Terreno(TRNO) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The company's total assets grew to $4.98 billion, with net income of $141.4 million and operating cash flow of $122.1 million for H1 2025 Consolidated Balance Sheets | Balance Sheet Highlights (in thousands) | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Net investments in real estate | $4,752,477 | $4,661,615 | | Cash and cash equivalents | $128,368 | $18,070 | | Total Assets | $4,982,211 | $4,770,156 | | Liabilities & Equity | | | | Total liabilities | $1,039,223 | $1,107,824 | | Total stockholders' equity | $3,942,988 | $3,662,332 | | Total Liabilities and Equity | $4,982,211 | $4,770,156 | Consolidated Statements of Operations | Income Statement Highlights (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $112,234 | $94,247 | $222,654 | $179,277 | | Gain on sales of real estate | $54,643 | $— | $66,485 | $5,715 | | Net income | $93,273 | $35,696 | $141,399 | $71,755 | | Diluted EPS | $0.90 | $0.37 | $1.38 | $0.77 | Consolidated Statements of Equity - Total stockholders' equity increased from $3.66 billion at the end of 2024 to $3.94 billion as of June 30, 2025, primarily due to net income of $141.4 million and net proceeds from common stock issuance of $233.4 million, partially offset by dividends of $101.3 million[13] Consolidated Statements of Cash Flows | Cash Flow Summary (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $122,067 | $111,369 | | Net cash used in investing activities | ($62,075) | ($547,122) | | Net cash provided by financing activities | $50,491 | $451,967 | | Net increase in cash | $110,483 | $16,214 | Condensed Notes to Consolidated Financial Statements Key notes detail $152.8 million in property acquisitions, $66.5 million gain on sales, and $742.4 million total debt as of June 30, 2025 - As of June 30, 2025, the Company owned 297 buildings aggregating approximately 18.9 million square feet and 47 improved land parcels consisting of approximately 150.6 acres in six major coastal U.S. markets[21] - During the six months ended June 30, 2025, the Company acquired six industrial properties with a total initial investment of approximately $152.8 million[53] | Property Sales (H1 2025) | Number of Properties | Total Sales Price | Total Gain | | :--- | :--- | :--- | :--- | | Los Angeles | 1 | $97,000 | $49,523 | | San Francisco Bay Area | 2 | $24,880 | $11,842 | | Seattle | 1 | $17,500 | $5,120 | | Total | 4 | $139,380 | $66,485 | - As of June 30, 2025, total debt was approximately $742.4 million, comprised of unsecured term loans, senior unsecured notes, and one secured mortgage loan, with a weighted average interest rate of 3.8%[64][68] - During the six months ended June 30, 2025, the Company issued 3,506,371 shares of common stock under its ATM Program, resulting in net proceeds of approximately $234.0 million[74] Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides an overview of the company's business, recent activities, and financial performance, including a 19.1% Q2 2025 revenue increase and $472.5 million in pending acquisitions Overview The company's portfolio includes 297 buildings and 47 land parcels in six coastal U.S. markets, with 97.7% and 95.1% occupancy rates respectively - As of June 30, 2025, the company's portfolio of buildings and improved land parcels were approximately 97.7% and 95.1% leased, respectively, to 662 customers[95] - The New York City/Northern New Jersey market is the largest contributor to the portfolio, accounting for 29.1% of total annualized base rent[99] - The top 20 customers account for 26.0% of total annualized base rent, with Amazon.com being the largest single customer at 5.3%[103] - Cash rent on new and renewed leases commencing in H1 2025 increased by approximately 26.8% compared to previous rates for the same space[106] Recent Developments Recent developments include $123.5 million in Q2 2025 property acquisitions, $319.3 million in ongoing developments, and $472.5 million in pending acquisitions - Acquired six industrial properties for a total purchase price of approximately $123.5 million during Q2 2025[109] - As of June 30, 2025, the company had six properties under development or redevelopment with a total expected investment of $319.3 million[110] - Sold four properties during H1 2025 for a total of $139.4 million, realizing a gain of $66.5 million[112] - As of August 5, 2025, the company had outstanding contracts to acquire properties for a total purchase price of $472.5 million[116] Financial Condition and Results of Operations Q2 2025 total revenues increased 19.1% to $112.2 million, with net income rising to $93.3 million, driven by property acquisitions and strong leasing spreads | Metric (in thousands) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $112,234 | $94,247 | 19.1% | | Net Operating Income | $84,326 | $70,475 | 19.7% | | Same Store NOI | $61,612 | $58,053 | 6.1% | | Net Income | $93,273 | $35,696 | 161.3% | | Metric (in thousands) | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $222,654 | $179,277 | 24.2% | | Net Operating Income | $165,979 | $134,615 | 23.3% | | Same Store NOI | $121,915 | $116,451 | 4.7% | | Net Income | $141,399 | $71,755 | 97.1% | Liquidity and Capital Resources The company maintains a conservative capital structure with $614.0 million net debt and $1.3 billion in material cash commitments, including $472.5 million for pending acquisitions - The company's long-term financing strategy includes limiting total debt and preferred stock to less than 35% of total enterprise value and maintaining a net debt-to-adjusted EBITDA ratio below 5.0x[143] - As of June 30, 2025, there were no borrowings outstanding on the $600.0 million revolving credit facility[148] | Capitalization Metric | As of June 30, 2025 | | :--- | :--- | | Net Debt | $614.0 million | | Total Market Capitalization | $6.54 billion | | Total Debt-to-Total Market Capitalization | 11.4% | | Net Debt-to-Adjusted EBITDA | 1.9x | - As of August 5, 2025, the company had material cash commitments of approximately $1.3 billion, which includes $472.5 million for pending property acquisitions[161][162] Non-GAAP Financial Measures The company utilizes non-GAAP measures, reporting Q2 2025 FFO of $66.3 million and H1 2025 Adjusted EBITDA of $154.2 million, with strong cash-basis same-store NOI growth | FFO Highlights (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | FFO attributable to common stockholders | $66,335 | $58,408 | $129,238 | $109,424 | | Diluted FFO per common share | $0.64 | $0.61 | $1.27 | $1.18 | | Adjusted EBITDA (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $78,790 | $68,252 | $154,184 | $128,131 | | Same Store NOI Growth | Q2 2025 vs Q2 2024 | H1 2025 vs H1 2024 | | :--- | :--- | :--- | :--- | | Same Store NOI | 6.1% | 4.7% | | Cash-basis Same Store NOI | 7.3% | 7.2% | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate exposure on its $200.0 million variable-rate debt, where a 0.25% SOFR change impacts annual interest by $0.5 million - The company's primary market risk exposure is to interest rate changes on its variable-rate debt[178] - As of June 30, 2025, the company had $200.0 million in variable-rate debt outstanding. A 0.25% fluctuation in the SOFR rate would result in an approximate $0.5 million annual change in interest expense[179] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[180] - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[181] PART II. OTHER INFORMATION Legal Proceedings The company reports no involvement in any material litigation, nor is any threatened against it - The company is not involved in any material litigation[183] Risk Factors This section highlights potential adverse impacts of U.S. and foreign trade policies, tariffs, and government actions on economic activity and tenant businesses - The company identifies that changes to international trade policies, tariffs, and related government actions could depress economic activity and have a material adverse effect on the business of its tenants and its own financial results[185][186] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 1,347 shares of common stock during the quarter, primarily for employee tax withholding obligations on vested restricted stock - During the quarter, 1,347 shares were repurchased at an average price of $55.99 per share. These were shares surrendered by employees to satisfy tax withholding obligations on vested restricted stock[188][190] Defaults Upon Senior Securities The company reports no defaults upon its senior securities - None reported[190] Mine Safety Disclosures This item is not applicable to the company - Not Applicable[191] Other Information No directors or officers adopted, terminated, or modified Rule 10b5-1 trading arrangements during Q2 2025 - During Q2 2025, no directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement[192] Exhibits This section lists exhibits filed with the Form 10-Q, including the 2025 Equity Incentive Plan and required certifications - The report includes exhibits such as the 2025 Equity Incentive Plan, officer certifications, and Inline XBRL documents[194]