Terreno Realty Corporation Announces Quarterly Operating, Investment and Capital Markets Activity

Rhea-AI Summary

Terreno Realty Corporation (NYSE:TRNO) reported significant operational and financial updates for Q2 2021. The firm owned 234 buildings and 27 land parcels, achieving a 97.5% lease rate with a 21.1% increase in cash rents. In Q2, it acquired six properties for $54.2 million, boosting its portfolio by approximately 136,000 square feet. Year-to-date, total acquisitions reached $164.2 million. Additionally, the company raised $69.6 million through shares and announced a $150 million private placement of senior unsecured notes to fund sustainable projects.

Positive

• Owned portfolio increased to 234 buildings totaling approximately 13.8 million square feet.
• 97.5% leased operating portfolio, up from 96.1% in Q1 2021.
• 21.1% increase in cash rents for new and renewed leases in Q2.
• Acquired six properties worth approximately $54.2 million during Q2.
• Year-to-date acquisitions of approximately $164.2 million.

Negative

• Tenant retention ratio decreased to 64.3% for new and renewed leases in Q2.
• Higher risk due to reliance on the successful outcome of acquisitions under contract and letter of intent.

Terreno Realty Corporation (NYSE:TRNO), an acquirer, owner and operator of industrial real estate in six major coastal U.S. markets, announced today its operating, investment and capital markets activity for the second quarter of 2021.

Operating

As of June 30, 2021, Terreno Realty Corporation owned 234 buildings aggregating approximately 13.8 million square feet and 27 improved land parcels consisting of approximately 97.6 acres. In addition, Terreno Realty Corporation had three properties under redevelopment that upon completion will contain approximately 415,000 square feet:

• The operating portfolio, excluding three properties under redevelopment, was 97.5% leased at June 30, 2021 to 535 tenants as compared to 96.1% at March 31, 2021 and 96.0% at June 30, 2020.
• The same-store portfolio of approximately 12.7 million square feet was 97.8% leased at June 30, 2021 as compared to 97.4% at March 31, 2021 and 96.1% at June 30, 2020;
• The improved land portfolio of 27 parcels totaling approximately 97.6 acres was 98.0% leased at June 30, 2021 as compared to 97.9% at March 31, 2021 and 98.5% at June 30, 2020; and
• Cash rents on new and renewed leases totaling approximately 0.8 million square feet commencing during the second quarter increased approximately 21.1% with a tenant retention ratio of 64.3%. Cash rents on new and renewed leases totaling approximately 1.1 million square feet commencing during the six months ending June 30, 2021 increased approximately 19.7% with a tenant retention ratio of 72.8%.

Investment

During the second quarter of 2021, Terreno Realty Corporation acquired six properties consisting of six buildings containing approximately 136,000 square feet and three improved land parcels of approximately 11.4 acres for an aggregate purchase price of approximately $54.2 million. The second quarter investment activity was as follows:

• 500 SW 16^th Street: One 3.4-acre improved land parcel in Renton, Washington, immediately adjacent to I-405 between State Route 167 (Valley Freeway) and State Route 181 (West Valley Highway). The property was acquired 100% leased to one tenant for a purchase price of approximately $7.6 million and an estimated stabilized cap rate of 1.5%;
• 2454 Occidental Avenue South: One industrial distribution building containing approximately 19,000 square feet and two flex buildings containing an aggregate of approximately 33,000 square feet on 2.9 acres located in the SoDo District of Seattle, Washington. The property provides 12 dock-high and two grade-level loading positions and parking for 127 cars. The property was acquired 92% leased to five tenants, all of which expire by June 2023, for a purchase price of approximately $16.5 million and an estimated stabilized cap rate of 4.6%;
• 20405 Gramercy Place: One industrial distribution building containing approximately 17,000 square feet on 0.9 acres located west of I-405 between Los Angeles International Airport and the ports of LA and Long Beach in Torrance, California. The property provides one dock-high and four grade-level loading positions and parking for 34 cars. The property was acquired 100% leased to one tenant on a short-term basis for a purchase price of approximately $6.3 million and an estimated stabilized cap rate of 4.7%;
• 560 East Gish Road: One 2.2-acre improved land parcel in San Jose, California, adjacent to the intersection of I-880 and US 101 and Norman Y. Mineta San Jose International Airport. The property was acquired 100% leased to one tenant for a purchase price of approximately $8.0 million and an estimated stabilized cap rate of 4.8%;
• 21414 68^th Avenue South: One industrial distribution building containing approximately 40,000 square feet and one flex building containing approximately 27,000 square feet on 4.4 acres in Kent, Washington in the northern Kent Valley. The property provides eight dock-high and five grade-level loading positions and parking for 105 cars. The property was acquired 100% leased to three tenants for a purchase price of approximately $10.0 million and an estimated stabilized cap rate of 5.5%; and
• 3000 NW 73^rd Street: One 5.8-acre improved land parcel in Miami, Florida, approximately three miles from Miami International Airport and six miles from both PortMiami and Downtown Miami. The property is vacant and Terreno Realty Corporation is redeveloping it into two LEED-certified industrial distribution buildings totaling approximately 129,000 square feet with 36 dock-high loading positions, 32’ clear height, and parking for 104 cars. The property was purchased for approximately $5.8 million and the total expected investment is approximately $20.1 million with an estimated stabilized cap rate of 5.1% and anticipated stabilization in the fourth quarter of 2022.

As of June 30, 2021, Terreno Realty Corporation had three properties under redevelopment (SoDo Row in Seattle, and NW 73^rd and America’s Gateway 5 in Miami) that upon completion will contain approximately 415,000 square feet with a total expected investment of approximately $91.6 million.

Year-to-date through the second quarter of 2021, Terreno Realty Corporation acquired ten properties consisting of 13 buildings containing approximately 665,000 square feet and three improved land parcels of approximately 11.4 acres for an aggregate purchase price of $164.2 million.

Terreno Realty Corporation has approximately $146.6 million of acquisitions under contract and approximately $31.8 million of acquisitions under letter of intent. There is no assurance that Terreno Realty Corporation will acquire the properties under contract or letter of intent because the proposed acquisitions are subject to the completion of satisfactory due diligence, closing conditions and, in the case of letters of intent, contracts.

Capital Markets

During the second quarter of 2021, Terreno Realty Corporation issued 1,084,294 shares of common stock with a weighted average offering price of $64.21 per share, receiving gross proceeds of $69.6 million under the Company’s at-the-market equity offering program. Year-to-date through June 30, 2021, Terreno Realty Corporation has issued 1,790,818 shares of common stock with a weighted average offering price of $61.84 per share, receiving gross proceeds of $110.7 million under the Company’s at-the-market equity offering program. Terreno Realty Corporation did not repurchase any shares of common stock pursuant to the Company’s share repurchase authorization.

During the second quarter of 2021, Terreno Realty Corporation announced the private placement of $150 million senior unsecured notes. The senior unsecured notes consist of $100 million seven-year senior unsecured notes (“Green Bonds”) that bear interest at a fixed rate of 2.41% and $50 million ten-year senior unsecured notes that bear interest at a fixed rate of 2.84%. The $150 million senior unsecured notes are expected to close on or around July 15, 2021. The Company intends to allocate the net proceeds of the Green Bonds to recently completed and future green buildings that will be LEED, BREEAM or Energy Star certified, and towards projects that improve energy efficiency, sustainable water and wastewater management, and renewable energy.

Additional information is available on the Company’s website at www.terreno.com. Terreno Realty Corporation expects to file its quarterly report on Form 10-Q for the period ended June 30, 2021 on or about August 4, 2021.

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.

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,” 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, the impact of the COVID-19 pandemic on our business, our tenants and the national and local economies, and those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2020 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.

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FAQ

What are the key highlights from Terreno Realty's Q2 2021 report?

Terreno Realty reported a 97.5% lease rate, a 21.1% increase in cash rents, and acquisition of six properties for $54.2 million.

How much did Terreno Realty Corporation raise through stock issuance in Q2 2021?

Terreno Realty raised $69.6 million by issuing 1,084,294 shares at an average price of $64.21.

What is the tenant retention rate reported by Terreno Realty for Q2 2021?

The tenant retention ratio was 64.3% for new and renewed leases.

How many properties did Terreno Realty acquire in the first half of 2021?

Terreno Realty acquired ten properties consisting of 13 buildings and three improved land parcels for approximately $164.2 million.

What is the total expected investment for Terreno Realty's redevelopment projects as of Q2 2021?

The total expected investment for redevelopment projects is approximately $91.6 million.