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

Rhea-AI Summary

Terreno Realty Corporation (NYSE:TRNO) reported robust results for Q4 2022, achieving a 98.6% overall occupancy rate, up from 98.4% in Q3 2022 and 95.5% YoY. Same-store occupancy rose to 99.5%, and cash rents increased by 45.2% for new and renewed leases. The company acquired $59.4 million in properties during the quarter and $414.8 million for the year. However, it issued 814,526 shares raising $47.9 million through its ATM program, which may affect shareholder equity.

Positive

• 98.6% quarter-end occupancy compared to 98.4% in Q3 2022 and 95.5% YoY.
• 99.5% quarter-end same-store occupancy compared to 98.9% in Q3 2022 and 98.1% YoY.
• 45.2% increase in cash rents on new and renewed leases in Q4 2022.
• $59.4 million of acquisitions in Q4 2022; $414.8 million for the full year.
• Sold three properties for $57.9 million, generating strong returns.

Negative

• Issued 814,526 shares under ATM for $47.9 million, potentially diluting shareholder value.

• 98.6% quarter-end occupancy compared to prior quarter of 98.4% and prior year of 95.5%
• 99.5% quarter-end same-store occupancy compared to prior quarter of 98.9% and prior year of 98.1%
• 45.2% increase in cash rents on new and renewed leases; 49.5% increase for the full year
• $59.4 million of acquisitions; full year 2022 acquisitions of $414.8 million
• Sold three properties for $57.9 million; for the full year 2022 sold four properties for $168.3 million
• Issued 814,526 shares of common stock under ATM for gross proceeds of $47.9 million; for the full year 2022 issued 1,286,125 shares of common stock under ATM for gross proceeds of $78.9 million

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 its operating, investment and capital markets activity for the fourth quarter of 2022.

Operating

As of December 31, 2022, Terreno Realty Corporation owned 252 buildings aggregating approximately 15.3 million square feet and 46 improved land parcels consisting of approximately 161.4 acres. In addition, Terreno Realty Corporation had three properties under redevelopment that, upon completion, will consist of one building aggregating approximately 34,000 square feet and two improved land parcels aggregating approximately 12.1 acres:

• The operating portfolio, excluding one property under redevelopment, was 98.6% leased at December 31, 2022 to 569 tenants as compared to 98.4% at September 30, 2022 and 95.5% at December 31, 2021;
• The same-store portfolio of approximately 12.1 million square feet was 99.5% leased at December 31, 2022 as compared to 98.9% at September 30, 2022 and 98.1% at December 31, 2021;
• The improved land portfolio of 46 parcels, excluding two parcels under redevelopment, totaling approximately 161.4 acres was 92.5% leased at December 31, 2022 as compared to 91.6% at September 30, 2022 and 94.8% at December 31, 2021. Occupancy at December 31, 2022 included acquired vacancy of 6.7 acres (approximately 430bps) which is pre-leased and expected to commence February 1, 2023;
• Cash rents on new and renewed leases totaling approximately 0.3 million square feet and 2.6 acres of improved land commencing during the fourth quarter increased approximately 45.2% with a tenant retention ratio of 80.6% for the operating portfolio and 0.0% for the improved land portfolio. Cash rents on new and renewed leases totaling approximately 2.2 million square feet and 19.1 acres of improved land commencing during the year ended December 31, 2022 increased approximately 49.5% with a tenant retention ratio of 56.6% for the operating portfolio and 65.0% for the improved land portfolio;
• Executed a lease renewal for 66,000 square feet in Rancho Dominguez, California with a provider of third-party logistics in the Southwestern U.S. and Mexico. The lease, which was to expire in April 2023, will now expire May 2026;
• Executed a lease renewal for 63,000 square feet in Jamaica Queens, New York with a global freight forwarding provider. The lease, which was to expire in December 2022, will now expire December 2027;
• Executed a lease renewal for 110,000 square feet in Commerce, California with a provider of third-party logistics. The lease, which was to expire in March 2023, will now expire April 2028; and
• Executed a lease for 6.7 acres of improved land in Medley, Florida with a North American provider of equipment rentals. The lease will commence February 1, 2023 and expire March 2033.

Investment

During the fourth quarter of 2022, Terreno Realty Corporation acquired four properties consisting of three buildings containing approximately 65,000 square feet and one improved land parcel of approximately 2.8 acres for an aggregate purchase price of approximately $59.4 million. The fourth quarter investment activity was as follows:

• 7045 NW 46th Street: One industrial distribution building containing approximately 16,000 square feet on 0.7 acres located in Miami, Florida, adjacent to Miami International Airport and the Palmetto Expressway. The property provides two dock-high loading positions and parking for 15 cars. The property was acquired vacant for a purchase price of approximately $4.7 million and an estimated stabilized cap rate of 5.2%. Subsequent to acquisition, Terreno Realty Corporation executed a five-year lease commencing December 31, 2022 with a supplier of spa and salon equipment;
• 5401 West 104th Street: One industrial transshipment building containing approximately 26,000 square feet on 1.8 acres located in Los Angeles, California, west of I-405 and adjacent to Los Angeles International Airport. The property provides 19 dock-high loading positions and parking for 66 cars. The property was acquired 100% leased to one tenant through September 2024 for a purchase price of approximately $17.0 million and an estimated stabilized cap rate of 2.5%;
• 629 Henry Street: One industrial distribution building containing approximately 23,000 square feet on 1.8 acres located in Elizabeth, New Jersey adjacent to Newark Liberty International Airport and Exit 13A of the New Jersey Turnpike. The property provides two dock-high and two grade level loading positions and parking for 37 cars. The property was acquired 100% leased on a short-term basis for a purchase price of approximately $15.4 million and an estimated stabilized cap rate of 5.4%; and
• 14805 S. Maple Avenue: One 2.8-acre improved land parcel in Rancho Dominguez, California, between Los Angeles International Airport and the Ports of Los Angeles and Long Beach and adjacent to Terreno Realty Corporation’s improved land parcels at 14725 and 14732 S. Maple Avenue. The property contains a 51,000-square-foot building which is leased on a short-term basis through June 2023, after which the building will be demolished and the property will be redeveloped into a 2.8-acre improved land parcel. The property was acquired for a purchase price of approximately $22.4 million and the estimated stabilized cap rate of the redeveloped property is 6.2%.

During the fourth quarter of 2022, Terreno Realty Corporation commenced the redevelopment of 4857 W 147th Street in Hawthorne, California. Upon completion, the property will consist of an approximately 34,000 square foot LEED-certified industrial distribution building, with a total expected investment of approximately $18.1 million. The estimated stabilized cap rate of the redeveloped property is approximately 6.1%. As of December 31, 2022, Terreno Realty Corporation had three properties under redevelopment (245 Paterson Plank Road in Northern New Jersey, Berryessa Road in San Francisco and 147^th Street in Los Angeles) that, upon completion, will consist of one building aggregating approximately 34,000 square feet and two improved land parcels aggregating approximately 12.1 acres, with a total expected investment of approximately $69.3 million.

Terreno Realty Corporation’s acquisition activity for the full year 2022 included 20 properties consisting of 17 buildings containing approximately 831,000 square feet and eleven improved land parcels of approximately 35.7 acres for an aggregate purchase price of $414.8 million.

During the fourth quarter of 2022, Terreno Realty Corporation sold three properties containing approximately 216,000 square feet for an aggregate sale price of approximately $57.9 million:

• One property in Kent, Washington containing approximately 32,000 square feet on 3.8 acres for a sale price of approximately $8.7 million. The property was acquired by Terreno Realty Corporation in July 2014 for approximately $2.8 million. The unleveraged internal rate of return generated by the investment was 15.6%;
• One property in Somerset, New Jersey containing approximately 86,000 square feet on 6.9 acres for a sale price of approximately $25.0 million. The property was acquired by Terreno Realty Corporation in September 2016 for approximately $9.1 million. The unleveraged internal rate of return generated by the investment was 20.7%; and
• One property in Bayonne, New Jersey containing approximately 98,000 square feet on 3.6 acres for a sale price of approximately $24.3 million. The property was acquired by Terreno Realty Corporation in March 2014 for approximately $9.2 million. The unleveraged internal rate of return generated by the investment was 14.1%.

For the full year 2022, Terreno Realty Corporation sold four properties containing approximately 797,000 square feet for an aggregate sale price of $168.3 million generating an unleveraged internal rate of return of approximately 15.5%.

Terreno Realty Corporation has approximately $73.0 million of acquisitions under contract and approximately $13.5 million of acquisitions under letters of intent. There is no assurance that Terreno Realty Corporation will acquire the properties under contract or letters 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 fourth quarter of 2022, Terreno Realty Corporation issued 814,526 shares of common stock with a weighted average offering price of $58.82 per share, receiving gross proceeds of $47.9 million under the Company’s at-the-market equity offering program. For the full year 2022, Terreno Realty Corporation issued 1,286,125 shares of common stock with a weighted average offering price of $61.31 per share, receiving gross proceeds of $78.9 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.

As of December 31, 2022, there were no borrowings outstanding under Terreno Realty Corporation’s $400 million revolving credit facility, and the Company has no debt maturities in 2023.

Additional information is available on the Company’s website at www.terreno.com. Terreno Realty Corporation expects to file its annual report on Form 10-K for the year ended December 31, 2022 on or about February 8, 2023.

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, 2021 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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Terreno Realty Corporation

Jaime Cannon, 415-655-4580

Source: Terreno Realty Corporation

FAQ

What was Terreno Realty Corporation's Q4 2022 occupancy rate?

Terreno Realty Corporation reported a quarter-end occupancy rate of 98.6% for Q4 2022.

How much did Terreno Realty Corporation increase cash rents in Q4 2022?

Cash rents on new and renewed leases increased by 45.2% during Q4 2022.

What are the acquisitions made by Terreno Realty Corporation in Q4 2022?

Terreno Realty Corporation acquired properties totaling approximately $59.4 million in Q4 2022.

How many shares did Terreno Realty Corporation issue under its ATM program in Q4 2022?

Terreno Realty Corporation issued 814,526 shares under its ATM program for gross proceeds of $47.9 million.

What is the same-store occupancy rate for Terreno Realty Corporation in Q4 2022?

The same-store occupancy rate for Q4 2022 was 99.5%.