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

Company Release –

  • 96.7% quarter end occupancy compared to prior quarter of 96.9% and prior year of 96.4%
  • 97.5% quarter end same store occupancy compared to prior quarter of 98.0% and prior year of 96.1%
  • 14.7% increase in cash rents on new and renewed leases for the quarter; 12.5% year to date
  • $51.6 million of acquisitions comprising approximately 258,000 square feet; $187.6 million year to date
  • Sold two properties for approximately $40.5 million
  • 2,206,685 shares of common stock issued under ATM for gross proceeds of $79.1 million
  • Private placement of $100 million senior unsecured notes with a seven-year term at 3.75%

SAN FRANCISCO--()--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 2017.

Operations

As of September 30, 2017, Terreno Realty Corporation owned 183 buildings aggregating approximately 12.6 million square feet and eight improved land parcels consisting of 41.6 acres. Key operating measures for the portfolio were as follows:

  • The total portfolio was 96.7% leased to 399 tenants as compared to 96.9% at June 30, 2017 and 96.4% at September 30, 2016;
  • The same store portfolio of approximately 10.2 million square feet was 97.5% leased at September 30, 2017 as compared to 98.0% at June 30, 2017 and 96.1% at September 30, 2016;
  • Cash rents on new and renewed leases totaling approximately 0.2 million square feet commencing during the third quarter increased approximately 14.7%. Cash rents on new and renewed leases totaling approximately 1.2 million square feet commencing during the nine months ended September 30, 2017 increased approximately 12.5%.

Occupancy decreased from June 30, 2017 primarily due to the sale of two 100% leased properties aggregating approximately 448,000 square feet and approximately 41,000 square feet of acquired vacancy.

Investment

During the third quarter of 2017, Terreno Realty Corporation acquired six industrial properties consisting of eight buildings containing approximately 258,000 square feet and one improved land parcel aggregating approximately 1.1 acres for an aggregate purchase price of approximately $51.6 million. The third quarter investment activity was as follows:

  • Telegraph Springs: Two rear-load industrial distribution buildings containing approximately 87,000 square feet on 5.3 acres in Santa Fe Springs, California, east of the intersection of Interstate 5 and Interstate 605. This property provides 17 dock-high and ten grade-level loading positions and was 100% leased to eight tenants. The purchase price was approximately $14.9 million with an estimated stabilized cap rate of 4.7%;
  • Dawson: One industrial transshipment building containing approximately 13,000 square feet on 1.4 acres adjacent to Seattle’s Port and SoDo district. This property provides 12 dock-high and three grade-level loading positions and was 100% leased to one tenant through February 2019. The purchase price was approximately $4.0 million with an estimated stabilized cap rate of 2.8%;
  • 1215 Walnut: One rear-load industrial distribution building containing approximately 58,000 square feet on 3.0 acres in Compton, California, adjacent to CA Route 91 (the Artesia Freeway) between Los Angeles International Airport and the Ports of LA and Long Beach. This property provides eight dock-high and one grade-level loading positions and was 100% leased to one tenant. The purchase price was approximately $9.4 million with an estimated stabilized cap rate of 5.2%;
  • NW 70th IV: One industrial distribution building containing approximately 16,000 square feet on 0.6 acres in Miami, Florida, immediately adjacent to Miami International Airport and three existing Terreno Realty Corporation properties on NW 70th Avenue. This property provides four dock-high loading positions and was 100% leased to one tenant on a short-term basis. The purchase price was approximately $2.5 million with an estimated stabilized cap rate of 6.1%;
  • Kero Road: Two transshipment facilities containing approximately 43,000 square feet and one improved land parcel comprising approximately 1.1 acres in Carlstadt, New Jersey, less than two miles north of the Meadowlands Sports Complex and Exit 16W of the New Jersey Turnpike. This property provides 77 dock-high and ten grade-level loading positions and was 100% leased to three tenants, two of which are on a short-term basis. The purchase price was approximately $13.5 million with an estimated stabilized cap rate of 5.2%; and
  • Hotchkiss: One industrial distribution building containing approximately 41,000 square feet on 2.1 acres in Fremont, California between Interstates 880 and 680. The property is vacant and will provide four dock-high and two grade-level loading positions after renovation. The purchase price was approximately $7.3 million with an estimated stabilized cap rate of 5.2%.

Terreno Realty Corporation’s year-to-date acquisitions total 16 industrial properties consisting of 21 buildings with approximately 1.2 million square feet and three improved land parcels totaling approximately 18.9 acres for an aggregate purchase price of $187.6 million.

During the third quarter of 2017, Terreno Realty Corporation sold two industrial properties in Maryland’s Baltimore/Washington D.C. corridor for an aggregate sale price of approximately $40.5 million. The properties consisted of an aggregate 448,000 square feet and were 100% leased at disposition. 8730 Bollman Place was purchased by Terreno Realty Corporation on June 24, 2011 for approximately $7.5 million and generated an estimated unleveraged internal rate of return of approximately 12.4%. 6675 Amberton Drive and 6660 Santa Barbara Road (Route 100) was purchased by Terreno Realty Corporation on June 12, 2013 for approximately $16.7 million and generated an estimated unleveraged internal rate of return of approximately 15.7%. Capital from the sales will be recycled into properties that Terreno Realty Corporation expects to provide better prospective returns.

Terreno Realty Corporation has approximately $73.4 million of acquisitions under contract aggregating approximately 493,000 square feet and approximately $50.1 million of acquisitions under letter of intent aggregating approximately 281,300 square feet. Terreno Realty Corporation has one property under contract for sale for approximately $11.5 million containing approximately 135,000 square feet. There is no assurance that Terreno Realty Corporation will acquire or dispose of the properties under contract or letter of intent because the proposed acquisitions and dispositions 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 2017, Terreno Realty Corporation issued 2,206,685 shares of common stock with a weighted average offering price of $35.84 per share, receiving gross proceeds of $79.1 million under the Company’s at-the-market equity offering program. Year-to-date Terreno Realty Corporation issued 7,042,771 shares of common stock with a weighted average share price of $31.87 for gross proceeds of $224.5 million. Terreno Realty Corporation did not repurchase any shares of common stock pursuant to the Company’s share repurchase authorization.

The Company redeemed all 1,840,000 outstanding shares of its 7.75% Series A Cumulative Redeemable Preferred Stock (CUSIP 88146M200) (the “Series A Preferred Stock”) on July 19, 2017 (the “Redemption Date”).

Terreno Realty Corporation closed the private placement of $100 million senior unsecured notes with a seven-year term on July 14, 2017, that bears interest at a fixed annual rate of 3.75%.

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, 2017 on or about November 1, 2017.

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,” 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, 2016 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.

Contacts

Terreno Realty Corporation
W. Blake Baird, 415-655-4580
Michael A. Coke, 415-655-4580

Contacts

Terreno Realty Corporation
W. Blake Baird, 415-655-4580
Michael A. Coke, 415-655-4580