Breaking Down Terreno Realty Corporation (TRNO) Financial Health: Key Insights for Investors

You are defintely looking at Terreno Realty Corporation (TRNO) right now because its industrial real estate model-focused on high-demand, coastal US markets-is showing some serious resilience, but you need to know if the stock price reflects that. The direct takeaway is that while the underlying business is incredibly strong, evidenced by a 96.2% portfolio occupancy rate as of Q3 2025, valuation debates persist. For the third quarter of 2025, the company reported revenue of $116.25 million and an Earnings Per Share (EPS) of $1.00, significantly beating analyst consensus, which tells you their pricing power is real; they saw a massive 23.8% year-to-date increase in cash rents on new and renewed leases. Plus, the balance sheet looks clean with no debt maturities in 2025, but you still have to square that with a Discounted Cash Flow (DCF) analysis suggesting the stock may be 26.9% undervalued with a fair value around $81.85 as of October 2025. That's a big gap.

Revenue Analysis

You need to know if Terreno Realty Corporation (TRNO)'s revenue growth is sustainable, not just a one-off spike. The direct takeaway is that their revenue engine is running hot, driven by strong rental increases in their core industrial real estate holdings. For the trailing twelve months (TTM) ending September 30, 2025, the company reported total revenue of approximately $443 million, which represents a solid year-over-year increase of 21.13%.

This kind of growth isn't accidental; it's a function of their concentrated portfolio in high-demand coastal U.S. markets. Looking at the nine months ended September 30, 2025, total revenue hit $338.9 million, up from $278.91 million in the same period a year prior. That's a clear trajectory. The near-term opportunity here is that their lease structure is defintely capturing the market's pricing power.

Here's the quick math on their recent quarter: Third-quarter 2025 revenue came in at $116.25 million, up from $99.64 million in Q3 2024. This translates to a quarterly growth rate of about 16.67%. That kind of consistent double-digit growth is exactly what we look for in a real estate investment trust (REIT) focused on infill industrial properties-assets located in densely populated, supply-constrained areas.

The primary revenue streams for Terreno Realty Corporation are straightforward, but the breakdown is crucial for understanding risk. Their business is overwhelmingly centered on leasing space, but the type of industrial property matters. The bulk of their income comes from warehouse and distribution centers, which is smart given the continued strength of e-commerce logistics.

• Warehouse/Distribution: Accounts for 78.7% of total annualized base rent.
• Improved Land: Contributes 11.2%, a unique and high-value segment.
• Transshipment: Makes up 6.6% of rent, focusing on quick transfer of goods.
• Flex: The smallest segment at 3.5%, offering adaptable space.

What this breakdown tells you is that this is a pure-play industrial REIT, not a diversified gamble. The growth is heavily tied to two factors: acquiring new properties and pushing rents on existing ones. The significant change in revenue is less about new product lines and more about pricing power; cash rents on new and renewed leases saw a year-to-date increase of 23.8% through the third quarter of 2025. That's a huge tailwind, plus it's supplemented by higher tenant expense reimbursements.

If you're digging deeper into the ownership structure and market sentiment, you should be Exploring Terreno Realty Corporation (TRNO) Investor Profile: Who's Buying and Why?, but from a fundamental revenue perspective, the picture is clear: high-quality assets in the right locations are allowing them to command premium rents, which directly fuels their top-line growth.

Profitability Metrics

You're looking for a clear picture of Terreno Realty Corporation (TRNO)'s financial engine, not just the top-line revenue. For a specialized industrial Real Estate Investment Trust (REIT), the profitability story is told through three key margins: Net Operating Income (NOI) as a proxy for Gross Profit, Operating Profit, and Net Profit.

The headline for 2025 is clear: Terreno Realty Corporation maintains exceptional profitability, though you need to look past the high Net Income figures to understand the core operational efficiency. The company's focus on high-barrier-to-entry coastal markets like Los Angeles and New York City is defintely paying off in premium rents and high margins.

Here's the quick math on their 2025 performance, using the latest available figures:

• Net Profit Margin (TTM): A powerful 72.5% as of September 30, 2025.
• Operating Profit Margin (Q2 2025): Approximately 38.96%.
• Full-Year Revenue Forecast: Analysts project $465.02 million for the full 2025 fiscal year.

Margin Analysis: High Net, Solid Operating

Terreno Realty Corporation's profitability is a two-part story. The Net Profit Margin for the trailing twelve months (TTM) ending Q3 2025 stood at an impressive 72.5%. This huge number is typical for a REIT, as their Net Income includes significant non-cash gains, such as the large gain on the sale of real estate investments that boosted Q2 2025 Net Income to $93.273 million. That's a big, one-time boost.

A more consistent measure of day-to-day efficiency is the Operating Profit Margin (Operating Income divided by Revenue). In Q2 2025, this margin was about 38.96% (calculated from $43.72 million in Operating Income on $112.23 million in revenue). This margin shows the strength of their core rental business before factoring in interest expense and non-recurring items. It's solid.

Profitability Trends and Industry Comparison

Looking at trends, Terreno Realty Corporation's TTM Net Income growth was a staggering 93.36% year-over-year as of September 30, 2025, largely due to strategic property sales at high valuations. This trend shows a successful capital recycling strategy-selling mature assets to fund new, higher-growth acquisitions and developments.

When you compare the operating efficiency to peers, Terreno Realty Corporation looks strong. Their TTM Operating Margin of 48.21% (as of October 2025) is significantly higher than that of major industrial REIT competitors like Rexford Industrial Realty, which reported an Operating Margin of 33.45%, and STAG Industrial, at 29.77%. This outperformance suggests superior cost management or, more likely, a portfolio of properties that commands premium rents in supply-constrained coastal markets.

Here's a quick look at how Terreno Realty Corporation stacks up on a key efficiency metric:

Operational Efficiency and Cost Management

The real story of operational efficiency isn't just in the margins, but in the leasing spreads. Terreno Realty Corporation is capturing significant rental rate growth, which is the ultimate sign of strong asset management. For the nine months ended September 30, 2025, the increase in cash rents on new and renewed leases was a massive 23.8% year-to-date. This ability to push rents aggressively, coupled with a lean operational structure, is the core driver of their high margins.

This efficiency is further underscored by their tenant retention ratio of 71.1% for the operating portfolio in Q2 2025, which helps reduce turnover costs and vacancy risk. They're getting higher rents and keeping tenants longer. That's the ideal scenario. If you want a deeper dive into who is betting on this performance, check out Exploring Terreno Realty Corporation (TRNO) Investor Profile: Who's Buying and Why?

Debt vs. Equity Structure

You want to know how Terreno Realty Corporation (TRNO) is funding its growth, and the simple answer is: mostly with equity, keeping their leverage defintely low. This conservative approach is a core part of their financial strength, especially in a volatile interest-rate environment.

As of the third quarter of 2025, Terreno Realty Corporation's balance sheet shows a remarkably light debt load. The total debt reported for the quarter ending September 2025 was approximately $1.02 billion. This total breaks down into two key components:

• Short-Term Debt & Capital Lease Obligation: Approximately $280.0 million. This amount aligns with the balance outstanding on their $600 million revolving credit facility.
• Long-Term Debt & Capital Lease Obligation: Approximately $742.9 million.

Here's the quick math on their leverage: the Debt-to-Equity (D/E) ratio for Terreno Realty Corporation as of September 2025 stood at a lean 0.26. This is a critical figure. For context, the average Debt-to-Equity ratio for Industrial REITs is around 0.6376. Terreno Realty Corporation is running with about a third of the leverage of its peers, which gives them a massive cushion against market downturns or rising rates. They are simply not dependent on debt to sustain operations.

The company's strategy clearly favors equity funding (Total Stockholders' Equity was roughly $4 billion in Q3 2025). This is evident in their capital markets activity this year. Year-to-date through September 30, 2025, Terreno Realty Corporation issued 3,506,371 shares of common stock through its at-the-market (ATM) program, generating gross proceeds of $237.4 million. This is a deliberate, consistent choice to use equity to fund acquisitions and development, rather than piling on debt.

On the debt management front, the near-term risk is minimal. Terreno Realty Corporation has no debt maturities in 2025. Their next significant maturity is just $50 million in 2026. This staggered, long-dated maturity profile is exactly what you want to see from a REIT, protecting cash flow from the need to refinance at potentially higher rates right now. If you want a deeper dive into who is buying all that new stock, you should check out Exploring Terreno Realty Corporation (TRNO) Investor Profile: Who's Buying and Why?

The table below summarizes the key leverage metrics as of the end of Q3 2025, showing just how conservative their financing structure is.

What this estimate hides is the potential dilution from the ATM program, but for a growth-focused REIT, this low-leverage, equity-heavy model is a major competitive advantage, especially when acquiring assets.

Liquidity and Solvency

You want to know if Terreno Realty Corporation (TRNO) can cover its near-term obligations, and the quick answer is yes-their liquidity position is strong, which is defintely a key strength for a real estate investment trust (REIT) in this economic climate. The company maintains healthy current and quick ratios, and its capital strategy is clearly focused on funding growth through equity and managing debt maturities carefully.

The core of Terreno Realty Corporation's immediate financial health lies in its liquidity ratios. As of the second quarter of 2025 (Q2 2025), the company's Current Ratio stood at approximately 1.75. This means for every dollar of current liabilities (short-term bills), the company has $1.75 in current assets (cash, receivables, etc.) ready to cover it. The Quick Ratio, which excludes less-liquid assets like inventory, is essentially identical at 1.75, which is typical for a REIT that holds little to no inventory. This is a very comfortable cushion; anything above 1.0 signals a strong ability to meet obligations.

Here's the quick math on their working capital (Current Assets minus Current Liabilities) from the mid-2025 figures. Based on Q2 2025 data, Terreno Realty Corporation reported Current Assets of approximately $128.37 million and Current Liabilities of about $73.43 million. This leaves a positive working capital of roughly $54.94 million. This positive trend gives Terreno Realty Corporation flexibility for unexpected expenses or small, opportunistic acquisitions without needing to immediately tap credit lines. A positive working capital is always a good sign.

When you look at the cash flow statement, you see a clear, strategic pattern. The company is generating solid cash flow from operations (CFOA), which is the lifeblood of any business. More importantly, the trends in investing and financing activities show a disciplined approach to funding growth:

• Operating Cash Flow: This is consistently positive, driven by high occupancy (96.2% as of Q3 2025) and significant rent growth, with cash rents on new and renewed leases increasing by 23.8% year-to-date through September 30, 2025.
• Investing Cash Flow: This is a net outflow, which is expected for a growth-oriented REIT. Year-to-date through Q3 2025, acquisitions totaled $596.1 million, largely offset by dispositions of $386.4 million. They are actively recycling capital, selling older or non-core assets to fund new, higher-return properties.
• Financing Cash Flow: Terreno Realty Corporation has been strategically using its At-The-Market (ATM) equity program, issuing shares for gross proceeds of $237.4 million year-to-date through September 30, 2025, to fund its investment activity. This equity-funded growth, alongside no debt maturities in 2025, substantially de-risks the balance sheet.

The company's debt structure is also a major strength, as they have no debt maturities in 2025 and only $50 million in 2026 maturities. This is a huge advantage in a higher interest rate environment, as it removes the immediate pressure to refinance. As of November 4, 2025, the balance outstanding on their $600 million revolving credit facility was approximately $192.5 million, leaving significant capacity for new acquisitions or to manage unexpected capital needs. The low debt-to-equity ratio of 0.20 further confirms a very conservative and well-managed balance sheet.

For a deeper dive into the company's overall financial picture, including valuation tools and strategy, you can read the full post here: Breaking Down Terreno Realty Corporation (TRNO) Financial Health: Key Insights for Investors.

Valuation Analysis

You want to know if Terreno Realty Corporation (TRNO) is a good buy right now, and the short answer is that the market is pricing in significant growth, but analysts still see a clear path to upside. The stock is not cheap on traditional metrics, but for a high-quality industrial REIT focused on supply-constrained coastal markets, you rarely get a bargain. It's a classic growth-at-a-reasonable-price (GARP) debate.

As of late 2025, Terreno Realty Corporation trades with a trailing Price-to-Earnings (P/E) ratio of about 18.92. That's a premium compared to the broader market, but it's important to remember that for a Real Estate Investment Trust (REIT), the Price-to-Funds From Operations (P/FFO) ratio of 23.26 is often a better measure of value. The market is defintely valuing the firm's strategic focus on infill industrial properties, which you can read more about in their Mission Statement, Vision, & Core Values of Terreno Realty Corporation (TRNO).

Is Terreno Realty Corporation Overvalued or Undervalued?

The valuation picture is mixed, which is common for a well-run REIT that has consistently grown its dividend. While the Price-to-Book (P/B) ratio sits at 1.53, suggesting the stock trades at a moderate premium to its net asset value, the Enterprise Value-to-EBITDA (EV/EBITDA) ratio of 27.31x is quite high. This EV/EBITDA multiple signals that the market places a high value on the company's operating cash flow before accounting for debt and capital structure-a premium for their operational efficiency and high occupancy rates.

Here's the quick math on the key valuation multiples based on 2025 fiscal year data:

Stock Performance and Analyst Consensus

Looking at the past year, the stock has shown resilience, but also volatility. Over the last 12 months, Terreno Realty Corporation's stock has traded between a 52-week low of $48.18 and a high of $69.20. The recent price of around $60.10 to $61.73 puts it near the middle of this range, suggesting the market has digested the recent economic shifts and is now waiting for the next catalyst.

The dividend story remains solid. The annual dividend is currently around $2.08 per share, giving a yield of about 3.45%. The payout ratio is healthy at approximately 66.03% of trailing earnings, which is sustainable and leaves room for future increases, a key factor for income-focused investors.

The institutional view is encouraging. A consensus of 11 analysts maintains a 'Buy' rating for Terreno Realty Corporation. Their average 12-month price target is $65.27, which suggests a potential upside of approximately 9.64% from the current trading price. This indicates that while the stock trades at a premium, most professionals believe the company's growth prospects, driven by its strategic industrial portfolio, justify a higher valuation.

• Buy rating signals confidence in near-term performance.
• Target price of $65.27 offers a clear upside.
• High EV/EBITDA is the cost of buying premium assets.

Your action here should be to weigh the high EV/EBITDA against the analyst consensus. If you believe the industrial real estate boom in coastal US markets will continue, the premium is warranted. If not, wait for a pullback closer to the 52-week low.

Risk Factors

You're looking at Terreno Realty Corporation (TRNO) because of its strong focus on supply-constrained, high-barrier-to-entry coastal markets, but that strategy comes with its own set of risks you need to map out. The biggest near-term concerns are the external financial pressures from interest rates and the internal operational challenge of managing tenant turnover, which is already impacting occupancy.

Frankly, Terreno Realty Corporation's defensive, coastal-market strategy is a double-edged sword. It drives premium rents, but it also concentrates risk in the most expensive, regulation-heavy US markets: Los Angeles, Seattle, and Northern New Jersey/New York City. Plus, as a Real Estate Investment Trust (REIT), the company is always exposed to sector-specific risks like real estate demand shifts and interest rate fluctuations.

Financial and Macro Headwinds

The financial risks for Terreno Realty Corporation are less about solvency and more about capital allocation and dividend sustainability. The good news is the balance sheet is defintely strong, with a conservative debt-to-equity ratio of just 0.26. Even better, the company has no debt maturities in 2025, which is a massive shield against the current high-interest-rate environment.

Still, a few numbers jump out in the 2025 data. The dividend payout ratio (DPR) is a point of concern, with one analysis suggesting it is an unsustainable 1.08, meaning the company is paying out more than it earns in a given period. Here's the quick math: if the DPR is over 1.00, it pressures future cash flow or requires capital raises to maintain the dividend, even though the latest quarterly dividend of $0.52 per share was declared. Another liquidity metric to watch is the current ratio (current assets divided by current liabilities). While one report suggests a healthy 1.75, an earlier, more cautious analysis pointed to a potential constraint at 0.14, which suggests you need to scrutinize their cash position very closely.

• Interest Rate Risk: Higher rates directly impact the cost of future acquisitions and development financing, potentially compressing the estimated stabilized cap rates (capitalization rates).
• Dividend Sustainability: The reported DPR of 1.08 raises questions about the long-term funding of the dividend without relying on external capital.
• Liquidity Constraints: The lower current ratio estimate of 0.14 flags a potential short-term challenge in covering liabilities, though the absence of 2025 debt maturities mitigates this.

Operational and Strategic Risks

The core operational risk is that the industrial real estate market, while strong, is not immune to softening. We saw this play out in the third quarter of 2025 (Q3 2025) with a dip in portfolio occupancy. The operating portfolio was 96.2% leased as of September 30, 2025, a noticeable drop from 97.7% at the end of June 2025.

What this estimate hides is that a portion of this drop (about 190 basis points, or 1.9%) was due to the acquisition of a vacant multi-market portfolio, but the overall trend of tenant turnover is still a headwind. Analysts anticipate that downtime and tenant turnover will negatively impact same-property metrics in Q4 2025 and early 2026. Also, the company's development pipeline, while promising, carries execution risk. The total expected investment for the six properties under development or redevelopment is substantial, at approximately $391.2 million as of September 30, 2025. You always have to factor in construction delays and cost overruns on projects of that scale.

Mitigation Strategies and Next Steps

Terreno Realty Corporation mitigates these risks primarily through its strategic discipline and capital structure. The focus on high-demand, supply-constrained markets is the core strategy to maintain high rental growth, which saw a cash rent change of 34.2% on new and renewed leases in Q1 2025. They are also actively mitigating development risk by pre-leasing projects well in advance, like the Countyline Corporate Park Phase IV Building 36, which is fully pre-leased until 2037 with a total expected investment of $56.2 million.

The strong balance sheet, with its low debt-to-equity ratio and $600 million revolving credit facility with no outstanding borrowings as of March 31, 2025, provides a substantial buffer against financial shocks and gives them dry powder for opportunistic acquisitions. This financial flexibility is their biggest defense against a volatile interest rate environment.

If you want a deeper dive into the valuation side of this, particularly how the market is pricing in these risks, check out our full analysis: Breaking Down Terreno Realty Corporation (TRNO) Financial Health: Key Insights for Investors.

Finance: Monitor the Q4 2025/Q1 2026 tenant retention rate to see if the occupancy dip is a one-off event or a trend.

Growth Opportunities

You're looking for a clear path through the industrial real estate market, and Terreno Realty Corporation (TRNO) offers one, but it requires understanding their niche. The primary growth driver isn't just market expansion, but a focused, high-density strategy that creates a pricing moat (sustainable competitive advantage). The near-term outlook for 2025 is strong, backed by significant capital deployment and rent escalations.

Analysts are projecting full-year 2025 revenue for Terreno Realty Corporation to hit approximately $465.02 million, an increase of over 21% from the previous year. This growth is defintely not accidental; it's a direct result of their strategic focus on infill industrial properties-the kind of last-mile logistics assets that are hard to replicate in major US coastal markets like Los Angeles and New York City/Northern New Jersey. This is a location game, and they are winning it.

Here's the quick math on their core growth drivers, which are already in motion for 2025:

• Lease Rate Growth: Cash rents on new and renewed leases increased a massive 23.8% year-to-date through the third quarter of 2025. This is pure pricing power.
• Acquisition Velocity: Year-to-date through Q3 2025, the company executed approximately $596.1 million in acquisitions, expanding their portfolio to 307 buildings.
• Development Pipeline: They have six properties under development or redevelopment, representing 0.9 million square feet, with a total expected investment of approximately $391.2 million.

The company's strategic initiatives are all about maximizing value from their irreplaceable locations. For example, they've been converting obsolete assets, like the redevelopment of a property in Santa Ana, California, which involved demolishing office buildings to construct a 92,000 square foot industrial distribution building for a total investment of $41.3 million in Q1 2025. Plus, their commitment to sustainability, with LEED-certified assets, allows them to command higher rents and attract high-growth, tech-driven tenants, which is a subtle but powerful competitive advantage.

When you look at the financials, the balance sheet strength provides the foundation for this aggressive growth. Terreno Realty Corporation has a conservative capital structure, with $0 in debt maturing in 2025, giving them significant financial flexibility to continue opportunistic acquisitions, even in a volatile interest rate environment. They also raised $237.4 million via an At-The-Market (ATM) equity offering in Q1 2025, which gives them dry powder for deals.

To be fair, the occupancy dipped slightly to 96.2% as of September 30, 2025, but that included 381,000 square feet of vacancy from a recent multi-market portfolio acquisition-it's a temporary dip from a growth-focused purchase, not an operational failure. The same-store occupancy, which strips out new deals, actually improved to 98.6%.

Here is a snapshot of the forward-looking earnings estimates based on the latest Q3 2025 performance, which saw them report an EPS of $1.00, significantly beating the consensus estimate of $0.66:

The core takeaway is this: Terreno Realty Corporation is a landlord in the most supply-constrained, high-demand logistics markets in the US, and that superior location advantage gives them the leverage to continually push rents higher. This is a business built on scarcity, and that's a great place to be. For a deeper dive into the company's full financial picture, you can read more in our full report: Breaking Down Terreno Realty Corporation (TRNO) Financial Health: Key Insights for Investors.

Next Step: Your team should model a scenario where TRNO's year-over-year cash rent growth moderates to 15% in 2026 to stress-test your valuation assumptions by the end of the month.