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

Rhea-AI Summary

Terreno Realty (NYSE:TRNO) reported its Q1 2025 operating results, showing a quarter-end occupancy of 96.6% compared to 97.4% in the previous quarter. The company achieved a 34.2% increase in cash rents on new and renewed leases with a 71.7% tenant retention ratio.

Key developments include:

• Sale of two properties for $24.9 million
• Completion of Santa Ana property redevelopment with $41.3 million investment
• Issuance of 3.5 million shares through ATM program raising $237.4 million
• Portfolio expansion to 298 buildings (19.3 million square feet) and 47 improved land parcels

The company has $55.9 million in acquisitions under contract and $16.0 million under letters of intent. Additionally, Terreno has five properties under development expected to total $392.8 million in investment.

Positive

• 34.2% increase in cash rents on new and renewed leases
• Strong tenant retention ratio of 71.7%
• Profitable property sales with IRRs of 13.0% and 7.5%
• No debt maturities in 2025 and zero borrowings on $600M credit facility
• Successful ATM offering raising $237.4M strengthening balance sheet

Negative

• Quarter-end occupancy declined to 96.6% from 97.4% in previous quarter
• Same-store occupancy decreased to 97.4% from 98.3% quarter-over-quarter
• Lower stabilized cap rates of 5.1% and 5.9% on new developments

Insights

Real Estate Investment Analyst

Terreno's Q1 2025 report reveals a mixed but predominantly positive performance picture. The standout metric is the 34.2% increase in cash rents on new and renewed leases, significantly outpacing inflation and industry averages. While quarter-over-quarter occupancy declined slightly from 97.4% to 96.6%, the year-over-year comparison shows improvement from 96.2%, indicating solid demand fundamentals in their coastal industrial markets.

The company's active portfolio management strategy is evident through the sale of two properties for $24.9 million, generating healthy unleveraged IRRs of 13.0% and 7.5%. Meanwhile, they've completed strategic redevelopment with the Santa Ana property, which achieved 100% leasing at a 5.1% stabilized cap rate. This recycling of capital from lower-yielding assets to higher-potential developments enhances long-term growth prospects.

The equity raise of $237.4 million at $67.71 per share (significantly above current trading price) demonstrates strong investor confidence and provides substantial dry powder for their $71.9 million acquisition pipeline and ongoing development projects. With zero debt on their $600 million revolving credit facility and minimal near-term maturities, Terreno maintains exceptional financial flexibility to capitalize on opportunities in their six core coastal markets.

• 96.6% quarter-end occupancy compared to prior quarter of 97.4% and prior year of 96.2%
• 97.4% quarter-end same-store occupancy compared to prior quarter of 98.3% and prior year of 96.3%
• 34.2% increase in cash rents on new and renewed leases and tenant retention ratio of 71.7%
• Sold two properties for $24.9 million
• Completed the development and stabilization of one property with a total investment of $41.3 million
• Issued 3,506,371 shares of common stock under ATM for gross proceeds of $237.4 million ($67.71 per share)

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 2025.

Operating

As of March 31, 2025, Terreno Realty Corporation owned 298 buildings aggregating approximately 19.3 million square feet and 47 improved land parcels consisting of approximately 150.6 acres leased to 663 customers:

• The operating portfolio was 96.6% leased at March 31, 2025 as compared to 97.4% at December 31, 2024 and 96.2% at March 31, 2024;
• The same-store portfolio of approximately 15.6 million square feet was 97.4% leased at March 31, 2025 as compared to 98.3% at December 31, 2024 and 96.3% at March 31 2024;
• The improved land portfolio of 47 parcels totaling approximately 150.6 acres was 95.1% leased at March 31, 2025 as compared to 95.1% at December 31, 2024 and 94.6% at March 31, 2024;
• Cash rents on new and renewed leases totaling approximately 0.6 million square feet and 4.3 acres of improved land commencing during the first quarter increased approximately 34.2% with a tenant retention ratio of 71.7% for the operating portfolio and 0.0% for the improved land portfolio; and
• Leased 100% of Countyline Corporate Park Phase IV Building 33 in Hialeah, Florida. Stabilization is expected in the third quarter of 2025 upon completion of tenant improvements and the estimated stabilized cap rate is 5.9%. Stabilization will bring Countyline Corporate Park Phase IV to 63% complete and stabilized.

Investment

During the first quarter of 2025, Terreno Realty Corporation sold two properties consisting of two buildings containing approximately 88,000 square feet for an aggregate sale price of approximately $24.9 million:

• One 66,000 square foot industrial distribution building on 3.0 acres in Union City, California for a sale price of approximately $16.9 million. The property was acquired by Terreno Realty Corporation in March 2015 for approximately $7.4 million. The unleveraged internal rate of return generated by the investment was 13.0%; and
• One 22,000 square foot industrial distribution building on 0.7 acres in South San Francisco, California for a sale price of approximately $8.0 million. The property was acquired by Terreno Realty Corporation in July 2020 for approximately $6.3 million. The unleveraged internal rate of return generated by the investment was 7.5%.

During the first quarter of 2025, Terreno Realty Corporation completed the redevelopment and stabilization of 1720 East Garry Avenue in Santa Ana, California. The 4.9-acre property contained three multi-tenant office buildings that were demolished. The redeveloped property contains a 92,000 square foot rear-load industrial distribution building with ten dock-high and two grade-level loading positions and parking for 145 cars for a total investment of $41.3 million. The redeveloped property is LEED Silver certified, 100% leased to a provider of temperature-controlled life sciences supply chain solutions and the estimated stabilized cap rate is 5.1%.

As of March 31, 2025, Terreno Realty Corporation had five properties under development or redevelopment that, upon completion, will consist of eight buildings aggregating approximately 0.8 million square feet which are approximately 48% pre-leased, and approximately 22.4 acres of land entitled for future development, with a total expected investment of approximately $392.8 million.

Terreno Realty Corporation has approximately $55.9 million of acquisitions under contract and approximately $16.0 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 first quarter of 2025, Terreno Realty Corporation issued 3,506,371 shares of common stock with a weighted average offering price of $67.71 per share under the Company’s at-the-market equity offering program, receiving gross proceeds of $237.4 million. Terreno Realty Corporation did not repurchase any shares of common stock pursuant to the Company’s share repurchase authorization.

As of March 31, 2025, there were no borrowings outstanding under Terreno Realty Corporation’s $600 million revolving credit facility. Terreno Realty Corporation has no debt maturities in 2025 and $50 million of debt maturities in 2026.

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 quarter ended March 31, 2025 on or about May 7, 2025.

Terreno Realty Corporation acquires, owns and operates industrial real estate in six major coastal U.S. markets: New York City/Northern New Jersey; Los Angeles; Miami; San Francisco Bay Area; Seattle 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”, “potential”, “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, 2024 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/20250408532612/en/

Terreno Realty Corporation

Jaime Cannon, 415-655-4580

Source: Terreno Realty Corporation

FAQ

What was TRNO's occupancy rate in Q1 2025 and how did it compare to previous periods?

TRNO's Q1 2025 occupancy was 96.6%, down from 97.4% in Q4 2024 but up from 96.2% in Q1 2024.

How much did Terreno Realty raise through its ATM program in Q1 2025?

TRNO raised $237.4 million by issuing 3,506,371 shares at an average price of $67.71 per share.

What was the rent increase percentage for TRNO's new and renewed leases in Q1 2025?

TRNO achieved a 34.2% increase in cash rents on new and renewed leases with a 71.7% tenant retention ratio.

How many properties did TRNO sell in Q1 2025 and for what amount?

TRNO sold two properties totaling 88,000 square feet for $24.9 million.

What is TRNO's current development pipeline value as of Q1 2025?

TRNO has five properties under development with a total expected investment of $392.8 million.