Prologis

PLD

Market cap $123B

Prologis is downgraded to "Neutral" due to valuation concerns despite strong logistics fundamentals and secular warehouse tailwinds. PLD's core warehouse portfolio boasts a 20% market rent spread, 5.2% YoY same-store NOI growth, and 6% guided core FFO growth for 2025. Management is pivoting toward data centers, targeting $5 billion in annual investment and viewing it as a "generational value creation opportunity."

Prologis' leasing momentum, rent growth and data center expansion give it an edge over Realty Income for long-term cash flow growth in 2026.

DOC reports $925M in deals, buying a South San Francisco campus for $600M and selling $325M of stabilized outpatient assets.

The REIT sector closed out 2025 with a tough December (-1.48%) and finishing the year with a -3.57% total return for 2025. Small caps (+0.51%) eked out a small gain in December, while mid caps (-1.77%), large caps (-2.55%) and micro caps (-3.88%) fell at the close of the year. 42.04% of REIT securities had a positive total return in December with only 38.36% in the black for the full year.

PLD and two other REITs stand to gain as the demand for industrial, data center and healthcare assets rises, supported by disciplined capital and low rates.

REITs generate lots of stable income, the bulk of which they must pay out in dividends. Prologis should be the largest dividend payer in the REIT sector this year.

REITs (MSCI US REIT Index, RMZ) are positioned for multi-year outperformance, with accelerating AFFO growth, healthy balance sheets, and discounted valuations. Despite underperformance versus the S&P 500, REITs offer a credible path to 13-15% annualized total returns via multiple expansion and a 4% dividend yield. Wide NAV discounts create near-term catalysts, as managements deploy asset sales, cost controls, and strategic alternatives to close valuation gaps.

Brookfield Asset Management expects to grow its dividend by more than 15% annually in the coming years. MPLX has raised its high-yielding distribution by 10% or more for four consecutive years.

PLD shares rise 9.1% in three months as leasing rebounds, occupancy climbs and data center expansion strengthens the logistics REIT's outlook.

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