Prologis, trading under the ticker PLD, is the biggest real estate investment trust (REIT) in the United States. The company operates over 1 billion square feet of industrial real estate, making it one of the most easily accessible options for beginner investors to gain exposure to logistics properties.
Since its founding in 1983, the company has consistently grown its customer base, with Amazon, Home Depot, and FedEx some of its largest clients. While Prologis is active on four continents, its bread and butter remain in the domestic U.S. market, contributing over 80% of the company’s net operating income. In recent years, Prologis has become increasingly active in solar energy, boasting the second-largest onsite solar installed capacity in the US.
In this article, we’ll share tips for choosing a stock broker to buy Prologis stock, provide a step-by-step guide to help you make your first purchase, highlight exchange-traded funds (ETFs) with high exposure to Prologis stock, delve deeper into the reporting structure of Prologis, and more!
How to buy Prologis stock (Step-by-step guide)
1. Choose a good stock broker
Since Prologis is among the largest U.S. real estate stocks, you can choose from many brokers to help you purchase. That said, consider the terms offered by each broker and ensure the broker you pick works with residents of your country. Below, we highlight four brokers that offer Prologis stock:
|Broker||Stock commission, US||Minimum Deposit||Available countries|
|Interactive Brokers||Free for US investors. Up to $0.0035 per share (min. $0.35) for international investors||$0||Worldwide – exceptions apply.|
|Public.com||$0||$0||US and UK|
|Webull||$0||$0||US, Hong Kong, China, Singapore, Japan, UK, Australia|
2. Open and fund your account
Once you have weighed the pros and cons of each broker, you are all set to open an account. The process usually takes a few days as the broker verifies your identity. After the process is finalised, you must deposit money into your account.
3. Place a “Buy Order”
If you have found an online broker that suits your needs, managed to open an investment account, and made the initial deposit, you are all set to buy your stock. All you have to do is find the Prologis shares within your chosen broker and place a buy order. For this example, we will use the mobile version of Interactive Brokers GlobalTrader:
a) Search for Prologis ( or the ticker “PLD”) and select it from the list:
b) Click “Buy”:
c) Choose the order details. Now, it’s time to choose how to invest:
The three most important order parameters to set are:
- Type of order: By default, Interactive Brokers sets your order type as Limit, short for Limit order. This is good since it allows you to set a maximum price at which you are willing to buy the shares. The alternatives are a Market order, which will purchase your shares at the best available price immediately, and a Stop order, which is a more sophisticated order – it will enter a market order once a specific stop price is reached (in our example above, you may set the stop price anywhere below $108.51, for instance at $106).
- Limit price: Assuming you kept the “Limit” as the type of order, you need to set the maximum price you are willing to pay per share. If you use Market order, you do not need to fill this and will buy at the best available Ask price. If you use a Stop order, you need to set a Stop price.
- Shares: Here, you define the number of shares you want to purchase; alternatively, you may set a dollar amount instead.
Additionally, Interactive Brokers GlobalTrader allows you to set two more parameters that are not as important:
- TIF: Short for time in force. This option shows how long your order will remain active. It is set to Day by default, meaning it will get cancelled unless executed by the end of the day. The alternative is Good ‘Til Cancel, which means the order will be active for up to 90 days or until you cancel it manually.
- Market Hours: This option shows in which time interval your order will be valid. The default option is Extended, meaning your order participates in trading during regular trading hours, as well as before and after the regular opening hours of the exchange. However, while Prologis is one of the more liquid stocks, trading in extended hours is often associated with larger bid-ask spreads and illiquidity, especially for smaller companies. Hence, you may want to change the default option to Regular, meaning your order participates in trading only during the regular opening hours of the exchange, when trading is most liquid. The last option is Overnight, which means your order only participates in trading after regular hours but before the exchange opens on the next day.
d) Preview the order: Finally, it is a good idea to click Preview and double-check everything is in order. A new window will appear:
e) Place the order: Once double-checking the order parameters, close the preview window (tap anywhere outside it or click Cancel) and drag Slide to Buy to the right to finish the process.
ETFs – an alternative way to gain exposure
ETFs allow you to gain exposure to a dozen or even hundreds of companies with a single investment. ETFs can be a good option if you:
- Want to complement your Prologis position with similar companies;
- Want to limit your portfolio volatility (ETFs invest in many companies operating in different lines of business, limiting your exposure to idiosyncratic risks);
- Are interested in following a specific theme in your investments (U.S. REITs, International REITs, etc);
Some ETFs you may want to consider are:
- iShares U.S. Real Estate ETF (ticker IYR) tracks over 70 U.S. real estate stocks, although it is heavily skewed to large capitalisation companies. The ETF distributes dividends, and the expense ratio stands at 0.40%. The ETF’s largest holdings are Prologis, American Tower and Equinix. You can read our dedicated IYR article here.
- Vanguard Real Estate Index Fund (ticker VNQ) tracks over 150 U.S. real estate stocks and is more diversified compared to IYR. The ETF distributes dividends, and the expense ratio stands at 0.12%. The ETF’s largest holdings are Prologis, American Tower and Equinix. You can read our dedicated VNQ article here.
Prologis’s Financials and Performance
Once you have purchased Prologis shares, keeping track of how the company and its competitors are doing is a good idea. In doing so, you will get greater insight into whether to add to your position, hold it, or sell it to pursue better opportunities elsewhere.
Apart from the investor relation section (available here), there are specialised platforms to help you understand how Prologis is doing financially. One platform you can use is Koyfin – you can access Company overviews, Key statistics, Financials, Transcripts, and more! Get a 20% discount on Koyfin.
For example, Koyfin allows you to access analyst estimates for the company’s sales multiple years ahead:
While such platforms cannot substitute your own research 100% of the time, they can be a very useful tool in the research process, saving you time and providing new investment ideas.
The go-to place to find up-to-date information on the company is its investor relations section, available here. Below, we will provide a quick overview of the company’s operations.
Since Prologis is a REIT, there are several industry key performance indicators to keep an eye on:
- Core funds from operations (Core FFO)
- Same-store net operating income (NOI) growth
Core funds from operations is a cash flow metric which seeks to show the underlying cash generation of the company. The need to monitor core funds from operations rather than net income arises from US REITs depreciating their real estate, just as one would depreciate a piece of machinery over time. However, unlike machinery, real estate tends to hold its value better over time (think of what house prices were 20 years ago!). This accounting treatment lowers profits. Furthermore, depreciation also lowers book value. Since depreciation is a non-cash expense, REITs often have cash available for distribution to shareholders above accounting profits. Hence, Core FFO is arguably the most useful metric as it is unaffected by depreciation.
To arrive at Core FFO, Prologis adjusts net income for depreciation, gains/losses recognised from real estate transactions and early extinguishment of debt, impairment charges, deferred taxes and unrealised gains or losses on foreign currency or derivative activity.
Same-store net operating income growth is another key metric to watch as it shows the growth achieved by Prologis’s properties as leases are renewed at market rent levels upon expiration. Inflation indexation or fixed rent escalators also affect same-store NOI growth. Over the long term, same-store NOI growth tends to correlate strongly with inflation. However, Prologis has a number of properties leased long-term at rent levels below current market rents, resulting in significant rent increases as these old leases expire and are renewed at the new market rent level. As a result, Prologis is likely to deliver strong same-store NOI growth for the foreseeable future.
Occupancy is a standard REIT metric to watch. Declines in building occupancy signal waning market demand and reduced pricing power. Alternatively, strong occupancy shows intense competition for Prologis’s properties and results in higher rent levels.
Leverage measures the proportion of Prologis’s properties funded by debt. Monitoring trends in absolute debt levels and the interest rates Prologis funds itself can help investors assess the company’s ability to allocate cash for dividends as opposed to interest and principal payments.