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Terreno Realty (TRNO) Issues Q4 Operations & Investment Update

Terreno Realty Corporation TRNO recently issued an update on fourth-quarter operating, investment and capital activities.

As of Dec 31, 2021, the company’s portfolio included 253 buildings, spanning 15.1 million square feet, and 36 improved land parcels encompassing 127.1 acres. It also had four properties under redevelopment.

Operational Update

As of Dec 31, 2021, Terreno Realty’s operating portfolio, exclusive of two properties under redevelopment, was 95.5% leased. This marks a contraction of 250 basis points sequentially and mainly reflects acquired vacancy of 373,000 square feet, of which 361,000 square feet are preleased and expected to commence before Jun 30, 2022. The remaining part — 82,000 square feet — is from the inclusion of SoDo Row, Seattle.

Similarly, the same-store portfolio (spanning 12.5 million square feet) was 98.2% leased at the end of the quarter, down from 98.6% witnessed at the prior-quarter end.

However, TRNO was able to lock in higher rents on new and renewed leases, reflecting resilience in its portfolio. Cash rents on new and renewed leases (commenced during the fourth quarter) — aggregating 0.6 million square feet — grew 34.4%, with a tenant retention ratio of 57.5%.

Investment Update

The company continued to expand its portfolio on acquisitions during the October-December quarter. It acquired 14 properties comprising 13 buildings, encompassing roughly 891,000 square feet, and six improved land parcels of roughly 19.6 acres for a total of approximately $326.1 million.

For full-year 2021, Terreno Realty’s acquisition activity included 34 properties. This comprised 34 buildings, encompassing roughly 1,895,000 square feet, and 14 improved land parcels of about 53 acres for a total of $657.3 million.

Moreover, Terreno Realty sold one property for $32.7 million during the fourth quarter. For full-year 2021, TRNO sold two properties for $43.0 million.

Further, Terreno Realty has around $21 million of acquisitions under contract as well as $174.3 million of acquisitions under letters of intent.

Capital Markets Activity

During the December-end quarter, Terenno Realty tapped the equity market with its at-the-market (ATM) equity offering program to raise capital. It specifically issued 27,414 shares of common stock under ATM for gross proceeds of $1.8 million. For the full year, TRNO issued 2,569,771 shares of common stock under ATM, reaping gross proceeds of $162.5 million.

Moreover, during the fourth quarter, Terreno Realty closed a public offering of 4,025,000 shares of its common stock at $74.50 per share, receiving gross proceeds of $299.9 million.

Conclusion

Terreno Realty’s efforts to expand and strengthen its portfolio with acquisitions are a strategic fit. It also indicates that the company is financially sound to execute such deals.

There has been a significant increase in e-commerce’s share of total retail sales, spurring demand for warehouse and distribution spaces. Apart from the fast adoption of e-commerce, industrial real estate space is anticipated to gain traction over the long run from a likely rise in inventory levels of companies as a precaution for any supply-chain disruption. This, in turn, will likely keep supporting industrial landlords like Terreno Realty, Prologis PLD, Duke Realty Corp. DRE and Rexford Industrial Realty, Inc. REXR to enjoy a favorable market environment.

However, with the industrial asset category being attractive in these challenging times, there is a development boom in several markets. This high supply is likely to fuel competition and curb pricing power.

Terreno Realty currently carries a Zacks Rank #3 (Hold). In the past three months, the company’s shares have rallied 19.7%, outperforming its industry's growth of 10.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Image Source: Zacks Investment Research

Prologis carries a Zacks Rank of 2 (Buy) at present. Prologis’ 2021 FFO per share is expected to increase 8.4% year over year.

The Zacks Consensus Estimate for PLD’s 2021 FFO per share has been revised marginally upward in two months.

Duke Realty carries a Zacks Rank of 3 at present. The long-term growth rate for Duke Realty is projected at 7.80%.

The Zacks Consensus Estimate for DRE’s 2021 FFO per share has been revised marginally upward in two months to $1.74.

The Zacks Consensus Estimate for Rexford Industrial’s ongoing-year FFO per share has moved 5.2% north to $1.63 over the past three months.

The Zacks Consensus Estimate for Rexford Industrial’s 2021 FFO per share suggests an increase of 23.5% year over year. Currently, REXR carries a Zacks Rank of 2.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.


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Prologis, Inc. (PLD): Free Stock Analysis Report
 
Duke Realty Corporation (DRE): Free Stock Analysis Report
 
Terreno Realty Corporation (TRNO): Free Stock Analysis Report
 
Rexford Industrial Realty, Inc. (REXR): Free Stock Analysis Report
 
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