Terreno Realty Corporation Acquires Property in Brooklyn, NY for $12.0 Million
- None.
- None.
Insights
The acquisition of an industrial property by Terreno Realty Corporation in East Williamsburg, Brooklyn, represents a strategic expansion within a highly sought-after market. The location adjacent to the Brooklyn-Queens Expressway offers logistical advantages for distribution companies, potentially increasing the property's value. The investment in industrial real estate aligns with the broader trend of e-commerce growth, requiring more distribution centers close to urban areas to facilitate quick delivery. A stabilized cap rate of 5.7% is moderately attractive, considering the current economic climate and the average cap rates in the region for industrial properties.
However, the property's vacancy indicates that immediate income generation is not guaranteed. Terreno will need to invest in capital expenditures and leasing efforts to reach stabilization. The short-term costs may affect cash flow, but if managed effectively, the property could provide a steady income stream and asset appreciation in the long term, given the robust demand for industrial spaces in major cities.
Industrial real estate remains a strong sector, especially in coastal markets with limited supply and high demand. Terreno Realty's focus on these areas could provide a competitive advantage. The acquisition in Brooklyn, a borough experiencing significant gentrification and industrial-to-residential conversions, suggests that Terreno is capitalizing on the scarcity of industrial zoned land. This scarcity may drive up rental rates and property values over time, benefiting Terreno's portfolio.
Investors should monitor the company's ability to lease the vacant property, as it will be a critical factor in achieving the estimated stabilized cap rate. The company's track record in leasing and operating similar assets will be an important indicator of future performance. Additionally, the proximity to the expressway could make the property particularly attractive to logistics companies, a sector that has seen growth due to the rise in online shopping.
The $12.0 million acquisition by Terreno Realty is a significant capital allocation that reflects confidence in the industrial real estate market's resilience and potential for growth. The property's vacant status poses a risk, as immediate returns are not realized and there is a dependency on future leasing success. Investors should consider the company's expertise in rapidly leasing similar properties and the current market demand for such spaces.
From a financial perspective, the estimated stabilized cap rate serves as an indicator of potential return on investment, but it is contingent upon achieving a 95% occupancy rate. The initial non-income generating status of the property could be a drag on earnings in the near term. However, given the strategic location and the ongoing trend of industrial space shortages in urban areas, the long-term outlook could be favorable if the company successfully leases the property at or above market rates.
The property consists of one industrial distribution building containing approximately 24,000 square feet on 0.7 acres. The property is at 181 Lombardy Street adjacent to the Brooklyn-Queens Expressway, provides one dock-high and one grade-level loading position and parking for 10 cars. The property is vacant and the estimated stabilized cap rate is
Estimated stabilized cap rates are calculated as annualized cash basis net operating income stabilized to market occupancy (generally
Terreno Realty Corporation acquires, owns and operates industrial real estate in six major coastal
Additional information about Terreno Realty Corporation is available on the company’s web site at www.terreno.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. We caution investors that forward-looking statements are based on management’s beliefs and on assumptions made by, and information currently available to, management. When used, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “result,” “should,” “will,” “seek,” “target,” “see,” “likely,” “position,” “opportunity,” “outlook,” “potential,” “enthusiastic,” “future” and similar expressions which do not relate solely to historical matters are intended to identify forward-looking statements. These statements are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including risks related to our ability to meet our estimated forecasts related to stabilized cap rates, and those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2023 and our other public filings. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. We expressly disclaim any responsibility to update our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240315277504/en/
Jaime Cannon
415-655-4580
Source: Terreno Realty Corporation
FAQ
What did Terreno Realty (TRNO) acquire recently?
Where is the acquired property located?
What is the size of the building on the acquired property?
What is the estimated stabilized cap rate for the acquired property?
In which U.S. markets does Terreno Realty (TRNO) focus on?
