Terreno (TRNO) Buys Industrial Asset In Gardena For $37.6M

Industrial real estate investment trust (REIT) Terreno Realty Corporation (NYSE:TRNO) has been positioning itself to benefit from the improving fundamentals of the industrial markets by acquiring strategic assets in core markets. On Dec15, the company added another industrial property to its portfolio through the acquisition of an industrial property in Gardena, CA.

The company shelled out around $37.6 million for this buyout. The property consists of two industrial distribution buildings of about 231,000 square feet, spread on 11.1 acres of land.It is 100% leased to one tenant, and offers 24 dock-high and three grade-level loading positions, as well as a parking facility for 163 cars.

It is strategically located at 1855 West 139th Street, south of Interstate 105, and between Interstates 110 and 405. The property carries an estimated stabilized cap rate of 4.2%. The latest acquisition is anticipated to drive Terreno’s bottom line in the near future.

Terreno has restrained from pursuing ground-up development or land investments and instead aims to boost shareholder value through acquisition of industrial assets. Specifically, the company focuses on a long-term growth strategy of owning high-quality industrial assets at in-fill locations that can be redeveloped to accommodate single and multiple tenants. The company is fortifying its portfolio in six major port cities that depict solid demographictrends and have strong barriers to entry which limit new supply.

The company’s investment-driven growth strategy is highlighted by its active acquisition activities. On Dec 1, Terreno acquired an improved land parcel in Carson, CA, for approximately $12.9 million. The land, spanning 5.4 acres, is 100% leased.

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. Given Terreno’s solid capacity to offer modern, bulk distribution properties, the company remains well poised to capitalize on robust industry fundamentals.

Terreno currently carries a Zacks Rank #3 (Hold). Encouragingly, year to date, shares of the company have outperformed the industry. While the stock has gained 31.3%, the industry has recorded growth of 5.3% during this period.

Better-ranked stocks in the REIT space include Franklin Street Properties (NYSE:FSP) , Columbia Property Trust (NYSE:CXP) and MedEquities Realty Trust (NYSE:MRT) . All three carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Franklin Street Properties’ funds from operations (FFO) per share estimates for 2017 remained unchanged at $1.05 over the past month. Its share price has increased 7.6% in three months’ time.

Columbia Property Trust’s FFO per share estimates for the current year have moved up 2.7% to $1.15 in a month’s time. Over the past three months, the company’s shares have gained 8.8%.

MedEquities Realty’s 2017 FFO per share estimates remained unchanged at $1.12 over the past month. The stock has been down 1.3% for the past three months.

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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