Prologis, Inc. (PLD): what the price requires
At today's price, Prologis, Inc. (PLD) is priced for +13.1% FFO growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-17 · Source: https://boothcheck.com/report/PLD
Headline
| Field | Value |
|---|---|
| Ticker | PLD |
| Company | Prologis, Inc. |
| Current price | $141.76/sh |
| Composition | Real Estate (Rental Operations and Development) 93% / Strategic Capital 7% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | reit |
| Implied FFO growth | 13.1% |
| Price-to-FFO | 22.2x |
| FFO yield | 4.5% |
Solve inputs: computed at a 10.5% cost of equity with 4% terminal growth over a 5-year stage.
Reconcile: at the x-ray's 9.3% required return this reads ~7.7%/yr; the models below use their own rates.
How unusual the bet is: extreme
| Reference | Value |
|---|---|
| vs own history | +0.65σ |
| cohort percentile (of 88 peers) | 85 |
| sustained it ~5 years at this level | 54% |
| implied end-window share | 1% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 3.80x | 5 | expensive |
| Earnings | 6.25x | 5 | expensive |
| Relative | 1.76x | 6 | expensive |
| Growth | 1.04x | 5 | expensive |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.5%); the inversion above states its own rate.
Per-Model Detail (n=21)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $136.84 | 1.04x | yes | FCF base $5.4B, growth 7% (input: historical growth), terminal g 4.0%, WACC 7.5%, 6yr projection |
| DCF Exit Multiple | Growth | $143.94 | 0.98x | yes | Exit EV/EBITDA: 20.9x / 22.9x / 24.9x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $171.24 | 0.83x | yes | P/E 35x (static sector reference · 2026-04), scenarios: 29.2x / 35.0x / 40.8x (bear / base = reference held flat / bull), EV/EBITDA 20x |
| Simple DDM | Growth | $208.38 | 0.68x | yes | DPS $4.18, g=7.1% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3% |
| Two-Stage DDM | Growth | $72.58 | 1.95x | yes | Stage 1: 3% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $42.90 | 3.30x | yes | BV/sh $55.87, ROE (TTM) 7.1%, ke 9.3% |
| Two-Stage Excess Return | Asset | $37.32 | 3.80x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $58.99 | 2.40x | yes | Rev $8.9B, growth 7% (input: historical growth; tapered), Terminal P/S: 6.7x / 8.0x / 9.3x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $74.52 | 1.90x | yes | FFO/share $6.21, growth 3% (input: historical FFO/share growth, 10y median), PEG=13.35 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $17.07 | 8.30x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $3.97B × (1−4%) / WACC 7.5% → EPV (no growth) |
| Residual Income | Asset | $36.51 | 3.88x | yes | BV $55.87 + 5yr PV of (ROE (TTM) 7.1% − Kₑ 9.3%) × BV; BV grows 4.6%/yr |
| Graham Number | Asset | $88.36 | 1.60x | yes | √(22.5 × FFO/share $6.21 × BVPS $55.87) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $119.17 | 1.19x | yes | EBITDA $7.40B × sector EV/EBITDA 20.0x |
| FCF Yield | Earnings | $22.68 | 6.25x | yes | FCF $5135.8M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $20.50 | 6.92x | yes | SBC-adj FCF $4.94B (FCF $5.14B − SBC $0.19B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $72.09 | 1.97x | yes | FFO/share $6.21 × (8.5 + 2×2.7%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $9.87 | 14.36x | yes | BV $55.87 × (ROIC 1.3% / WACC 7.5%) |
| P/Sales Sector | Relative | $56.07 | 2.53x | yes | Revenue $8.95B × sector P/S 6.0x |
| PEG Fair Value | Relative | $31.05 | 4.57x | yes | FFO/share $6.21 × (PEG 1.5 × growth 2.7% (input: historical FFO/share growth, 10y median)) → PE 4.0x |
| Earnings Yield | Earnings | $67.14 | 2.11x | yes | FFO/share $6.21 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | $88.07 | 1.61x | yes | FFO/share $6.21 × 14.2x P/FFO (route cohort median, n=85); FFO $5.95B (FFO incl. D&A + impairments, FY2025, companyfacts), shares 958M |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt (REIT basis) | $33.8b |
| Net debt / FFO | 5.68x |
| Fixed-charge coverage (FFO basis) | 7.0x |
| Funds from operations (trailing) | $5.9b |
| Share count CAGR (dilution) | 5.8% |
| Burning cash | no |
REIT basis: leverage is read against funds from operations (FFO), not depreciation-gutted operating income. The header's implied growth runs on ADJUSTED FFO — FFO minus recurring maintenance capex — so the header's multiple and this leverage ratio use bases that differ by that capex; neither substitutes for the other.
Bullet Takeaways
- Prologis is a mature REIT, so the right yardstick is adjusted funds from operations, not earnings or book value. At about $140 (as of June 27, 2026) the price is roughly 23 times AFFO, which inverts to about 13.4% annual AFFO growth, a pace that sits at the very top of the REIT group and that the engine flags as extreme.
- Only the growth-DCF frame reaches the price. The asset, earnings-power, and peer-multiple frames all read it as richly valued, so the premium is a bet on durable compounding that static valuation cannot capture, the signature of a moat-priced franchise.
- The operating signals are strong: Q1 2026 core FFO of $1.50 per share (up from $1.42), record 64 million square feet of lease signings, 95.3% occupancy, and a pivot toward data-center development. The fragile variable is interest rates, which set both the REIT's borrowing cost and the multiple investors will pay.
Bull Case
Prologis has to be read for what it is, a mature, dominant REIT, because that determines which numbers matter. A real-estate trust is valued on its adjusted funds from operations, the cash earnings plus property depreciation minus the maintenance capex that keeps buildings leasable, not on an earnings multiple or book value. At about $140 the price is roughly 23 times AFFO. That looks rich against the asset and earnings frames, but those frames are built for operating companies and structurally understate a REIT whose depreciation is a non-cash charge against appreciating logistics real estate. The correct lens shows a stabilized, cash-generative platform, and the question is whether its growth justifies the premium the market assigns.
The operating evidence says the platform is firing. Q1 2026 core FFO reached $1.50 per diluted share, up from $1.42 a year earlier, the company signed a record 64 million square feet of leases, occupancy held at 95.3% after the seasonal first-quarter dip, and retention ran near 76%. The FY2025 10-K shows the pricing power underneath: occupancy of 95.6% at year end and a 50.1% net-effective rent change on leases that commenced during the year, meaning expiring leases are re-signing at roughly one-and-a-half times the prior rate. That rent mark-to-market is the embedded growth engine, the trust can lift cash flow simply by rolling existing leases to current market rents, before any new development. Prologis raised its 2026 core FFO guidance to $6.07 to $6.23 on that strength.
The durability premium the price pays for is grounded in scale and optionality. Prologis is the largest logistics-property owner globally, with a Strategic Capital arm that earns fees managing third-party capital and a Prologis Essentials platform layering services on top of the real estate. The newest leg is data centers: the company lifted development-start guidance to $4.5 to $5.5 billion with about 40% now allocated to data-center build-to-suits, and started $1.3 billion of data-center projects in Q1 alone. That is a way to redeploy its land bank and power access into one of the highest-demand real-estate categories. A franchise that compounds through rent mark-to-market, fee income, and a credible data-center option is exactly the kind of business where only the growth frame reaches the price, because the static frames cannot price durable compounding.
Bear Case
The variable with the most leverage on Prologis is interest rates, and the current price does not leave much room for them to stay high. A REIT is a spread business: it borrows to own real estate and pays out the cash, so its value moves inversely with rates on two fronts at once. Higher rates raise the cost of the debt it rolls, and the 10-K is explicit that there can be no assurance it maintains its credit ratings and that a downgrade would mean higher borrowing costs and difficulty accessing capital. Just as importantly, higher rates lift the discount rate investors apply, which compresses the multiple. At roughly 23 times AFFO, the very top of the REIT group, Prologis is priced as if rates fall and stay low; if the rate environment stays elevated, both its cash flow growth and the multiple the market pays can move against it simultaneously.
The implied growth is the second pressure point. The price embeds about 13.4% annual AFFO growth, which the engine labels extreme and which sits beyond the REIT cohort, and history shows only about 54% of REITs growing this fast sustained the pace for even five years. That is demanding for a business whose recent FFO-per-share growth has been in the mid-single digits, far below the 13% the price requires. The static valuation frames make the gap concrete: earnings-power value capitalizing normalized operating income lands near $17, residual income near $37, and the funds-from-operations multiple near $83, all well below the $140 price. When the price is three to six times what the asset and earnings frames support and only the most optimistic growth frame reaches it, the margin for disappointment is thin.
The demand cycle adds near-term risk on top of the rate exposure. Industrial real estate has been working through a digestion period after the pandemic build-out, and while Prologis forecasts tightening vacancy and rising rents in 2026, it also pulled back its development pipeline by over a billion dollars as tariff tensions and tenant hesitation chilled leasing decisions. Tariffs cut directly at warehouse demand because they reshape trade flows and make occupiers cautious about committing to new space. Net debt sits around 5.7 times FFO, manageable for a REIT but real leverage nonetheless. A name priced for top-of-cohort, durable double-digit growth is fragile to any combination of rates staying higher, the rent mark-to-market normalizing as in-place rents catch up to market, or a tariff-driven slowdown in logistics demand, and the price reflects little of that risk.
Valuation
Prologis is valued on a REIT basis, against adjusted funds from operations, because depreciation on logistics real estate is a non-cash charge and operating-income or book-value frames mis-measure the business. At about $140 the price is roughly 23 times AFFO (and about 22 times FFO, a 4.5% FFO yield), which inverts to about 13.4% annual AFFO growth over a five-year stage, solved at a 10.7% cost of equity with 4% terminal growth. The engine flags this as extreme, the most demanding end of its scale: the implied pace sits at the very top of the REIT group and beyond the cohort, and only about 54% of REITs growing this fast held it for five years. The assumed rate is within what Prologis has delivered in strong stretches, but the price requires it to persist, which is the stretch.
The method cross-section is the clearest evidence of a moat premium. Only the growth family reaches the price: the perpetual-growth and exit-multiple DCFs land near $137 to $143, essentially at the quote. Every other family sits well below. The asset family is the furthest off, with residual income near $37 and the ROIC-justified book value in the single digits, because REIT accounting depresses reported ROE and ROIC. The earnings family is also far below, earnings-power value near $17 and the FFO-capitalization methods in the $60s to $90s. The dedicated funds-from-operations multiple, applying a cohort-median P/FFO, lands around $83. The engine's characterization is precise: asset, earnings-power, and peer-multiple models all say richly valued, and only the growth-DCF reaches the price, so the bet is durable compounding the static frames cannot price.
The honest synthesis is that Prologis is fairly valued only if you fully credit its status as a best-in-class compounder and rates cooperate, and expensive if you anchor on any frame other than forward growth. That premium can be justified by the rent mark-to-market embedded in below-market leases, the Strategic Capital fee stream, and the data-center optionality, all real sources of above-cohort growth. But it is a premium, not a discount, and it is most exposed to interest rates, which drive both the AFFO growth and the multiple at once. The valuation rewards conviction in the franchise and punishes any scenario where rates stay high or logistics demand softens.
Catalysts
The catalysts run through the quarterly FFO cadence, the rate environment, and the data-center build-out. Prologis reported Q1 2026 on April 16, 2026, with core FFO of $1.50 per diluted share (up from $1.42), record lease signings of 64 million square feet, and 95.3% occupancy, and it raised 2026 core FFO guidance to $6.07 to $6.23 with average occupancy guided to 95% to 95.75%. The mark-to-market on rolling leases, running around 50% net effective on recently commenced leases, is the recurring engine to watch, since it converts below-market in-place rents into FFO growth quarter after quarter. Each guidance update and each occupancy and rent-change print is a direct read on whether the implied growth is materializing.
The strategic catalyst is the pivot into data centers and the read on the demand cycle. Prologis lifted development-start guidance to $4.5 to $5.5 billion with roughly 40% allocated to data-center build-to-suits and began $1.3 billion of data-center projects in Q1, so progress and returns on those projects are a meaningful swing factor for the growth narrative. At the same time the company trimmed its broader development pipeline by over a billion dollars as tariff tensions and tenant hesitation slowed leasing, so the trajectory of warehouse net absorption (Prologis projects 200 million square feet in 2026 versus 155 million in 2025) and vacancy (forecast to ease from 7.4% toward roughly 7.1% to 7.2%) are the cyclical indicators to track. Sentiment is constructive, with a Buy-to-Strong-Buy-leaning consensus and price targets clustered around $153 to $156, modestly above the current quote. The dominant catalysts are interest-rate moves, which reprice both the FFO growth and the multiple, and the data-center development ramp; the dominant risk triggers are rates staying elevated, a tariff-driven logistics slowdown, and the rent mark-to-market fading as in-place rents catch up to market.
Peer Cohorts (Per Segment, With Filing Citations)
Real Estate (Rental Operations and Development) (reported)
- REXR (Rexford Industrial Realty, Inc.)
- (no filing in the citation store)
- EGP (EASTGROUP PROPERTIES, INC.)
- (no filing in the citation store)
- FR (FIRST INDUSTRIAL REALTY TRUST, INC.)
- (no filing in the citation store)
- TRNO (Terreno Realty Corporation)
- (no filing in the citation store)
- STAG (STAG Industrial, Inc.)
- (no filing in the citation store)
- COLD (AMERICOLD REALTY TRUST, INC.)
- (no filing in the citation store)
Strategic Capital (reported)
- BAM (BROOKFIELD ASSET MANAGEMENT LTD.)
- (no filing in the citation store)
- BX (Blackstone Inc.)
- (no filing in the citation store)
- KKR (KKR & Co. Inc.)
- (no filing in the citation store)
- APO (APOLLO GLOBAL MANAGEMENT, INC.)
- (no filing in the citation store)
- ARES (ARES MANAGEMENT CORPORATION)
- (no filing in the citation store)
- OWL (BLUE OWL CAPITAL INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.