Terreno Realty Corporation (TRNO): what the price assumes

Generated: 2026-08-08 · Exported: 2026-08-09 · Source: https://boothcheck.com/report/TRNO

Headline

Field	Value
Ticker	TRNO
Company	Terreno Realty Corporation
Sector / Industry	Real Estate / REIT
Current price	$69.45/sh

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	reit
Implied FFO growth	-1.4%
Price-to-FFO	14.1x
FFO yield	7.1%

Solve inputs: computed at a 9.7% cost of equity with 4% terminal growth over a 5-year stage; each 1pp of cost of equity moves the implied AFFO growth ~3.8pp.

How unusual the bet is: within-range

Reference	Value
vs own history	-0.65σ
cohort percentile (of 105 peers)	44
implied end-window share	0%

Valuation X-Ray

The price is justified by relative-multiple; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	1.54x	4	expensive
Earnings	2.39x	4	expensive
Relative	1.23x	6	expensive
Growth	1.44x	4	expensive

Families that justify the price: Relative Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.3%); the inversion above states its own rate.

Per-Model Detail (n=18)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$58.06	1.20x	yes	FCF base $0.3B, growth 20% (input: historical growth), terminal g 4.0%, WACC 8.3%, 6yr projection
DCF Exit Multiple	Growth	$54.03	1.29x	yes	Exit EV/EBITDA: 63.7x / 65.7x / 67.7x (bear / base = today's held flat / bull), 6yr
Relative Valuation	Relative	$86.69	0.80x	yes	P/E 26.59x (blended: static sector reference 35x + trailing (TTM) 14x), scenarios: 21.7x / 26.6x / 31.5x (bear / base = reference held flat / bull), EV/EBITDA 33.72x
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	$43.47	1.60x	yes	Stage 1: 7% for 5yr, Stage 2: 3.5% perpetual
Simple Excess Return	Asset	$43.59	1.59x	yes	BV/sh $40.82, ROE (TTM) 9.9%, ke 9.3%
Two-Stage Excess Return	Asset	$45.01	1.54x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$37.67	1.84x	yes	Rev $0.5B, growth 20% (input: historical growth; tapered), Terminal P/S: 9.8x / 12.0x / 14.2x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair Value	Relative	$59.64	1.16x	yes	FFO/share $4.97, growth 7% (input: historical FFO/share growth, 8y median), PEG=2.38 (Overvalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	—	—	no	—
Residual Income	Asset	$45.27	1.53x	yes	BV $40.82 + 5yr PV of (ROE (TTM) 9.9% − Kₑ 9.3%) × BV; BV grows 6.4%/yr
Graham Number	Asset	$67.57	1.03x	yes	√(22.5 × FFO/share $4.97 × BVPS $40.82) — Graham's conservative floor
EV/EBITDA Relative	Relative	$15.48	4.49x	yes	EBITDA $0.12B × sector EV/EBITDA 20.0x
FCF Yield	Earnings	$19.86	3.50x	yes	FCF $272.4M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	$18.02	3.85x	yes	SBC-adj FCF $0.25B (FCF $0.27B − SBC $0.02B) capitalized at Kₑ
Ben Graham Formula	Earnings	$95.64	0.73x	yes	FFO/share $4.97 × (8.5 + 2×7.2%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	—	—	no	—
P/Sales Sector	Relative	$27.96	2.48x	yes	Revenue $0.49B × sector P/S 6.0x
PEG Fair Value	Relative	$53.91	1.29x	yes	FFO/share $4.97 × (PEG 1.5 × growth 7.2% (input: historical FFO/share growth, 8y median)) → PE 10.8x
Earnings Yield	Earnings	$53.73	1.29x	yes	FFO/share $4.97 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	$69.87	0.99x	yes	FFO/share $4.97 × 14.1x P/FFO (route cohort median, n=85); FFO $0.52B (FFO incl. D&A + impairments, FY2025, companyfacts), shares 105M
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

Unit	Role	Valuation basis	Revenue	Reported profit	Value evidence	Status
Industrial real estate (whole company)	operating	enterprise	0.5B reported-currency	—	withheld	unresolved no unit value

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Field	Value
Funds from operations (trailing)	$522.8m
Share count CAGR (dilution)	8.7%
Burning cash	no

REIT basis: leverage is read against funds from operations (FFO), not depreciation-gutted operating income. The header's implied growth runs on ADJUSTED FFO — FFO minus recurring maintenance capex — so the header's multiple and this leverage ratio use bases that differ by that capex; neither substitutes for the other. Net debt could not be resolved from the corporate debt tags in the filings (REIT notes and mortgage debt are often tagged outside the corporate ladder), so the leverage ratio is withheld rather than rendered from incomplete tags. Interest expense is not separately reported in the cached statements, so fixed-charge coverage cannot be computed.

Bullet Takeaways

• Terreno owns what cannot be built more of: 309 buildings of infill industrial space in six coastal markets, where its 10-K defines the moat plainly, "Infill locations are geographic locations surrounded by high concentrations of already developed land and existing buildings", and the pricing power shows in cash rents up 27.7% on second-quarter leases.
• The growth engine runs on equity: the company issued 4.07 million shares year-to-date at an average $65.64 to fund $274.1 million of acquisitions, a model that stalls if the stock derates, and methods anchored to demonstrated earnings power put the price at 2.3x what they support.
• Watch the second-quarter earnings report in early August for whether the 97.6% occupancy and double-digit rent spreads hold, and whether the dividend, growing 12.6% a year on a roughly 40% payout of adjusted funds from operations, gets its next raise.

Bull Case

The structural advantage is that Terreno's competitors cannot manufacture its product. The company owns functional industrial buildings, 309 of them totaling about 19.8 million square feet at year-end per the 10-K, exclusively in infill submarkets of six major coastal cities, locations the filing describes as "surrounded by high concentrations of already developed land and existing buildings". New supply in those submarkets requires land that mostly does not exist, and the fragmented nature of infill markets, which fellow owner Rexford's filing calls, for Southern California, "the largest, most fragmented industrial market in the nation", means institutional-quality owners consolidate it building by building. The moat shows up where it should: cash rents on new and renewed leases jumped 27.7% in the second quarter and 25.3% year-to-date, with occupancy at 97.6%. Tenants pay those increases because relocating a last-mile distribution operation out of an infill submarket means giving up the delivery times that justified the rent.

The growth arithmetic compounds on top of the mark-to-market. Revenue grew 12.7% year over year in the March quarter, and the company keeps buying: $172.3 million of acquisitions in the second quarter, $274.1 million year-to-date across eight buildings. Because in-place rents sit far below market, the same growth continues even without acquisitions, as every expiring lease rolls up toward the 25%-plus spreads the current leasing tape shows. The dividend tells the compounding story in one line: up about 12.6% a year over the last five fiscal years, and still consuming only about 40% of adjusted funds from operations, the strictest cash measure after maintenance capital. A payout that low with rent spreads that high means the dividend growth is funded by the buildings, not by financial engineering.

The balance sheet is the conservative extreme of the sector. Net debt runs at about 1.6 times funds from operations, and the pre-charge cash stream covers fixed charges about 16.4 times, ratios most REITs cannot approach. That posture converts volatility into opportunity: when rates rise and leveraged buyers retreat, Terreno can keep acquiring in the very markets where its 10-K acknowledges competition from "pension funds and their advisors, bank and insurance company investment accounts, other public and private real estate investment companies". A landlord with irreplaceable locations, sub-market rents, a 40% payout, and almost no leverage has an unusual number of ways to win and very few ways to be forced to sell.

Bear Case

The fragility in Terreno's structure is not debt, it is the share-issuance treadmill. This is an external-growth REIT: it funds acquisitions primarily by selling new stock, 1.99 million shares in the second quarter at an average $66.46 and 4.07 million shares year-to-date at $65.64, raising $267.4 million against $274.1 million of year-to-date property purchases. The model is accretive only while the equity trades rich enough to issue above the value of what it buys. A derating, from rates, from a logistics downturn, from nothing more than sector rotation, closes the equity window and the growth engine stops without a single tenant missing a payment. The share count is already compounding around 4% in half a year, and the quality checklist flags the dilution even as it credits everything else.

The price also sits well above what the demonstrated cash flows defend. Methods anchored to earnings power put the price at 2.3 times what current results support, and asset-based reads at 1.5 times; only peer multiples and forward-growth methods reach it. The rent spreads that make the growth story, 27.7% on second-quarter leases, are the harvest of scarcity created years ago, and they mean-revert as leases roll to market. There are early frictions in the same filing that celebrates the spreads: contractual rent abatements granted to same-store tenants rose to "approximately $6.1 million" in 2025 from $3.9 million in 2024, which is what it looks like when landlords start paying tenants to sign. Occupancy at 97.6% is a point below the 97.7% of a year earlier, small movement, but in the direction the bear expects.

Competition presses from both sides of the trade. For assets, the 10-K describes the acquisition market as "highly competitive", with pension capital and other REITs bidding for the same infill buildings, which compresses the yields on the $274 million Terreno deploys each half-year. For tenants, the filing concedes that "Actions by our competitors may decrease or prevent increases in the occupancy and rental rates of our properties". And the demand side is a levered bet on coastal trade flows: the six markets are ports-and-airports economies, so tariff escalation or an import slowdown lands directly on warehouse demand. A REIT priced at sector-average multiples, dependent on continuous equity issuance, in a property type whose golden decade of rent growth is visibly decelerating, is a fine business at the wrong point in its own flywheel.

Valuation

Read the price on adjusted funds from operations, the cash measure after the maintenance capital that keeps warehouses leasable. At $69.36 (July 10, 2026), Terreno trades at about 15 times adjusted funds from operations, and the striking part is what that multiple implies: the price is consistent with adjusted funds from operations declining about 0.9% a year. For a landlord whose second-quarter leases carried 27.7% cash rent increases, that is a notably pessimistic embed, and the multiple sits in the lower half of the REIT peer group's price-to-adjusted-funds-from-operations range. The market, in other words, is paying for the portfolio as it is and giving little credit for the mark-to-market still inside the leases.

The method families sort into a clean pattern. Peer multiples land right at the price and growth-based methods within about 20%, while earnings-power reads put the price at 2.3 times what trailing results support and asset-based methods at 1.5 times. That is the signature of a REIT whose GAAP-visible earnings lag its economics: depreciation and below-market in-place rents make the demonstrated-profit lens structurally harsh, which is exactly why the sector is read on funds from operations instead. The portfolio behind the numbers is the 10-K's "functional properties in infill locations that may be shared by multiple tenants", 309 buildings across six coastal markets, 97.6% occupied.

The income statement a REIT holder actually cares about reads well. The dividend runs at $2.08 per share annualized, a 3.0% yield at the current price, after growing about 12.6% a year over the last five fiscal years, and it consumes only about 39% of funds from operations and 40.1% of adjusted funds from operations, leaving an unusually thick retention cushion. Leverage is read against the same cash stream the price is set on: net debt is about 1.6 times funds from operations and fixed charges are covered about 16.4 times, so the balance sheet neither threatens the dividend nor carries the growth. What carries the growth is equity issuance, $267.4 million of it year-to-date at prices below the current quote, and that dependence, not solvency, is the variable that decides whether the 15x multiple compounds or stalls.

Catalysts

The freshest data arrived July 7, when Terreno published its second-quarter operating update: occupancy of 97.6% at quarter-end, up from 96.3% the prior quarter, same-store occupancy of 97.8%, and cash rents on new and renewed leases up 27.7% for the quarter and 25.3% year-to-date. The full second-quarter earnings report in early August puts the funds-from-operations numbers behind those operating stats, and the market's question is simple: whether rent spreads in the mid-20s persist as leases signed during the 2021-2022 scarcity peak roll through, or whether the deceleration visible in the March-quarter spread mix continues.

Capital deployment is the other running catalyst. The company acquired $172.3 million of properties in the second quarter, including six buildings totaling about 518,000 square feet, bringing year-to-date purchases to $274.1 million, funded substantially by 4.07 million shares issued at an average $65.64. The pace of both sides of that trade, buildings in and shares out, each quarter measures whether the external-growth model is still accretive at current prices. Notable leasing wins keep marking demand, including an 11-year lease with a fresh-produce importer in Doral, Florida running to 2037. The dividend calendar matters too: with the payout at roughly 40% of adjusted funds from operations and a five-year growth rate of 12.6% annually, the size of the next declared increase is the cleanest signal of management's confidence in the rent roll ahead.

Peer Cohorts (Per Segment, With Filing Citations)

Industrial real estate (whole company) (reported)

• REXR (Rexford Industrial Realty, Inc.)
• FY2025 10-K: …103,399 97,823 Acquired lease intangible liabilities, net 116,487 147,473 Tenant security deposits 92,444 90,698 Tenant prepaid rents 88,777 90,576 Total Liabilities 3,774,694 3,922,239 Equity Rexford Industrial Realty, Inc. stockholders' equity Preferred stock, $ 0.01 par value per share, 10,050,000 shares…
• FY2025 10-K: …Southern California's infill industrial property market is the largest, most fragmented industrial market in the nation, demonstrating favorable long-term tenant demand fundamentals in the face of an ongoing long-term scarcity and diminishment of supply over time. We have a portfolio of 419 properties totaling…
• FR (FIRST INDUSTRIAL REALTY TRUST, INC.)
• FY2025 10-K: T I THE COMPANY Item 1. Business Background First Industrial Realty Trust, Inc. is a self-administered and fully integrated real estate company which owns, manages, acquires, sells, develops and redevelops industrial real estate. The Company is a Maryland corporation organized on August 10, 1993 and a real estate…
• FY2025 10-K: …and in-place leases, respectively. (C) Purchase price excludes closing costs. Additionally, for the year ended December 31, 2025, three industrial buildings were acquired from the Joint Venture. As such, the purchase price was reduced by our proportionate share of the Joint Venture's gain on sale and incentive fees…
• EGP (EASTGROUP PROPERTIES, INC.)
• FY2025 10-K: …totaling 7,108,000 square feet in Houston and 6,428,000 square feet in Dallas, which represent 9.5% and 10.9%, respectively, of the Company's total Real estate properties based on percentage of total annualized base rent (as defined in Item 2. Properties). A downturn in general economic conditions and local real…
• FY2025 10-K: …including variable rate debt that has been swapped to an effectively fixed rate through the use of interest rate swaps. The Company may also access the public debt or convertible bond markets in the future as a means to raise capital. EastGroup plans to hold its properties as long-term investments but may decide to…
• PLD (Prologis, Inc.)
• FY2025 10-K: Real Estate Segment - NOI 6,188 5,717 Strategic capital segment: Strategic capital revenues 592 672 Strategic capital expenses (271 ) (292 ) Strategic Capital Segment - NOI 321 380 General and administrative expenses (469 ) (419 ) Depreciation and amortization expenses (2,626 ) (2,580 ) Operating income before gains…
• FY2025 10-K: …portfolio were 53.5% leased with a current investment of $3.0 billion and a TEI of $5.1 billion when completed and leased, leaving $2.1 billion of estimated additional required investment); • development of new industrial properties that we may hold for long-term investment or subsequently contribute to…
• STAG (STAG Industrial, Inc.)
• FY2025 10-K: …that offer relative value across CBRE-EA Tier 1 industrial property types and tenants through the principled application of our proprietary risk assessment model, (ii) provide growth through 34 Table of Contents sophisticated industrial operation and an attractive opportunity set, and (iii) capitalize our business…
• FY2025 10-K: …than approximately 2.8% of our total annualized base rental revenue and no single industry accounting for more than approximately 11.4% of our total annualized base rental revenue. We own all of our properties and conduct substantially all of our business through our Operating Partnership, which we control and…
• LXP (LXP INDUSTRIAL TRUST)
• FY2025 10-K: …manufacturing investments and business-friendly local and state governments. 32 Table of Contents There continues to be competition for the acquisition of industrial properties, specifically warehouse and distribution facilities. While we believe the industrial market will continue to grow, increased costs from…
• FY2025 10-K: Sold our interests in 11 warehouse facilities for gross proceeds of $389.1 million. Two of the facilities sold were vacant development projects totaling 2.1 million square feet, located in Ocala, Florida and Indianapolis, Indiana markets for a gross aggregate price of $174.6 million. Debt . • Repaid $50.0 million of…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q2 2026 operating update, July 7, 2026 · Q2 2026 operating update, July 2026 · Terreno press release, July 7, 2026 · Zacks via TradingView, 2026