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Terreno Realty Stands on Solid Ground: Opinion

Stocks in this article: TRNOPLD

NEW YORK ( TheStreet) -- Due to uncertain economic and financial market prospects as well as record low interest rates, investors have been searching for income-producing investments that provide better yields than bonds.

Investors have been drawn to real estate investment trusts because of their dividend yields and growth potential.

As REITs are structured to pay out the majority of their income, investors should look for one that has strong management, a conservative financial profile, and a strong operating portfolio and business platform. Terreno Realty (TRNO) is one such REIT.

This San Francisco-based REIT acquires, owns and operates industrial real estate in six major U.S. coastal markets: Los Angeles, northern New Jersey/New York City, the San Francisco Bay area, Seattle, Miami, and Washington/Baltimore.

Terreno acquires functional, flexible properties in infill locations near major population centers and transportation infrastructure. Terreno completed its initial public offering in February of 2010 and has been building its portfolio since then. As the REIT is new, it's still building out its portfolio, and its metrics will not reflect the potential of the investment.

Terreno invests in six major coastal U.S. markets. Exclusively. Each has large and growing consumer populations. Each has highly developed airport, seaport and highway infrastructure for rapid distribution of goods. All six markets have significant physical and regulatory barriers to the development of competing properties. Terreno invests in:

  • Los Angeles (four buildings, 100% occupancy and 10.9% of annual base rent);
  • Northern New Jersey/New York City (23 buildings, 93.2% occupancy and 44.9 % of annual base rent);
  • San Francisco Bay area (nine buildings, 84.4% occupancy and 15.3% of annual base rent);
  • Seattle (three buildings, 100% occupancy and 7.4% of annual base rent);
  • Miami (six buildings, 98% occupancy and 14.6% of annual base rent); and
  • Washington/Baltimore (three buildings, 80.2% occupancy and 6.9% of annual base rent).

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