Terreno Realty Corporation Announces Quarterly Operating, Investment and Capital Markets Activity

  • 96.9% quarter end occupancy compared to prior quarter of 97.4% and prior year of 92.7%
  • 98.0% quarter end same store occupancy compared to prior quarter of 98.9% and prior year of 92.2%
  • 9.4% increase in cash rents on new and renewed leases for the quarter; 12.0% year to date
  • $121.2 million of acquisitions comprising approximately 807,000 square feet; $155.0 million year to date
  • Sold one property for approximately $25.3 million
  • 2,788,986 shares of common stock issued under ATM for gross proceeds of $89.4 million
  • Announced private placement of $100 million senior unsecured notes with a seven-year term at 3.75%

SAN FRANCISCO--()--Terreno Realty Corporation (NYSE:TRNO), an acquirer, owner and operator of industrial real estate in six major coastal U.S. markets, announced today its operating, investment and capital markets activity for the second quarter of 2017.

Operations

As of June 30, 2017, Terreno Realty Corporation owned 178 buildings aggregating approximately 12.7 million square feet and seven improved land parcels consisting of 40.5 acres. Key operating measures for the portfolio were as follows:

  • The total portfolio was 96.9% leased to 396 tenants as compared to 97.4% at March 31, 2017 and 92.7% at June 30, 2016;
  • The same store portfolio of approximately 10.3 million square feet was 98.0% leased at June 30, 2017 as compared to 98.9% at March 31, 2017 and 92.2% at June 30, 2016; and
  • Cash rents on new and renewed leases totaling approximately 0.6 million square feet commencing during the second quarter increased approximately 9.4%. Cash rents on new and renewed leases totaling approximately 1.0 million square feet commencing during the six months ended June 30, 2017 increased approximately 12.0%.

Investment

During the second quarter of 2017, Terreno Realty Corporation acquired eight industrial properties consisting of eleven buildings containing approximately 807,000 square feet and two improved land parcels aggregating approximately 17.8 acres for an aggregate purchase price of approximately $121.2 million. The second quarter investment activity was as follows:

  • Lynwood: One million square feet (23 acres) of improved land 100% ground leased on a long-term basis to two tenants in the South Bay submarket of Los Angeles, California adjacent to Interstate 105 and between Interstates 110 and 710. Current improvements on the property consist of two industrial distribution buildings containing approximately 464,000 square feet and one rail transshipment facility containing approximately 13,000 square feet. This property provides 81 dock-high and 12 grade-level loading positions. The purchase price was approximately $31.4 million with an estimated stabilized cap rate of 3.9%;
  • 7777 West Side: One industrial distribution building containing approximately 126,000 square feet on approximately 4.4 acres in North Bergen, New Jersey adjacent to Exit 16E of the New Jersey Turnpike and approximately five miles from Manhattan. This property provides eight dock-high and two grade-level loading positions and was 100% leased to one tenant. The purchase price was approximately $14.0 million with an estimated stabilized cap rate of 5.3%;
  • Hanford: One industrial distribution building containing approximately 35,000 square feet on approximately 1.1 acres in Seattle, Washington within the SoDo district and adjacent to Seattle’s Port. This property provides six dock-high and one grade-level loading positions and was 72% leased to two tenants. The purchase price was approximately $5.9 million with an estimated stabilized cap rate of 5.0%;
  • Avenue A: Four transshipment facilities containing approximately 32,700 square feet and two improved land parcels totaling approximately 8.1 acres in Carlstadt, New Jersey, less than two miles north of the Meadowlands Sports Complex and Exit 16W of the New Jersey Turnpike. This property provides 75 loading positions and was 100% leased to four tenants, three of which are short term. The purchase price was approximately $12.0 million with an estimated stabilized cap rate of 5.7%;
  • 2920 V Street: One industrial distribution building containing approximately 22,000 square feet on 0.7 acres one block from New York Avenue/Route 50 in the northeastern section of the District of Columbia and adjacent to Terreno Realty Corporation’s V Street Gateway Business Park. This property provides four dock-high and one grade-level loading positions and was vacant. The purchase price was approximately $3.7 million with an estimated stabilized cap rate of 5.0%;
  • South Main III: One industrial distribution building containing approximately 114,000 square feet on approximately 5.5 acres In Gardena, California between CA Route 91 (the Artesia Freeway), Interstates 110, 105, and 710 and between Los Angeles International Airport and the Ports of LA and Long Beach. This property provides 21 dock-high and two grade-level loading positions, and was 100% leased to one tenant. The purchase price was approximately $24.7 million with an estimated stabilized cap rate of 3.7%;
  • Frelinghuysen: 10.6-acre improved land parcel in Newark, New Jersey adjacent to U.S. Routes 1 and 9, I-78 and Newark Liberty International Airport. This property was acquired vacant. The purchase price was approximately $16.3 million with an estimated stabilized cap rate of 5.3%; and
  • Stockton: 7.2-acre improved land parcel in Newark, New Jersey immediately adjacent to U.S. Routes 1 and 9, and less than one mile from I-78, Exit 14 of the New Jersey Turnpike and Newark Liberty International Airport. This property was acquired vacant. The purchase price was approximately $13.2 million with an estimated stabilized cap rate of 5.4%.

Subsequent to June 30, 2017, Terreno Realty Corporation acquired two industrial properties consisting of three buildings totaling approximately 100,000 square feet for an aggregate purchase price of approximately $18.9 million bringing total acquisitions year-to-date to twelve industrial properties consisting of 16 buildings totaling approximately 1.0 million square feet and two improved land parcels totaling approximately 17.8 acres for an aggregate purchase price of $155.0 million.

Terreno Realty Corporation has approximately $36.8 million of acquisitions under contract aggregating approximately 282,000 square feet and approximately $7.1 million of acquisitions under letter of intent aggregating approximately 38,000 square feet. Terreno Realty Corporation has two properties under contract for sale for approximately $40.5 million aggregating approximately 448,000 square feet. There is no assurance that Terreno Realty Corporation will acquire or dispose of the properties under contract or letter of intent because the proposed acquisitions and dispositions are subject to the completion of satisfactory due diligence, closing conditions and, in the case of letters of intent, contracts.

During the second quarter of 2017, Terreno Realty Corporation sold one industrial property for an aggregate sale price of approximately $25.3 million. This property was located in Whittier, California and contained approximately 162,000 square feet on approximately 7.4 acres. The property was 100% leased to one tenant and was purchased by Terreno Realty Corporation June 12, 2012 for approximately $16.1 million. The estimated unleveraged internal rate of return generated by the investment was approximately 14.5%. Capital from this sale was recycled into a property that Terreno Realty Corporation expects to provide better prospective returns.

Capital Markets

During the second quarter of 2017, Terreno Realty Corporation issued an aggregate of 2,788,986 shares of common stock with a weighted average offering price of $32.05 per share, receiving gross proceeds of approximately $89.4 million under the Company’s at-the-market equity offering program. Year-to-date Terreno Realty Corporation issued 4,836,086 shares of common stock with a weighted average price of $30.06 for gross proceeds of $145.4 million. Terreno Realty Corporation did not repurchase any shares of common stock pursuant to the Company’s share repurchase authorization.

The Company intends to redeem all 1,840,000 outstanding shares of its 7.75% Series A Cumulative Redeemable Preferred Stock (CUSIP 88146M200) (the “Series A Preferred Stock”) on July 19, 2017 (the “Redemption Date”).

During the second quarter of 2017, Terreno Realty Corporation announced the private placement of $100 million senior unsecured notes with a seven-year term. Terreno Realty Corporation expects the seven-year note to close on July 14, 2017 and bear interest at a fixed annual rate of 3.75%.

Additional information is available on the company’s website at www.terreno.com. Terreno Realty Corporation expects to file its quarterly report on Form 10-Q for the period ended June 30, 2017 on or about August 2, 2017.

Terreno Realty Corporation acquires, owns and operates industrial real estate in six major coastal U.S. markets: Los Angeles; Northern New Jersey/New York City; San Francisco Bay Area; Seattle; Miami; and Washington, D.C.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. We caution investors that forward-looking statements are based on management’s beliefs and on assumptions made by, and information currently available to, management. When used, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “result,” “should,” “will,” and similar expressions which do not relate solely to historical matters are intended to identify forward-looking statements. These statements are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including risks related to our ability to meet our estimated forecasts related to stabilized cap rates and those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2016 and our other public filings. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. We expressly disclaim any responsibility to update our forward-looking statements, whether as a result of new information, future events, or otherwise.

Contacts

Terreno Realty Corporation
W. Blake Baird or Michael A. Coke, 415-655-4580

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