Continuing with its acquisition-driven growth strategy, Terreno Realty (NYSE:TRNO) Corporation TRNO recently shelled out $9.8 million for the purchase of an industrial property in Rancho Dominguez, CA.
Spanning an area of 2.5 acres at 14732 S. Maple Avenue, the property is in close proximity to the Los Angeles International Airport, Ports of Los Angeles and the Long Beach. The vacant space has an estimated stabilized cap rate of 5.7%.
Terreno Realty is focused on expanding its portfolio on acquisitions. It targets functional assets at in-fill locations, which enjoy high-population densities and are located near high-volume distribution points. Through such efforts, the company is well poised to fortify its portfolio in the six major coastal U.S. markets — Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami and Washington, DC — which display solid demographic trends and witness healthy demand for industrial real estates.
Some of Terreno Realty’s notable acquisitions in November include two industrial properties located in Bellevue, WA and Los Angeles, CA for $11.7 million and $4.4 million, respectively. Further, in the first three quarters of 2020, the company's acquisitions included five properties, comprising three buildings aggregating 101,000 square feet and two improved land parcels totaling 5.5 acres, for $46.1 million in total.
The industrial asset class has grabbed the limelight for showing resilience amid the coronavirus pandemic with low vacancy rates, high asking rents and robust rent collections. There has been a notable increase in e-commerce’s share of total retail sales, spurring demand for warehouse and distribution spaces. Apart from the fast adoption of e-commerce, the industrial real estate space is anticipated to gain traction over the long run from a likely rise in the inventory levels of companies as a precaution for any supply-chain disruptions.
This, in turn, will likely keep supporting industrial landlords like Terreno Realty, Prologis (NYSE:PLD) PLD, Duke Realty (NYSE:DRE) Corp. DRE and Plymouth PLYM to enjoy a favorable market environment.
Nevertheless, the pandemic’s adverse impact on the economy might thwart demand for spaces to some extent in the near term. Rent relief and deferrals for tenants are likely to be concerns as well. Also, surplus supply is a headwind for the industrial real estate market.
Terreno Realty currently carries a Zacks Rank #3 (Hold). The company’s shares have declined 1.9%, as against the industry's growth of 1.3% over the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Prologis, Inc. (PLD): Free Stock Analysis Report
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