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Terreno Realty (TRNO) Buys Anaheim Property, Boosts Portfolio

Terreno Realty Corporation TRNO recently shelled out $7.3 million to purchase an industrial property in Anaheim, CA. The move comes as part of the company’s acquisition-driven growth strategy.

Located at 3091 East Coronado Street, this 1.2-acre improved land parcel was acquired vacant. However, TRNO executed a lease for the property with a Southern California investment group facilitating commissary services, starting immediately and ending in December 2027.

The property’s advantageous location — next to the intersection of CA SR 91 (The Riverside Freeway) and CA SR 57 (The Orange Freeway) — is likely to have lured the tenant. The move led to an estimated stabilized cap rate of 5.0%.

Amid an e-commerce boom, growth in industries and companies making efforts to improve supply-chain efficiencies, demand for industrial real estate space has been shooting up. TRNO is banking on such opportunities and is focused on expanding its portfolio through acquisitions.

Further, the company is targeting functional assets at in-fill locations. Such assets enjoy high-population densities and are located near high-volume distribution points.

With such expansion efforts, Terreno Realty is well-poised to enhance 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. These markets display solid demographic trends and witness healthy demand for industrial real estate.

Since the beginning of the year through Jul 7, 2022, Terreno Realty acquired 13 properties, comprising 14 buildings of roughly 766,000 square feet and seven improved land parcels of around 27.4 acres. The total purchase price was $309.5 million.

Moreover, in recent months, Terreno Realty shelled out $32.1 million to purchase an industrial property in Rancho Dominguez, CA. The estimated stabilized cap rate of the property is 5.5%. TRNO also acquired an industrial property in Hawthorne, CA, for $6.5 million.

Apart from the fast adoption of e-commerce, industrial real estate space is poised to gain traction over the long run from a likely rise in the inventory levels of companies as a precaution for any supply-chain disruption. This will offer opportunities to industrial landlords, including TRNO, Prologis PLD and Rexford Industrial Realty REXR, to enjoy a favorable market environment.

Shares of Zacks Rank #2 (Buy) Terreno Realty have climbed 9.6% quarter to date compared with the industry’s increase of 1.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Prologis carries a Zacks Rank of 2 at present. Prologis’ long-term growth rate is projected at 9.0%. The Zacks Consensus Estimate for PLD’s 2022 funds from operations per share has been revised marginally upward in the past two months.

Rexford Industrial Realty carries a Zacks Rank of 3 (Hold) at present. Rexford Industrial Realty’s 2022 revenues are expected to increase 36.9% year over year. REXR’s long-term growth rate is projected at 11.3%.

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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