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Terreno (TRNO) Updates Q1 Operating & Investment Activities


Terreno Realty Corporation TRNO provided insights on its first-quarter operating, investment and capital markets activities.

In sync with its strategy of acquiring industrial properties in strategic locations, this San Francisco-based real estate investment trust (REIT) purchased three industrial properties in the first quarter for a total of $84.7 million.

These properties, comprising three buildings spanning 418,000 square feet, are located in Torrance, CA; Woodside Queens, NY and Seattle, WA. Further, the company has about $40.3 million of acquisitions under contract for approximately 258,000 square feet and a land parcel spanning 3.5 acres.

Additionally, the company has an obligation to pay for a senior secured loan of $55 million which is held by a portfolio of improved land parcels. Terreno has the option to buy some of the land parcels in exchange of repayment of the loan. Moreover, the company has approximately 45,000 square feet of space for total $12.2 million for acquisition under the letter of intent.

On the disposition front, Terreno sold one distribution building — situated in Capitol Heights, MD — covering around 139,000 square feet for a price of $20.3 million. Also, it has one property under contract for disposition, measuring 302,000 square feet for a value of $24.3 million.

During the quarter, Terreno raised $2.1 million by issuing 59,234 shares of common stock. No shares were repurchased by the company.

Terreno’s first quarter’s operating metrics were mixed. The same-store portfolio of approximately 11.1 million square feet was 97.5% leased as of Mar 31, 2018, compared with 98.3% at the prior-quarter end. However, cash rents on new and renewed leases increased 12.5% for the quarter.

The company enjoyed the ownership of 195 buildings, spanning around 12.9 million square feet, together with ten improved land parcels, comprising 47.9 acres as of Mar 31, 2018. Additionally, three buildings are under redevelopment and will span across 377,000 square feet after completion. After considering redevelopment costs of $22.3 million, the total value comes up to $98.5 million.

Notably, the industrial asset category has grabbed attention on the back of robust demand, recovering economy and job market, strengthening e-commerce market as well as a healthy manufacturing environment. Given Terreno’s solid capacity to offer modern, bulk distribution properties, it remains well poised to capitalize on robust industry fundamentals.

Encouragingly, in the past year, shares of Terreno have outperformed the industry. While its shares have gained 17.4%, the industry has recorded a loss of 5.4% during this period.

However, in the last 60 days, Terreno’s full-year 2018 funds from operations (FFO) per share estimates witnessed a decline of 1.6%. It currently carries a Zacks Rank #4 (Sell).

Stocks Worth a Look

A few better-ranked stocks from the same space include Arbor Realty Trust ABR, Extra Space Storage Inc. EXR and Sotherly Hotels Inc. SOHO. All three stocks carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arbor Realty Trust’s Zacks Consensus Estimate for 2018 FFO per share remained unchanged at 90 cents over the past month. Its shares have returned 10.2% in 12 months.

Extra Space Storage’s FFO per share estimates for the current year moved up 0.9% to $4.59 in a month’s time. Its shares have gained 16.6% over the past 12 months.

Sotherly Hotels’ FFO per share estimates for 2018 remained unchanged at $1.05 over the past month. The stock has gained 23.3% during the past 12 months.

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

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