Terreno Buys Property in California - Analyst Blog
15 Giugno 2011 - 4:00PM
Zacks
Terreno Realty
Corporation (TRNO), a real estate investment trust (REIT),
has recently acquired an industrial building in Inglewood,
California, for approximately $4.1 million. The acquisition is part
of the long-term strategy of the company to desist from pursuing
ground-up development or land investments, and instead own
functional and flexible buildings in infill locations that can be
modified to accommodate single and multiple tenants at discounts to
replacement cost.
The acquired property spanning
28,000 square feet of space is presently 100% leased to a single
tenant. The estimated stabilized cap rate of the asset is 6.8%,
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.
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. However, we have an ‘Outperform’
recommendation and a Zacks #1 Rank (short-term ‘Strong Buy’) for
Winthrop Realty Trust (FUR), one of the peers of
Terreno Realty.
WINTHROP REALTY (FUR): Free Stock Analysis Report
TERRENO REALTY (TRNO): Free Stock Analysis Report
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