Terreno Realty Acquires Property - Analyst Blog
May 24 2011 - 2:16PM
Zacks
Terreno Realty Corporation (TRNO), a real
estate investment trust (REIT), has recently acquired an industrial
building in Kearny, New Jersey, for approximately $32.6 million.
The purchase price included the assumption of a mortgage loan of
$14.8 million collateralized by the property. The mortgage loan
bears a fixed annual interest rate of 5.5% and is scheduled to
mature in March 2021.
The acquired property spanning 211,000 square feet of space is
presently 100% leased to a single tenant. The estimated stabilized
cap rate of the asset is 5.6%, which is calculated as annualized
cash basis net operating income stabilized to market occupancy
(generally 95%) divided by its total acquisition cost.
Total acquisition cost includes the initial purchase price, the
effects of marking assumed debt to market, buyer’s due diligence
and closing costs, estimated near-term capital expenditures and
leasing costs necessary to achieve stabilization.
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 barriers-to-entry markets of Los
Angeles, Northern New Jersey/New York City, San Francisco Bay Area,
Seattle, Miami and Washington D.C./Baltimore.
Each of these locations 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.
As part of its corporate strategy, Terreno Realty does not
pursue ground-up development or land investments on its own.
Alternatively, the company acquires functional and flexible
buildings in infill locations that can be modified to accommodate
single and multiple tenants at discounts to replacement cost.
We have a Neutral rating on Terreno Realty, which presently has
a Zacks #4 Rank translating into a short-term Sell rating and
indicates that the stock is expected to perform well below the
overall U.S. equity market for the next 1–3 months. We also have a
Neutral recommendation and a Zacks #3 Rank (short-term Hold) for
AMB Property Corp. (AMB), a competitor of Terreno
Realty.
AMB PROPERTY CP (AMB): Free Stock Analysis Report
TERRENO REALTY (TRNO): Free Stock Analysis Report
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