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96.0% quarter-end occupancy compared to prior quarter of 97.8% and prior year of 97.9%
96.5% quarter-end same-store occupancy compared to prior quarter of 98.0% and prior year of 97.7%
38.2% increase in cash rents on new and renewed leases; 28.9% increase year-to-date
$10.1 million of acquisitions; $39.8 million year-to-date
Sold three properties for approximately $51.3 million
619,300 shares of common stock issued under ATM for gross proceeds of $32.7 million; $55.5 million year-to-date
Terreno Realty Corporation (NYSE:TRNO), an acquirer, owner and operator of industrial real estate in six major coastal U.S. markets, announced today its operating, investment and capital markets activity for the second quarter of 2020.
As of June 30, 2020, Terreno Realty Corporation owned 218 buildings aggregating approximately 13.1 million square feet and 22 improved land parcels consisting of approximately 85.0 acres. In addition, Terreno Realty Corporation had two properties under redevelopment that upon completion will contain approximately 454,000 square feet:
The operating portfolio, excluding two properties under redevelopment, was 96.0% leased at June 30, 2020 to 484 tenants as compared to 97.8% at March 31, 2020 and 97.9% at June 30, 2019. The decline in occupancy as compared to the prior quarter was driven primarily by a 192,000 square foot lease expiration at the Company’s 130 Interstate property and a 50,000 square foot lease expiration at the Company’s Whelan property which was acquired in fourth quarter of 2019 with a short-term lease;
The same-store portfolio of approximately 12.0 million square feet was 96.5% leased at June 30, 2020 as compared to 98.0% at March 31, 2020 and 97.7% at June 30, 2019. The decline in occupancy as compared to the prior quarter was driven primarily by a 192,000 square foot lease expiration at the Company’s 130 Interstate property during the second quarter;
The improved land portfolio of 22 parcels totaling approximately 85.0 acres was 98.5% leased at June 30, 2020 as compared to 96.7% at March 31, 2020 and 93.0% at June 30, 2019;
Cash rents on new and renewed leases totaling approximately 0.5 million square feet commencing during the second quarter increased approximately 38.2% with a tenant retention ratio of 18.4%. Cash rents on new and renewed leases totaling 1.1 million square feet commencing during the six months ending June 30, 2020 increased approximately 28.9% with a tenant retention ratio of 52.3%; and
Executed a full-building lease with a leading manufacturer of electric vehicles stabilizing a 51,000 square foot redevelopment property in Seattle, Washington. The total investment cost was approximately $15.9 million with an estimated stabilized cap rate of 5.1%.
Terreno Realty Corporation continues to work with its customers who have been forced to close or otherwise limit operations or whose businesses have been adversely impacted during the pandemic to, on a case-by-case basis, provide rent deferments. With regard to rent billed for June 2020, the Company received, as of July 9, 2020, approximately 93% of such rent in cash and an additional 1% by applying security deposits. As of July 9, 2020:
174 tenants, representing approximately 36.0% of the Company’s total tenants had requested rent deferral or abatement. Such requests aggregated 7.0% of the Company’s annualized base rent;
Of the 174 requests, the Company granted rent deferrals to 62 tenants aggregating 2.7% of annualized base rent (35.6% of total requests by number and 39.3% by dollar amount) which represents 77.0% of the total dollar deferral requests (3.6% of annualized base rent) from those tenants. The Company did not grant any rent abatement;
The Company denied 50 tenant requests aggregating 1.8% of annualized base rent (28.7% of total requests by number and 25.7% by dollar amount). 58 tenants aggregating 1.6% of annualized base rent requesting rent deferral or abatement rescinded their requests (33.3%% of requests by number and 22.5% by dollar amount);
The Company is still in discussions with four tenants who are requesting 0.05% of our annualized base rent in rent deferral or abatement (2.3% of requests by number and 0.7% by dollar amount); and
The Company may in the future amend or enter into additional rent deferral agreements.
During the second quarter of 2020, Terreno Realty Corporation acquired two industrial properties consisting of one building containing approximately 13,000 square feet and one improved land parcel containing approximately 2.8 acres for an aggregate purchase price of approximately $10.1 million. The second quarter investment activity was as follows:
36 South Hudson Street: One industrial distribution building containing approximately 13,000 square feet on 1.1 acres in Seattle, Washington. The property is three blocks from Terreno Realty Corporation’s SoDo Row redevelopment, provides three grade-level loading positions and excess yard. The property was acquired 100% leased to one tenant through December 2021 for a purchase price of approximately $5.6 million and estimated stabilized cap rate of 4.0%; and
20045 84th Ave South: One improved land parcel of approximately 2.8 acres in Kent, Washington. The property is in the northern Kent Valley and adjacent to Terreno Realty Corporation’s Kent 202nd property. The property was acquired 100% leased to one tenant on a month-to-month basis for a purchase price of approximately $4.5 million and estimated stabilized cap rate of 5.7%. Subsequent to acquisition, executed a full-property lease with a leading e-commerce firm.
Year-to-date through the second quarter of 2020, Terreno Realty Corporation acquired four properties consisting of two buildings totaling approximately 79,000 square feet and two improved land parcels totaling approximately 5.5 acres for an aggregate purchase price of $39.8 million. During the second quarter of 2020, Terreno Realty Corporation sold three properties in Maryland’s Baltimore/Washington Corridor totaling approximately 340,000 square feet for an aggregate sale price of approximately $51.3 million generating an unleveraged internal rate of return of approximately 10.9%.
As of June 30, 2020, Terreno Realty Corporation had two properties under redevelopment (SoDo Row and Kent 192, both in Seattle) that upon completion will contain approximately 454,000 square feet with a total expected investment of approximately $97 million.
Terreno Realty Corporation has two acquisitions under contract totaling approximately $13.6 million consisting of one 7.0-acre improved land parcel and one building containing 22,000 square feet. Additionally, the Company has one property under contract for sale for approximately $22.2 million comprising approximately 192,000 square feet. There is no assurance that Terreno Realty Corporation will acquire or dispose of properties under contract because the proposed acquisitions and disposition are subject to the completion of satisfactory due diligence and closing conditions.
During the second quarter of 2020, Terreno Realty Corporation issued 619,300 shares of common stock with a weighted average offering price of $52.81 per share, receiving gross proceeds of $32.7 million under the Company’s at-the-market equity offering program. Year-to-date through June 30, 2020, Terreno Realty Corporation has issued 1,046,327 shares of common stock with a weighted average offering price of $53.04 per share, receiving gross proceeds of $55.5 million under the Company’s at-the-market equity offering program. Terreno Realty Corporation did not repurchase any shares of common stock pursuant to the Company’s share repurchase authorization. The Company has a cash balance of approximately $150 million, no balance outstanding on its $250 million revolving credit facility, and no remaining 2020 debt maturities.
Additional information is available on the Company’s website at www.terreno.com. Terreno Realty Corporation expects to file its quarterly report on Form 10-Q for the period ended June 30, 2020 on or about August 5, 2020.
Terreno Realty Corporation acquires, owns and operates industrial real estate in six major coastal U.S. markets: Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami, and Washington, D.C.
This press release contains forward-looking statements within the meaning of the federal securities laws. We caution investors that forward-looking statements are based on management’s beliefs and on assumptions made by, and information currently available to, management. When used, the words "anticipate," "believe," "estimate," "expect," "intend," "may," "might," "plan," "project," "result," "should," "will," "seek," "target," "see," "likely," "position," "opportunity," "outlook," and similar expressions which do not relate solely to historical matters are intended to identify forward-looking statements. These statements are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including risks related to our ability to meet our estimated forecasts related to stabilized cap rates, the impact of the COVID-19 pandemic on our business, our tenants and the national and local economies, and those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2019 and our other public filings. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. We expressly disclaim any responsibility to update our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.
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Terreno Realty Corporation
W. Blake Baird or Michael A. Coke, 415-655-4580