Terreno Realty Corporation Announces Quarterly Operating, Investment and Capital Markets Activity
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 2023.
Operating
As of September 30, 2023, Terreno Realty Corporation owned 257 buildings aggregating approximately 15.8 million square feet and 46 improved land parcels consisting of approximately 165.8 acres:
- The operating portfolio was 98.3% leased at September 30, 2023 to 563 tenants as compared to 97.8% at June 30, 2023 and 98.4% at September 30, 2022;
- The same-store portfolio of approximately 13.2 million square feet was 98.5% leased at September 30, 2023 as compared to 98.4% at June 30, 2023 and 98.1% at September 30, 2022;
- The improved land portfolio of 46 parcels totaling approximately 165.8 acres was 96.3% leased at September 30, 2023 as compared to 96.3% at June 30, 2023 and 91.6% at September 30, 2022;
- Cash rents on new and renewed leases totaling approximately 0.5 million square feet and 2.8 acres of improved land commencing during the third quarter increased approximately 38.9% with a tenant retention ratio of 61.4% for the operating portfolio and 100.0% for the improved land portfolio. Excluding one fixed-rate lease renewal for approximately 93,000 square feet in Oakland, California, cash rents on new and renewed leases increased approximately 48.6% during the third quarter;
- Cash rents on new and renewed leases totaling approximately 1.8 million square feet and 11.4 acres of improved land commencing during the nine months ended September 30, 2023 increased approximately 57.1% with a tenant retention ratio of 55.0% for the operating portfolio and 19.4% for the improved land portfolio;
- Executed an early lease renewal and expansion in San Leandro, California with a provider of global aerospace and defense industry products and services. The expansion lease of 22,000 square feet commenced July 20, 2023 and expires December 2034. The renewal lease of 148,000 square feet, which was to expire in December 2024, will now expire December 2034; and
- Executed a lease for 31,000 square feet in Carlstadt, New Jersey with a North American distributor of grocery and non-food products. The lease commenced on August 1, 2023 and will expire May 2028.
Investment
During the third quarter of 2023, Terreno Realty Corporation acquired one 4.9-acre property which will be redeveloped for a purchase price of approximately $14.8 million. The third quarter investment activity was as follows:
- 1720 East Garry Avenue: 4.9-acre property in Santa Ana, California, immediately adjacent to the Costa Mesa Freeway (CA 55) and less than two miles from the intersection of CA 55 and I-405 and the John Wayne Airport in Orange County. The property was acquired for a purchase price of approximately $14.8 million and contained three multi-tenant office buildings leased on a short-term basis which will be demolished. After redevelopment, expected to be completed in the first quarter of 2025, the property will contain 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 expected investment of $40.6 million. The redeveloped property is 100% pre-leased to a provider of temperature-controlled life sciences supply chain solutions, expected to achieve LEED certification and the estimated stabilized cap rate is 5.1%.
Year-to-date, Terreno Realty Corporation acquired five properties consisting of six buildings containing approximately 681,000 square feet, 4.9 acres which will be redeveloped with the construction of an approximately 92,000 square foot industrial distribution building, and a 121-acre project entitled for 2.2 million square feet of industrial distribution buildings for an aggregate purchase price of approximately $410.8 million.
Subsequent to September 30, 2023, Terreno Realty Corporation sold one 100%-leased property in Hanover, Maryland for a sale price of approximately $18.0 million. The 13.4-acre improved land parcel was purchased by Terreno Realty Corporation on July 12, 2016 for approximately $8.2 million. The unleveraged internal rate of return generated by the investment was 17.5%. Year-to-date, Terreno Realty Corporation sold two properties consisting of one building containing approximately 127,000 square feet and one approximately 13.4-acre improved land parcel for an aggregate sale price of $43.4 million generating an unleveraged internal rate of return of approximately 15.8%.
During the third quarter of 2023, Terreno Realty Corporation commenced redevelopment of one property that, upon completion, will consist of one building containing approximately 92,000 square feet, with a total expected investment of approximately $40.6 million. Year-to-date, Terreno Realty Corporation commenced development or redevelopment of six properties that, upon completion, will consist of five buildings aggregating approximately 1.2 million square feet and one approximately 2.8-acre improved land parcel, with a total expected investment of approximately $282.3 million:
- Building 38 of Terreno Realty Corporation's Countyline Corporate Park in Miami, one cross-dock industrial distribution building containing approximately 506,000 square feet which is 100% pre-leased and expected to be stabilized in the second quarter of 2024 with an estimated stabilized cap rate of 5.0%;
- Building 39 of Terreno Realty Corporation's Countyline Corporate Park in Miami, one rear-load industrial distribution building containing approximately 178,000 square feet which is expected to be stabilized in the fourth quarter of 2024 with an estimated stabilized cap rate of 6.0%;
- Building 40 of Terreno Realty Corporation's Countyline Corporate Park in Miami, one rear-load industrial distribution building containing approximately 186,000 square feet which is 27% pre-leased and expected to be stabilized in the fourth quarter of 2024 with an estimated stabilized cap rate of 6.0%;
- Building 41 of Terreno Realty Corporation's Countyline Corporate Park in Miami, one rear-load industrial distribution building containing approximately 191,000 square feet which is 100% pre-leased and expected to be stabilized in the fourth quarter of 2023 with an estimated stabilized cap rate of 5.1%;
- 14805 S. Maple Avenue in Los Angeles, a 2.8-acre improved land parcel expected to be stabilized in the third quarter of 2024 with an estimated stabilized cap rate of 5.5%; and
- 1720 East Garry Avenue in Los Angeles, one rear-load industrial distribution building containing approximately 92,000 square feet which is 100% pre-leased and expected to be stabilized in the first quarter of 2025 with an estimated stabilized cap rate of 5.1%.
As of September 30, 2023, Terreno Realty Corporation had eight properties under development or redevelopment that, upon completion, will consist of 7 buildings aggregating approximately 1.2 million square feet which are approximately 68% pre-leased and one approximately 2.8-acre improved land parcel, with a total expected investment of approximately $336.1 million. Additionally, we owned approximately 62.7 acres of land entitled for future development of six buildings aggregating approximately 1.1 million square feet.
Terreno Realty Corporation has approximately $76.3 million of acquisitions under contract. There is no assurance that Terreno Realty Corporation will acquire the properties under contract because the proposed acquisitions are subject to the completion of satisfactory due diligence and closing conditions.
Capital Markets
During the third quarter of 2023, Terreno Realty Corporation issued 1,575,173 shares of common stock with a weighted average offering price of $60.78 per share under the Company's at-the-market equity offering program, receiving gross proceeds of $95.7 million. Year-to-date through September 30, 2023, Terreno Realty Corporation has issued 2,542,279 shares of common stock with a weighted average offering price of $61.61 per share, receiving gross proceeds of $156.6 million under the Company's at-the-market equity offering program. Combined with the February 2023 public offering of 5.75 million shares of common stock, Terreno Realty Corporation has issued 8,292,279 shares of common stock at a weighted average offering price of $62.23 per share, receiving aggregate gross proceeds of $516.0 million in 2023. Terreno Realty Corporation did not repurchase any shares of common stock pursuant to the Company's share repurchase authorization.
As of September 30, 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 September 30, 2023 on or about November 1, 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, 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.
News published on and distributed by:
