Prologis Earnings: High Mark-to-Market Leads to Record Releasing Spreads, but Demand Is Slowing

No-moat-rated Prologis reported a decent set of numbers in its third-quarter results. The firm reported core funds from operations, or FFO, of $1.30 per share, 25% lower than the $1.73 in FFO during third-quarter 2022. The sharp decline in FFO during the third quarter can be mainly attributed to the promote income within the strategic capital segment that tends to be lumpy. We think that investors should analyze the underlying performance of the industrial portfolio of the company after excluding the strategic capital segment. Real estate operations, which excludes the strategic capital segment, reported a core FFO of $1.26 per share in the third quarter, which was 20% higher on a year-over-year basis. We are maintaining our $124 per share fair value estimate for Prologis after incorporating the third-quarter results.