Terreno Realty Corporation
), a real estate investment trust (REIT), has recently acquired
an industrial building spanning 110,000 square feet in Tukwila,
Washington, for approximately $8.0 million. The company also
assumed a mortgage loan worth $5.0 million with a fixed annual
interest rate of 6.31% scheduled to mature in July 2016. The
property was purchased from an unnamed seller.
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 100% leased to six tenants.
The industrial building is strategically located in the northern
Kent Valley submarket, in close proximity to the Sea-Tac
International Airport - the fourth largest air-cargo airport in
the Northwest. The property is also adjacent to Interstate 5 -
the key highway on the West Coast of the U.S, and Interstate 405
- a major north-south highway in Southern California.
Consequently, the property brings on board unmatched distribution
space for the company.
The estimated stabilized cap rate of the asset is 6.3%. 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.