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Terreno Realty (TRNO) Acquires Industrial Asset in Kirkland

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Zacks Equity Research
·3 min read
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Terreno Realty Corporation TRNO shelled out $33.8 million for the purchase of an industrial property in Kirkland, WA. The move comes as part of its acquisition-driven growth strategy.

The property comprises of industrial distribution building spanning 127,000 square feet of space across 7.2 acres of land. The property’s location at 10822-10856 117th Place NE, adjacent to I-405, and design suitable for logistics purpose has likely enabled the property to be fully leased to five tenants. It has an estimated stabilized cap rate of 2.9%.

The addition of the property will increase rental revenues in the upcoming years, until all the leases for the property expire in December 2026.

Terreno Realty is focused on expanding its portfolio on acquisitions. It targets functional assets at in-fill locations, which enjoy high-population densities and are located near high-volume distribution points. Through such efforts, the company is well-poised to fortify its portfolio in the 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 a healthy demand for industrial real estates.

In fact, the industrial real estate asset category has grabbed headlines and continues to play a pivotal role, transforming the way how consumers shop and receive their goods. Services like same-day delivery are gaining traction and last-mile properties in high-income urban areas are witnessing solid pricing, occupancy and growth in rentals.

Companies are making immense efforts to improve supply-chain efficiencies, propelling demand for logistics infrastructure and efficient distribution networks. Moreover, in light of the coronavirus pandemic, warehouse operations have become more essential with more e-commerce customers. Over the long term, apart from the fast adoption of e-commerce, logistics real estate is expected to benefit from a likely increase in inventory levels post crisis.

This, in turn, will likely keep supporting industrial landlords like Terreno Realty, Prologis PLD, Duke Realty Corp. DRE and Rexford Industrial Realty, Inc. REXR to enjoy a favorable market environment.

Nevertheless, there is a development boom in a number of markets. This high supply is likely to fuel competition and curb pricing power. Particularly, new supply is likely to put pressure on the vacancy level, which is likely to increase to some extent in the upcoming quarters.

Terreno Realty currently carries a Zacks Rank #3 (Hold). In the past year, the company’s shares have declined 2%, wider than the industry's fall of 1.9%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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

Duke Realty Corporation (DRE) : Free Stock Analysis Report

Terreno Realty Corporation (TRNO) : Free Stock Analysis Report

Rexford Industrial Realty, Inc. (REXR) : Free Stock Analysis Report

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