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Terreno Buys Assets in Oakland & Brooklyn, Sells 1 in Doral

Zacks Equity Research

Terreno Realty Corporation TRNO is making concerted efforts to bank on the industrial real estate sector’s robust fundamentals through purchase of potential properties in core markets.

Recently, the company shelled out approximately $23.8 million for the purchase of an industrial property in Oakland, CA. It consists of a vacant industrial distribution building containing around 93,000 square feet on 4.7 acres. Being adjacent to the eastern terminus of the San Francisco-Oakland Bay Bridge and the Port of Oakland Seaport, together with its offering of 19 dock-high and six grade-level loading positions as well as parking for 28 cars, the property is well poised to experience high demand. Further, its stabilized cap rate has been estimated at 4.8%, which highlights the property’s decent earnings potential.

Terreno also strengthened its presence in Brooklyn, NY, with an industrial property purchase for $80.5 million. Comprising two industrial distribution buildings containing 192,000 square feet on 6.0 acres in East Williamsburg at 134-154 Morgan Avenue, this property is 100% leased to eight tenants. Also, the company acquired a vacant industrial property, comprising two industrial buildings and containing approximately 30,000 square feet, in Santa Fe Springs, CA, for $5.3 million.

Meanwhile, Terreno has also sold an industrial property in Doral, FL, for $14 million. The company had acquired the property for around $9.9 million in January 2015, and the estimated unleveraged internal rate of return generated by the investment was about 7.2%.

Notably, the company is focused on an acquisition-driven growth strategy. It targets functional buildings at in-fill locations, which enjoy high-population densities and are located near high volume-distribution points. Amid these, Terreno’s efforts to shed non-core properties will enhance its portfolio and provide capital for strategic acquisitions.

Through such efforts, the company is well poised to fortify its portfolio in six major port cities — Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami, and Washington, D.C. — which display solid demographic trends and witness healthy demand for industrial real estates.

Particularly, the e-commerce boom, resilient consumer sentiment, low unemployment level and rising wages are playing key roles in keeping up the industrial and logistics sector’s healthy performance. Companies are making immense efforts to improve supply-chain efficiencies, spurring demand for logistics infrastructure and efficient distribution networks.

This is opening up ample opportunities for Terreno Realty and other industrial REITs, like Duke Realty Corp. DRE, Prologis PLD and Liberty Property Trust LPT to prosper. Nevertheless, rising supply and protectionist trade policies have the capability to mar the companies’ growth tempo to some extent.

Currently, Terreno Realty carries a Zacks Rank #3 (Hold). Its shares have gained 24.5% compared with the industry’s rise of 12.1%, over the past six months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.




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Liberty Property Trust (LPT) : Free Stock Analysis Report
 
Prologis, Inc. (PLD) : Free Stock Analysis Report
 
Duke Realty Corporation (DRE) : Free Stock Analysis Report
 
Terreno Realty Corporation (TRNO) : Free Stock Analysis Report
 
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