Prologis (PLD) provides COVID-19 business update.
Prologis (PLD) hosted a business outlook call today to discuss aspects of the global logistics market amid the COVID-19 pandemic. Presenting for the company were Hamid Moghadam, CEO, Gene Reilly, CIO, and Tom Olinger, CFO. As summarized by REIT/BASE, key comments were as follows:
* PLD has received approximately 2/3 of its April rent payments, with most of the remaining payments due through the end of the month. Management noted that the timing of tenant payments is very similar to prior periods.
*Tenants representing approximately 24% of gross rents have submitted requests for rent deferrals. PLD noted that many of these requests were from larger, well-capitalized companies that would not meet PLD's criteria for rent deferral. Net of these requests, management estimated that granted rent deferrals would be approximately 1% of gross rents, with such amounts taking the form of back-end loans.
*Space demand from e-commerce tenants has increased. PLD said it now expects tenants to focus on supply-chain resiliency, creating a need for 'safety stock' and resulting in a potential 5-10% increase in industrial space needs over the next several years.
*March leasing volume was up approximately 16% over the prior year when adjusting for portfolio growth. Tenant retention has improved slightly and PLD has been able to achieve rent increases on expiring leases. Recent leasing efforts have focused on maintaining occupancy rather than pushing market rents.
*Speculative development starts have been put on hold. The company has 30 build-to-suit projects in various stages of completion, of which PLD's share of the remaining construction cost was approximately $1.9 billion. With respect to acquisitions, management noted its bias is to be 'patient' on any new investments.
* PLD is in a strong liquidity position with approximately $800 million of cash and $3.8 billion of undrawn capacity on its bank lines. Free cash flow estimates for the year of approximately $1 billion are unchanged from initial guidance. The company has very little debt maturing through 2021.
* PLD expects to release first quarter earnings on April 21 and conduct its normal earnings call later that day.
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* PLD has received approximately 2/3 of its April rent payments, with most of the remaining payments due through the end of the month. Management noted that the timing of tenant payments is very similar to prior periods.
*Tenants representing approximately 24% of gross rents have submitted requests for rent deferrals. PLD noted that many of these requests were from larger, well-capitalized companies that would not meet PLD's criteria for rent deferral. Net of these requests, management estimated that granted rent deferrals would be approximately 1% of gross rents, with such amounts taking the form of back-end loans.
*Space demand from e-commerce tenants has increased. PLD said it now expects tenants to focus on supply-chain resiliency, creating a need for 'safety stock' and resulting in a potential 5-10% increase in industrial space needs over the next several years.
*March leasing volume was up approximately 16% over the prior year when adjusting for portfolio growth. Tenant retention has improved slightly and PLD has been able to achieve rent increases on expiring leases. Recent leasing efforts have focused on maintaining occupancy rather than pushing market rents.
*Speculative development starts have been put on hold. The company has 30 build-to-suit projects in various stages of completion, of which PLD's share of the remaining construction cost was approximately $1.9 billion. With respect to acquisitions, management noted its bias is to be 'patient' on any new investments.
* PLD is in a strong liquidity position with approximately $800 million of cash and $3.8 billion of undrawn capacity on its bank lines. Free cash flow estimates for the year of approximately $1 billion are unchanged from initial guidance. The company has very little debt maturing through 2021.
* PLD expects to release first quarter earnings on April 21 and conduct its normal earnings call later that day.
04/06/2020