Prologis Earnings: Muted Supply and Signs of Demand Stabilization Augur Well for Future Growth

No-moat-rated Prologis reported a decent set of numbers in the second quarter as there were increasing signs of demand stabilization coupled with a moderating supply pipeline. Management said that the sector is near peak vacancy, and a dearth of new-supply additions as visible in declining construction starts will be the basis for more-favorable conditions in 2025. The firm reported core funds from operations of $1.34 per share, 27% lower than the $1.83 in FFO during the second quarter of 2023. Excluding net promote income, which tends to be lumpy, the firm reported core funds from operations of $1.36 per share, up 9% on a year-over-year basis. We do not plan on materially changing our $120 per share fair value estimate for Prologis as we incorporate second-quarter results.