Terreno Realty Corporation Update 07/10/24

 

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

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 2024.

Operating

As of June 30, 2024, Terreno Realty Corporation owned 292 buildings aggregating approximately 18.1 million square feet and 45 improved land parcels consisting of approximately 152.4 acres:

  • The operating portfolio was 96.0% leased at June 30, 2024 to 668 tenants as compared to 96.2% at March 31, 2024 and 97.8% at June 30, 2023. Occupancy declined during the second quarter primarily due to 99,000 square feet of acquired vacancy (approximately 60bps);
  • The same-store portfolio of approximately 14.7 million square feet was 96.0% leased at June 30, 2024 as compared to 96.2% at March 31, 2024 and 98.1% at June 30, 2023;
  • The improved land portfolio of 45 parcels totaling approximately 152.4 acres was 98.1% leased at June 30, 2024 as compared to 94.6% at March 31, 2024 and 96.3% at June 30, 2023;
  • Cash rents on new and renewed leases totaling approximately 0.5 million square feet and 18.9 acres of improved land commencing during the second quarter increased approximately 45.9% with a tenant retention ratio of 56.4% for the operating portfolio and 61.2% for the improved land portfolio. Cash rents on new and renewed leases totaling approximately 1.2 million square feet and 22.2 acres of improved land commencing during the six months ended June 30, 2024 increased approximately 46.5% with a tenant retention ratio of 56.6% for the operating portfolio and 65.7% for the improved land portfolio;
  • Executed a lease for 5.5 acres of improved land in Newark, New Jersey with an automobile exporter. The lease commenced in May 2024 and will expire January 2028; and
  • Executed an early lease renewal and expansion in Fremont, California with an Advanced Air Mobility provider. The renewal lease of 30,000 square feet, which was to expire in February 2025, will now expire August 2029. The expansion lease of 41,000 square feet commenced in June 2024 and will expire August 2029.

Investment

During the second quarter of 2024, Terreno Realty Corporation acquired one industrial property consisting of four buildings containing approximately 357,000 square feet and a multi-market portfolio of industrial properties consisting of 28 buildings containing approximately 1.2 million square feet for an aggregate purchase price of approximately $448.8 million. The second quarter investment activity was as follows:

  • 6584-6674 Fleet Drive: Four industrial distribution buildings containing approximately 357,000 square feet on 19.1 acres located in Alexandria, Virginia, approximately two miles from the intersection of I-95/395 and I-495 (Capital Beltway). The property provides 67 dock-high and 38 grade-level loading positions and parking for 580 cars. The property was acquired 100% leased to 21 tenants, with all leases expiring by 2031, for a purchase price of approximately $84.3 million and an estimated stabilized cap rate of 5.3%; and
  • Multi-market portfolio of industrial properties: 28 buildings containing approximately 1.2 million square located in New York City, Northern New Jersey, San Francisco Bay Area, and Los Angeles. The portfolio was acquired 91.6% leased to 70 tenants for a purchase price of approximately $364.5 million. The in-place cap rate is 4.3%, the estimated stabilized cap rate is 5.0% and the estimated stabilized cap rate adjusting to today’s market rents is 5.8%.

Year-to-date, Terreno Realty Corporation has acquired three properties consisting of six buildings containing approximately 397,000 square feet and a multi-market portfolio of industrial properties consisting of 28 buildings containing approximately 1.2 million square feet for an aggregate purchase price of approximately $467.3 million.

During the second quarter of 2024, Terreno Realty Corporation commenced development of Countyline Corporate Park Phase IV Building 31 in Hialeah, Florida that, upon completion, will consist of one industrial distribution building containing approximately 162,000 square feet, with a total expected investment of approximately $42.1 million. Building 31 has been 100% pre-leased to a national tire distributor commencing with building completion, expected to be in the fourth quarter of 2024, and expiring May 2032.

Year-to-date, Terreno Realty Corporation has commenced development of three properties that, upon completion, will consist of three industrial distribution buildings aggregating approximately 484,000 square feet, with a total expected investment of approximately $121.2 million. Additionally, we commenced the redevelopment of one existing property in Gardena, California that, upon completion, will consist of three industrial distribution buildings aggregating approximately 228,000 square feet, with an expected additional investment of $64.0 million.

During the second quarter of 2024, Terreno Realty Corporation completed the development and stabilization of Countyline Corporate Park Phase IV Building 38 in Hialeah, Florida. The building is 100% leased to a North American distributor of foodservice packaging, commercial cleaning supplies, janitorial equipment and industrial packaging. Building 38 is a 506,000 square foot 36-foot clear height cross-dock industrial distribution building on 27.6 acres with 105 dock-high and four grade-level loading positions and parking for 360 cars. The building is expected to achieve LEED certification, the total expected investment is $88.5 million and the estimated stabilized cap rate is 5.0%.

During the second quarter of 2024, Terreno Realty Corporation completed the development and stabilization of Countyline Corporate Park Phase IV Building 40 in Hialeah, Florida. The building, which was previously expected to stabilize in the fourth quarter of 2024, is 100% leased to four tenants. Building 40 is a 186,000 square foot 36-foot clear height industrial distribution building on 9.1 acres with 60 dock-high and two grade-level loading positions and parking for 159 cars. The building is expected to achieve LEED certification, the total expected investment is $43.8 million and the estimated stabilized cap rate is 6.3%.

As of June 30, 2024, Terreno Realty Corporation had nine properties under development or redevelopment that, upon completion, will consist of ten buildings aggregating approximately 1.1 million square feet which are approximately 41% pre-leased and one approximately 2.8-acre improved land parcel, with a total expected investment of approximately $389.3 million. Additionally, we owned approximately 35.4 acres of land entitled for future development of three buildings aggregating approximately 0.7 million square feet.

Terreno Realty Corporation has approximately $7.7 million of acquisitions under contract. There is no assurance that Terreno Realty Corporation will acquire the properties under contract because the proposed acquisitions are subject to the completion of satisfactory due diligence and closing conditions.

Capital Markets

During the second quarter of 2024, Terreno Realty Corporation did not issue any shares of common stock under the Company’s at-the-market equity offering program. Year-to-date through June 30, 2024, Terreno Realty Corporation has issued 2,353,278 shares of common stock with a weighted average offering price of $64.00 per share under the Company’s at-the-market equity offering program, receiving gross proceeds of $150.6 million. Combined with the March 2024 public offering of 6,325,000 shares of common stock, Terreno Realty Corporation has issued 8,678,278 shares of common stock at a weighted average offering price of $62.54 per share, receiving aggregate gross proceeds of $542.8 million. Terreno Realty Corporation did not repurchase any shares of common stock pursuant to the Company’s share repurchase authorization.

As of June 30, 2024, there were no borrowings outstanding under Terreno Realty Corporation’s $400 million revolving credit facility. Terreno Realty Corporation has one $100 million senior unsecured note maturing in July 2024 which will be retired utilizing cash on hand and no debt maturing in 2025.

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 quarter ended June 30, 2024 on or about August 7, 2024.

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

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