Terreno Realty (TRNO) Q4 2023 earnings summary

Executive summary

• Focused on industrial properties in six major coastal U.S. markets, with 16.0 million sq. ft. and 98.5% portfolio occupancy at Dec. 31, 2023; full-year cash same-store NOI growth was 13.3%.

• 2023 FFO per diluted share was $2.22, while net income per share was $1.81; results included gains on real estate sales and $0.6 million of DirectBuy Home Improvement bad-debt expense.

Financial highlights

• FY 2023 revenue was $323.6 million vs. $276.2 million in 2022; net income was $151.5 million vs. $198.0 million, and diluted EPS was $1.81 vs. $2.61.

• Q4 revenue was $86.5 million vs. $76.0 million YoY; net income was $57.6 million vs. $58.9 million, and diluted EPS was $0.67 vs. $0.77.

• FY FFO per diluted share was $2.22 vs. $2.00; adjusted FFO was $148.9 million vs. $104.9 million in 2022.

• FY cash same-store NOI growth was 13.3%, or 13.7% excluding termination fees; about $2.0 million, or 120 bps, of cash NOI growth related to properties acquired vacant or with near-term expirations.

Outlook and guidance

• Seven properties under development or redevelopment were 88.3% pre-leased as of Feb. 6, 2024; expected completion dates range from Q2 2024 to Q1 2025.

• Countyline Phase IV is expected to reach completion in 2027 with ten LEED-certified industrial buildings totaling about 2.2 million sq. ft. and expected investment of about $511.5 million.

• In Jan. 2024, Countyline Building 39 was 100% pre-leased under a 10-year lease, commencing upon completion.

• Rooftop solar projects are expected to begin operating in part from 2024; the goal is solar on at least 5% of total rooftop area by year-end 2024, up from 1%.