Terreno Realty Corporation Announces Development Start in Hialeah, FL

Rhea-AI Summary

Terreno Realty (TRNO) announces the commencement of construction of a 162,000 square foot industrial distribution building in Florida, pre-leased to a national tire distributor. The project is part of Countyline Corporate Park Phase IV, with an estimated investment of $42.1 million and a stabilized cap rate of 6.0%. The entire project is expected to consist of 17 buildings totaling 3.5 million square feet and an investment of approximately $511.5 million.

Insights

Real Estate Analyst

The commencement of construction on Countyline Corporate Park Phase IV Building 31 by Terreno Realty Corporation represents a strategic move in expanding its industrial real estate portfolio. A 100% pre-lease rate, particularly to a national tire distributor, indicates strong demand in the Hialeah, Florida market and provides a stable income forecast for the property. The projected stabilized cap rate of 6.0% offers insight into the expected yield from the property, which is in line with current market trends for industrial assets in similar locations.

LEED certification is increasingly sought after in new industrial developments, catering to a growing demand for sustainable and energy-efficient buildings. This could potentially offer long-term cost savings and attract environmentally conscious tenants, providing a competitive edge in the market. The significant investment of $42.1 million for Building 31 and the broader $511.5 million for the entire Phase IV, underscores the scale and potential impact of this development on Terreno's portfolio and the regional industrial real estate market.

Sustainability Consultant

Terreno Realty Corporation's commitment to achieving LEED certification for Building 31 aligns with broader industry trends prioritizing sustainability. LEED-certified buildings are not only environmentally responsible but also can offer financial benefits such as reduced operating costs and increased asset value. The emphasis on sustainable development is particularly relevant given the industrial sector's traditionally large environmental footprint. By integrating green building practices, Terreno can appeal to a segment of tenants who value corporate social responsibility and may be willing to pay a premium for such features.

Financial Analyst

Investors often scrutinize pre-lease rates as indicators of a project's financial viability. The fact that Building 31 is fully pre-leased before completion suggests that Terreno Realty Corporation has effectively mitigated vacancy risk, which is a positive sign for cash flow continuity. The long-term lease, expiring in May 2032, provides a clear revenue trajectory, which is important for financial planning and forecasting. However, it is important to consider the potential risks associated with a single-tenant occupancy, such as dependency on the tenant's financial stability and the impact of industry-specific downturns.

Moreover, the estimated stabilized cap rate should be compared against the industry average and the specific market to evaluate the investment's attractiveness. A cap rate of 6.0% could be considered favorable in today's market, reflecting a balance between risk and return. The total investment figures and the phased development approach also suggest a calculated expansion strategy, with Phase IV completion expected to significantly enhance Terreno's market presence by 2027.

-Building 100% pre-leased

BELLEVUE, Wash.--(BUSINESS WIRE)-- Terreno Realty Corporation (NYSE:TRNO), an acquirer, owner and operator of industrial real estate in six major coastal U.S. markets, announced today that it has commenced construction of Countyline Corporate Park Phase IV Building 31 in Hialeah, Florida. Building 31 of Terreno Realty Corporation’s Countyline Corporate Park is a 162,000 square foot 36-foot clear height rear-load industrial distribution building on 10.0 acres with 53 dock-high and two grade-level loading positions and parking for 140 cars. Building 31 has been 100% pre-leased to a national tire distributor commencing with building completion, expected to be in the fourth quarter of 2024, and expiring May 2032. Building 31 is expected to achieve LEED certification, the total expected investment is $42.1 million and the estimated stabilized cap rate is 6.0%.

Countyline Corporate Park Phase IV consists of a 121-acre project entitled for 2.2 million square feet of industrial distribution buildings in Miami’s Countyline Corporate Park (“Countyline”), immediately adjacent to Terreno Realty Corporation’s seven buildings within Countyline (Countyline Corporate Park Phase III). Countyline is a landfill redevelopment adjacent to Florida’s Turnpike and the southern terminus of I-75 located at the intersection of NW 170th Street and NW 107th Avenue. At expected completion in 2027, Countyline Corporate Park Phase IV is expected to contain ten LEED-certified industrial distribution buildings totaling approximately 2.2 million square feet providing 660 dock-high and 22 grade-level loading positions and parking for 1,875 cars for a total expected investment of approximately $511.5 million.

Taken together, Terreno Realty Corporation’s Countyline Corporate Park Phase III and IV will contain 17 industrial distribution buildings and 3.5 million square feet.

Estimated stabilized cap rates are calculated as annualized cash basis net operating income stabilized to market occupancy (generally 95%) divided by total acquisition cost. Total acquisition cost includes the initial purchase price, the effects of marking assumed debt to market, buyer’s due diligence and closing costs, estimated near-term capital expenditures and leasing costs necessary to achieve stabilization.

Terreno Realty Corporation acquires, owns and operates industrial real estate in six major coastal U.S. markets: Los Angeles; Northern New Jersey/New York City; San Francisco Bay Area; Seattle; Miami; and Washington, D.C.

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/20240410467372/en/

Jaime Cannon 415-655-4580

Source: Terreno Realty Corporation

FAQ

What is the ticker symbol for Terreno Realty ?

The ticker symbol for Terreno Realty is TRNO.

What is the expected completion date for Building 31 in Countyline Corporate Park Phase IV?

Building 31 is expected to be completed in the fourth quarter of 2024.

Who is the building pre-leased to?

Building 31 is 100% pre-leased to a national tire distributor.

What is the estimated stabilized cap rate for Building 31?

The estimated stabilized cap rate for Building 31 is 6.0%.

How many industrial distribution buildings will be in Countyline Corporate Park Phase IV upon completion?

Countyline Corporate Park Phase IV is expected to contain ten LEED-certified industrial distribution buildings totaling approximately 2.2 million square feet.