Prologis Delivers Strong Earnings, Blasts ‘Instability’ of Trump’s Tariff Policy

Even amid the turmoil of tariffs, Prologis (PLD) still delivered an impressive first quarter for its investors, but that didn’t stop the firm leadership from voicing its concerns with President Donald Trump’s ad hoc tariff policy. 

The industrial giant reported that it leased 58 million square feet of space in the first quarter of 2025; expanded its data center capacity by 400 megawatts, or 14 percent; and deployed $650 million in capital for new development. 

“Prologis delivered a very strong quarter,” said Tim Arndt, chief financial officer, during an earnings call Wednesday. “We outperformed expectations on earnings, occupancy and rent.”

Prologis reported average occupancy of 94.9 percent in the first quarter — down 1.9 percent from the first quarter of 2024  — and noted that the core funds from operations per diluted share of $1.42 increased 10.9 percent from that same period last year. The firm also raised $500 million of new corporate debt in the quarter (at a 4.1 percent interest rate) and received an upgrade from Moody’s Ratings to an AA rating, making the firm one of two public REITs with that rock-solid rating. 

But officials at the firm lambasted Trump’s recent tariff policy, which has caused market turmoil since being announced earlier this month. Arndt noted that prior to the April 2 “Liberation Day,” policy from Trump, industrial fundamentals were improving, and “had it not been recent uncertainty from global tariffs” the firm would have raised its return expectations for 2025 

“While the instability created in the last two weeks may disrupt logistics and supply chains, it will certainly slow decision-making. Many companies now question where to source, manufacture or where to sell their goods,” said Arndt. “Let’s be clear, the range of outcomes is wide. We see potential for a recession, inflation or possibly both.”

He added that the firm hasn’t dismissed the possibility of “a quick resolution” and that Prologis has a global footprint with highly diversified rent roll that uses fixed-escalation leases, while the firm’s “fortress balance sheet” — which raised $400 million of new capital in the quarter — sources global investment from institutional partners. 

“All of this positions Prologis to be a partner of choice for our customers, especially in turbulent times,” said Arndt. “What was ultimately announced on April 2 clearly went beyond our early predictions, making the environment less certain.”

All told, Prologis stock price sat at $99.79, down 13 percent from its April 16, 2024 share price of $114.74.  

Steve Sakwa, an analyst at Evercore ISI, noted on the call that the 2 percent occupancy drop “was a bit wider than what we were looking for.” Arndt responded the drop was due to rolling leases, while adding that the firm believes it will build back the lost occupancy by the end of the year.

“We had a disproportionate amount of leasing rolling in the first quarter, so I’d describe our retention pretty good at 73 percent,” said Arndt. “It’s very much in line with our expectations.”

But Prologis leadership believes several economic trends will work in the firm’s favor throughout 2025. Arndt said he believes inventory levels will increase as businesses stockpile and build resilience, e-commerce will take a larger share as product availability remains uncertain, and the inflationary effects of tariffs will increase the value of hard assets, replacement costs and rents. 

“In closing, we run the company in a disciplined way with the simple tenets to stay close to customers and invest capital accretively, so times like this don’t call for dramatic shifts to our strategy,” said Arndt.

Brian Pascus can be reached at bpascus@commercialobserver.com