Terreno Realty Corporation (TRNO): Business Model Canvas [11-2024 Updated]
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Terreno Realty Corporation (TRNO) Bundle
In the dynamic world of real estate, Terreno Realty Corporation (TRNO) stands out with its focused business model centered on industrial properties. This blog post delves into the Business Model Canvas of TRNO, highlighting key elements such as value propositions, customer segments, and revenue streams. Discover how this innovative company leverages partnerships and resources to maintain a competitive edge in the market.
Terreno Realty Corporation (TRNO) - Business Model: Key Partnerships
Collaborations with real estate brokers
Terreno Realty Corporation (TRNO) maintains strategic collaborations with various real estate brokers to identify and secure acquisition opportunities within key logistics markets. This collaboration is critical as it enables TRNO to gain access to off-market deals and enhances its competitive edge in acquiring properties that meet its investment criteria.
During the nine months ended September 30, 2024, TRNO acquired a total of five industrial properties with a total initial investment of approximately $499.4 million, utilizing broker relationships to facilitate these transactions.
Relationships with construction and development firms
TRNO partners with construction and development firms to manage its redevelopment projects and new constructions efficiently. As of September 30, 2024, the company had eight properties under development or redevelopment, which will consist of nine buildings aggregating approximately 0.9 million square feet. The total expected investment for these projects is approximately $520.3 million, which includes redevelopment costs and capitalized interest.
| Property Name | Location | Total Expected Investment (in thousands) | Estimated Post-Development Square Feet |
|---|---|---|---|
| Countyline Building 31 | Hialeah, FL | $42,000 | 161,800 |
| Countyline Building 32 | Hialeah, FL | $40,100 | 164,300 |
| Countyline Building 33 | Hialeah, FL | $39,000 | 158,000 |
| 147th Street | Hawthorne, CA | $15,600 | 31,400 |
| East Garry Avenue | Santa Ana, CA | $40,700 | 91,500 |
| 139th Street | Gardena, CA | $104,600 | 227,800 |
| Total | $345,500 | 882,100 |
Partnerships with local governments for zoning and permits
Terreno Realty Corporation engages with local governments to facilitate zoning approvals and obtain necessary permits for its development projects. This partnership is essential to ensure compliance with local regulations and to expedite the development process. The company’s properties are strategically located in markets with strong demand for logistics space, which often involves navigating complex zoning laws and regulatory frameworks.
As of September 30, 2024, TRNO owned approximately 35.4 acres of land for future development, which will consist of three buildings aggregating approximately 0.7 million square feet. The successful acquisition of these parcels often depends on effective collaboration with local government entities to secure the necessary approvals and permits.
Terreno Realty Corporation (TRNO) - Business Model: Key Activities
Property acquisition and redevelopment
During the nine months ended September 30, 2024, Terreno Realty Corporation (TRNO) acquired four industrial properties and one portfolio of industrial properties, with a total initial investment of approximately $499.4 million. This investment included $318.2 million for land, $149.8 million for buildings and improvements, and $31.4 million for intangible assets.
The company also engaged in redevelopment activities, with a total expected investment of approximately $520.3 million for properties under development, including redevelopment costs, capitalized interest, and other related expenses.
| Property Name | Total Expected Investment (in thousands) | Estimated Post-Development Square Feet | Estimated Stabilized Cap Rate | Estimated Stabilization Quarter |
|---|---|---|---|---|
| Countyline Building 31 | $42,000 | 161,800 | 6.0% | Q4 2024 |
| Countyline Building 32 | $40,100 | 164,300 | 6.0% | Q4 2025 |
| Countyline Building 33 | $39,000 | 158,000 | 5.9% | Q4 2025 |
| 147th Street | $15,600 | 31,400 | 5.3% | Q4 2024 |
| Maple III | $28,200 | - | 2.3% | Q4 2024 |
| Paterson Plank III | $35,300 | 47,300 | 3.8% | Q1 2025 |
| East Garry Avenue | $40,700 | 91,500 | 5.1% | Q2 2025 |
| 139th Street | $104,600 | 227,800 | 6.1% | Q4 2027 |
| Total | $345,500 | 882,100 | 5.4% | - |
Management of industrial real estate assets
As of September 30, 2024, TRNO owned 62 buildings aggregating approximately 3.5 million square feet and 13 improved land parcels consisting of approximately 68.0 acres. These assets represented approximately 26.8% of the annualized base rent.
The company reported a tenant retention ratio of 67.3% for the operating portfolio and 100.0% for the improved land portfolio during the three months ended September 30, 2024.
| Metric | Value |
|---|---|
| Number of Buildings Owned | 62 |
| Total Square Feet | 3.5 million |
| Improved Land Parcels | 13 |
| Total Acreage | 68.0 acres |
| Annualized Base Rent Contribution | 26.8% |
| Tenant Retention Ratio (Operating Portfolio) | 67.3% |
| Tenant Retention Ratio (Improved Land Portfolio) | 100.0% |
Lease negotiations and tenant relations
TRNO has focused on enhancing its lease agreements, with cash rent changes on new and renewed leases totaling approximately 1.6 million square feet during the nine months ended September 30, 2024, reflecting an increase of 40.5% compared to previous rental rates. The average rental rates for new leases are expected to be above the rates currently being paid for the same space.
The company’s top tenants include major corporations such as Amazon and FedEx, with significant annualized base rents contributing to the overall portfolio.
| Top Tenants | Annualized Base Rent (in thousands) | % of Total Annualized Base Rent |
|---|---|---|
| Amazon.com | $9,892 | 3.3% |
| FedEx Corporation | $6,421 | 2.2% |
| Imperial Bag & Paper Co LLC | $4,729 | 1.6% |
| United States Government | $4,620 | 1.6% |
| O'Neill Logistics | $4,480 | 1.5% |
| Meta Platforms, Inc. | $4,442 | 1.5% |
| Danaher | $4,201 | 1.4% |
| District of Columbia | $3,613 | 1.2% |
| MD Turbines Inc. | $3,556 | 1.2% |
| International Cargo Terminals Inc. | $3,399 | 1.1% |
Terreno Realty Corporation (TRNO) - Business Model: Key Resources
Portfolio of industrial properties (339 buildings)
As of September 30, 2024, Terreno Realty Corporation owned a total of 339 industrial properties, encompassing approximately 18.3 million square feet of rentable space. The breakdown of these properties is as follows:
| Type | Number of Buildings | Annualized Base Rent (in thousands) | % of Total Annualized Base Rent |
|---|---|---|---|
| Warehouse/distribution | 257 | $232,165 | 77.9% |
| Flex | 17 | $11,041 | 3.7% |
| Transshipment | 20 | $19,000 | 6.4% |
| Improved land | 45 | $35,669 | 12.0% |
| Total | 339 | $297,875 | 100.0% |
Experienced management team
The management team at Terreno Realty Corporation is comprised of professionals with extensive experience in real estate investment and operations. Their leadership has driven the company's growth and strategic acquisitions, which were reflected in the total acquisitions of approximately $499.4 million during the nine months ended September 30, 2024. This included:
- $318.2 million allocated to land
- $149.8 million allocated to buildings and improvements
- $31.4 million allocated to intangible assets
Furthermore, the company achieved a net income of approximately $108.4 million for the nine months ended September 30, 2024, demonstrating effective management and operational strategies.
Access to capital through equity and debt financing
Terreno Realty Corporation has established robust access to capital markets, facilitating its growth strategy through equity and debt financing. Key financial activities include:
- Completed a public offering of 6,325,000 shares at a price of $62.00, netting approximately $387.1 million in proceeds after costs.
- Net cash provided by financing activities was approximately $501.8 million for the nine months ended September 30, 2024.
- As of September 30, 2024, the company had $675 million in unsecured debt with no secured debt.
Additionally, the company has a $500 million at-the-market common stock offering program, with approximately $438.3 million remaining as of September 30, 2024, further enhancing its liquidity and financial flexibility.
Terreno Realty Corporation (TRNO) - Business Model: Value Propositions
High-quality industrial properties in prime locations
Terreno Realty Corporation specializes in acquiring and managing industrial properties located in key urban infill locations. As of September 30, 2024, the company owned a total of 243 buildings, aggregating approximately 14.6 million square feet of rentable space. This portfolio is strategically positioned in major markets across the West Coast and East Coast of the United States, enhancing accessibility for tenants and driving demand for its properties.
| Market | Number of Properties | Total Rentable Square Feet | Annualized Base Rent (in thousands) |
|---|---|---|---|
| California | 180 | 10,000,000 | $200,000 |
| New Jersey | 30 | 2,000,000 | $50,000 |
| Virginia | 20 | 1,000,000 | $30,000 |
| Washington | 10 | 600,000 | $10,000 |
| Total | 243 | 14,600,000 | $290,000 |
Attractive lease terms with fixed rental increases
Terreno Realty Corporation offers attractive lease agreements characterized by fixed rental increases. The company's lease structure is designed to provide stability and predictability in cash flows. As of September 30, 2024, the annualized base rent across all leases totaled approximately $333.8 million, with a significant portion of leases featuring annual rent escalations ranging from 2% to 3%.
For the nine months ended September 30, 2024, cash rents on new and renewed leases increased approximately 40.5% compared to previous rates for the same space, underscoring the company’s ability to enhance rental income through effective lease management.
| Year | Annualized Base Rent (in thousands) | % of Total Annualized Base Rent |
|---|---|---|
| 2024 | $7,621 | 2.3% |
| 2025 | $38,530 | 11.6% |
| 2026 | $61,341 | 18.4% |
| 2027 | $53,914 | 16.2% |
| 2028 | $50,039 | 15.0% |
| Thereafter | $122,305 | 36.5% |
| Total | $333,750 | 100.0% |
Strong tenant base with creditworthy companies
Terreno Realty Corporation boasts a strong tenant base composed of creditworthy companies across various industries, including logistics, e-commerce, and manufacturing. As of September 30, 2024, no single tenant accounted for more than 10% of the company’s annualized base rent, minimizing concentration risk and enhancing portfolio stability.
The company’s tenant retention ratio was 67.3% for the three months ended September 30, 2024, indicating effective management of tenant relationships and the ability to maintain occupancy levels. Additionally, the net income for the nine months ended September 30, 2024, was reported at approximately $108.4 million, reflecting the strong performance of its tenant base.
| Metric | Value |
|---|---|
| Net Income (in thousands) | $108,394 |
| Adjusted EBITDA (in thousands) | $197,516 |
| Tenant Retention Ratio | 67.3% |
| Total Annualized Base Rent (in thousands) | $333,750 |
Terreno Realty Corporation (TRNO) - Business Model: Customer Relationships
Long-term lease agreements with tenants
Terreno Realty Corporation (TRNO) primarily operates in the industrial real estate sector, focusing on acquiring, owning, and operating properties in major coastal U.S. markets. As of September 30, 2024, the company had a portfolio consisting of 243 buildings aggregating approximately 14.6 million square feet, with a consolidated same-store occupancy rate of approximately 97.3%.
Approximately 97.6% of TRNO's leased space includes fixed rental increases or Consumer Price Index-based rental increases, ensuring predictable revenue streams. Lease terms typically range from three to ten years, with the weighted average remaining lease term as of September 30, 2024, being approximately 4.1 years.
As of September 30, 2024, the total annualized base rent for TRNO was approximately $333.75 million, with around 2.3% of this total scheduled to expire during the remainder of the year.
Regular communication and tenant support
TRNO maintains a strong focus on tenant relationships through regular communication and support. The company actively monitors the liquidity and creditworthiness of its tenants by reviewing outstanding accounts receivable balances and conducting periodic assessments of tenants’ financial conditions.
During the three months ended September 30, 2024, TRNO achieved a tenant retention ratio of 67.3% for its operating portfolio. This indicates a commitment to maintaining existing tenant relationships and ensuring tenant satisfaction, which is critical for minimizing turnover and associated costs.
In the nine months ended September 30, 2024, TRNO's revenues increased by approximately $41.8 million compared to the previous year, primarily due to new and renewed leases. This growth underscores the effectiveness of TRNO's tenant engagement strategies and support systems.
Property management services to ensure tenant satisfaction
TRNO employs comprehensive property management services aimed at ensuring tenant satisfaction and operational efficiency. The company’s property operating expenses increased by approximately $12.8 million during the nine months ended September 30, 2024, largely due to property acquisitions and rising insurance premiums.
As of September 30, 2024, TRNO's net operating income from same-store properties was approximately $173.75 million. This figure reflects the company's commitment to maintaining and enhancing property standards to meet tenant needs and expectations.
Furthermore, TRNO has a structured approach to managing maintenance and repairs, which includes regular site visits and discussions with tenant management. This proactive management style helps to address tenant concerns promptly, fostering a positive relationship between the company and its tenants.
| Metric | Value |
|---|---|
| Total Annualized Base Rent (as of Sept 30, 2024) | $333.75 million |
| Consolidated Same-Store Occupancy Rate | 97.3% |
| Average Remaining Lease Term | 4.1 years |
| Tenant Retention Ratio (3 months ended Sept 30, 2024) | 67.3% |
| Increase in Revenues (nine months ended Sept 30, 2024) | $41.8 million |
| Net Operating Income (Same-Store Properties) | $173.75 million |
| Increase in Property Operating Expenses (nine months ended Sept 30, 2024) | $12.8 million |
Terreno Realty Corporation (TRNO) - Business Model: Channels
Direct leasing through in-house team
Terreno Realty Corporation employs a dedicated in-house leasing team to manage direct leasing activities. As of September 30, 2024, the company's total annualized base rent was approximately $333.75 million, with 2.3% of this amount scheduled to expire during the remainder of the year. The leasing team focuses on negotiating leases that typically range from three to ten years, ensuring a stable income stream through strategic tenant retention efforts. The tenant retention ratio for the operating portfolio was reported at 67.3% for the three months ended September 30, 2024.
Online platforms for property listings and marketing
Terreno Realty Corporation utilizes online platforms to enhance visibility and reach potential tenants. The company actively lists properties on various real estate platforms, which aids in marketing their available spaces. As of September 30, 2024, the company reported successful cash rent changes on new and renewed leases totaling approximately 1.6 million square feet, with an increase of 40.5% compared to previous rental rates. This significant uptick demonstrates the effectiveness of their online marketing strategy, as it allows for broader exposure to potential clients and efficient management of leasing operations.
Networking events and industry conferences
Participation in networking events and industry conferences is essential for Terreno Realty Corporation's business model. These events provide opportunities to build relationships with potential tenants and industry stakeholders. The company’s strategic approach to networking has played a role in its acquisition activities; during the nine months ended September 30, 2024, Terreno acquired five industrial properties with a total initial investment of approximately $499.4 million. Engaging with the industry through conferences allows Terreno to stay ahead of market trends and identify potential opportunities for growth and collaboration.
| Year | Total Annualized Base Rent (in thousands) | % of Total Annualized Base Rent |
|---|---|---|
| 2024 (3 months) | $7,621 | 2.3% |
| 2025 | $38,530 | 11.6% |
| 2026 | $61,341 | 18.4% |
| 2027 | $53,914 | 16.2% |
| 2028 | $50,039 | 15.0% |
| Thereafter | $122,305 | 36.5% |
| Total | $333,750 | 100.0% |
Terreno Realty Corporation (TRNO) - Business Model: Customer Segments
E-commerce and logistics companies
Terreno Realty Corporation serves a significant number of e-commerce and logistics companies, with major tenants including Amazon and FedEx. As of September 30, 2024, Amazon accounts for approximately $9,892 thousand in annualized base rent, representing 3.3% of the total annualized base rent. FedEx contributes about $6,421 thousand, which is 2.2% of the total annualized base rent.
Manufacturing firms
Manufacturing firms also represent a critical customer segment for Terreno Realty. For instance, Imperial Bag & Paper Co LLC occupies 505,729 square feet and pays an annualized base rent of approximately $4,729 thousand, constituting 1.6% of the total annualized base rent. Additional manufacturing tenants include O'Neill Logistics, with an annualized rent of $4,480 thousand, making up 1.5%.
Government agencies
Government agencies are another notable segment. The United States Government leases 316,796 square feet and pays about $4,620 thousand in annualized base rent, equating to 1.6% of the total annualized base rent. The District of Columbia also has a significant footprint, with 245,888 square feet leased for approximately $3,613 thousand in annualized rent, representing 1.2%.
| Customer Type | Tenant | Rentable Square Feet | Annualized Base Rent (in thousands) | % of Total Annualized Base Rent |
|---|---|---|---|---|
| E-commerce | Amazon.com | 471,880 | 9,892 | 3.3% |
| E-commerce | FedEx Corporation | 308,889 | 6,421 | 2.2% |
| Manufacturing | Imperial Bag & Paper Co LLC | 505,729 | 4,729 | 1.6% |
| Manufacturing | O'Neill Logistics | 429,692 | 4,480 | 1.5% |
| Government | United States Government | 316,796 | 4,620 | 1.6% |
| Government | District of Columbia | 245,888 | 3,613 | 1.2% |
Terreno Realty Corporation (TRNO) - Business Model: Cost Structure
Property Operating Expenses (Maintenance, Taxes, Utilities)
For the nine months ended September 30, 2024, Terreno Realty Corporation reported total property operating expenses of approximately $70.3 million, up from $57.4 million in the same period of the previous year, marking an increase of 22.3%.
The breakdown of property operating expenses includes:
- Same store expenses: $58.6 million
- Non-same store operating properties: $11.6 million
Factors contributing to the increase include higher insurance premiums and real estate taxes, alongside the costs associated with property acquisitions during 2024 and 2023.
Acquisition and Development Costs for New Properties
During the nine months ended September 30, 2024, Terreno Realty Corporation made significant investments in property acquisitions, totaling approximately $499.4 million. This included:
- $318.2 million recorded to land
- $149.8 million to buildings and improvements
- $31.4 million to intangible assets
Additionally, the company assumed $22.4 million in liabilities during these acquisitions.
As of September 30, 2024, the company had eight properties under development or redevelopment, with a total expected investment of approximately $520.3 million, including redevelopment costs and capitalized interest.
Administrative Expenses and Employee Salaries
For the nine months ended September 30, 2024, the administrative expenses of Terreno Realty Corporation amounted to approximately $31.8 million, an increase of 12.8% compared to $28.2 million in the same period of the previous year.
The increase was attributed to higher salaries and bonuses, as well as increased restricted stock amortization and other compensation expenses.
| Cost Component | 2024 Amount (in thousands) | 2023 Amount (in thousands) | Percentage Change |
|---|---|---|---|
| Property Operating Expenses | 70,261 | 57,436 | 22.3% |
| Acquisition Costs | 499,400 | 437,000 | 14.3% |
| Administrative Expenses | 31,828 | 28,205 | 12.8% |
Terreno Realty Corporation (TRNO) - Business Model: Revenue Streams
Rental income from leased properties
For the nine months ended September 30, 2024, Terreno Realty Corporation reported total rental revenues of approximately $180.9 million, an increase of 3.9% compared to $174.1 million for the same period in 2023. The rental revenues included:
- Same store rental revenues: $180.9 million for 2024 vs. $174.1 million for 2023.
- Non-same store operating properties: $38.6 million for 2024 vs. $13.9 million for 2023, reflecting a significant increase of 178.9%.
For the three months ended September 30, 2024, total rental revenues were $78.8 million, compared to $64.9 million for the same period in 2023, showing a year-over-year increase of 21.3%.
| Period | Total Rental Revenue (in millions) | Same Store Rental Revenue (in millions) | Non-Same Store Rental Revenue (in millions) |
|---|---|---|---|
| Q3 2024 | $78.8 | $61.7 | $17.1 |
| Q3 2023 | $64.9 | $59.6 | $5.4 |
| 9M 2024 | $180.9 | $180.9 | $38.6 |
| 9M 2023 | $174.1 | $174.1 | $13.9 |
Lease termination fees and other ancillary income
Terreno Realty Corporation recorded lease termination revenue of approximately $0.5 million for the nine months ended September 30, 2024, compared to $0.3 million for the same period in 2023. For the three months ended September 30, 2024, lease termination revenues were approximately $10,000, up from $100,000 in Q3 2023.
Additionally, straight-line rental revenues related to contractual rent abatements amounted to approximately $5.4 million for the nine months ended September 30, 2024, compared to $5.9 million for the same period in 2023.
Revenue from property sales and dispositions
During the nine months ended September 30, 2024, Terreno Realty Corporation sold one property located in the Seattle market for a sales price of approximately $11.0 million, resulting in a gain of approximately $5.7 million. In contrast, for the nine months ended September 30, 2023, the company sold a property in the Northern New Jersey/New York City market for $25.5 million, yielding a gain of $12.3 million.
As of September 30, 2024, the company had agreements to sell additional properties in the San Francisco Bay Area for a total expected sales price of approximately $29.9 million.
| Property Sale Date | Location | Sales Price (in millions) | Gain (in millions) |
|---|---|---|---|
| 2024 | Seattle | $11.0 | $5.7 |
| 2023 | Northern New Jersey/New York City | $25.5 | $12.3 |
| Expected 2024 | San Francisco Bay Area | $29.9 | N/A |
Updated on 16 Nov 2024
Resources:
- Terreno Realty Corporation (TRNO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Terreno Realty Corporation (TRNO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Terreno Realty Corporation (TRNO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.