Terreno Realty Announces Lease Renewal, Sees Decent Demand
Last Monday,Terreno Realty Corporation TRNO announced the execution of an early lease renewal in Sunnyvale, CA, with a leading provider of molecular diagnostic testing. This reflects the healthy demand for its properties from existing tenants. The 172,000-square-foot lease of three buildings, originally set to expire in March 2025, has been extended until March 2030.
The demand for industrial real estate space has been high amid an e-commerce boom, growth in industries and companies making efforts to improve supply-chain efficiencies. Terreno Realty is also experiencing healthy demand for its properties from both existing and new tenants.
Apart from the above lease renewal, on Aug. 16, 2024, the company executed a lease for 69,000 square feet in San Leandro, CA. This lease with an ocean freight provider will commence on Sep. 30, 2024 and is slated for expiry in January 2030.
On Aug. 13, 2024, TRNO also announced the execution of an early lease renewal in Torrance, CA, with a global supplier of automotive parts, components and technologies. The 99,000-square-foot lease, originally set to expire in January 2025, has been extended until January 2030.
On Aug. 1, 2024, the company also announced that it has pre-leased 67% of Countyline Corporate Park Phase IV Building 33 in Hialeah, FL. The lease, which will run for seven years with a third-party logistics provider and encompass 105,000 square feet of space, will start upon the completion of building construction and tenant improvements expected in March 2025.
Q2 Leasing Details of Terreno Realty
TRNO’s operating portfolio was 96% leased to 668 tenants as of June 30, 2024. Its same-store portfolio of 14.7 million square feet was 96% leased on June 30, 2024. For the company’s improved land portfolio of 45 parcels spanning 152.4 acres, the leased rate was 98.1% as of June 30, 2024 compared to 94.6% and 96.3% recorded as of March 31, 2024 and June 30, 2023, respectively.
Terreno Realty was able to lock in higher rents on new and renewed leases during the quarter. The cash rents on new and renewed leases climbed 45.9%. The tenant retention ratio was 56.4% for the operating portfolio and 61.2% for the improved land portfolio.
With a solid operating platform, a robust balance sheet position and strategic expansion moves, TRNO seems well-positioned to capitalize on long-term growth opportunities amid favorable industry fundamentals.
Shares of Terreno Realty, currently carrying a Zacks Rank #3 (Hold), have rallied 26.6% in the past three months, outperforming the industry’s growth of 20.2%
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Stocks to Consider
Some better-ranked stocks from the REIT sector are Cousins Properties Incorporated CUZ and Lamar Advertising LAMR, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Cousins Properties’ ongoing year’s FFO per share has increased marginally over the past month to $2.66.
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Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
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