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Terreno Realty Revamps Kent Property, Achieves 100% Lease

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Zacks Equity Research
·3 min read
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Terreno Realty Corporation TRNO recently announced the completion of the redevelopment of its property in Kent, WA, and achieved 100% leasing to a provider of retail supply chain, warehousing and final-mile delivery.

The redeveloped property at 8615 South 192nd Street comprises a newly-developed rear-load industrial distribution building, spanning an area of about 220,000 square feet on 12.7 acres. This property is situated near the State Route 167 (Valley Freeway) in the northern Kent Valley. The total cost of the revamped property is $33.9 million and the estimated stabilized cap rate is 5%.

In an effort to boost its portfolio quality, Terreno Realty targets functional buildings at in-fill locations, which enjoy high-population densities and are located near high volume-distribution points. In July, the company completed the acquisition of an industrial property in South San Francisco, CA, for $6.3 million and a stabilized cap rate of 4.7%. Moreover, in the second quarter, the company completed the acquisition of an industrial building spanning about 13,000 square feet and an improved land parcel of 2.8 acres, for a total price of $10.1 million.

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

Demand for industrial real estate has been strong amid the e-commerce boom and supply-chain strategy transformation. In light of the coronavirus pandemic, warehouse operations have become more essential with the fast adoption of e-commerce. Moreover, apart from the accelerated adoption of e-commerce, logistics real estate is anticipated to benefit from the likely increase in inventory levels post the coronavirus crisis. This will open up solid prospects for Terreno Realty, and other industrial REITs like Duke Realty Corp. DRE, Prologis PLD and Rexford Industrial Realty, Inc. REXR.

However, the pandemic’s adverse impact on the economy will likely thwart demand for space in the near term. Rent relief and deferrals, particularly for small tenants, are added concerns.

Over the past year, shares of Terreno Realty have appreciated 21.7% as against the 3.2% decline of the industry it belongs to.

Currently, this industrial REITcarries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Prologis, Inc. (PLD) : Free Stock Analysis Report
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