Terreno Updates on 2Q Performance
Terreno Realty Corporation (TRNO), a real estate investment trust (:REIT), has recently provided an update of the various acquisitions, operating and other capital market activities it has executed in the second quarter of 2012. The company expects to file its quarterly report for the quarter ended June 30, 2012 in the first week of August.
During the quarter, Terreno Realty acquired two industrial properties in California for an aggregate purchase price of $68.5 million. These included the acquisition of five industrial buildings in Commerce, California, spanning 545,000 square feet of space, for $52.4 million. The company also acquired a property in Whittier, California, spanning 162,000 square feet of industrial space, for $16.1 million.
Subsequent to the quarter-end, Terreno Realty acquired two R&D buildings and one distribution building in Sunnyvale, California. The properties were purchased for $33.7 million and had an aggregate of approximately 172,000 square feet of industrial space.
The continuous acquisition spree is part of the long-term strategy of the company to abstain from pursuing ground-up development or land investments, and instead own functional and flexible buildings that can be modified to accommodate single and multiple tenants at discounts to replacement cost.
During the just-completed quarter, Terreno Realty obtained a $39.8 million non-recourse mortgage loan at a fixed annual interest rate of 3.65%. In order to further augment its liquidity, the company also extended the borrowing capacity of its existing $80.0 million senior revolving credit facility to $100 million by exercising its accordion option.
At quarter-end, Terreno Realty owned 54 buildings aggregating 4.2 million square feet in high barrier-to-entry markets of Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami and Washington D.C./Baltimore. The properties were approximately 91.3% leased to 85 tenants.
San Francisco-based Terreno Realty owns and operates industrial real estate properties primarily in six major coastal markets of the U.S. Each of the locations in which Terreno Realty has a significant presence is characterized by a well-established transportation network. This includes seaports, airports, highways and railways that are essential for the swift distribution of goods.
In addition, available land in these markets is scarce, resulting in steep barriers for the development of new and competing properties.
We have a Neutral rating on Terreno Realty, which presently has a Zacks #3 Rank that translates into a short-term Hold rating. However, we have an Outperform recommendation and a Zacks #1 Rank (short-term Strong Buy rating) for Winthrop Realty Trust (FUR), one of the peers of Terreno Realty.
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