Prologis Downgraded By Scotiabank Amid Tariff Turmoil
The world's largest industrial landlord was double downgraded by Scotiabank Monday, causing stocks to fall to a nearly five-year low.
Prologis has been taken from Sector Overperform to Sector Underperform, meaning the REIT’s stocks are expected to perform worse than the industrial market overall in the coming months.
Scotiabank also reduced the price target to $97 from $133.
Prologis' stock was $91.71 a share during Monday trading, down 6.6% from its previous close of $98.35, according to Seeking Alpha. As of midday Tuesday, the price remains the same.
Weaker earnings at Prologis would mirror a broader slowdown in the industrial market. The national industrial vacancy rate doubled in the last two years and reached 8.2% in February, CommercialEdge reports.
Prologis’ vacancy rose from 4.1% in the third quarter of 2024 to 4.4% in Q4. The company expects a continued increase this year, Chief Financial Officer Tim Arndnt said during a Q4 earnings call, forecasting it could hit 5.5%.
Prologis reports its Q1 earnings next week.
Analyst Nicholas Yulico wrote that Scotiabank doesn’t expect an occupancy recovery for industrial anytime soon. While the bank's initial timeline for improvement was the second half of this year, it has been pushed back to the second half of 2026.
The United States’ new trade policy is expected to worsen industrial fundamentals, analysts wrote. The 10% tariffs on China and 25% tariffs on Mexico and Canada announced in February left industrial projects on shaky ground, as the three countries account for two-fifths of the nation’s imports.
“Although Industrial REITs have already underperformed since Trump's tariff announcement, we see little potential for positive catalysts this year and see Street estimates for 2026-2027 as broadly too high,” Yulico wrote.
The broad-based tariffs that went into effect April 2 have hit the markets even harder and sent stocks nosediving April 3. Nareit’s U.S. Global REIT Index Data Tracker reported industrial players were down from their opening price by over 8%.
Prologis isn’t the only industrial REIT whose forecast is gloomier in the current environment. EastGroup Properties and Terreno Realty were downgraded Tuesday by Piper Sandler, which said industrial companies will be the REITs most in flux due to tariffs.
Trump’s November election sparked a spike in industrial leasing, setting Prologis up well for this year. Its Q4 net earnings doubled YOY to $1.3B.
Prologis beat its $1.94B projections with total revenue of $2.2B and signed over 60M SF of leases in the quarter.
