Commenced (square feet) | 55,900,000 | 65,600,000 | -9,700,000 | -14.8% |
| Retention | 75.9% | 77.2% | -130 bps | -1.7% |
| Net Effective Rent Change | 38.0% | 49.4% | -1140 bps | -23.1% |
| Rental Revenue | $2,205 | $2,054 | $151 | 7.4% |
| Total Revenue | $2,388 | $2,214 | $174 | 7.8% |
| Adjusted EBITDA | $2,081 | $1,868 | $213 | 11.4% |
| Consolidated NOI | $1,694 | $1,570 | $124 | 7.9% |
| Same Store NOI | $1,710 | $1,617 | $93 | 5.7% |
| Adjusted Net Earnings | $833 | $782 | $51 | 6.5% |
| Adjusted EPS | $0.86 | $0.82 | $0.04 | 4.9% |
| Core FFO | $1,545 | $1,426 | $119 | 8.3% |
| Core FFO per Share | $1.60 | $1.49 | $0.11 | 7.4% |
| Dividends/Distributions per share | $1.07 | $1.01 | $0.06 | 5.9% |
Prologis also strengthened its expectations for the remainder of 2026, reflecting the performance recorded during the quarter.
Full-year development outlook strengthened again
The company narrowed its full-year 2026 core FFO guidance to between $6.25 and $6.29 per share, lifting the midpoint of its forecast by 1 cent.
Its occupancy outlook now stands at 95.25% to 95.5%. The upper end of that range was reduced by 25 basis points.
More significantly, Prologis raised its forecast for development starts to between $5 billion and $5.75 billion, an increase of 8% at the midpoint. The company had already increased its development-starts outlook by $1 billion when it reported its second-quarter results.
Chief Financial Officer Tim Arndt attributed the results to solid operating performance and disciplined capital allocation. He said the company’s financial position and balance-sheet strength provided the capacity and flexibility to continue investing in expansion, even in an environment of higher interest rates.
Segro acquisition to expand Prologis’ European footprint
Prologis’ growth strategy also includes its planned acquisition of London-based logistics warehouse operator Segro, traded on the London Stock Exchange under the ticker SGRO.
In July, Segro’s board agreed to recommend Prologis’ best-and-final offer, valued at $18.8 billion. The proposed combination would significantly increase Prologis’ presence in Europe, expanding its European footprint by 47% to 368 million square feet.
The combined business would have $269 billion in assets under management, strengthening the group’s scale and its ability to serve customers across international supply chains.
Letter said shareholder approval represented an important milestone in bringing the two companies together. He added that Prologis was looking forward to completing the transaction, broadening its European platform and increasing the scale of its operations.
Prologis shares rise as the market reacts to results
Prologis shares were up 1.3% in early trading on Thursday, while the S&P 500 was down 0.5%.
The company scheduled a conference call for noon Eastern Daylight Time on Thursday to discuss its third-quarter performance.
The results point to a logistics property market supported by more balanced inventory levels and demand from e-commerce, advanced manufacturing and data centre infrastructure. If completed, the Segro acquisition would further expand Prologis’ European operations and reinforce its capacity to support increasingly international supply chains.
