Terreno Realty's Hawthorne Redevelopment: A Strategic Industrial Investment
Monday, Nov 18, 2024 9:20 am ET
3min read Terreno Realty Corporation (NYSE:TRNO) has announced the completion of the redevelopment and stabilization of Terreno 147th Street in Hawthorne, California. This strategic move by the industrial real estate acquirer, owner, and operator reflects the company's commitment to modernizing its portfolio and capitalizing on the competitive Los Angeles market.
The redeveloped property, a 31,000 square foot industrial distribution building, sits on 1.3 acres and features four dock-high and one grade-level loading positions, along with parking for 35 cars, including four electric charging stations. The property's strategic location in Hawthorne, California, near aerospace and technology companies, positions it well for potential rent growth and tenant retention.
The redevelopment project represents a total investment of $15.6 million, with an estimated stabilized cap rate of 5.6%. While this cap rate is slightly lower than the average cap rates for industrial real estate investments in the Los Angeles market over the past year, the property's modern specifications and sustainable features, such as EV charging stations and expected LEED certification, align with modern tenant demands and ESG requirements. Additionally, the long-term lease secured through April 2028 with an atomic energy tenant provides stable income visibility, further contributing to the lower cap rate.
The long-term lease with an atomic energy tenant significantly enhances the risk-return profile of this investment. The 100% pre-leased status from completion through April 2028 provides stable income visibility, reducing vacancy risk. The atomic energy tenant's stable cash flows and low volatility in energy demand further mitigate risk. The 5.6% estimated stabilized cap rate, while moderate, is reasonable for a new Class A industrial asset in the competitive Los Angeles market. The property's strategic location, modern specifications, and sustainable features support strong tenant retention and value appreciation, aligning with modern tenant demands and ESG requirements.
In conclusion, Terreno Realty's Hawthorne redevelopment project is a strategic investment that capitalizes on the competitive Los Angeles market and modern tenant demands. The property's modern specifications, sustainable features, and long-term lease with an atomic energy tenant position it well for potential rent growth, tenant retention, and value appreciation. While the estimated stabilized cap rate is slightly lower than the average cap rates for industrial real estate investments in the Los Angeles market over the past year, the property's unique features and stable income visibility make it an attractive investment opportunity.
The redeveloped property, a 31,000 square foot industrial distribution building, sits on 1.3 acres and features four dock-high and one grade-level loading positions, along with parking for 35 cars, including four electric charging stations. The property's strategic location in Hawthorne, California, near aerospace and technology companies, positions it well for potential rent growth and tenant retention.
The redevelopment project represents a total investment of $15.6 million, with an estimated stabilized cap rate of 5.6%. While this cap rate is slightly lower than the average cap rates for industrial real estate investments in the Los Angeles market over the past year, the property's modern specifications and sustainable features, such as EV charging stations and expected LEED certification, align with modern tenant demands and ESG requirements. Additionally, the long-term lease secured through April 2028 with an atomic energy tenant provides stable income visibility, further contributing to the lower cap rate.
The long-term lease with an atomic energy tenant significantly enhances the risk-return profile of this investment. The 100% pre-leased status from completion through April 2028 provides stable income visibility, reducing vacancy risk. The atomic energy tenant's stable cash flows and low volatility in energy demand further mitigate risk. The 5.6% estimated stabilized cap rate, while moderate, is reasonable for a new Class A industrial asset in the competitive Los Angeles market. The property's strategic location, modern specifications, and sustainable features support strong tenant retention and value appreciation, aligning with modern tenant demands and ESG requirements.
In conclusion, Terreno Realty's Hawthorne redevelopment project is a strategic investment that capitalizes on the competitive Los Angeles market and modern tenant demands. The property's modern specifications, sustainable features, and long-term lease with an atomic energy tenant position it well for potential rent growth, tenant retention, and value appreciation. While the estimated stabilized cap rate is slightly lower than the average cap rates for industrial real estate investments in the Los Angeles market over the past year, the property's unique features and stable income visibility make it an attractive investment opportunity.
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