Zacks_Analysts' Blog : Terreno Realty Prices Equity Offer - Analyst Blog

Terreno Realty Corporation (TRNO), a real estate investment trust (REIT), has recently announced an equity offer of 4 million shares at $14.25 each to raise cash to increase its liquidity. The company has also decided to grant a 30-day option to the underwriters to purchase an additional 0.6 million shares to cover any over-allotments.

The Goldman Sachs Group, Inc. (GS) – a full-service global investment banking and securities firm, and KeyBanc Capital Markets Inc. – the investment banking division of KeyCorp (KEY), are acting as the joint book-running managers for the offering.

Terreno Realty intends to utilize the proceeds to repay a part of its debt and fund potential acquisitions. Over the years, the company has resisted from pursuing ground-up development or land investments and instead focused on acquiring high-quality assets. The continuous acquisition binge is also part of the long-term strategy of the company to own functional and flexible buildings in infill locations that can be modified to accommodate single and multiple tenants at discounts to replacement cost.

San Francisco-based Terreno Realty owns and operates industrial real estate properties primarily in six major coastal markets of the U.S. These include the high barrier-to-entry markets of Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami and Washington D.C./Baltimore.

Each of the locations in which Terreno Realty has a significant presence is characterized by a well-established transportation network – seaports, airports, highways and railways that are essential for the swift distribution of goods. In addition, available land in these markets is scarce, resulting in steep barriers for the development of new and competing properties.

We have a ‘Neutral’ rating on Terreno Realty, which presently has a Zacks #3 Rank translating into a short-term ‘Hold’ rating.