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Terreno (TRNO) on Acquisition Spree, Buys Los Angeles Assets

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 Los Angeles, CA, for $18.1 million.

The buyout comprises five industrial buildings, encompassing about 53,000 square feet of space, on 1.9 acres near the Downtown Los Angeles Arts District. The buildings are likely to enjoy superior demand for being positioned strategically at 130-134 and 140-148 South Anderson Street, 1319 Mono Street and 135-151 South Utah Street. There are 11 grade-level loading positions as well as parking for 83 cars. This industrial property is 90% leased to seven tenants. Further, its stabilized cap rate has been estimated at 5.2%, which highlights the property’s decent earning potential.

Apart from the latest acquisition, earlier this month, the company added another industrial property in Carlstadt, NJ, for $4 million. The buyout comprised a 2-acre improved land parcel which is located at 51 Kero Road. It is close to the company’s properties at 50 and 100 Kero Road, Meadowlands Sports Complex and Exit 16W of the New Jersey Turnpike. It is currently fully leased to one tenant.

Such strategic acquisitions will likely 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 witness 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 healthy fundamentals of the industrial real estate category.

Rising e-commerce market, resilient consumer sentiment, low unemployment level and rising wages are playing key roles in keeping up the industrial and logistics sector’s healthy performance. Companies are making immense efforts to improve supply-chain efficiencies, spurring demand for logistics infrastructure and efficient distribution networks. 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. Nevertheless, rising supply and protectionist trade policies are key concerns.

Currently, Terreno Realty carries a Zacks Rank #3 (Hold). Its shares have gained 21.9% compared with the industry’s rise of 9.8%, over the past six months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.




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