Terreno Realty's Rent Rises in Q3, Occupancy Declines Y/Y

Terreno Realty Corporation TRNO recently provided an update on its operating, investment and capital market activity for the third quarter of 2025. Per the third-quarter 2025 update, TRNO locked in higher rents on new and renewed leases. Although occupancy for the improved land portfolio increased, operating portfolio occupancy declined year over year. Nevertheless, accretive acquisitions and developments are likely to support its growth in the upcoming period.

Let us gather insight on the line items on which the company has provided an update.

TRNO’s Operating Activity

In the third quarter of 2025, this industrial REIT witnessed a 17.2% increase in cash rents on new and renewed leases. The leases that commenced in the third quarter totaled around 0.6 million square feet and 8 acres of improved land. The tenant retention ratio was 68.7% for the operating portfolio and 100% for the improved land portfolio.

As of Sept. 30, 2025, the occupancy for the improved land portfolio was 98.6% compared with 98.5% recorded at June 30, 2025, and 97.1% at Sept. 30, 2024.

As of Sept. 30, 2025, the occupancy for the operating portfolio was 96.2%, which shrank 150 basis points (bps) sequentially and 80 bps year over year. For the same-store portfolio of around 14.1 million square feet, TRNO had 98.6% quarter-end occupancy, up 10 bps sequentially and 150 bps year over year.

As of Sept. 30, 2025, Terreno Realty’s portfolio included 307 buildings spanning around 20.2 million square feet and 44 improved land parcels encompassing 146.4 acres leased to 676 tenants.

TRNO’s Investment Activity

TRNO has been actively restructuring its portfolio by disposing of non-core assets and acquiring value-accretive investments. Such efforts will aid long-term revenue growth.

In the third quarter of 2025, Terreno Realty sold three properties, including six buildings spanning around 302,000 square feet and two improved land parcels of around 4.4 acres, all at an aggregate sale value of $102.8 million.

In the same period, the company acquired two industrial properties, including three buildings spanning around 132,000 square feet and a multi-market portfolio consisting of 12 buildings encompassing around 1.2 million square feet, all at an aggregate purchase value of $472.6 million.

Subsequent to Sept. 30, 2025, the company sold a property comprising a 603,000 square foot industrial distribution building in South Brunswick, NJ, for a sale price of approximately $144.2 million.

As of Sept. 30, 2025, TRNO had acquisitions worth around $20.8 million under contract and nearly $39 million under letters of intent. Moreover, the company has around $8.8 million of dispositions under contract.

TRNO’s Development and Redevelopment Activity

As of Sept. 30, 2025, Terreno Realty had six properties under development or redevelopment. Post completion, these will comprise nine buildings spanning around 0.9 million square feet, which are 54% pre-leased. The company also has around 10.7 acres of land dedicated to future developments with an estimated investment value of around $391.2 million.

TRNO’s Capital Market Activity

In the third quarter of 2025, Terreno Realty did not issue any shares of common stock under its at-the-market equity offering program. In the same period, the company also did not repurchase any shares under its share repurchase authorization.

As of Sept. 30, 2025, the company’s balance outstanding for its $600 million revolving credit facility was approximately $280 million. It has no debt maturities in 2025, while $50 million of debt is maturing in 2026.

TRNO: In a Snapshot

In a rising e-commerce market, the industrial real estate asset category is playing a pivotal role, transforming the way consumers shop and receive their goods. Companies are making immense efforts to improve supply-chain efficiencies, propelling demand for logistics infrastructure and efficient distribution networks. Given Terreno Realty’s solid capacity to offer modern logistics facilities, it is well-poised to bank on this trend.

With a solid operating platform, strategic expansion moves and a healthy balance sheet position, TRNO seems well-positioned to capitalize on long-term growth opportunities amid favorable industry fundamentals.

In the past three months, shares of this Zacks Rank #2 (Buy) company have gained 4.2% compared with the industry's growth of 1.2%.

Other Stocks to Consider

Some other top-ranked stocks from the broader REIT sector are Crown Castle CCI and OUTFRONT Media OUT, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for CCI’s 2025 FFO per share has moved 2 cents northward to $4.21 over the past two months.

The Zacks Consensus Estimate for OUT’s 2025 FFO per share has moved a cent upward to $1.89 over the past two months.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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