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

Rhea-AI Summary

Terreno Realty Corporation (NYSE: TRNO) reported its third-quarter 2020 results, highlighting a strong operational performance. As of September 30, 2020, the company owned 219 buildings totaling 13.1 million square feet, achieving a leasing rate of 97.3%, up from 96.0% in Q2 2020. The same-store portfolio was 98.5% leased. The company acquired a 22,000-square-foot property for $6.3 million and sold a 192,000-square-foot property for $22.2 million, generating a 7.4% internal rate of return. The company also has $32.4 million in acquisitions under contract and a robust cash balance of $156 million.

Positive

• Leasing rate increased to 97.3% from 96.0% in Q2 2020.
• Same-store portfolio achieved a leasing rate of 98.5%.
• Acquired a 22,000-square-foot property for $6.3 million with a cap rate of 4.7%.
• Sold a 192,000-square-foot property for $22.2 million, generating a 7.4% internal rate of return.
• Total cash balance of approximately $156 million.

Negative

• None.

SAN FRANCISCO--(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 third quarter of 2020.

Operating

As of September 30, 2020, Terreno Realty Corporation owned 219 buildings aggregating approximately 13.1 million square feet and 22 improved land parcels consisting of approximately 85.0 acres. In addition, Terreno Realty Corporation had one property under redevelopment that upon completion will contain approximately 234,000 square feet:

• The operating portfolio, excluding one property under redevelopment, was 97.3% leased at September 30, 2020 to 476 tenants as compared to 96.0% at June 30, 2020 and 97.2% at September 30, 2019;
• The same-store portfolio of approximately 12.0 million square feet was 98.5% leased at September 30, 2020 as compared to 96.5% at June 30, 2020 and 98.1% at September 30, 2019. The increase in occupancy as compared to the prior quarter was driven primarily by the commencement of a 192,000 square foot lease at the Company’s 130 Interstate property;
• The improved land portfolio of 22 parcels totaling approximately 85.0 acres was 98.5% leased at September 30, 2020 as compared to 98.5% at June 30, 2020 and 93.2% at September 30, 2019;
• Cash rents on new and renewed leases totaling approximately 0.9 million square feet commencing during the third quarter increased approximately 20.3% with a tenant retention ratio of 59.6%. Cash rents on new and renewed leases totaling 2.0 million square feet commencing during the nine months ending September 30, 2020 increased approximately 25.2% with a tenant retention ratio of 54.9%;
• Executed a lease for 192,000 square feet with a wholesale distributor of home furnishings and housewares at the Company’s 130 Interstate property in South Brunswick, New Jersey. The lease commenced September 1, 2020 and will expire October 31, 2030. Executed a full-building lease for 211,000 square feet with a leading e-commerce firm at the Company’s Belleville property in Kearny, New Jersey. The lease commenced July 9, 2020 and will expire July 31, 2030; and
• Executed a full-building lease with a provider of retail supply chain, warehousing and final-mile delivery, stabilizing a 220,000 square foot redevelopment property in Seattle, Washington. The total investment cost was approximately $33.9 million with an estimated stabilized cap rate of 5.0%.

Investment

During the third quarter of 2020, Terreno Realty Corporation acquired one industrial property containing approximately 22,000 square feet. The third quarter investment activity was as follows:

• 179 Starlite Street: One industrial building containing approximately 22,000 square feet on 0.7 acres in South San Francisco, California. The property is adjacent to Highway 101 between San Francisco International Airport and the city of San Francisco, and provides two dock-high and one grade-level loading positions and parking for 15 cars. The property was acquired 100% leased to one tenant for a purchase price of approximately $6.3 million and estimated stabilized cap rate of 4.7%.

Year-to-date through the third quarter of 2020, Terreno Realty Corporation acquired five properties consisting of three buildings totaling approximately 101,000 square feet and two improved land parcels totaling approximately 5.5 acres for an aggregate purchase price of $46.1 million. During the third quarter of 2020, Terreno Realty Corporation sold one property in Miami Lakes, Florida of approximately 192,000 square feet for a sale price of approximately $22.2 million generating an unleveraged internal rate of return of 7.4%. Year-to-date through the third quarter of 2020, Terreno Realty Corporation sold four properties totaling 532,000 square feet for an aggregate sale price of $73.4 million generating an unleveraged internal rate of return of approximately 9.3%.

As of September 30, 2020, Terreno Realty Corporation had one property under redevelopment (SoDo Row in Seattle) that upon completion will contain approximately 234,000 square feet with a total expected investment of approximately $63 million.

Terreno Realty Corporation has approximately $32.4 million of acquisitions under contract containing approximately 52,000 square feet and 1.9 acres of improved land, and approximately $12.4 million of acquisitions under letter of intent containing approximately 13,000 square feet and 2.2 acres of improved land. There is no assurance that Terreno Realty Corporation will acquire 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 third quarter of 2020, Terreno Realty Corporation issued 8,250 shares of common stock with a weighted average offering price of $59.92 per share, receiving gross proceeds of $0.5 million under the Company’s at-the-market equity offering program. Year-to-date, Terreno Realty Corporation has issued 1,054,577 shares of common stock with a weighted average offering price of $53.09 per share, receiving gross proceeds of $56.0 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. The Company has a cash balance of approximately $156 million, no balance outstanding on its $250 million revolving credit facility, and no remaining 2020 debt maturities.

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 September 30, 2020 on or about November 4, 2020.

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, 2019 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.