Terreno Realty On Acquisition Spree, Buys Property In Queens

Industrial REIT Terreno Realty Corporation TRNO continues its efforts to capitalize on the healthy fundamentals in the industrial markets through purchase of potential properties in core markets. As part of such moves, most recently, the company shelled out $25.2 million for the purchase of an industrial property in Woodside Queens, NY. This comes after the acquisition of an industrial property Torrance, CA, for $17.5 million on Jan 31.

The recently-acquired property consists of one industrial distribution building, which following the conclusion of the revamp expected by the end of this year, will comprise approximately 83,000 square feet on around 3.7 acres. It is advantageously located next to the intersection of the Brooklyn-Queens Expressway and the Grand Central Parkway. It is situated nearly a mile away from the LaGuardia Airport at 1 Bulova Avenue. The property is 23% leased to one tenant on a short-term basis.

Notably, the industrial real estate asset category has grabbed attention due to elevated demand, recovering economy and job market, strengthening e-commerce market and a healthy manufacturing environment. This is offering scope to industrial REITs, including Prologis, Inc. PLD, DCT Industrial Trust DCT, Duke Realty Corporation DRE and Terreno.

In fact, Terreno remains well poised to capitalize on robust industry fundamentals as it has solid capacity to offer modern distribution properties. The company is aimed at boosting shareholders' value through acquisition of industrial assets. It specifically targets functional buildings at in-fill locations which enjoy high population densities and are situated near high volume-distribution points.

Particularly, Terreno is 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 depict solid demographic trends and have strong barriers to entry which limit new supply. Further, the company's 2017 acquisition activity included 23 industrial properties comprising 35 buildings, with around 1.7 million square feet and five improved land parcels, aggregating around 25.1 acres for a total of $292.7 million.

Moreover, concurrent with acquisitions, the company has been putting in concerted efforts to shed non-core properties in a bid to enhance its overall portfolio mix and provide capital for strategic acquisitions. Recently, it announced selling of an industrial property in Capitol Heights, MD, for approximately $20.3 million.

In fact, during 2017, the company's dispositions comprised four properties sold at a total price of around $77.3 million, producing an unleveraged internal rate of return of 13.7%. The company intends to redeploy the sale proceeds in acquiring high-yielding assets.

However, currently Terreno carries a Zacks Rank #4 (Sell). The stock has depreciated 4.6% over the past six months, which is narrower than the 9.7% loss incurred by the industry it belongs to.

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