Terreno Realty's Rents Rise in Q1, Occupancy Improves Y/Y

Core Insights - Terreno Realty Corporation (TRNO) reported a strong first-quarter 2025 performance, highlighting increased rents and improved occupancy rates, driven by the rising demand for industrial real estate in the e-commerce sector [1][12] Operating Activity - In Q1 2025, TRNO experienced a 34.2% increase in cash rents for new and renewed leases in its operating portfolio, while the improved land portfolio saw no change [2] - The total leases that commenced in Q1 amounted to approximately 0.6 million square feet and 4.3 acres of improved land, with a tenant retention ratio of 71.7% [2] Occupancy Rates - As of March 31, 2025, the occupancy rate for the operating portfolio was 96.6%, reflecting a year-over-year increase of 40 basis points, although it decreased by 80 basis points sequentially [3] - The same-store portfolio, covering around 15.6 million square feet, had a quarter-end occupancy of 97.4%, up 110 basis points year-over-year but down 90 basis points sequentially [3] - The improved land portfolio, consisting of 47 parcels and 150.6 acres, maintained an occupancy rate of 95.1% [4] Investment Activity - TRNO is restructuring its portfolio by selling non-core assets and acquiring value-accretive investments, with two properties sold in Q1 2025 for a total of approximately $24.9 million [5] - As of March 31, 2025, TRNO had acquisitions worth around $55.9 million under contract and nearly $16 million under letters of intent [6] Development and Redevelopment Activity - TRNO had five properties under development or redevelopment as of March 31, 2025, which will include eight buildings totaling around 0.8 million square feet, currently 48% leased [7] - The company also has approximately 22.4 acres of land earmarked for future developments, with an estimated investment value of around $392.8 million [7] Capital Market Activity - In Q1 2025, TRNO issued 3,506,371 shares of common stock at a weighted average offer price of $67.71 per share, generating gross proceeds of $237.4 million [8] - The company had no borrowings outstanding under its $600 million revolving credit facility as of March 31, 2025, with no debt maturities in 2025 [9] Industry Context - The industrial real estate sector is experiencing significant growth due to the rising e-commerce market, which is transforming consumer shopping and delivery methods [12] - Companies are focusing on enhancing supply-chain efficiencies, increasing the demand for logistics infrastructure and distribution networks, positioning TRNO to capitalize on these trends [12]