Terreno Realty Corporation Announces Quarterly Operating, Investment and Capital Markets Activity

Terreno Realty Corporation (NYSE:TRNO), an acquirer, owner and operator of industrial real estate in six major coastal U.S. markets, announced today its operating, investment and capital markets activity for the fourth quarter of 2021.

Operating

As of December 31, 2021, Terreno Realty Corporation owned 253 buildings aggregating approximately 15.1 million square feet and 36 improved land parcels consisting of approximately 127.1 acres. In addition, Terreno Realty Corporation had four properties under redevelopment that upon completion will consist of three buildings aggregating approximately 181,000 square feet and two improved land parcels of approximately 12.1 acres:

• The operating portfolio, excluding two properties under redevelopment, was 95.5% leased at December 31, 2021 to 554 tenants as compared to 98.0% at September 30, 2021 and 97.8% at December 31, 2020. The decline in occupancy as compared to the prior quarter was driven primarily by acquired vacancy of 373,000 square feet (approximately 250bps) of which 361,000 square feet (approximately 240bps) is pre-leased and expected to commence prior to June 30, 2022, and 82,000 square feet (approximately 50bps) from the inclusion of SoDo Row Seattle;
• The same-store portfolio of approximately 12.5 million square feet was 98.2% leased at December 31, 2021 as compared to 98.6% at September 30, 2021 and 98.0% at December 31, 2020;
• The improved land portfolio of 36 parcels, excluding two parcels under redevelopment, totaling approximately 127.1 acres was 94.8% leased at December 31, 2021 as compared to 96.1% at September 30, 2021 and 98.6% at December 31, 2021; and
• Cash rents on new and renewed leases totaling approximately 0.6 million square feet commencing during the fourth quarter increased approximately 34.4% with a tenant retention ratio of 57.5%. Cash rents on new and renewed leases totaling approximately 2.6 million square feet commencing during the year ended December 31, 2021 increased approximately 28.4% with a tenant retention ratio of 65.7%.

Investment

During the fourth quarter of 2021, Terreno Realty Corporation acquired 14 properties consisting of 13 buildings containing approximately 891,000 square feet and six improved land parcels of approximately 19.6 acres for an aggregate purchase price of approximately $326.1 million. The fourth quarter investment activity was as follows:

• 9045 Willows Road: One 0.8-acre improved land parcel in Redmond, Washington, between I-405 and SR 520. The property was acquired 100% leased to one tenant on a short-term basis for a purchase price of approximately $3.5 million and an estimated stabilized cap rate of 4.9%;
• 16650-16750 Woodinville Redmond Road: Two industrial distribution buildings containing approximately 118,000 square feet on 9.6 acres in Woodinville, Washington, immediately adjacent to Terreno Realty Corporation's property at 16224-16240 Woodinville Redmond Road, southeast of the intersection of I-405 and SR 522. The property provides 27 dock-high and eight grade-level loading positions and parking for 291 cars. The property was acquired 100% leased to four tenants for a purchase price of approximately $33.5 million and an estimated stabilized cap rate of 3.7%;
• 4181-4241 West 108th Street: Two recently developed rear-load 32-foot clear industrial distribution buildings containing approximately 402,000 square feet on 19.0 acres in Hialeah, Florida, immediately adjacent to Terreno Realty Corporation's three existing buildings on West 108th Street and adjacent to Florida's Turnpike and the southern terminus of I-75. The property provides 124 dock-high and four grade-level loading positions and parking for 328 cars and is expected to obtain LEED certification. The property is 100% pre-leased to seven tenants with leases that commence between December 2021 and June 2022. The property was acquired for a purchase price of approximately $74.1 million, net of free-rent credits, and an estimated stabilized cap rate of 3.8%;
• 4501 46th Street: One 4.4-acre improved land parcel in Bladensburg, Maryland, less than two miles outside Washington, D.C., between U.S. Route 1 Alternate and Maryland Route 201. The property was acquired 100% leased to one tenant through May 2024 for a purchase price of approximately $11.9 million and an estimated stabilized cap rate of 3.8%;
• 5150-5236 Eisenhower Avenue: Three industrial distribution buildings containing approximately 199,000 square feet on 9.3 acres located in Alexandria, Virginia, inside the Capital Beltway. The property provides 25 dock-high and 15 grade-level loading positions and parking for 216 cars. The property was acquired 100% leased to 13 tenants, all of which expire by 2026, for a purchase price of approximately $60.8 million and an estimated stabilized cap rate of 3.0%;
• 14725 S. Maple Avenue: One 2.3-acre improved land parcel in Rancho Dominguez, California, between Los Angeles International Airport and the Ports of Los Angeles and Long Beach and adjacent to Terreno Realty Corporation's improved land parcel at 14732 S. Maple Avenue. The property was acquired 100% leased on a short-term basis through March 2022 for a purchase price of approximately $13.8 million and an estimated stabilized cap rate of 4.9%;
• 5380 Tuxedo Road: One 2.9-acre improved land parcel in Hyattsville, Maryland, less than one mile outside Washington, D.C., adjacent to the intersection of U.S. Route 50 and the Baltimore-Washington Parkway. The property was acquired 100% leased to two tenants, 89% on a short-term basis, for a purchase price of approximately $8.0 million and an estimated stabilized cap rate of 5.6%;
• 768 and 772 Ceres Avenue: Two industrial distribution buildings containing approximately 17,000 square feet on 0.4 acres in Downtown Los Angeles, California. The property provides two grade-level loading positions and parking for 22 cars. The property was acquired 100% leased to two tenants expiring in February 2023 and July 2024 for a purchase price of approximately $7.7 million and an estimated stabilized cap rate of 3.4%;
• 1300 Berryessa Road: One 7.2-acre improved land parcel in San Jose, California, between U.S. 101 and Interstate 680 and adjacent to the Berryessa/North San Jose Bay Area Rapid Transit Station. The property is vacant and under redevelopment. The property was purchased for approximately $23.0 million and the total expected investment is approximately $24.6 million with an estimated stabilized cap rate of 5.2%;
• 619 S. Pickett Street: One industrial distribution building containing approximately 28,000 square feet on 1.3 acres located in Alexandria, Virginia, inside the Capital Beltway. The property provides two dock-high and one grade-level loading positions and parking for 20 cars. The property was acquired vacant for a purchase price of approximately $9.0 million and an estimated stabilized cap rate of 4.5%;
• 228 North Avenue: One industrial transshipment building containing approximately 31,000 square feet on 6.0 acres located in Elizabeth, New Jersey, adjacent to Exit 13A of the New Jersey Turnpike, Port Newark and Newark Liberty International Airport. The property provides 52 dock-high and two grade-level loading positions and parking for 33 cars and 153 trailers. The property was acquired 100% leased to one tenant on a short-term basis for a purchase price of approximately $44.0 million and an estimated stabilized cap rate of 4.8%;
• 15001 South San Pedro Street: One 2.0-acre improved land parcel in Gardena, California, between I-110 and I-710 and between Los Angeles International Airport and the Ports of LA and Long Beach. The property was acquired vacant for a purchase price of approximately $8.8 million. Terreno Realty Corporation executed a lease for the property commencing October 18, 2021 and ending October 17, 2026 with a regional logistics provider resulting in an estimated stabilized cap rate of 7.0%;
• 190 Morgan Avenue: One industrial distribution building containing approximately 12,000 square feet on 0.3 acres located in Brooklyn, New York, adjacent to Terreno Realty Corporation's 134-154 Morgan Park. The property provides one grade-level loading position and parking for 3 cars. The property was acquired vacant for a purchase price of approximately $4.5 million and an estimated stabilized cap rate of 4.9%; and
• 16224-16240 Woodinville Redmond Road: One industrial distribution building containing approximately 84,000 square feet on 5.1 acres in Woodinville, Washington, immediately adjacent to Terreno Realty Corporation's property at 16650-16750 Woodinville Redmond Road, southeast of the intersection of I-405 and SR 522. The property provides 16 dock-high and three grade-level loading positions and parking for 139 cars. The property was acquired 100% leased to one tenant for a purchase price of approximately $23.6 million and an estimated stabilized cap rate of 3.1%.

Terreno Realty Corporation's acquisition activity for the full year 2021 included 34 properties consisting of 34 buildings containing approximately 1,895,000 square feet and 14 improved land parcels of approximately 53.0 acres for an aggregate purchase price of $657.3 million.

As of December 31, 2021, Terreno Realty Corporation had four properties under redevelopment (NW 73^rd and America's Gateway 5 in Miami, 245 Paterson Plank Road in New Jersey, and Berryessa Road in San Francisco) that upon completion will consist of three buildings aggregating approximately 181,000 square feet and two improved land parcels of approximately 12.1 acres, with a total expected investment of approximately $75.8 million. During the fourth quarter, Terreno Realty Corporation moved its SoDo Row redevelopment property, which was 64.8% leased to three tenants, to the operating portfolio. The total expected investment in SoDo Row is $66.6 million and the estimated stabilized cap rate is 5.0%.

During the fourth quarter of 2021, Terreno Realty Corporation sold one property in New Jersey containing approximately 167,000 square feet for a sale price of approximately $32.7 million generating an unleveraged internal rate of return of approximately 10.1%. For the full year 2021, Terreno Realty Corporation sold two properties totaling 202,000 square feet for an aggregate sale price of $43.0 million generating an unleveraged internal rate of return of approximately 10.2%.

Terreno Realty Corporation has approximately $21.0 million of acquisitions under contract and approximately $174.3 million of acquisitions under letters of intent. There is no assurance that Terreno Realty Corporation will acquire the properties under contract or letters of intent because the proposed acquisitions are subject to the completion of satisfactory due diligence, closing conditions and, in the case of letters of intent, contracts.

Capital Markets

During the fourth quarter of 2021, Terreno Realty Corporation closed an offering of 4,025,000 shares of its common stock at a price to the public of $74.50 per share, receiving gross proceeds of $299.9 million. The Company intends to use the net proceeds from the offering for general corporate purposes, which may include, without limitation, working capital, repayment of indebtedness, future acquisitions and redevelopments.

In addition, Terreno Realty Corporation issued 27,414 shares of common stock with a weighted average offering price of $64.07 per share under the Company's at-the-market equity offering program, receiving gross proceeds of $1.8 million. For the full year 2021, Terreno Realty Corporation issued 2,569,771 shares of common stock with a weighted average offering price of $63.23 per share under the Company's at-the-market equity offering program, receiving gross proceeds of $162.5 million. Terreno Realty Corporation did not repurchase any shares of common stock pursuant to the Company's share repurchase authorization.

During the fourth quarter of 2021, Terreno Realty Corporation closed on the previously announced private placement of $125 million nine-year senior unsecured notes that bear interest at a fixed rate of 2.38%. The Company intends to use the net proceeds from the offering to fund acquisitions and for other corporate purposes.

Additional information is available on the Company's website at www.terreno.com. Terreno Realty Corporation expects to file its annual report on Form 10-K for the year ended December 31, 2021 on or about February 9, 2022.

Terreno Realty Corporation acquires, owns and operates industrial real estate in six major coastal U.S. markets: Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami, and Washington, D.C.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. We caution investors that forward-looking statements are based on management's beliefs and on assumptions made by, and information currently available to, management. When used, the words "anticipate," "believe," "estimate," "expect," "intend," "may," "might," "plan," "project," "result," "should," "will," "seek," "target," "see," "likely," "position," "opportunity," "outlook," and similar expressions which do not relate solely to historical matters are intended to identify forward-looking statements. These statements are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including risks related to our ability to meet our estimated forecasts related to stabilized cap rates, the impact of the COVID-19 pandemic on our business, our tenants and the national and local economies, and those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2020 and our other public filings. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. We expressly disclaim any responsibility to update our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.