Terreno(TRNO) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The company reported Q1 2022 revenue of $64.0 million and net income of $19.7 million, with stable liabilities Consolidated Balance Sheets Total assets slightly decreased to $2.920 billion, while total liabilities remained stable at $866 million Consolidated Balance Sheets | Account | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | Total Assets | $2,920,341 | $2,924,215 | | Net investments in real estate | $2,753,788 | $2,667,764 | | Cash and cash equivalents | $106,278 | $204,404 | | Total Liabilities | $866,060 | $866,252 | | Senior unsecured notes, net | $621,344 | $621,175 | | Total Stockholders' Equity | $2,054,281 | $2,057,963 | Consolidated Statements of Operations Q1 2022 revenues grew 26.3% year-over-year to $64.0 million, boosting net income and diluted EPS Consolidated Statements of Operations | Metric | Q1 2022 (in thousands) | Q1 2021 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $64,035 | $50,691 | 26.3% | | Total Costs and Expenses | $39,413 | $30,525 | 29.1% | | Net Income | $19,662 | $16,257 | 20.9% | | Net Income available to common stockholders | $19,581 | $16,206 | 20.8% | | Diluted EPS | $0.26 | $0.24 | 8.3% | Consolidated Statements of Cash Flows Operating cash flow increased to $28.0 million, while investing and financing activities led to a net cash decrease Consolidated Statements of Cash Flows | Cash Flow Activity | Q1 2022 (in thousands) | Q1 2021 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $28,033 | $26,155 | | Net cash used in investing activities | ($96,837) | ($112,379) | | Net cash (used in) provided by financing activities | ($26,473) | $8,793 | | Net decrease in cash | ($95,277) | ($77,431) | Condensed Notes to Consolidated Financial Statements Notes detail property acquisitions of $70.3 million, a planned sale, and future commitments of $177.7 million - The company acquires, owns, and operates industrial real estate in six major coastal U.S. markets, with a portfolio of 256 buildings (approx. 15.1 million sq. ft.) and 37 improved land parcels (approx. 128.3 acres) as of March 31, 2022[25] - During Q1 2022, the company acquired two industrial properties for a total investment of approximately $70.3 million[52] - As of March 31, 2022, the company had an agreement to sell one property for approximately $110.4 million, which had a net book value of $30.6 million[58] - As of May 3, 2022, the company had contracts to acquire ten industrial properties for a total purchase price of approximately $177.7 million[81] Management's Discussion and Analysis of Financial Condition and Results of Operations Revenue growth of 26.3% was driven by acquisitions and a 34.8% increase in cash rents on new leases Overview The company's portfolio of 256 buildings maintains high occupancy, with Amazon as its largest tenant Market Diversification | Market | % of Total Annualized Base Rent | | :--- | :--- | | Northern New Jersey/New York City | 27.4% | | Los Angeles | 17.5% | | San Francisco Bay Area | 16.9% | | Seattle | 16.9% | | Washington, D.C. | 10.9% | | Miami | 10.4% | - Cash rent on new and renewed leases commencing in Q1 2022 increased by 34.8%, with a tenant retention ratio of 47.7%[100] Recent Developments Q1 2022 saw two property acquisitions for $86.2 million and progress on four redevelopment projects Q1 2022 Acquisitions | Property Name | Location | Square Feet | Purchase Price (in thousands) | Stabilized Cap Rate | | :--- | :--- | :--- | :--- | :--- | | Countyline 29 & 30 | Hialeah, FL | 407,000 | $73,200 | 3.8% | | 33rd Place | Bellevue, WA | 29,000 | $13,040 | 3.4% | | Total/Weighted Average | | 436,000 | $86,240 | 3.7% | - As of March 31, 2022, four properties were under redevelopment with a total expected investment of $144.4 million and an estimated weighted average stabilized cap rate of 4.4%[104] Financial Condition and Results of Operations Q1 2022 revenue grew 26.3% and total NOI increased 26.8%, driven by acquisitions and same-store growth Results of Operations Comparison | Metric (Q1 2022 vs Q1 2021) | $ Change (in thousands) | % Change | | :--- | :--- | :--- | | Total Revenues | $13,344 | 26.3% | | Total Property Operating Expenses | $3,364 | 24.9% | | Total Net Operating Income | $9,980 | 26.8% | | Same Store NOI | $3,186 | 9.0% | | Non-Same Store Operating Properties NOI | $6,794 | 395.5% | Liquidity and Capital Resources The company maintains a conservative capital structure with ample liquidity from cash and credit facilities - The company's long-term financial goals include maintaining debt and preferred stock below 35% of total enterprise value and a fixed charge coverage ratio above 2.0x[123] Key Financial Metrics | Metric | As of March 31, 2022 | | :--- | :--- | | Total Debt, net | $720.9 million | | Total Market Capitalization | $6.31 billion | | Total Debt-to-Total Market Capitalization | 11.4% | | Total Debt-to-Adjusted EBITDA | 4.2x | | Weighted Average Maturity of Total Debt | 5.7 years | Non-GAAP Financial Measures Key non-GAAP metrics showed strong growth, with FFO up 25.2% and cash-basis same-store NOI up 11.6% Non-GAAP Performance | Metric | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | FFO attributable to common stockholders | $34,480k | $27,534k | 25.2% | | Diluted FFO per common share | $0.46 | $0.40 | 15.0% | | Adjusted EBITDA | $42,582k | $33,803k | 26.0% | | Same store NOI | $38,647k | $35,461k | 9.0% | | Cash-basis same store NOI | $36,517k | $32,730k | 11.6% | Quantitative and Qualitative Disclosures About Market Risk The primary market risk is interest rate fluctuations on its $100.0 million of variable-rate debt - As of March 31, 2022, the company had $100.0 million in variable-rate debt outstanding, where a 25 basis point change in LIBOR would impact annual interest expense by approximately $0.3 million[152] - The company is preparing for the cessation of LIBOR after June 30, 2023, and its credit facility includes provisions for replacing it with an alternative rate like SOFR[153][154][155] Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes - Management concluded that as of the end of the period, the company's disclosure controls and procedures were effective[156] - No material changes were made to the internal control over financial reporting during the quarter ended March 31, 2022[158] PART II. OTHER INFORMATION Legal Proceedings The company reports no involvement in or awareness of any material litigation - The company reports no material litigation[161] Risk Factors No material changes to previously disclosed risk factors were reported for the period - No material changes to the risk factors disclosed in the 2021 Form 10-K were reported[162] Unregistered Sales of Equity Securities and Use of Proceeds The company acquired 6,348 shares from employees for tax purposes but made no other repurchases - In February 2022, 6,348 shares of common stock were surrendered by employees to satisfy tax withholding obligations related to vesting restricted stock[163] Exhibits This section lists required exhibits, including officer certifications and Inline XBRL data files - Exhibits filed with the report include CEO and CFO certifications and Inline XBRL data files[168]