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Terreno Realty (TRNO) Boosts Portfolio With Hialeah Property

Terreno Realty Corporation TRNO shelled out $173.6 million to purchase an industrial property in Hialeah, FL. The move comes as part of the company’s acquisition-driven growth strategy.  

Located in Miami’s Countyline Corporate Park, the industrial property is next to TRNO’s seven fully leased buildings within Countyline. It comprises a 121-acre project entitled to 2.2 million square feet of industrial distribution buildings.

The completion of the project is expected in 2025 and will have a total expected investment of roughly $491.4 million. The estimated stabilized cap rate of the two buildings under construction is 5% and of the eight buildings to be constructed is 6%. The property’s advantageous location is likely to help attract tenants.

Amid an e-commerce boom, growth in industries and companies making efforts to improve supply-chain efficiencies, the demand for industrial real estate space has been shooting up. TRNO is banking on such opportunities and is focused on expanding its portfolio through acquisitions.

Further, the company is targeting functional assets at in-fill locations. Such assets enjoy high-population densities and are located near high-volume distribution points.

With such expansion efforts, Terreno Realty is well-poised to enhance its portfolio in six major coastal U.S. markets — Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami and Washington, DC. These markets display solid demographic trends and witness healthy demand for industrial real estate.

In the fourth quarter, TRNO acquired four properties comprising three buildings, encompassing roughly 65,000 square feet, and one improved land parcel of roughly 2.8 acres for a total of $59.4 million.

For the full-year 2022, Terreno Realty’s acquisition activity included 20 properties. These comprised 17 buildings encompassing roughly 831,000 square feet and 11 improved land parcels of about 35.7 acres for a total of $414.8 million.

Apart from the fast adoption of e-commerce, the industrial real estate space is poised to gain traction over the long run from a likely rise in the inventory levels of companies as a precaution for any supply-chain disruption. This will offer opportunities to industrial landlords, including TRNO, Prologis PLD and First Industrial Realty Trust, Inc. FR, to enjoy a favorable market environment.

Shares of Terreno Realty, currently carrying a Zacks Rank #3 (Hold), have climbed 9.6% in the past three months against the industry’s decline of 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research
Zacks Investment Research

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Prologis carries a Zacks Rank of 3 at present. Prologis’ long-term growth rate is projected at 7.20%. The Zacks Consensus Estimate for PLD’s 2023 funds from operations (FFO) per share of $5.53 calls for a 7.2% year-over-year increase.

First Industrial Realty carries a Zacks Rank of 3 at present. The Zacks Consensus Estimate for First Industrial Realty’s 2023 FFO per share has moved 2 cents north to $2.40 over the past two months.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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