Terreno Realty CorporationTRNO has provided insights on its third-quarter operating, investment and capital markets activities.
Terreno's assets experienced solid demand for space on the back of improving fundamentals of industrial markets. This helped the company improve its leasing metrics on a year-over-year (y/y) basis.
Specifically at third-quarter end, Terreno's total portfolio was 96.7% leased, while its 10.2 million-square-foot same-store portfolio was 97.5% leased. Cash rents on new and renewed leases grew nearly 14.7% during the quarter, raising the tally for the year to 12.5%.
However, sale of two fully-leased properties, covering around 448,000 square feet of space, resulted in a fall of occupancy rates compared to the previous quarter. These properties, situated in Maryland's Baltimore/Washington D.C. corridor, were sold for $40.5 million. The company intends to redeploy the sale proceeds in the acquisition of high-yielding assets.
On the acquisition front, Terreno added six industrial properties, spanning 258,000 square feet of space, and a 1.1-acre improved land parcel to its roster during the third quarter. It shelled out approximately $51.6 million for these buyouts.
Year to date, the company holds 16 industrial properties and three improved land parcels encompassing nearly 1.2 million square feet of space and 18.9 acres, respectively. This adds up to an investment of $187.6 million.
The company complemented its investment-driven growth strategy by optimizing the capital structure. In July, Terreno raised $100 million through a private placement of senior unsecured notes. These notes have a seven-year term and carry an annual interest rate of 3.75%.
In July, the company redeemed all of the 1,840,000 cumulative preference shares, carrying a coupon rate of 7.75%.
Also, during the quarter, Terreno raised $79.1 million by issuing 2,206,685 shares of common stock.
Notably, the industrial asset category has grabbed attention on the back of robust demand, recovering economy and job market, strengthening e-commerce market, and healthy manufacturing environment. Given Terreno's solid capacity to offer modern, bulk distribution properties, the company remains well poised to capitalize on robust industry fundamentals.
Encouragingly, year to date, shares of Terreno have outperformed the industry . While the company's shares have gained 29.3%, the industry has recorded growth of 4.9% during this period.
Also, in the last 30 days, its current-quarter and full-year 2017 funds from operations (FFO) per share estimates remained unchanged at 27 cents and $1.13, respectively. Terreno currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in the REIT space include DCT Industrial Trust Inc. DCT , Prologis Inc. PLD and CoreSite Realty Corporation COR , each carrying a Zacks Rank of 2 (Buy). You can see see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
While DCT Industrial and Prologis have expected long-term growth rates of 4.1% and 4.6%, respectively, the expected long-term growth rate for CoreSite Realty is currently pegged at 16%.
Note: All EPS numbers presented in this write up represent funds from operations ("FFO") per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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