What Makes Prologis (PLD) a Strong Investment?

Baron Capital's Q2 2026 letter for the Baron Real Estate Income Fund provides insight into why Prologis (PLD) is considered a strong investment. The fund gained 12.18% during the quarter, slightly outperforming the MSCI US REIT Index's 11.84% increase. Morningstar ranks the fund #2 since its December 2017 inception. Management sees a multi-year recovery in real estate emerging, despite high interest rates, housing affordability challenges, and AI disruptions.

They support this outlook with attractive valuations, increasing M&A activity, positive supply-demand dynamics, strong balance sheets, improving debt conditions, and growing recognition of real estate's role in AI investments.

In its letter, Baron Real Estate Fund expresses continued confidence in Prologis, Inc. (NYSE:PLD) as a key holding. PLD operates in high-barrier, high-growth logistics markets. The stock closed at $133.74 per share on September 21, 2026. Over the past month, PLD shares declined 5.24% but gained 18.68% over the past 52 weeks. Prologis has a market cap of $131.65 billion, with a 52-week trading range between $111.03 and $153.35.

The fund remains constructive on PLD's industrial REIT holdings, citing favorable multiyear outlooks for demand, supply, and rent growth. In-place rents at PLD are generally 20% below market levels, and the company benefits from secular trends such as e-commerce expansion, supply chain logistics, just-in-time inventory strategies, and nearshoring/onshoring. Despite the fund acknowledging the potential of AI stocks, it believes PLD offers greater upside potential with less downside risk.