Prologis Is A No Brainer Industrial Real Estate Trust
Date
12/30/2024 1:34:21 AM
(MENAFN- The Arabian Post) Arabian Post -
Matein Khalid
I am still puzzled by the frenzied selling in the bond market after the FOMC cut its dot-plot projections from 4 to 2 for 2025 at its Dec 18 conclave. Why? Mr. Market had already priced in two rate cuts in 2025 after he was spooked by the uptick in core PCE/CPI data. Inflation risk in Trumpnomics is exaggerated but with the President elect now wanting to seize control of the Panama Canal from Panama and Greenland from Denmark on national security grounds, nothing is certain in Trumpworld. trump has a razor thin majority in congress and must never forget that the post-Covid inflation doomed Kamala, a recurrent theme in the ouster of most world leaders since 2022.
US voters making $50,000 a year had a 15 point swing from Obama/Biden to Trump since inflation is the ultimate regressive tax hike. So I believe that Trump will be constrained by inflation to a degree that was simply not the case in his first term. This factor alone will dampen his tariff threats once/if he takes a bite on a reality sandwich, especially if the sandwich includes avocados, berries, tomatoes and lettuce from Mexico whose prices will spike sharply after a 25% tariffs and US farmers are already being squeezed as China diverts its beef, grain and soybean orders from Nebraska/Iowa to the Argentine pampas and Brazil.
A friend in the Caribbean islands asked me if the world's largest industrial REIT Prologis has finally bottomed at 105, down from as high as 156 during the Powell Fed's draconian interest rate hikes in 2022. I wish I could predict bottoms but sadly, I have been searching for Tinkerbelle ever since I first saw the Peter Pan statue as a little boy in Hyde Park but her magic dust still eludes my Bloomberg screen.
Prologis (PLD), founded by a brilliant Persian entrepreneur I was once honoured to meet at a GS San Fran conference, owns 1.2 billion sq. ft. of industrial real estate in the world's great mega ports, from Tokyo, Long Beach/LA, London to Singapore, New York/NJ, Miami etc. Amazon and FedEx are their largest tenants for obvious reasons and their hightech distribution centers and warehouses are located in four continents.
Why PLD and why now? 1) PLD's economies of scale make it the killer logistics partner for the world's biggest corporate clients, governments and sovereign wealth funds. 2) PLD's economies of scale, AI adoption, global footprint and M&A track record make this a Godzilla. Yup, size matters. 3) Hamid-jan's balance sheet is stellar and his credibility on Wall Street is AAA, a must for raising capital. 4) the occupancy rate is 97% as the supply pipeline falls. 5) the stock slump since 2022 reflects both interest rate shock and macro headwinds. 6) PLD is investing in the white hot Asian data center market, as is DAMAC. 7) with 13% compounded annual growth in FFO, a 3.6% div yield and a 19X FPE, this is a no brainer for me once rate peaks and this puppy falls below 95. Viva CBOE options.
via Prologis is a no brainer industrial real estate trust
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