BELLEVUE, Wash.--(BUSINESS WIRE)--Terreno Realty Corporation (NYSE:TRNO), an acquirer, owner and operator of industrial real estate in six major coastal U.S. markets, announced today its operating, investment and capital markets activity for the second quarter of 2023.
Operating
As of June 30, 2023, Terreno Realty Corporation owned 257 buildings aggregating approximately 15.8 million square feet and 46 improved land parcels consisting of approximately 165.8 acres:
- The operating portfolio was 97.8% leased at June 30, 2023 to 566 tenants as compared to 98.1% at March 31, 2023 and 97.9% at June 30, 2022. Occupancy decreased during the second quarter primarily due to a 45,000 square foot (approximately 30 bps) short-term sale leaseback expiration at the Company’s recently acquired Long Island City property. The property was subsequently leased with a September 1, 2023 commencement date;
- The same-store portfolio of approximately 13.2 million square feet was 98.4% leased at June 30, 2023 as compared to 98.5% at March 31, 2023 and 97.1% at June 30, 2022;
- The improved land portfolio of 46 parcels totaling approximately 165.8 acres was 96.3% leased at June 30, 2023 as compared to 98.9% at March 31, 2023 and 97.0% at June 30, 2022;
- Cash rents on new and renewed leases totaling approximately 0.8 million square feet and 3.0 acres of improved land commencing during the second quarter increased approximately 59.2% with a tenant retention ratio of 51.7% for the operating portfolio and 0.0% for the improved land portfolio. Cash rents on new and renewed leases totaling approximately 1.3 million square feet and 8.6 acres of improved land commencing during the six months ended June 30, 2023 increased approximately 64.3% with a tenant retention ratio of 52.9% for the operating portfolio and 0.0% for the improved land portfolio;
- Executed a lease for 45,000 square feet in Long Island City, Queens, New York with the leading bike share provider in New York City. The property was vacant as of June 30, 2023 and the new lease will commence on September 1, 2023 and will expire June 2029;
- Executed an early lease renewal in Kent, Washington with a leading e-commerce firm. The lease of 158,000 square feet, which was to expire in January 2024, will now expire January 2029;
- Executed a lease for 41,000 square feet in Hialeah, Florida with an international logistics services provider. The ten-year lease is expected to commence in November 2023 upon completion of tenant improvements. Building 41 of Terreno Realty Corporation’s Countyline Corporate Park Phase IV, a 191,000 square foot, 32-foot clear height rear-load industrial distribution building, is now 100% pre-leased and is expected to complete construction in the third quarter of 2023 and achieve LEED certification; and
- Completed the redevelopment of Terreno Realty Corporation’s Berryessa improved land parcel in San Jose, California and executed a lease for 6.3 acres of improved land to host a City of San Jose program to provide unhoused individuals with supportive interim tiny-home housing and safe RV parking. The lease commenced on June 30, 2023 and will expire August 2033. The total cost of the redeveloped property is approximately $26.3 million and the stabilized cap rate is approximately 4.9%.
Investment
During the second quarter of 2023, Terreno Realty Corporation acquired one property consisting of one building containing approximately 33,000 square feet for a purchase price of approximately $13.4 million. The second quarter investment activity was as follows:
- 2266 25th Place NE: One newly constructed industrial distribution building containing approximately 33,000 square feet on 1.3 acres located in Washington, D.C., one-half mile from Terreno Realty Corporation’s V Street portfolio in northeast Washington and U.S. Route 50/New York Avenue NE. The property provides two dock-high and five grade-level loading positions and parking for 23 cars. The property was acquired 100% leased for a purchase price of approximately $13.4 million and an estimated stabilized cap rate of 5.3%.
Year-to-date, Terreno Realty Corporation acquired four properties consisting of six buildings containing approximately 681,000 square feet and a 121-acre project entitled for 2.2 million square feet of industrial distribution buildings for an aggregate purchase price of approximately $396.1 million.
During the second quarter of 2023, Terreno Realty Corporation sold one 100%-leased property in North Bergen, New Jersey containing approximately 127,000 square feet for a sale price of approximately $25.5 million generating an unleveraged internal rate of return of approximately 14.4%. The property was acquired by Terreno Realty Corporation in April 2017 for approximately $14.0 million.
As of June 30, 2023, Terreno Realty Corporation had seven properties under development or redevelopment that, upon completion, will consist of 6 buildings aggregating approximately 1.1 million square feet and one 2.8-acre improved land parcel, with a total expected investment of approximately $295.4 million, excluding land for future development. During the second quarter of 2023, Terreno Realty Corporation commenced construction of buildings 39 and 40 of Terreno Realty Corporation’s Countyline Corporate Park in Miami, two rear-load industrial distribution buildings containing in aggregate 364,000 square feet which are 14% pre-leased and expected to be stabilized in the fourth quarter of 2024. The estimated stabilized cap rate is 6.0%. Additionally, during the second quarter of 2023, Terreno Realty Corporation commenced redevelopment of 14805 S. Maple Avenue, a 2.8-acre improved land parcel in Los Angeles expected to be stabilized in the third quarter of 2024 with an estimated stabilized cap rate of 5.5%.
Terreno Realty Corporation has approximately $49.5 million of acquisitions under contract and approximately $14.8 million of acquisitions under letters of intent. There is no assurance that Terreno Realty Corporation will acquire the properties under contract or letters of intent because the proposed acquisitions are subject to the completion of satisfactory due diligence, closing conditions and, in the case of letters of intent, contracts.
Capital Markets
During the second quarter of 2023, Terreno Realty Corporation issued 617,106 shares of common stock with a weighted average offering price of $62.75 per share under the Company’s at-the-market equity offering program, receiving gross proceeds of $38.7 million. Year-to-date through June 30, 2023, Terreno Realty Corporation has issued 967,106 shares of common stock with a weighted average offering price of $62.95 per share, receiving gross proceeds of $60.9 million under the Company’s at-the-market equity offering program. Combined with the February 2023 public offering of 5.75 million shares of common stock, Terreno Realty Corporation has issued 6,717,106 shares of common stock at a weighted average offering price of $62.57 per share, receiving aggregate gross proceeds of $420.3 million in 2023. Terreno Realty Corporation did not repurchase any shares of common stock pursuant to the Company’s share repurchase authorization.
As of June 30, 2023, there were no borrowings outstanding under Terreno Realty Corporation’s $400 million revolving credit facility, and the Company has no debt maturities in 2023.
Additional information is available on the Company’s website at www.terreno.com. Terreno Realty Corporation expects to file its quarterly report on Form 10-Q for the period ended June 30, 2023 on or about August 2, 2023.
Terreno Realty Corporation acquires, owns and operates industrial real estate in six major coastal U.S. markets: Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami, and Washington, D.C.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. We caution investors that forward-looking statements are based on management’s beliefs and on assumptions made by, and information currently available to, management. When used, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “result,” “should,” “will,” “seek,” “target,” “see,” “likely,” “position,” “opportunity,” “outlook,” and similar expressions which do not relate solely to historical matters are intended to identify forward-looking statements. These statements are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including risks related to our ability to meet our estimated forecasts related to stabilized cap rates, and those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2022 and our other public filings. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. We expressly disclaim any responsibility to update our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.
