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Terreno Realty Buys Asset for $14M, Spreads Out in New Jersey

Zacks Equity Research

As part of its concerted efforts to capitalize on robust fundamentals of the industrial real estate sector through purchase of potential properties in core markets, Terreno Realty Corporation TRNO recently acquired an industrial property in Kearny, NJ, for $14.1 million.

The buyout comprises 48 3rd Street, which is an approximately 28,000-square-foot transshipment building on 4.6 improved acres and 286 Central Avenue, which is a 2.9-acre improved land parcel. The property enjoys proximity to Exit 15E of the New Jersey Turnpike, U.S Routes 1 and 9, and the Pulaski Skyway. It is currently fully leased to three tenants. Further, its stabilized cap rate has been estimated at 5.4%, which highlights the property’s decent earning potential.

Notably, the property has been purchased for roughly $14.1 million. However, the acquisition marks as a partial repayment of the $55-million senior secured loan made by Terreno Realty last year. The outstanding loan balance now stands at $16 million.

Apart from the latest acquisition, this March, the company added another industrial property in Kearny. The buyout comprised 16.8-acre improved land parcel which is located at 81 North Hackensack Avenue. It is currently fully leased to one tenant.

Moreover, earlier in February, Terreno Realty acquired an industrial property located in Maspeth Queens, NY, for roughly $24 million. Built on two acres of land, the property consists of one industrial trans-shipment building, spanning nearly 18,000 square feet of space. It is situated adjacent to the intersection of the Brooklyn-Queens Expressway and the Long Island Expressway.

We expect such strategic acquisitions to help the company ride on its growth trajectory. Specifically, the company targets functional buildings at in-fill locations which enjoy high-population densities and are located near high volume-distribution points. In fact, 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 experience healthy demand for industrial real estates.

In fact, not only Terreno Realty but also other industrial REITs like Duke Realty Corp. DRE, Prologis PLD and Liberty Property Trust LPT are likely to benefit from the improved fundamentals of the industrial real estate category as the industry continues to witness soaring demand for space amid high-consumer spending, e-commerce boom, as well as a healthy manufacturing environment. Nonetheless, any protectionist trade policies might impede economic growth, as well as affect industrial REITs’ businesses.

Currently, Terreno Realty carries a Zacks Rank #2 (Buy). Its shares have gained 22.6% compared with the industry’s rise of 18.7%, over the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



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