Terreno Realty Corporation Announces Redevelopment in Gardena, CA
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Insights
The redevelopment of Terreno Realty Corporation's industrial property is a strategic move that capitalizes on the demand for industrial real estate in prime coastal markets. Given the location between major interstates and the property's proximity to Los Angeles, the potential for high logistics efficiency is significant. The industrial sector has seen a surge in demand, primarily driven by the growth of e-commerce and the need for efficient distribution networks.
Furthermore, the project's expected completion in 2027 positions Terreno to benefit from long-term industrial real estate trends. The commitment to achieving LEED certification reflects a growing industry focus on sustainability, which could appeal to environmentally conscious tenants and investors. However, the substantial investment and the time required for redevelopment could pose risks related to construction delays or changes in market conditions.
The announced $64.0 million investment into the redevelopment project represents a significant capital expenditure for Terreno Realty Corporation. The estimated stabilized cap rate of 6.1% is a critical figure for investors, as it indicates the potential return on investment from the property, post-stabilization. This rate is within a reasonable range for industrial properties, suggesting that the project could deliver solid returns if market conditions remain favorable.
However, investors should consider the short-term lease with an e-commerce firm, which may temporarily generate income but also implies potential vacancy risk post-lease expiration. The financial health of Terreno, along with its ability to secure tenants in the long term, will be crucial for the project's success and the company's stock performance.
The pursuit of LEED certification for the redeveloped property indicates Terreno Realty Corporation's commitment to sustainable building practices. LEED-certified buildings are designed to be energy-efficient and resource-saving, which can lead to reduced operating costs and appeal to tenants looking for 'green' spaces. This move aligns with a broader trend in real estate development that prioritizes sustainability, potentially giving Terreno a competitive edge in attracting tenants and aligning with investor interest in socially responsible investments.
The property at 1855 W 139th Street is south of I-105 and between I-405 and I-110. After demolition of the existing buildings and redevelopment, expected to be completed in 2027, the property will contain three industrial buildings totaling 228,000 square feet with 34 dock-high and 17 grade-level loading positions and parking for 332 cars for a total expected additional investment of
Terreno Realty Corporation has executed a short-term lease for the existing property with an e-commerce firm that commenced January 19, 2024 and will expire January 2026.
Estimated stabilized cap rates are calculated as annualized cash basis net operating income stabilized to market occupancy (generally
Terreno Realty Corporation acquires, owns and operates industrial real estate in six major coastal
Additional information about Terreno Realty Corporation is available on the company’s web site at www.terreno.com.
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,” “enthusiastic,” “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, 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/20240118838975/en/
Jaime Cannon
415-655-4580
Source: Terreno Realty Corporation
FAQ
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