Terreno Realty (TRNO) Expands Borrowing Capacity by $150M – July 1, 2022
As part of its effort to boost liquidity position and flexibility, Terreno Realty (TRNO – Free Report) has recently announced an expansion of its borrowing capacity under its revolving credit facility by $150 million. The present facility capacity aggregates to $400 million and the outstanding balance under it is $12 million.
Terreno Realty aims to maintain financial flexibility by following a conservative capital structure which uses retained cash flows, proceeds from dispositions of properties, long-term debt and the issuance of common and perpetual preferred stock to finance its growth.
As of Mar 31, 2022, TRNO had cash and cash equivalents of around $106.3 million. Its total debt (net) outstanding as of the same date was $720.8 million and the weighted average maturity of its total debt was 5.7 years. The total debt-to-adjusted EBITDA was 4.2X as of Mar 31, 2022.
The demand for industrial real estate space is soaring, given the growth in industries, an e-commerce boom, and companies striving to improve supply-chain efficiencies. Additionally, a rise in inventory levels of companies as a precautionary measure for any supply-chain disruption is expected to lend to the long-term growth momentum for this sector, thereby serving a favorable market to industrial landlords. With increased financial flexibility, Terreno Realty remains well poised to capitalize on such opportunities.
The company is expanding through acquisitions to enhance its portfolio in six major coastal U.S. markets — Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami and Washington, DC. These markets exhibit solid demographic trends and witness healthy demand for industrial real estate. It targets functional assets at in-fill locations, which enjoy high-population densities and are located near high-volume distribution points.
Terreno Realty recently added a few industrial properties to its portfolio in the second quarter of 2022. In June, TRNO closed the acquisition of an industrial property in Redmond, WA, for $19.9 million. The property is 38% leased to one tenant, with an estimated stabilized cap rate of 4.3%. In the same month, it shelled out $13 million for the acquisition of an industrial property in Newark, NJ. This property is presently 100% leased to one tenant on a short-term basis and has an estimated stabilized cap rate of 5.4%. From the beginning of the year through May 3, 2022, TRNO has carried out acquisitions worth $113.3 million. Such moves to boost liquidity aid its expansionary endeavors.
However, analysts seem bearish about this Zacks Rank #4 (Sell) stock. The recent trend in estimate revision for 2022 funds from operations (FFO) per share does not indicate a favorable outlook for the company as the same has marginally moved downward to $1.95 over the past week.
In the past three months, TRNO shares have declined 26.4% compared with the industry’s fall of 16.5%.
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Stocks to Consider
Some top-ranked stocks from the REIT sector are Host Hotels & Resorts (HST – Free Report) , OUTFRONT Media (OUT – Free Report) and Pebblebrook Hotel Trust (PEB – Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Host Hotels’ 2022 FFO per share has moved 5.1% upward in the past month to $1.65.
The Zacks Consensus Estimate for OUTFRONT Media’s ongoing year’s FFO per share has been raised 7.7% over the past two months to $2.09.
The Zacks Consensus Estimate for Pebblebrook Hotel Trust’s current-year FFO per share has moved 12.5% northward in the past month to $1.80.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
