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Terreno Realty (TRNO) Sees High Occupancy, Rent Growth in Q2
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Terreno Realty Corporation (TRNO - Free Report) witnessed a rise in quarter-end occupancy and an increase in cash rents on new and renewed leases in the second quarter. This reflects solid demand for the company’s properties.
In its recently issued operating update, TRNO noted that for its operating portfolio, the occupancy reached 97.9% as of Jun 30, 2022, marking an expansion of 100 basis points (bps) from the prior-quarter end and 40 bps from the year-ago quarter-end. Moreover, its same-store portfolio was 98.0% leased on Jun 30, 2022.
Terreno Realty was able to lock in higher rents on new and renewed leases, reflecting resilience in its portfolio. Cash rents on new and renewed leases (commenced during the second quarter) aggregating 0.5 million square feet and 7.2 acres of improved land grew 55.4%, with a tenant retention ratio of 27.5% for the operating portfolio and 100% for the improved land portfolio.
Terreno Realty continued to expand its portfolio through acquisitions during the April-June quarter. During the said period, TRNO shelled out a total of $203.3 million as the purchase price for the acquisition of 10 properties comprising 10 buildings containing roughly 330,000 square feet and five improved land parcels of 19.5 acres.
It has around $58.2 million of acquisitions under contract and $65.5 million of acquisitions under letters of intent. From the beginning of the year through Jul 7, 2022, Terreno Realty acquired 13 properties comprising 14 buildings, containing roughly 766,000 square feet, and seven improved land parcels of around 27.4 acres for a total purchase price of $309.5 million.
During the second quarter, TRNO sold one property in New Jersey encompassing around 581,000 square feet for $110.4 million, reaping an unleveraged internal rate of return of 15.2%.
As of Jun 30, 2022, Terreno Realty’s portfolio included 249 buildings spanning 15.1 million square feet and 42 improved land parcels encompassing 147.7 acres. It also had four properties under redevelopment.
On the capital market activity front, in the said period, Terreno Realty announced an increase in borrowing capacity under its unsecured revolving credit facility by $150 million to $400 million. As of Jun 30, 2022, the balance outstanding on the facility was roughly $12 million. TRNO issued 27,087 shares of the common stock, with a weighted average offering price of $76.03 per share, reaping gross proceeds of $2.1 million under its at-the-market equity offering program.
Conclusion
Terreno Realty’s efforts to expand and strengthen its portfolio with acquisitions are a strategic fit. This also indicates that the company is financially sound to execute such deals.
There has been a significant increase in e-commerce’s share of total retail sales, spurring demand for warehouse and distribution spaces. Apart from the fast adoption of e-commerce, industrial real estate space is anticipated to gain traction over the long run from a likely rise in the inventory levels of companies as a precaution for any supply-chain disruption. This, in turn, will keep supporting industrial landlords like Terreno Realty, Prologis (PLD - Free Report) and Rexford Industrial Realty, Inc. (REXR - Free Report) to enjoy a favorable market environment.
However, with the industrial asset category being attractive presently, there is a development boom in several markets. This high supply is likely to fuel competition and curb pricing power.
Prologis carries a Zacks Rank of 2 (Buy) at present. Prologis’ long-term growth rate is projected at 9.8%. The Zacks Consensus Estimate for PLD’s 2022 funds from operations (FFO) per share has been revised marginally upward in the past week.
Rexford Industrial Realty holds a Zacks Rank of 2 at present. Rexford Industrial Realty’s 2022 revenues are expected to increase 34% year over year. The Zacks Consensus Estimate for REXR’s 2022 FFO per share has been revised more than 1% upward in the past week.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Terreno Realty (TRNO) Sees High Occupancy, Rent Growth in Q2
Terreno Realty Corporation (TRNO - Free Report) witnessed a rise in quarter-end occupancy and an increase in cash rents on new and renewed leases in the second quarter. This reflects solid demand for the company’s properties.
In its recently issued operating update, TRNO noted that for its operating portfolio, the occupancy reached 97.9% as of Jun 30, 2022, marking an expansion of 100 basis points (bps) from the prior-quarter end and 40 bps from the year-ago quarter-end. Moreover, its same-store portfolio was 98.0% leased on Jun 30, 2022.
Terreno Realty was able to lock in higher rents on new and renewed leases, reflecting resilience in its portfolio. Cash rents on new and renewed leases (commenced during the second quarter) aggregating 0.5 million square feet and 7.2 acres of improved land grew 55.4%, with a tenant retention ratio of 27.5% for the operating portfolio and 100% for the improved land portfolio.
Terreno Realty continued to expand its portfolio through acquisitions during the April-June quarter. During the said period, TRNO shelled out a total of $203.3 million as the purchase price for the acquisition of 10 properties comprising 10 buildings containing roughly 330,000 square feet and five improved land parcels of 19.5 acres.
It has around $58.2 million of acquisitions under contract and $65.5 million of acquisitions under letters of intent. From the beginning of the year through Jul 7, 2022, Terreno Realty acquired 13 properties comprising 14 buildings, containing roughly 766,000 square feet, and seven improved land parcels of around 27.4 acres for a total purchase price of $309.5 million.
During the second quarter, TRNO sold one property in New Jersey encompassing around 581,000 square feet for $110.4 million, reaping an unleveraged internal rate of return of 15.2%.
As of Jun 30, 2022, Terreno Realty’s portfolio included 249 buildings spanning 15.1 million square feet and 42 improved land parcels encompassing 147.7 acres. It also had four properties under redevelopment.
On the capital market activity front, in the said period, Terreno Realty announced an increase in borrowing capacity under its unsecured revolving credit facility by $150 million to $400 million. As of Jun 30, 2022, the balance outstanding on the facility was roughly $12 million. TRNO issued 27,087 shares of the common stock, with a weighted average offering price of $76.03 per share, reaping gross proceeds of $2.1 million under its at-the-market equity offering program.
Conclusion
Terreno Realty’s efforts to expand and strengthen its portfolio with acquisitions are a strategic fit. This also indicates that the company is financially sound to execute such deals.
There has been a significant increase in e-commerce’s share of total retail sales, spurring demand for warehouse and distribution spaces. Apart from the fast adoption of e-commerce, industrial real estate space is anticipated to gain traction over the long run from a likely rise in the inventory levels of companies as a precaution for any supply-chain disruption. This, in turn, will keep supporting industrial landlords like Terreno Realty, Prologis (PLD - Free Report) and Rexford Industrial Realty, Inc. (REXR - Free Report) to enjoy a favorable market environment.
However, with the industrial asset category being attractive presently, there is a development boom in several markets. This high supply is likely to fuel competition and curb pricing power.
Shares of Zacks Rank #3 (Hold) Terreno Realty have declined 6.1% over the past month compared with the industry’s fall of 5.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Prologis carries a Zacks Rank of 2 (Buy) at present. Prologis’ long-term growth rate is projected at 9.8%. The Zacks Consensus Estimate for PLD’s 2022 funds from operations (FFO) per share has been revised marginally upward in the past week.
Rexford Industrial Realty holds a Zacks Rank of 2 at present. Rexford Industrial Realty’s 2022 revenues are expected to increase 34% year over year. The Zacks Consensus Estimate for REXR’s 2022 FFO per share has been revised more than 1% upward in the past week.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.