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Terreno Realty (TRNO) Continues Buyout Spree With $50M Buyout

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Terreno Realty Corporation (TRNO - Free Report) recently shelled out $50 million for the purchase of three industrial properties in Seattle, WA. The move comes as part of its acquisition-driven growth strategy.

The improved land parcels totals 11.7 acres. With an advantageous location on Martin Luther King Jr Way S next to King County International Airport-Boeing Field and Interstate 5, these properties are expected to see solid demand and hence, the buyout seems a strategic fit.

The price for the property at 9801 is $11.9 million. This property comprises 3.1 acres and enjoys full occupancy with a stabilized cap rate of 2.4%. The price for the other property at 9845 is $15.8 million. This property spans 3.4 acres and enjoys full occupancy with a stabilized cap rate of 3.4%. The price for the third property at 9600 is $22.4 million. This vacant property spans 5.2 acres with a stabilized cap rate of 4.9%.

Amid an e-commerce boom, growth in industries and companies making efforts to improve supply-chain efficiencies, demand for logistics infrastructure and efficient distribution networks has been shooting up. This is aiding the industrial real estate market to prosper.

In addition, apart from the fast adoption of e-commerce, logistics real estate is anticipated to benefit from a likely increase in inventory levels post the global health crisis, offering scope to industrial landlords, including Terreno Realty, Duke Realty , Prologis (PLD - Free Report) and Rexford Industrial Realty, Inc. (REXR - Free Report) , among others, to enjoy a favorable market environment.

Terreno Realty is also banking on such scopes and 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. Recently, the company acquired an industrial property in Orange, CA, for $9.3 million.

The company is well poised on the back of these efforts to enhance 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.

However, 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. New supply is likely to put pressure on vacancy level, which is likely to increase to some extent in the upcoming quarters.

Terreno Realty currently carries a Zacks Rank #3 (Hold). In the past three months, the company’s shares have gained 6.7% compared with its industry's rally of 8.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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