Terreno Realty Corporation (TRNO - Free Report) is making considerable efforts to strengthen its portfolio in California. In fact, on Dec 20, 2018, this industrial real estate investment trust (REIT) shelled out $6.2 million for the acquisition of an industrial property in Fremont.
Built on 1.5 acres of land, the property consists of one industrial distribution building, spanning nearly 29,000 square feet of space. It is positioned at 45897 Hotchkiss Street, between Interstates 880 and 680. It is situated adjacent to the company’s 45861 Hotchkiss Street property, thereby increasing its market share and providing higher pricing power.
The property is 42% leased to a single tenant. Further, it is well amenitized with four dock-high and two grade-level loading capacity, along with parking for 54 cars.
The stabilized cap rate of the property is estimated to be 5.2%. The buyout is in line with its efforts to convert value-add investments into stabilized assets and thereby, realize higher value.
Particularly, Terreno Realty is aimed at boosting shareholders’ value through opportunistic acquisitions. 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 experience healthy demand for industrial real estates.
Notably, e-commerce penetration has led to surge in online shopping and same-day delivery options, thereby, spurring demand for the industrial real estate category. This is because last-mile delivery options require greater warehouse space, which is strengthening distribution capabilities in urban neighborhood. 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) .
However, escalating concerns over global trade tensions and the impact of higher tariffs remain headwinds for this real estate category. If higher tariffs disrupt the global distribution channel, it will likely deaccelerate the flow of goods, impacting demand for industrial space.
In fact, shares of this Zacks Rank #2 (Buy) company have edged down 0.5% in the past year, narrower than the industry’s loss of 8.8%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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