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Terreno (TRNO) Continues Acquisition Spree With $34.6M Buyout

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Terreno Realty Corporation TRNO is on an acquisition spree and recently announced shelling out $34.6 million for the buyout of an industrial property in San Leandro, CA. The latest buyout in San Leandro comes after the company’s recent purchase of two industrial properties in Los Angeles and Inglewood, CA for $27.2 million.

The San Leandro property comprises five industrial distribution buildings encompassing 104,000 square feet of space on 4.2 acres at 2953-2999 and 3041-3057 Teagarden Street. It is adjacent to I-880 and Oakland International Airport, indicating an advantageous location and positioning it well to lure tenants. As such, the property is fully leased to 13 tenants, all of which expire by 2027. The estimated stabilized cap rate is 3.5%.

The properties in Los Angeles and Inglewood that the company recently purchased are situated west of I-405, adjacent to Los Angeles International Airport. The distribution building in Inglewood encompasses roughly 19,000 square feet on 0.9 acres and is currently 70% leased to one tenant and the estimated stabilized cap rate is 2.4%. The second industrial distribution building in Los Angeles spans approximately 40,000 square feet on 2.1 acres. At present, it is 100% leased to four tenants, with an estimated stabilized cap rate of 3.2%.

The industrial real estate market is witnessing solid fundamentals as the demand for the logistics infrastructure and efficient distribution networks has been shooting up amid an e-commerce boom, growth in industries and companies making efforts to improve supply-chain efficiencies. In addition to the fast adoption of e-commerce, a rise in the inventory levels of companies as a precautionary measure for any supply-chain disruption is expected to lead to the long-term growth momentum for this sector.

This offers opportunities to industrial landlords, including Terreno Realty, Prologis PLD and Rexford Industrial Realty, Inc. REXR, among others, to enjoy a favorable market environment.

Amid this favorable environment, TRNO is focused on expanding its portfolio through opportunistic acquisitions. It targets functional assets at in-fill locations, which enjoy high-population densities and are located near high-volume distribution points.

In addition to the abovementioned acquisitions, Terreno Realty recently acquired an industrial property in Anaheim, CA for $15.0 million, which is currently vacant and has an estimated stabilized cap rate of 4.7%. Also, it purchased an industrial property at 127-167 and 147-163 Doremus Avenue in Newark, NJ for $11.9 million. The property is 100% leased on a short-term basis to one tenant and has an estimated stabilized cap rate of 6.9%.

Backed by such 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 — which display solid demographic trends and witness healthy demand for industrial real estate.

Shares of Zacks Rank #2 (Buy) TRNO have declined 3.1% over the past year, narrower than the industry’s fall of 4.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Zacks Investment Research


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Prologis carries a Zacks Rank of 2 at present. Prologis’ long-term growth rate is projected at 9.8%.  
 
The Zacks Consensus Estimate for PLD’s 2022 funds from operations (FFO) per share has been revised marginally upward in a month.

Rexford Industrial Realty holds a Zacks Rank of 2 at present. Rexford Industrial Realty’s 2022 revenues are expected to increase 34% year over year.

The Zacks Consensus Estimate for REXR’s 2022 FFO per share has been revised 1.6% upward in the past two months.

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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