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Terreno Fortifies Liquidity

Zacks Equity Research

Last week, Terreno Realty Corporation (TRNO) – a real estate investment trust (:REIT) – obtained a new term loan worth $50 million. In addition to this, the company amended an existing revolving credit facility worth $100 million. The move depicts the company’s strategy of strengthening the balance sheet and reducing financing costs.

The new five-year term loan bears an annual interest rate of LIBOR (London Inter-Bank Offer Rate) plus 1.65%–2.65% and will vary depending on the company’s leverage. Additionally, the company has up to six months to borrow the whole amount.

Terreno Realty amended the existing revolving credit facility to extend the maturity date and slash the annual interest rate. The move extended the facility’s maturity date, by around one year, to Jan 17, 2016. Also, the annual interest rate decreased by 85 basis points to LIBOR plus 1.65%–2.65%, depending on the leverage.

The administrative agent and lead arranger of these transactions was Key Bank, whereas PNC Bank of PNC Financial Services Group Inc. (PNC), Union Bank, N.A. of Mitsubishi UFJ Financial Group, Inc. (MTU), Regions Bank of Regions Financial Corp. (RF) and National Association acted as additional lenders.

We expect both the strategic moves to improve the company’s liquidity position and pave way for a rise in shareholder value going forward. Notably, Terreno Realty provided an update about its strong investment activity in the fourth quarter of 2012. The company inked acquisition deals worth $31.8 million, bringing the total value of the full year 2012 acquisitions to roughly $180.9 million. This was 52% higher than $118.7 million – the 2011 figure.

San Francisco-based Terreno Realty owns and operates industrial real estate properties primarily in six major coastal markets of the U.S. These include the high barriers-to-entry markets of Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami and Washington D.C./Baltimore.

Terreno Realty holds a Zacks Rank #2 (Buy).

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