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Terreno Realty (TRNO) Buys Hialeah Asset, Enhances Portfolio

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Terreno Realty Corporation (TRNO - Free Report) recently shelled out $39.4 million for the purchase of an industrial property in Hialeah, FL. The move comes as part of its acquisition-driven growth strategy.

The property comprises one recently-developed rear-load 32-foot industrial distribution building, encompassing roughly 221,000 square feet on 11.4 acres. With an advantageous location at 4151 West 108th Street, this property offers 65 dock-high and two grade-level loading positions and parking for 188 cars.

The location is just next to Terreno Realty’s buildings at 4021-4071 West 108th Street and close to Florida’s Turnpike, and the southern terminus of I-75. It is fully leased to three tenant with all the leases expected to start between Jul 16 and Sep 30, this year. Rental revenues from the leases are likely to provide top-line visibility for the lease term.

Terreno Realty is focused on expanding its portfolio on acquisitions. It targets functional assets at in-fill locations, which enjoy high-population densities and are located near high-volume distribution points. Last month, the company acquired an industrial property in Renton, WA, for $7.6 million.

The company is well poised on the back of these efforts to fortify its portfolio in the six major coastal U.S. markets — Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami and Washington, DC — which display solid demographic trends and witness healthy demand for industrial real estates.

The industrial asset class has grabbed the limelight for showing resilience amid the pandemic with low vacancy rates, high asking rents and robust rent collections. There has been a notable 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, the industrial real estate space is anticipated to benefit from a likely rise in the inventory levels post the global health crisis, opening up prospects for industrial landlords, including Terreno Realty, Duke Realty , Prologis (PLD - Free Report) and Rexford Industrial Realty, Inc. (REXR - Free Report) , to enjoy the favorable market environment.

Terreno Realty has also has been witnessing decent demand from new and existing tenants, which are aiding its leasing and renewal activities. Nonetheless, with the asset category being attractive in these challenging times, there is a development boom in a number of markets. This high supply is likely to intensify competition and curb pricing power.

Terreno Realty’s shares have gained 19.2% in the past six months compared with its industry's rally of 21.5%. However, the Zacks Consensus Estimate for 2021 funds from operations (FFO) per share moved up marginally to $1.65 over the past two months. The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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