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Terreno Realty (TRNO) Acquires Hayward Assets, Enhances Portfolio

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As part of its acquisition-driven growth strategy, Terreno Realty Corporation (TRNO - Free Report) recently shelled out $8.3 million for the purchase of an industrial property in Hayward, CA.

Comprising two industrial distribution buildings containing roughly 41,000 square feet on 2.0 acres. With an advantageous location at 23482-23520 Foley Street, northwest of the intersection of I-880 and CA 92, the distribution buildings are anticipated to see solid demand and hence, the buyout seems a strategic fit. The estimated stabilized cap rate of the property is 4.9%.

In fact, the acquired property, offering 14 grade-level loading positions, as well as parking for 64 cars, is 92% leased to 10 tenants. All of the leases are set to expire by December 2025.

Demand for logistics infrastructure and efficient distribution networks has been shooting up amid an e-commerce boom, growth in industries and companies making efforts to improve supply-chain efficiencies. This is aiding the industrial real estate market. 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 (DRE - Free Report) , 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 Seattle, WA, for $50 million. Earlier, it acquired an industrial property in Orange, CA, for $9.3 million.

Terreno Realty 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.

In the past three months, the company’s shares have gained 3.3% compared with its industry's rally of 6.4%.

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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.

Terreno Realty currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.