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Terreno Realty (TRNO) Sees Rent Growth in Q2, Occupancy Declines
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Terreno Realty Corporation (TRNO - Free Report) recently provided an update on its operating, investment and capital market activity for the second quarter of 2024. The preliminary results highlight solid growth in cash rents, though occupancy levels declined because of acquired vacancy. Nevertheless, accretive acquisitions and developments are likely to support its growth in the upcoming period.
TRNO’s operating portfolio was 96.0% leased to 668 tenants as of Jun 30, 2024. This marked a decline from 96.2% as of Mar 31, 2024 and 97.8% as of Jun 30, 2023. The decrease was mainly due to 99,000 square feet of acquired vacancy. Its same-store portfolio of 14.7 million square feet was 96.0% leased on Jun 30, 2024, down from 96.2% on Mar 31, 2024 and 98.1% on Jun 30, 2023.
For the company’s improved land portfolio of 45 parcels spanning 152.4 acres, the leased rate was 98.1% as of Mar 31, 2024 compared to 94.6% and 96.3% recorded as of Mar 31, 2024 and Jun 30, 2023, respectively.
However, TRNO was able to lock in higher rents on new and renewed leases during the quarter. The cash rents on new and renewed leases climbed 45.9%. The tenant retention ratio was 56.4% for the operating portfolio and 61.2% for the improved land portfolio.
Terreno Realty, which is focused on expanding its assets base in the six major coastal U.S. markets — Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami and Washington, DC, continued with its strategic buyouts during the second quarter.
It purchased one industrial property comprising four buildings, encompassing 357,000 square feet and a multi-market portfolio of industrial properties consisting of 28 buildings containing 1.2 million square feet for a total of $448.8 million.
TRNO also has around $7.7 million of acquisitions under contract. As of Jun 30, 2024, Terreno Realty’s portfolio included 292 buildings spanning 18.1 million square feet and 45 improved land parcels encompassing 152.4 acres.
During the quarter, TRNO commenced the development of one property with a total expected investment of $42.1 million and stabilized two buildings encompassing 692,000 square feet at Countyline Corporate Park.
Encouragingly, as of Jun 30, 2024, Terreno Realty had nine properties under development or redevelopment. Post completion, these will comprise 10 buildings encompassing 1.1 million square feet, which are around 41% pre-leased and a 2.8-acre improved land parcel. The total expected investment for these projects is approximately $389.3 million. Additionally, TRNO owned 35.4 acres of land entitled for the future development of three buildings aggregating 0.7 million square feet.
On the balance sheet front, as of Jun 30, 2024, the company had no borrowings outstanding under its $400 million revolving credit facility. It has a single $100 million senior unsecured note maturing in July 2024, which will be retired using cash on hand, and none maturing in 2025.
Terreno Realty currently carries a Zacks Rank #5 (Strong Sell). The company’s shares have risen 5.3% in the past month compared with the industry’s growth of 1.9%.
Image Source: Zacks Investment Research
Conclusion
With a solid operating platform, a robust balance sheet position and strategic expansion moves, TRNO seems well-positioned to capitalize on long-term growth opportunities amid favorable industry fundamentals. Nonetheless, the rising supply of industrial real estate, stabilizing e-commerce sales growth, persistent macroeconomic uncertainty and a high interest rate environment pose key concerns for the company.
Stocks to Consider
Some better-ranked stocks from the REIT sector are Iron Mountain Incorporated (IRM - Free Report) and Americold Realty Trust, Inc. (COLD - Free Report) . While Americold Realty sports a Zacks Rank #1 (Strong Buy), Iron Mountain has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Iron Mountain’s 2024 FFO per share of $4.45 indicates an 8% increase year over year.
The Zacks Consensus Estimate for Americold’s 2024 FFO per share is pegged at $1.44, which suggests 13.4% year-over-year growth.
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 Rent Growth in Q2, Occupancy Declines
Terreno Realty Corporation (TRNO - Free Report) recently provided an update on its operating, investment and capital market activity for the second quarter of 2024. The preliminary results highlight solid growth in cash rents, though occupancy levels declined because of acquired vacancy. Nevertheless, accretive acquisitions and developments are likely to support its growth in the upcoming period.
TRNO’s operating portfolio was 96.0% leased to 668 tenants as of Jun 30, 2024. This marked a decline from 96.2% as of Mar 31, 2024 and 97.8% as of Jun 30, 2023. The decrease was mainly due to 99,000 square feet of acquired vacancy. Its same-store portfolio of 14.7 million square feet was 96.0% leased on Jun 30, 2024, down from 96.2% on Mar 31, 2024 and 98.1% on Jun 30, 2023.
For the company’s improved land portfolio of 45 parcels spanning 152.4 acres, the leased rate was 98.1% as of Mar 31, 2024 compared to 94.6% and 96.3% recorded as of Mar 31, 2024 and Jun 30, 2023, respectively.
However, TRNO was able to lock in higher rents on new and renewed leases during the quarter. The cash rents on new and renewed leases climbed 45.9%. The tenant retention ratio was 56.4% for the operating portfolio and 61.2% for the improved land portfolio.
Terreno Realty, which is focused on expanding its assets base in the six major coastal U.S. markets — Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami and Washington, DC, continued with its strategic buyouts during the second quarter.
It purchased one industrial property comprising four buildings, encompassing 357,000 square feet and a multi-market portfolio of industrial properties consisting of 28 buildings containing 1.2 million square feet for a total of $448.8 million.
TRNO also has around $7.7 million of acquisitions under contract. As of Jun 30, 2024, Terreno Realty’s portfolio included 292 buildings spanning 18.1 million square feet and 45 improved land parcels encompassing 152.4 acres.
During the quarter, TRNO commenced the development of one property with a total expected investment of $42.1 million and stabilized two buildings encompassing 692,000 square feet at Countyline Corporate Park.
Encouragingly, as of Jun 30, 2024, Terreno Realty had nine properties under development or redevelopment. Post completion, these will comprise 10 buildings encompassing 1.1 million square feet, which are around 41% pre-leased and a 2.8-acre improved land parcel. The total expected investment for these projects is approximately $389.3 million. Additionally, TRNO owned 35.4 acres of land entitled for the future development of three buildings aggregating 0.7 million square feet.
On the balance sheet front, as of Jun 30, 2024, the company had no borrowings outstanding under its $400 million revolving credit facility. It has a single $100 million senior unsecured note maturing in July 2024, which will be retired using cash on hand, and none maturing in 2025.
Terreno Realty currently carries a Zacks Rank #5 (Strong Sell). The company’s shares have risen 5.3% in the past month compared with the industry’s growth of 1.9%.
Image Source: Zacks Investment Research
Conclusion
With a solid operating platform, a robust balance sheet position and strategic expansion moves, TRNO seems well-positioned to capitalize on long-term growth opportunities amid favorable industry fundamentals. Nonetheless, the rising supply of industrial real estate, stabilizing e-commerce sales growth, persistent macroeconomic uncertainty and a high interest rate environment pose key concerns for the company.
Stocks to Consider
Some better-ranked stocks from the REIT sector are Iron Mountain Incorporated (IRM - Free Report) and Americold Realty Trust, Inc. (COLD - Free Report) . While Americold Realty sports a Zacks Rank #1 (Strong Buy), Iron Mountain has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Iron Mountain’s 2024 FFO per share of $4.45 indicates an 8% increase year over year.
The Zacks Consensus Estimate for Americold’s 2024 FFO per share is pegged at $1.44, which suggests 13.4% year-over-year growth.
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.