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Terreno Realty Corporation (TRNO - Free Report) recently issued an update on fourth-quarter operating, investment and capital activities.
As of Dec 31, 2022, Terreno Realty’s portfolio included 252 buildings spanning 15.3 million square feet and 46 improved land parcels encompassing 161.4 acres. It also had three properties under redevelopment.
Operational Update
As of Dec 31, 2022, TRNO’s operating portfolio, excluding one property under redevelopment, was 98.6% leased. This marks an expansion of 20 basis points (bps) sequentially and 310 bps year over year. The same-store portfolio (spanning 12.1 million square feet) was 99.5% leased at the end of the quarter, up 60 bps sequentially and 140 bps year over year.
Moreover, the improved land portfolio of 46 parcels, excluding two parcels under redevelopment, aggregated roughly 161.4 acres. The same was 92.5% leased as of Dec 31, 2022, up 90 bps sequentially.
Terreno Realty was able to lock in higher rents on new and renewed leases. These reflected solid industrial real estate market fundamentals and portfolio strength.
For the fourth quarter, this industrial REIT witnessed a 45.2% increase in cash rents on new and renewed leases, with a tenant retention ratio of 80.6% for the operating portfolio and 0.0% for the improved land portfolio. For the full year, TRNO experienced a 49.5% increase in cash rents on new and renewed leases.
Investment Update
The company continued to expand its portfolio on acquisitions during the October-December quarter. It acquired four properties comprising three buildings, encompassing roughly 65,000 square feet, and one improved land parcel of roughly 2.8 acres for a total of $59.4 million.
For the full-year 2022, Terreno Realty’s acquisition activity included 20 properties. These comprised 17 buildings encompassing roughly 831,000 square feet and 11 improved land parcels of about 35.7 acres for a total of $414.8 million.
Moreover, Terreno Realty sold three properties for $57.9 million in the fourth quarter. For the full-year 2022, TRNO sold four properties for $168.3 million, generating an unleveraged internal rate of return of roughly 15.5%.
Terreno Realty also has around $73.0 million of acquisitions under contract and approximately $13.5 million of acquisitions under letters of intent.
Capital Market 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 814,526 shares of common stock under ATM for gross proceeds of $47.9 million.
For the full year, TRNO issued 1,286,125 shares of common stock under ATM, reaping gross proceeds of $78.9 million. Also, the company did not repurchase any shares of common stock under its share repurchase authorization.
As of Dec 31, 2022, TRNO had no borrowings outstanding under its $400 million revolving credit facility as well as no debt maturities in 2023.
Conclusion
Terreno Realty’s efforts to expand and strengthen its portfolio with acquisitions are a strategic fit. These indicate that the company is financially sound to execute such deals.
However, rate hikes, inflation and macroeconomic uncertainty are raising concerns. Shares of this Zacks Rank #4 (Sell) company have rallied 14.5% in the past three months, outperforming the industry’s increase of 10%.
The Zacks Consensus Estimate for VICI Properties’ 2022 funds from operations (FFO) per share has moved 3.2% north to $1.92 over the past two months.
The Zacks Consensus Estimate for STAG Industrial’s 2022 FFO per share has been raised marginally over the past week to $2.21.
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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Terreno Realty (TRNO) Issues Q4 Operation & Investment Update
Terreno Realty Corporation (TRNO - Free Report) recently issued an update on fourth-quarter operating, investment and capital activities.
As of Dec 31, 2022, Terreno Realty’s portfolio included 252 buildings spanning 15.3 million square feet and 46 improved land parcels encompassing 161.4 acres. It also had three properties under redevelopment.
Operational Update
As of Dec 31, 2022, TRNO’s operating portfolio, excluding one property under redevelopment, was 98.6% leased. This marks an expansion of 20 basis points (bps) sequentially and 310 bps year over year. The same-store portfolio (spanning 12.1 million square feet) was 99.5% leased at the end of the quarter, up 60 bps sequentially and 140 bps year over year.
Moreover, the improved land portfolio of 46 parcels, excluding two parcels under redevelopment, aggregated roughly 161.4 acres. The same was 92.5% leased as of Dec 31, 2022, up 90 bps sequentially.
Terreno Realty was able to lock in higher rents on new and renewed leases. These reflected solid industrial real estate market fundamentals and portfolio strength.
For the fourth quarter, this industrial REIT witnessed a 45.2% increase in cash rents on new and renewed leases, with a tenant retention ratio of 80.6% for the operating portfolio and 0.0% for the improved land portfolio. For the full year, TRNO experienced a 49.5% increase in cash rents on new and renewed leases.
Investment Update
The company continued to expand its portfolio on acquisitions during the October-December quarter. It acquired four properties comprising three buildings, encompassing roughly 65,000 square feet, and one improved land parcel of roughly 2.8 acres for a total of $59.4 million.
For the full-year 2022, Terreno Realty’s acquisition activity included 20 properties. These comprised 17 buildings encompassing roughly 831,000 square feet and 11 improved land parcels of about 35.7 acres for a total of $414.8 million.
Moreover, Terreno Realty sold three properties for $57.9 million in the fourth quarter. For the full-year 2022, TRNO sold four properties for $168.3 million, generating an unleveraged internal rate of return of roughly 15.5%.
Terreno Realty also has around $73.0 million of acquisitions under contract and approximately $13.5 million of acquisitions under letters of intent.
Capital Market 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 814,526 shares of common stock under ATM for gross proceeds of $47.9 million.
For the full year, TRNO issued 1,286,125 shares of common stock under ATM, reaping gross proceeds of $78.9 million. Also, the company did not repurchase any shares of common stock under its share repurchase authorization.
As of Dec 31, 2022, TRNO had no borrowings outstanding under its $400 million revolving credit facility as well as no debt maturities in 2023.
Conclusion
Terreno Realty’s efforts to expand and strengthen its portfolio with acquisitions are a strategic fit. These indicate that the company is financially sound to execute such deals.
However, rate hikes, inflation and macroeconomic uncertainty are raising concerns. Shares of this Zacks Rank #4 (Sell) company have rallied 14.5% in the past three months, outperforming the industry’s increase of 10%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are VICI Properties Inc. (VICI - Free Report) and STAG Industrial, Inc. (STAG - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
The Zacks Consensus Estimate for VICI Properties’ 2022 funds from operations (FFO) per share has moved 3.2% north to $1.92 over the past two months.
The Zacks Consensus Estimate for STAG Industrial’s 2022 FFO per share has been raised marginally over the past week to $2.21.
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.