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

Rhea-AI Summary

Terreno Realty Corporation (NYSE:TRNO) reported its Q1 2023 performance, emphasizing a quarter-end occupancy of 98.1%, slightly down from 98.6% in Q4 2022 but improved from 96.9% year-over-year. The same-store occupancy was 98.5%, compared to 98.7% last quarter and 97.3% last year. The company achieved a 69.3% increase in cash rents on new and renewed leases and a tenant retention ratio of 54.4%. Notably, Terreno closed $382.6 million in acquisitions and held $62.9 million under contract. Additionally, it completed a stock offering for $359.4 million and issued $22.2 million under its ATM program. As of March 31, 2023, the company had zero borrowings under its $400 million credit facility.

Positive

• 98.1% quarter-end occupancy, up from 96.9% year-over-year.
• 69.3% increase in cash rents on new and renewed leases.
• $382.6 million in acquisitions completed.
• Successful offering of 5,750,000 shares for gross proceeds of $359.4 million.

Negative

• Quarter-end occupancy slightly decreased from 98.6% in the prior quarter.
• Tenant retention ratio of only 54.4%, indicating potential leasing challenges.

• 98.1% quarter-end occupancy compared to prior quarter of 98.6% and prior year of 96.9%
• 98.5% quarter-end same-store occupancy compared to prior quarter of 98.7% and prior year of 97.3%
• 69.3% increase in cash rents on new and renewed leases and tenant retention ratio of 54.4%
• $382.6 million of acquisitions; $62.9 million under contract
• Completed an offering of 5,750,000 shares of common stock for gross proceeds of $359.4 million
• Issued 350,000 shares of common stock under ATM for gross proceeds of $22.2 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 first quarter of 2023.

Operating

As of March 31, 2023, Terreno Realty Corporation owned 257 buildings aggregating approximately 15.9 million square feet and 46 improved land parcels consisting of approximately 161.4 acres:

• The operating portfolio was 98.1% leased at March 31, 2023 to 566 tenants as compared to 98.6% at December 31, 2022 and 96.9% at March 31, 2022;
• The same-store portfolio of approximately 13.2 million square feet was 98.5% leased at March 31, 2023 as compared to 98.7% at December 31, 2022 and 97.3% at March 31, 2022;
• The improved land portfolio of 46 parcels totaling approximately 161.4 acres was 98.9% leased at March 31, 2023 as compared to 92.5% at December 31, 2022 and 94.9% at March 31, 2022;
• Cash rents on new and renewed leases totaling approximately 0.6 million square feet and 5.6 acres of improved land commencing during the first quarter increased approximately 69.3% with a tenant retention ratio of 54.4% for the operating portfolio and 0.0% for the improved land portfolio;
• Executed a lease for 192,000 square feet in Northern New Jersey with a transportation and logistics services provider. The lease commenced April 1, 2023 and will expire November 2028. Terreno Realty Corporation executed an early termination agreement with an existing tenant in the 192,000 square foot space effective March 31, 2023; and
• Executed a lease for 3.5 acres of improved land in Redmond, Washington with a North American provider of workplace transportation services. The lease commenced March 31, 2023 and will expire June 2033.

Investment

During the first quarter of 2023, Terreno Realty Corporation acquired three properties consisting of five buildings containing approximately 648,000 square feet and a 121-acre project entitled for 2.2 million square feet of industrial distribution buildings for an aggregate purchase price of approximately $382.6 million. The first quarter investment activity was as follows:

• Countyline Corporate Park (“Countyline”): a 121-acre project entitled for 2.2 million square feet of industrial distribution buildings located in Hialeah, Florida, immediately adjacent to Terreno Realty Corporation’s seven fully-leased buildings within Countyline. The project, a landfill redevelopment adjacent to Florida’s Turnpike and the southern terminus of I-75, is expected to contain at completion in 2025 ten LEED-certified industrial distribution buildings, two of which are under construction, 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 $491.4 million. The estimated stabilized cap rate of the two buildings under construction is 5.0% and of the eight buildings to be built is 6.0%;
• 42-11 9th Street: One industrial distribution building containing approximately 45,000 square feet on 1.1 acres located in Long Island City, Queens, New York, immediately adjacent to the Queensboro 59th Street Bridge connecting Manhattan and Queens. The property provides one dock-high and two grade-level loading positions and off-street parking for 13 cars. The property was acquired 100% leased on a short-term basis for a purchase price of approximately $23.0 million and an estimated stabilized cap rate of 5.2%; and
• 7355-7395 Morton Avenue: Four industrial distribution buildings containing approximately 603,000 square feet on 30.5 acres located in Newark, California, adjacent to I-880, CA SR 84 and the Dumbarton Bridge. The property provides 86 dock-high and eight grade-level loading positions and parking for 730 cars. The property was acquired 100% leased to four tenants with leases expiring between 2026 and 2032 for a purchase price of approximately $186.0 million and an estimated stabilized cap rate of 4.6%.

As of March 31, 2023, Terreno Realty Corporation had four properties under development or redevelopment that, upon completion, will consist of 12 buildings aggregating approximately 2.3 million square feet and one 7.2-acre improved land parcel, with a total expected investment of approximately $571.2 million:

• Countyline Corporate Park in Miami - 121-acre landfill redevelopment project expected to contain upon completion in 2025 ten LEED-certified industrial distribution buildings for a total expected investment of $491.4 million. Two buildings are under construction; Building 41, a 191,000 square foot rear-load industrial distribution building which is 78.4% pre-leased and expected to be stabilized in the fourth quarter of 2023 and Building 38, a 506,000 square foot cross-dock industrial distribution building which is 100% pre-leased and expected to be stabilized in the second quarter of 2024;
• 245 Paterson Plank Road in Northern New Jersey - 4.9-acre improved land upon which a 48,000 square foot industrial distribution building is expected to be built. The property is expected to be stabilized in the fourth quarter of 2024 for a total expected investment of $35.8 million;
• Berryessa Road in San Francisco - 7.2-acre improved land parcel expected to be stabilized in the third quarter of 2023 for a total expected investment of $26.0 million; and
• 147th Street in Los Angeles - 34,000 square foot industrial distribution building expected to be stabilized in the third quarter of 2024 for a total expected investment of $18.1 million.

Terreno Realty Corporation has approximately $62.9 million of acquisitions under contract. Terreno Realty Corporation has one property under contract for sale for approximately $25.5 million containing approximately 127,000 square feet. There is no assurance that Terreno Realty Corporation will acquire or dispose of the properties under contract because the proposed acquisitions and dispositions are subject to the completion of satisfactory due diligence and closing conditions.

Capital Markets

During the first quarter of 2023, Terreno Realty Corporation closed an offering of 5,750,000 shares of its common stock at a price to the public of $62.50 per share, receiving gross proceeds of $359.4 million. The Company intends to use the net proceeds from the offering for acquisitions, redevelopments and for general corporate purposes.

In addition, Terreno Realty Corporation issued 350,000 shares of common stock with a weighted average offering price of $63.30 per share under the Company’s at-the-market equity offering program, receiving gross proceeds of $22.2 million. Terreno Realty Corporation did not repurchase any shares of common stock pursuant to the Company’s share repurchase authorization.

As of March 31, 2023, 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 quarterly report on Form 10-Q for the period ended March 31, 2023 on or about May 3, 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, 2022 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/20230411005860/en/

Terreno Realty Corporation

Jaime Cannon, 415-655-4580

Source: Terreno Realty Corporation

FAQ

What is Terreno Realty Corporation's occupancy rate as of March 31, 2023?

Terreno Realty Corporation reported an occupancy rate of 98.1% as of March 31, 2023.

How much did Terreno Realty Corporation acquire in Q1 2023?

The company completed $382.6 million in acquisitions during the first quarter of 2023.

What was the cash rent increase for Terreno Realty Corporation in Q1 2023?

Terreno Realty Corporation experienced a 69.3% increase in cash rents on new and renewed leases in Q1 2023.

What shares did Terreno Realty Corporation issue in Q1 2023?

Terreno Realty Corporation completed an offering of 5,750,000 shares for gross proceeds of $359.4 million.

What challenges did Terreno Realty Corporation face in tenant retention?

Terreno Realty Corporation reported a tenant retention ratio of 54.4% as of March 31, 2023.