Terreno Realty Corporation (TRNO - Free Report) recently shelled out approximately $22.8 million for the purchase of an industrial property in San Leandro, CA. This acquisition comes as part of the company’s concerted efforts to capitalize on robust fundamentals of the industrial real estate sector through purchase of potential properties in core markets.
Built on 7.3 acres of land, the property consists of three industrial distribution buildings containing 128,000 square feet of space. It offers 14 dock-high and 19 grade-level loading positions, as well as parking for 156 cars.
The acquired property is likely to witness solid demand for space as it is conveniently located toward the west of Interstate 880 and near to the Oakland International Airport. It is currently 95.4% leased to 13 tenants, out of which, seven leases will end over the next 12 months. Further, its stabilized cap rate has been estimated at 4.8%, which highlights decent earning potential of the property.
Recovering economy and improving job-market environment have resulted in higher consumer spending. This, along with a healthy manufacturing market and high business inventories, will likely spur demand for distribution and warehousing facilities. This elevated demand is expected to significantly drive performance of Terreno Realty, as well as other industrial REITs like Duke Realty Corp. (DRE - Free Report) , Prologis (PLD - Free Report) and Liberty Property Trust (LPT - Free Report) .
Particularly, Terreno Realty is aimed at boosting shareholders’ value through opportunistic acquisition. It targets functional buildings at in-fill locations which enjoy high-population densities and are situated near high volume-distribution points. In fact, the company is focused on fortifying its portfolio in six major port cities — Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami, and Washington, D.C. — that display solid demographic trends and have strong barriers to entry which limit new supply.
Apart from the latest acquisition, the company recently added a 54,000-square-foot distribution center in Hayward, CA, to its portfolio. Moreover, in the first six months of 2018, it acquired five industrial properties, comprising 468,000 square feet of rentable space. With such efforts Terreno Realty, looks poised to benefit from robust market fundamentals in the industrial real estate segment.
Additionally, the company’s shares have gained 6.8% so far this year, against the industry’s decline of 1%. The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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