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Terreno Buys Property in Auburn, Continues Expansion Moves

Zacks Equity Research

Terreno Realty Corporation TRNO recently announced the acquisition of an industrial property in Auburn, WA. The company shelled out approximately $9.5 million for this acquisition, which comes as part of its concerted efforts to bank on robust fundamentals of the industrial real estate sector through purchase of potential properties in core markets.

Comprising one industrial building of about 70,000 square feet on approximately 3.9 acres, this buyout at 1620 Industry Drive SW is likely to witness solid demand. This is because of its strategic position adjacent to Valley Freeway, State Route 167, in Kent Valley. The facility offers 13 dock-high and seven grade-level loading positions as well as parking for 37 cars. Currently, the industrial property is fully leased to six tenants. Further, its stabilized cap rate has been estimated at 5.1%, which highlights the property’s decent earning potential.

Apart from the latest acquisition in Auburn, this month the company also announced the buyout of other industrial properties in Los Angeles, CA and Carlstadt, NJ. In Los Angeles, the company acquired an industrial property for $18.1 million. This buyout comprised five industrial buildings, encompassing about 53,000 square feet of space, on 1.9 acres near the Downtown Los Angeles Arts District. It is 90% leased to seven tenants.

Moreover, Terreno added another industrial property in Carlstadt for $4 million. The buyout comprised a 2-acre improved land parcel, which is located at 51 Kero Road. It is close to the company’s properties at 50 and 100 Kero Road, Meadowlands Sports Complex and Exit 16W of the New Jersey Turnpike. It is currently fully leased to one tenant.

With such strategic buyouts, Terreno remains well poised to ride on its growth trajectory. The company targets functional buildings at in-fill locations which enjoy high-population densities and are located near high volume-distribution points. Through such efforts, the company is focused on fortifying 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.

In fact, rising e-commerce market, 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 offering ample opportunities to Terreno Realty and other industrial REITs, like Duke Realty Corp. DRE, Prologis PLD and Liberty Property Trust LPT to prosper. However, rising supply and protectionist trade policies have the capability to mar the growth tempo to some extent.

Currently, Terreno Realty carries a Zacks Rank #3 (Hold). Its shares have gained 21.4% compared with the industry’s rise of 9.8%, 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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