Terreno Realty Corporation
), a real estate investment trust (REIT), has recently acquired
an industrial building spanning 47,000 square feet in San Jose,
California. The property was purchased from an unnamed seller for
approximately $4.2 million.
DCT INDUSTRIAL (DCT): Free Stock Analysis
TERRENO REALTY (TRNO): Free Stock Analysis
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The acquisition is part of the long-term strategy of the company
to abstain from pursuing ground-up development or land
investments, and instead own functional and flexible buildings in
infill locations that can be modified to accommodate single and
multiple tenants at discounts to replacement cost.
The acquired property is presently 71% leased to two tenants. The
multi-tenant industrial building is strategically located in
close proximity to the Mineta San Jose International Airport
situated in the heart of Silicon Valley. The property is also
adjacent to Montague Expressway - a key highway in the region, US
101 - a north-south U.S. highway; and I-880 - an interstate
highway in the San Francisco Bay Area. Consequently, the property
brings on board unmatched distribution space for the company.
The estimated stabilized cap rate of the asset is 7.4%. Total
acquisition cost of the property included the initial purchase
price, the effects of marking assumed debt to market, due
diligence and closing costs, estimated near-term capital
expenditures, and leasing costs necessary to achieve
San Francisco-based Terreno Realty owns and operates industrial
real estate properties primarily in six major coastal markets of
the U.S. These include the high barrier-to-entry markets of Los
Angeles, Northern New Jersey/New York City, San Francisco Bay
Area, Seattle, Miami and Washington D.C./Baltimore.
As of September 30, 2012, Terreno Realty owned 63 buildings
aggregating 4.8 million square feet in high barrier-to-entry
markets of Los Angeles, Northern New Jersey/New York City, San
Francisco Bay Area, Seattle, Miami and Washington D.C./Baltimore.
The properties were approximately 92.6% leased to 97 tenants.
Each of the locations in which Terreno Realty has a significant
presence is characterized by a well-established transportation
network - seaports, airports, highways and railways that are
essential for the swift distribution of goods. In addition,
available land in these markets is scarce, resulting in steep
barriers for the development of new and competing properties.
We have a Neutral rating on Terreno Realty, which presently has a
Zacks #3 Rank translating into a short-term Hold rating. We also
have a Neutral recommendation and a Zacks #3 Rank for
DCT Industrial Trust Inc.
), one of the competitors of Terreno Realty.