Bullish indicating open at $55-$60, IPO prices at $37
On Tuesday, Piper Sandler made adjustments to Terreno Realty Corp ’s (NYSE:TRNO) financial outlook, lowering the price target to $60 from $61 while maintaining a Neutral rating. The stock, currently trading at $55.69, has shown resilience with an 8.81% gain over the past week, though InvestingPro analysis indicates the stock is slightly overvalued at current levels. The firm’s analyst, Alexander Goldfarb, cited tariff-related macroeconomic uncertainties that could potentially slow tenant decision-making as the primary reason for the preemptive reductions. These concerns are expected to moderate rent growth, prompting management to prioritize occupancy.
Goldfarb also revised the forecasted funds from operations (FFO) for the year 2025, reducing the estimate by $0.05 to $2.56, and for 2026, decreasing it by $0.15 to $2.64. The revisions were made in response to the current economic landscape influenced by tariffs, which could affect tenant behavior and rent growth.
The analysis included the impact of 3.5 million shares issued in the first quarter of 2025, which raised approximately $235 million at $67.7 per share. This capital raise is expected to be used to pay off the $80 million balance on the company’s revolving credit facility from the fourth quarter of 2024 and to generate interest income until it is deployed for acquisitions in the second and third quarters of 2025. The company has demonstrated strong shareholder returns, maintaining dividend payments for 15 consecutive years with a current yield of 3.52%.
Furthermore, Piper Sandler adjusted Terreno Realty’s acquisition expectations for fiscal year 2025 to $270 million, down from the previous $700 million estimate. This decision follows a quiet first quarter in 2025 where no acquisitions were made, and approximately $70 million worth of transactions are currently under contract or letter of intent, which is below the firm’s quarterly assumption of $175 million. The transaction market typically seeks two to three months of stability before re-engaging, which has been factored into these revised assumptions. For deeper insights into Terreno’s valuation and growth prospects, including 12 additional ProTips and comprehensive financial metrics, visit InvestingPro.
In other recent news, Terreno Realty Corporation has expanded its portfolio with the acquisition of an industrial property in Redmond, Washington, for approximately $9.3 million. This purchase aligns with the company’s strategy of focusing on key coastal markets in the U.S. Terreno Realty plans to renovate the building after the current tenant vacates, aiming for a stabilized cap rate of 5.5%. In analyst updates, Goldman Sachs upgraded Terreno Realty’s stock from Neutral to Buy, raising the price target to $77.00, citing the company’s strong growth prospects and operational strategy. BMO Capital Markets also adjusted its price target for Terreno Realty, increasing it from $71.00 to $73.00, while maintaining a Market Perform rating. JMP Securities reaffirmed its Market Outperform rating with a $72.00 price target, highlighting Terreno Realty’s strategic market focus and strong financial position. Despite mixed investor sentiment, analysts have noted Terreno Realty’s ability to maintain high occupancy rates and capitalize on favorable supply-demand conditions in its target markets.
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