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Prologis (NYSE:PLD) stock is trading around $33.40 versus its 52-week range of $24.91-$37.58, up 22% in the past 1-year. The stock yields 3.4%, in-line with average yield of the entire REIT space. On valuation, the stock trades at a multiple of 19 times, in-line with its peer group average. Some of its peers such as Brookfield Office Properties (NYSE:BPO) yields 3.5%, and CBL & Associates (NYSE:CBL) yields 4%.

Strong quarterly results: Prologis recently reported Q3-2012 Core FFO of $0.49, which was $0.06 ahead of consensus, driven by a tax benefit. Management increased FY2012 Core FFO guidance to $1.72-$1.74 from $1.64-$1.70. Fundamentals continue to improve with same-store NOI up 2.7% year-over-year, and rental income up 2.3% year-over-year.

Strong occupancy trends continue with occupancy for Q3-2012 in the operating portfolio improving to 93.1%, up 70bps sequentially.

A strong liquidity position consists of $158 million of unrestricted cash on the balance sheet, and $903 million in available liquidity under its credit agreements. The company is in compliance with all the covenants required under the public debt indentures, and the credit agreement.

Prologis has a diversified portfolio of tenants with the top 10 tenants contributing only 10.6% to total annualized rent. DHL is the largest customer, which only contributes 2.2% to the total rent.

The chart below compares share performance over the past year. "D"s mark dividends paid.

click to enlarge image

Tool provided by Kapitall.

Risks associated with investing in Prologis consist of weak economic conditions that could impact overall demand, change in the broader global economy could deteriorate the creditworthy of customers, and a continued increase in the deterioration of the European economy could have a significant impact on the company's NOI.

We conclude by saying that although on a pure valuation basis, the stock seems fairly valued, the positive fundamentals supersede the risks associated with the name. An income-oriented investor should consider looking for an entry point into the name to collect that additional income.

Source: Prologis: Should You Buy This High Yielding Industrial REIT?