Terreno Purchases Savage Property - Analyst Blog
01 Luglio 2011 - 6:00PM
Zacks
Terreno Realty Corporation (TRNO), a real
estate investment trust (REIT), has recently acquired an industrial
building in Savage, Maryland, for approximately $7.5 million. The
acquisition is part of the long-term strategy of the company to
continue owning 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 99,000 square feet of space is
presently 100% leased to a single tenant. The estimated stabilized
cap rate of the asset is 7.3%, 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.
Over the years, the company has desisted from pursuing ground-up
development or land investments and instead focused on acquiring
high-quality assets.
Each of the locations in which Terreno Realty has a significant
presence 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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