Terreno Realty Corporation

Q1 2020 Update

May 6, 2020

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Forward Looking Statements

This presentation contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact are forward-looking statements and, in some cases, can be identified by the use of the words "anticipate," "believe," "estimate," "expect," "intend," "may," "might," "plan," "project," "result," "should," "will," "seek," "target," "see," "likely," "position," "opportunity," "outlook," "potential," "enthusiastic," "future," and similar expressions. These statements are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including risks related to our ability to meet our estimated forecasts related to stabilized cap rates and the impact of the COVID-19 pandemic on our business, our tenants and the national and local economies. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected.

We caution investors that forward-looking statements are based on management's beliefs and on assumptions made by, and information currently available to, management. Factors that may cause actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: (i) our ability to identify and acquire industrial properties on terms favorable to us; (ii) general volatility of the capital markets and the market price of our stock; (iii) adverse economic or real estate conditions or developments in the industrial real estate sector and/or in the markets in which we acquire properties; (iv) our dependence on key personnel and our reliance on third parties to property manage the majority of our industrial properties; (v) our dependence upon tenants; (vi) our ability to comply with the laws, rules and regulations applicable to companies, and in particular, public companies; (vii) our ability to manage our growth effectively; (viii) tenant bankruptcies and defaults on or non-renewal of leases by tenants; (ix) decreased rental rates or increased vacancy rates; (x) increased interest rates and operating costs; (xi) declining real estate valuations and impairment charges; (xii) our expected leverage, our failure to obtain necessary outside financing, and future debt obligations; (xiii) our ability to make distributions to our stockholders; (xiv) our failure to successfully hedge against interest rate increases; (xv) our failure to successfully operate acquired properties; (xvi) our failure to maintain our status as a real estate investment trust ("REIT") and possible adverse changes to tax laws; (xvii) uninsured or underinsured losses relating to our properties; (xviii) environmental uncertainties and risks related to natural disasters; (xix) financial market fluctuations; and (xx) changes in real estate and zoning laws and increases in real property tax rates. Other factors that could materially affect results can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, including those set forth under the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Company's preliminary prospectus supplement relating to the offering under the section titled "Risk Factors", and in our other public filings.

We expressly disclaim any responsibility to update our forward-looking statements, whether as a result of new information, future events, or otherwise. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.

2

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Investment Strategy

Unique and Highly Selective

Focus on Functional Assets

Market Approach

in Infill Locations

  • Acquire, own and operate industrial real estate in six major coastal U.S. markets. Exclusively.
    • Mix of core and value-add investments
    • No greenfield development
    • No complex joint ventures
  • Superior market fundamentals, including lower vacancy and higher rent growth
    • Strong demand generators (high population densities, near high volume distribution points)
    • Physical and regulatory constraints to new supply
      • Shrinking supply in certain submarkets
  • Broad product opportunity set (1)
    • Warehouse / distribution (82.7%)
    • Flex (including light industrial and R&D) (5.1%)
    • Transshipment (5.3%)
    • Improved land (6.9%) (2)
  • Functional and flexible assets
    • Cater to sub-market tenant demands, including last-mile distribution
    • Generally suitable for multiple tenants
    • Adjacent to transportation infrastructure
  • Multiple value creation opportunities
    • Emphasis on discount to replacement cost provides margin of safety
    • Opportunity for higher and better use over time
  1. Reflects Terreno portfolio composition based on annualized base rent as of March 31, 2020. Excludes four properties under redevelopment that upon completion will contain approximately 0.5 million square feet.
  2. Includes 21 improved land parcels totaling approximately 82.2 acres that are 96.7% leased at March 31, 2020. Such land is used for truck,
  • trailer and container storage and/or car parking and may be redeveloped to higher and better use.

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Recent Highlights

Financial Highlights

  • Net Income available to common stockholders of $0.19 per diluted share for the quarter ended March 31, 2020 compared to $0.22 per diluted share for the quarter ended December 31, 2019 and $0.25 for the quarter ended March 31, 2019.
  • Funds From Operations (FFO)(1) of $0.35 per diluted share for the quarter ended March 31, 2020 compared to $0.35 per diluted share for the quarter ended December 31, 2019 and $0.35 for the quarter ended March 31, 2019.
  • Cash balance of $69.7 million as of March 31, 2020 and zero drawn on $250 million credit facility.

Operating Highlights

  • Cash-basisSame Store NOI(1) for the three months ended March 31, 2020 increased approximately 4.5% as compared to the same period in 2019 due to increased revenue on new and renewed leases(3).
  • Cash rents on new and renewed leases commencing during the three months ended March 31, 2020 increased approximately 21.9% on approximately 0.6 million square feet.
  • Total portfolio, excluding four properties under redevelopment and 21 improved land parcels, was 97.8% leased as of March 31, 2020 as compared to 96.8% at December 31, 2019 and 98.1% at March 31, 2019.
  • The same store portfolio of approximately 12.5 million square feet, representing approximately 94.0% of our total square feet, was 98.1% leased at March 31, 2020 as compared to 97.9% at December 31, 2019 and 98.2% at March 31, 2019.

4

(1) This is a non-GAAP financial measure, please see our Reporting Definitions for further explanation.

(2) FFO for the three months ended March 31, 2020 included the impact of approximately $0.5 million in reversed straight-line rent receivables due to the effects of COVID-19.

(3) Approximately $0.1 million (40bps) of the increase in cash-basis same store NOI for the three months ended March 31, 2020 was related to properties that were acquired vacant or with near term expirations.

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Recent Highlights

Investment Highlights

Q1 2020 Acquisitions

$29.7 million

YTD Acquisitions (1)

$34.2 million

Acquisitions Under Contract (1)(2)

$5.7 million

Dispositions Under Contract (1)(2)

$54.0 million

Capital Markets Activities

  • Issued approximately 0.4 million shares of common stock under the ATM program during the three months ended March 31, 2020 with a weighted average offering price of $53.37, receiving gross proceeds of approximately $22.8 million.
  • During the three months ended March 31, 2020, repaid a $32 million mortgage loan with a 2020 maturity. No remaining debt maturities in 2020 and an $11 million mortgage loan maturing in 2021 with no balance outstanding on a $250 million revolving credit facility.

COVID-19 Update

  • As of May 1, 2020, 170 tenants, representing 34% of our 498 total tenants' leases had requested rent deferral or abatement. Such requests aggregated 6.5% of our annualized base rent as of April 1, 2020.
  • Of the 170 requests we granted rent deferrals to 49 tenants aggregating 2.0% of annualized base rent (29% of total requests by number and 31% by dollar amount). Deferrals granted represent 76% of the total dollar requests from those 49 tenants. We did not grant any rent abatement.
  • We denied 67 tenant requests aggregating 2.5% of annualized base rent (39% of total requests by number and 38% by dollar amount). 46 tenants aggregating 1.2% of annualized base rent requesting rent deferral or abatement rescinded their requests (27% of requests by number and 18% by dollar amount).
  • We are still in discussions with 8 tenants who are requesting 0.2% of our annualized base rent in rent deferral or abatement (5% of requests by number and 3% by dollar amount).
  • As of May 1, 2020, we received approximately 84% of April rent billed in cash and 11% by applying security deposits.

5

(1)

As of May 6, 2020.

(2)

There is no assurance that we will acquire or dispose of properties under contract or letter of intent because the proposed acquisitions and dispositions are subject to the

completion of satisfactory due diligence and various closing conditions and, in the case of properties under letter of intent, purchase and sale agreements.

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Current Portfolio Overview

Occupancy (1)

Six Major Coastal U.S. Markets(2)

Portfolio

Same Store

99.0%

98.4%

98.4%

97.9%

97.8%

98.1%

97.2%

96.8%

Q2 2019 Q3 2019 Q4 2019 Q1 2020

Q2 2019 Q3 2019 Q4 2019 Q1 2020

Seattle 11.0%

Northern New Jersey /

New York City

29.7%

San Francisco Bay Area

18.2%Washington, D.C.

13.3%

Los Angeles

17.5%

Miami 10.3%

Key Metrics(3)

Square Feet

13.4 million

Average Acquisition Size

$13.5 million

Number of Buildings

219

Weighted Average

82.5%

Occupancy at Acquisition

21 Improved Land Parcels

82.2 acres; 96.7% leased

Square Feet Under

505,000

Redevelopment

  1. Portfolio and Same Store occupancy based on 13.4 million and 12.5 million square feet, respectively, as of March 31, 2020, and excludes 21 improved land parcels consisting of 82.2 acres and four properties under redevelopment that upon completion will contain approximately 0.5 million square feet.
  2. Based on annualized base rent by market including 13.4 million square feet and 21 improved land parcels consisting of 82.2 acres as of March 31, 2020. Excludes four properties under redevelopment that upon completion will contain approximately 0.5 million square feet.
  3. Properties owned as of March 31, 2020. Excludes four properties under redevelopment that upon completion will contain approximately 0.5 million square feet. Average acquisition size and weighted average occupancy at acquisition exclude 19 properties sold with an aggregate 2.6 million square feet.

6

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Terreno's Submarket Focus

Highly Focused Submarket Strategy

  • 31% of portfolio located in shrinking supply submarkets (1)
    • Characterized by shrinking industrial supply. Offers opportunities to convert existing buildings into higher and better use over time. Urban infill.
  • 55% of portfolio in no net new supply submarkets (1)
    • Characterized by older existing industrial product. Offers opportunities to redevelop existing buildings into new, modern industrial buildings. Infill.
  • 14% of portfolio in new supply submarkets (1)
    • Characterized by industrial buildings that will remain in their current state for the foreseeable future with previously undeveloped land available for industrial development. Greenfield.

Percentage Decrease in Industrial Supply Since 2000 (2) In Select Submarkets

SF Decrease

Decrease Since

Annual SF

Submarket

(Millions of SF)

2000

Decrease

Washington, D.C.

2.2

21.2%

1.1%

South San Francisco

2.7

14.5%

0.7%

Seattle SODO

1.7

7.1%

0.4%

Brooklyn/Queens

11.0

6.3%

0.3%

LAX Airport

1.1

6.2%

0.3%

  1. As of March 31, 2020. Reflects Terreno's portfolio composition based on geography and purchase price, includes properties under redevelopment, and improved land parcels. Refer to Appendix for submarket classifications.
  2. Data provided by Costar. As a comparison, industrial supply has increased 20% nationally and 113% in the Inland Empire since 2000.

7

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Shrinking Supply: South San Francisco

20% Decrease in Supply Since 1997

Demolished Industrial Inventory Approved for Redevelopment Terreno Properties (6 buildings, 223,000 SF)

Percentage Inventory Decrease and

Rental Rate Increase Since 1997

5%

140%

Inventory Change

Rental Rate Change

0%

120%

Change

100%

Change

-5%

80%

%

-10%

60%

%

Inventory

40%

RentRate

-15%

20%

-20%

0%

-20%

-25%

-40%

'97

'99

'01

'03

'05

'07

'09

'11

'13

'15

'17

'19

Source: CoStar

  • South San Francisco zoning limits freight forwarding contributing to higher and better use conversions.
  • Industrial buildings are being demolished and replaced by life science, creative office, manufacturing, and multifamily.

8

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Submarket Focus: Infill

Terreno portfolio located within highest density population areas as compared to other industrial REITs

17,500

Population Density Per Square Mile

15,000

12,500

10,000

7,500

5,000

2,500

-

TRNO REXR PLD EGP

FR DRE MNR COLD STAG

5-mile radius

10-mile radius

Represents average population density weighted by square feet and ranked by 5-mile radius.

Prologis (NYSE: PLD) average population density data as of 2018; PLD no longer discloses property level information.

Source: S&P Global Market Intelligence, Terreno Realty Corporation.

9

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Selected Recent Acquisitions

20045 84th Ave S.

Kent, WA

April 17, 2020

  • Purchase Price: $4.5 million
  • Estimated Stabilized Cap Rate: 5.7%
  • Size: One improved land parcel of 2.8 acres
  • Occupancy: 100% leased on a month-to-month basis
  • Location: Northern Kent Valley adjacent to Terreno Realty Corporation's Kent 202nd property

1691 Old Bayshore Highway

San Jose, CA

March 12, 2020

  • Purchase Price: $11.8 million
  • Estimated Stabilized Cap Rate: 5.0%
  • Size: One improved land parcel of 2.6 acres
  • Occupancy: 100% leased to one tenant
  • Location: Adjacent to the intersection of U.S. Highway 101 and I-880 and less than one mile from San Jose International Airport.

2310 East Gladwick Street

Rancho Dominguez, CA March 12, 2020

  • Purchase Price: $18.0 million
  • Estimated Stabilized Cap Rate: 3.6%
  • Size: One industrial building containing approximately 66,000 square feet on 3.7 acres
  • Occupancy: 100% leased to one tenant
  • Location: Between Los Angeles International Airport and the ports of LA and Long Beach.

10

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Selected Examples of Value Creation

  • Since Terreno's 2010 IPO, approximately two-thirds of our acquisitions have been value-add investments. Terreno has successfully stabilized 77 value-add investments to date. Terreno has sold approximately 10% of its acquisitions for an unleveraged IRR of 12.7%.

Strategy

Leasing

Examples

  • 56-8549th Street, Queens: Acquired with a short-term lease in February 2019. Completed standard make-ready work including office renovation, lighting upgrades, interior and exterior painting, sealcoat and restripe of parking, and upgraded fencing. Executed a new 7-year lease with a leading e-commerce firm that commenced in November 2019 with an estimated stabilized cap rate of 5.3%.
  • 2315 East Dominguez Street, Carson: Acquired with a short-term lease in November 2017. Completed entitlement process with city of Carson and make-ready work including full repaving, fencing, gate installation, ADA upgrades, and office refurbishment. Executed a new 5-year lease that commenced in March 2020 with an estimated stabilized cap rate of 6.9%.

Below Market

Dawson, Seattle: Acquired in July 2017 for an estimated 2.8% stabilized cap rate with 19

months remaining on below-market lease. Executed 5-year renewal with tenant in March 2019

Rents

increasing rent 119% over expiring rate and increasing stabilized cap rate to 6.0%.

  • California Avenue, Corona: Terreno acquired the 90,000 SF building in June 2014 for $7.8

Value Realized

million. Terreno sold the property 100% leased on March, 2019 for approximately $12.4

million, exiting the Inland Empire, and recognized a GAAP gain of approximately $4.5 million

and generated an unleveraged internal rate of return of 12.4%.

11

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Value Creation - Leasing

Property: 56-85 49th Street

Location: Maspeth, Queens, NY

Size: One building, 19,000 SF on 2.0 acres

Acquisition Price: $24.0 million in February 2019

Initial Occupancy: 100% occupied on a short-term basis

Leasing: Completed make-ready work and executed a 7-year lease with a leading e-commerce company that commenced in November 2019 with an estimated stabilized cap rate of 5.3%.

Value Creation - Executed 7-year lease with leading e-commerce company with estimated stabilized cap rate of 5.3%

12

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Value Creation - Leasing

Property: 2315 East Dominguez Street

Location: Carson, CA

Size: One improved land parcel on 5.4 acres

Acquisition Price: $12.9 million in November 2017

Initial Occupancy: 100% occupied on a short-term basis

Leasing: Completed entitlement process and make-ready work including full repaving, fencing, gate installation, ADA upgrades, and office refurbishment. Executed a new 5-year lease with a leading national ground delivery company that commenced in March 2020 with an estimated stabilized cap rate of 6.9%.

Value Creation - Executed 5-year lease with an estimated stabilized cap rate of 6.9%

13

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Value Creation - Below Market Rents

SoDo Seattle: Approximately Three Miles South of Downtown Seattle

Property: 5300 Denver Avenue

Size: One building, 30,000 SF on 1.5 acres

Acquisition Price: $4.7 million in May 2016

Rent Change on Rollover: Acquired with three years remaining on existing lease term. Negotiated an early termination with the existing tenant and immediately signed a seven-year lease with a replacement tenant at 78% higher rents and no downtime.

Property: 53 Dawson

Size: One building, 13,000 SF on 1.4 acres

Acquisition Price: $4.0 million in July 2017

Rent Change on Rollover: Acquired with 19 months remaining on below-market lease. Executed five-year renewal with tenant in March 2019 increasing rent 119% over expiring rate.

Value Creation -

Denver: New rents 78% higher increasing stabilized cap rate from 5.5% to 9.4%

Dawson: New rents 119% higher increasing stabilized cap rate from 2.8% to 6.0%

14

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Market Leading Corporate Structure

Management Alignment

  • Executive Team's long-term incentive compensation fully aligned with stockholders
    • Performance shares tied to three-year total stockholder return exceeding the MSCI U.S. REIT Index and FTSE Nareit Equity Industrial Index
    • No annual cash bonus plan for CEO and President with their long-term compensation paid solely in stock
  • No stock options, SARs, dividend equivalent units or UPREIT units
  • Significant senior management and board investment in common shares (approximately 2.4% of outstanding shares valued at $87.6 million)
    • $11 million invested by management in public offerings and open market purchases

Corporate Governance

  • Majority independent directors with diverse expertise serving annual terms; no classification of Board without shareholder approval ("MUTA opt- out")
  • Adopted a majority voting standard in non- contested director elections
  • Opted out of three Maryland anti-takeover provisions (no opt in without stockholder approval)
  • Ownership limits designed to protect REIT status and not for the purpose of serving as an anti- takeover device
  • No stockholder rights plan unless approved in advance by stockholders or if adopted, subject to termination if not ratified by stockholders within 12 months

15

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Key Takeaways

  • Focused strategy
    • Six major coastal US markets, exclusively
    • Flexible and functional assets in infill locations
  • Acquisition opportunities across our target markets at discounts to replacement cost
    • Ability to convert value-add investments into stabilized assets and realize value
    • Urban infill locations provide higher and better use opportunities over time
  • Strong balance sheet including an investment grade credit rating
  • Demonstrated value creation with 19 properties sold for an aggregate sales price of approximately $291.3 million earning a 12.7% unleveraged IRR
  • 11.7% dividend CAGR since initiating dividend in 2011
  • 12.3% compounded annual total shareholder return since 2010 IPO
  • Aligned management team and market leading corporate governance

16

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Appendix

17

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Appendix: Statements Of Operations

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three M onths Ended M arch 31,

2020

2019

REVENUES

Rental revenues and tenant expense reimbursements

$

45,116

$

40,880

Total revenues

45,116

40,880

COSTS AND EXPENSES

Property operating expenses

11,908

10,693

Depreciation and amortization

11,100

10,415

General and administrative (1)

5,758

5,963

Acquisition costs

52

-

Total costs and expenses

28,818

27,071

OTHER INCOME (EXPENSE)

Interest and other income

564

1,522

Interest expense, including amortization

(4,006)

(4,264)

Gain on sales of real estate investments

-

4,465

Total other income and expenses

(3,442)

1,723

Net income

12,856

15,532

Allocation to participating securities

(83)

(98)

Net income available to common stockholders

$

12,773

$

15,434

EARNINGS PER COMMON SHARE - BASIC AND DILUTED:

Net income available to common stockholders - basic

$

0.19

$

0.25

Net income available to common stockholders - diluted

$

0.19

$

0.25

BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

67,062,582

61,456,965

DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

67,469,721

61,604,250

For the Three M onths Ended M arch 31,

2020

2019

Performance share aw ard expense

$

1,473

$

1,780

  1. Includes non-cash compensation associated with the Company's Performance Share awards. For Performance Share awards granted prior to January 1, 2019, the Company estimates the fair value of the Performance Share awards using a Monte Carlo simulation model on the date of grant and at each reporting period, which may vary substantially from period to period based upon our relative share price performance. The Performance Share awards are recognized as compensation expense over the

requisite performance period based on the fair value of the Performance Share awards at the balance sheet date. For Performance Share awards granted after January 1,

18 2019, the Company estimates the fair value using a Monte Carlo simulation model on the date of grant and recognizes the expense over the performance period. Compensation expense related to all Performance Share awards outstanding is detailed above.

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Appendix: Net Income, FFO and Adjusted FFO

For the Three Months Ended March 31,

NET INCOME, FFO AND ADJUSTED FFO(1)

2020

2019

Total revenues

$

45,116

$

40,880

Property operating expenses

(11,908)

(10,693)

Depreciation and amortization

(11,100)

(10,415)

General and administrative (2)

(5,758)

(5,963)

Acquisition costs

(52)

-

Interest and other income

564

1,522

Interest expense, including amortization

(4,006)

(4,264)

Gain on sales of real estate investments

-

4,465

Net income

$

12,856

$

15,532

Allocation to participating securities

(83)

(98)

Net income available to common stockholders

$

12,773

$

15,434

Net income available to common stockholders per common share - basic

$

0.19

$

0.25

Net income available to common stockholders per common share - diluted

$

0.19

$

0.25

Adjustments to arrive at Funds from Operations:

Gain on sales of real estate investments

-

(4,465)

Depreciation and amortization related to real estate

11,074

10,387

Allocation to participating securities

(154)

(135)

Funds from Operations (1)

$

23,776

$

21,319

Funds from operations per common share - basic

$

0.35

$

0.35

Funds from operations per common share - diluted

$

0.35

$

0.35

Adjustments to arrive at Adjusted Funds From Operations:

Acquisition costs

52

-

Stock-based compensation

2,179

2,500

Straight-line rents

(316)

(737)

Amortization of lease intangibles

(1,389)

(870)

Total capital expenditures

(7,751)

(14,177)

Capital expenditures related to stabilization (3)

4,398

8,414

Adjusted Funds from Operations

$

20,949

$

16,449

Common stock dividends paid

$

18,158

$

14,643

Weighted average basic common shares

67,062,582

61,456,965

Weighted average diluted common shares

67,469,721

61,604,250

  1. See Reporting Definitions for further explanation.
  2. Includes non-cash compensation associated with the Company's Performance Share awards. For Performance Share awards granted prior to January 1, 2019, the Company estimates the fair value of the Performance Share awards using a Monte Carlo simulation model on the date of grant and at each reporting period, which may vary substantially from period to period based upon our relative share price performance. The Performance Share awards are recognized as compensation expense over the requisite performance period based on the fair value of the Performance Share awards at the balance sheet date. For Performance Share Awards granted after January 1, 2019, the Company estimates the fair value using a Monte Carlo simulation model on the date of grant and recognizes the expense over the performance period. Compensation expense related to all Performance Share awards outstanding was as follows:

For the Three M onths Ended M arch 31,

19

2020

2019

Performance share aw ard expense

$

1,473

$

1,780

  1. Capital expenditures related to stabilization includes costs incurred related to leasing acquired vacancy and redevelopment projects.

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Appendix: Supplemental Components of NAV

For the three

Q1 2020 ACQUISITIONS

months ended

COMPONENTS OF NET OPERATING INCOME(1)

Purchase

Estimated

March 31, 2020

Price

Stabilized

Total revenues

$

45,116

Property Name

Date

(in thousands)

Cap Rate

Acquisition

Less straight-line rents

(316)

Old Bayshore

San Jose, CA

$

11,784

5.0%

100%

Less amortization of lease intangibles

(1,389)

Gladwick

Rancho Dominguez, CA $

17,950

3.6%

100%

Less property operating expenses

(11,908)

Net operating income

Total/Weighted Average

$

29,734

4.2%

100%

$

31,503

CONTRACTUAL RENT ABATEMENTS

$

637

SUMMARY MARKET INFORMATION (Investments in Real Estate) (2)

LEASE TERMINATION INCOME

$

39

Annualized

CASH NOI FROM REDEVELOPMENTS

$

157

Annualized

Base Rent Per

BALANCE SHEET ITEMS

Rentable

Occupancy % as

Base Rent

Occupied

Market

Square Feet

of March 31, 2020

(000's)

Square Foot

Other assets and liabilities

Los Angeles

2,560,682

98.5%

$

22,603

$

8.97

Cash and cash equivalents

$

69,733

Restricted cash

297

Northern New Jersey/New York City

3,552,681

97.6%

36,543

10.54

Construction in progress (2)

102,467

San Francisco Bay Area

2,028,909

97.0%

25,014

12.71

Senior secured loan (3)

10,928

Seattle

1,776,747

97.7%

15,600

8.98

Miami

1,563,326

100.0%

14,209

9.09

Other assets, net

32,313

Washington, D.C.

1,874,378

96.1%

18,090

10.04

Less straight-line rents

(23,994)

Total/Weighted Average

13,356,723

97.8%

$

132,059

$

10.11

Security deposits

(14,247)

Dividends payable

(18,314)

SUMMARY MARKET INFORMATION (Improved Land)

Performance share awards payable

(4,950)

Accounts payable and other liabilities

(19,987)

Annualized

Total other assets and liabilities

$

134,246

Number of

Occupancy % as

Base Rent

Market

DEBT AND PREFERRED STOCK

Parcels

Acreage

of March 31, 2020

(000's)

Credit facility

$

-

Los Angeles

6

11.9

85.2%

$

2,209

Term loans payable (3)

(100,000)

Northern New Jersey/New York City

9

48.8

100.0%

5,528

Senior unsecured notes (3)

(350,000)

San Francisco Bay Area

2

4.0

100.0%

842

Mortgage loans payable (3)

(11,616)

Seattle

1

0.9

-

-

Total debt

$

(461,616)

Miami

2

3.2

100.0%

389

Washington, D.C.

1

13.4

100.0%

843

Total shares outstanding

67,695,805

Total/Weighted Average

21

82.2

96.7%

$

9,811

  1. See Reporting Definitions for further explanation.
  2. The Company had four properties under redevelopment as of March 31, 2020 that upon completion will contain approximately 0.5 million square feet with a total expected investment of approximately $111.9 million, including redevelopment costs of approximately $44.0 million.

20 (3) Excludes deferred financing costs and loan fees.

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Appendix: Same Store Results

For the Three Months

SAME STORE GROWTH (1)

Ended March 31,

$ Change % Change

2020

2019

Net income

$

12,856

$

15,532

$

(2,676)

(17.2)%

Depreciation and amortization

11,100

10,415

685

6.6%

General and administrative

5,758

5,963

(205)

(3.4)%

Acquisition costs

52

-

52

n/a

Total other income and expenses

3,442

(1,723)

5,165

n/a

Net operating income

33,208

30,187

3,021

10.0%

Less non-same store NOI

(3,426)

(851)

(2,575)

302.6%

Same store NOI

$

29,782

$

29,336

$

446

1.5%

Less straight-line rents and amortization of lease intangibles

(832)

(1,624)

792

(48.8)%

Cash-basis same store NOI

$

28,950

$

27,712

$

1,238

4.5%

HISTORICAL SAME STORE RESULTS (1) (2)

Full Year

Full Year Full Year

Full Year

Full Year

Full Year

Full Year

Full Year

2012

2013

2014

2015

2016

2017

2018

2019

Q1 2020

Same store square feet

2,235,500

3,091,365

4,792,329

6,312,641

8,627,109

10,159,084

10,421,965

11,795,386

12,549,644

Occupancy %

93.0%

96.8%

97.1%

94.4%

99.0%

97.5%

99.1%

98.4%

98.1%

Cash-basis same store NOI growth %

11.9%

18.1%

12.9%

3.1%

8.6%

16.5%

9.1%

9.2%

4.5%

Average cash-basis same store growth since IPO:

11.8%

  1. Same Store NOI is computed as rental revenues, including tenant expense reimbursements, less property operating expenses on a same store basis. The same store pool includes all properties that were owned as of March 31, 2020 and since January 1, 2019 and excludes properties that were disposed of prior to or were under redevelopment as of March 31, 2020. See Reporting Definitions for further explanation.
  2. Historical Same Store Results include cash-basis same store NOI growth %'s as reported in the Company's Form 10-Q and 10-K's. Previously reported cash-basis same store NOI growth has not been adjusted for properties that were subsequently disposed of or are held for sale to a third party.
  3. Included in cash-basis same store NOI was termination income of $0 million for both the three months ended March 31, 2020 and 2019, respectively.

21

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Appendix: Redevelopments and Dispositions

REDEVELOPMENTS

Total Expected

Amount

Estimated

Estimated Post-

Estimated

Investment (in

Amount Spent to

Remaining to

Stabilized Return

Development

Stabilization % Pre-leased

Property Name

thousands) (1)

Date

Spend

on Cost(2)

Square Feet

Quarter

March 31,2020

Sodo Row - North & South

$

61,652

$

55,720

$

5,932

4.5%

234,308

Q3 2021

24.0%

6th Avenue South

15,893

15,017

876

5.1%

50,270

Q2 2020

-

Kent 192

34,391

31,730

2,661

5.5%

219,910

Q4 2020

-

Total/Weighted Average

$

111,936

$

102,467

$

9,469

4.9%

504,488

11.1%

HISTORICAL DISPOSITIONS

Property

Market

Acquisition Date

Disposition Date

Acquisition Price

Disposition Price

Unleveraged IRR

Rialto

Los Angeles

September 2010

November 2012

$

12,110

$

16,962

20.9%

Maltese

New Jersey/New York

September 2010

December 2013

16,500

19,000

11.8%

Warm Springs

San Francisco

March 2010

June 2015

7,264

13,400

15.1%

Sweitzer

Washington, D.C.

October 2012

November 2015

6,950

11,200

21.5%

Fortune Qume

San Francisco

March 2010

February 2016

5,550

8,200

11.3%

Global Plaza

Washington, D.C.

March 2012

March 2016

6,100

8,200

13.2%

39th Street

Miami

August 2011

September 2016

4,400

6,097

12.1%

Whittier

Los Angeles

June 2012

April 2017

16,100

25,300

14.5%

Bollman

Washington, D.C.

June 2011

August 2017

7,500

12,000

12.4%

Route 100

Washington, D.C.

June 2013

August 2017

16,650

28,500

15.7%

8441 Dorsey

Washington, D.C.

March 2011

December 2017

5,800

11,500

11.9%

Hampton

Washington, D.C.

May 2014

February 2018

18,050

20,250

6.9%

10th Avenue

Miami

December 2010

June 2018

9,000

24,300

11.5%

26th Street (office)

Miami

September 2012

November 2018

3,150

4,325

14.4%

Miller Ave

Los Angeles

December 2014

November 2018

22,899

33,217

14.5%

California Ave

Los Angeles

June 2014

March 2019

7,815

12,410

12.4%

10100 NW 25th Street

Miami

January 2011

August 2019

9,875

14,000

7.2%

8215 Dorsey

Washington, D.C.

November 2009

October 2019

6,000

7,470

7.5%

9020 Junction

Washington, D.C.

November 2010

December 2019

13,800

15,000

7.6%

Total

$

195,513

$

291,331

12.7%

  1. Total expected investment for the property includes the initial purchase price, buyer's due diligence and closing costs, estimated near-term redevelopment expenditures, capitalized interest and leasing costs necessary to achieve stabilization.
  2. Estimated stabilized return on cost is calculated as annualized cash basis net operating income for the property stabilized to market occupancy (generally 95%) divided by the total expected investment for the property.
  3. We expect to use Sodo Row - North as a parking amenity for tenants at Sodo Row - South and may seek to opportunistically lease-up or

22 redevelop the space separately in the future.

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Appendix: Capitalization

Senior

Mortgage

Maturity

Credit Facility

Term Loans

Unsecured

Loans Payable

Total Debt

2020 (9 months)

$

-

$

-

$

-

$

345

$

345

2021

-

-

-

11,271

11,271

2022

-

100,000

50,000

-

150,000

2023

-

-

-

-

-

2024

-

-

100,000

-

100,000

Thereafter

-

-

200,000

-

200,000

Total Debt

-

100,000

350,000

11,616

461,616

Deferred financing costs, net

-

(365)

(2,229)

(14)

(2,608)

Total Debt, net

$

-

$

99,635

$

347,771

$

11,602

$

459,008

Weighted Average Interest Rate

n/a

2.7%

3.8%

5.5%

3.6%

As of March 31,

As of March 31,

2020

2019

Total Debt, net

$

459,008

$

442,898

Common Stock

Shares Outstanding

67,695,805

63,128,894

Market Price

$

51.75

$

42.04

Total Equity

3,503,258

2,653,939

Total Market Capitalization

$

3,962,266

$

3,096,837

Total Debt-to-Total Investments in Properties

20.9%

23.1%

Total Debt-to-Total Investments in Properties and Senior Secured Loan

20.8%

22.9%

Total Debt-to-Total Market Capitalization

11.6%

14.3%

Floating Rate Debt as a % of Total Debt (1)

21.7%

33.7%

Unhedged Floating Rate Debt as a % of Total Debt (2)

10.9%

0.0%

Mortgage Loans Payable as a % of Total Debt

2.5%

10.3%

Mortgage Loans Payable as a % of Total Investments in Properties

0.5%

2.4%

Adjusted EBITDA (3)

$

30,193

$

28,246

Interest Coverage

7.5

x

6.6

x

Fixed Charge Coverage

6.5

x

5.6

x

Total Debt-to-Adjusted EBITDA (3)

3.8

x

3.9

x

Weighted Average Maturity of Total Debt (years)

5.2

4.4

  1. Floating rate debt includes our existing $100.0 million of variable-rate term loan borrowings, $50 million of which are subject to a LIBOR interest

23 rate cap of 4.0%.

  1. Excludes $50.0 million of variable-rate term loan borrowings with a LIBOR interest rate cap of 4.0%.
  2. See Reporting Definitions for further explanation.

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Appendix: Submarket Focus

Market

Shrinking Supply (1)

No Net New Supply (2)

New Supply (3)

Los Angeles

LAX

South Bay

Inland Empire West

West of 405

Commerce/Vernon

Inland Empire East

Hawthorne

Mid-Counties

Downtown LA

San Fernando Valley

Orange County

New York City/Northern

Brooklyn/Queens

Meadowlands

Exit 8A

New Jersey

Secaucus

Newark/Elizabeth

Exit 10 / I 287

Bayonne

Fairfield

Jersey City

Exit 12

Teterboro

JFK

Kearny

San Francisco Bay Area

Silicon Valley

East Bay

Livermore

South SF

Richmond

Dogpatch/Mission Bay

Fremont

Miami

Central Dade

Airport/Doral

Medley

Hialeah

Airport North

North Dade

Miami Lakes

Seattle

South Seattle

Kent

Auburn

Tukwila

SeaTac

Sumner

Renton

Fife

Pullayup

Washington D.C.

D.C.

Corridor

Dulles

Inside the D.C. Beltway

Close in PG County

Close in NOVA

Percentage of Terreno's

Portfolio (4)

31%

55%

14%

  1. Shrinking Supply: Characterized by shrinking industrial supply. Offers opportunities to convert existing buildings into higher and better use over time. Super infill.
  2. No Net New Supply: Characterized by older existing industrial product. Offers opportunities to redevelop existing buildings into new, modern industrial buildings. Infill.
  3. New Supply: Characterized by industrial buildings that will remain in their current state for the foreseeable future with previously undeveloped land available for industrial development. Greenfield.

24 (4) As of March 31, 2020. Reflects Terreno portfolio composition based on geography and purchase price, includes four properties under redevelopment and improved land parcels. Completed redevelopments are included at total investment.

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Appendix: Management and Board of Directors

Blake Baird

Co-founded Terreno Realty Corporation in 2007

Former President and Director of AMB Property Corporation (NYSE: AMB)

Chairman and CEO

Director of Sunstone Hotel Investors, Inc. (NYSE: SHO)

Mike Coke

Co-founded Terreno Realty Corporation in 2007

Former Chief Financial Officer and Executive Vice President of AMB

President

Director of Digital Realty Trust, Inc. (NYSE: DLR)

Andy Burke

Joined Terreno Realty Corporation in 2008

Former Vice President, Investment Officer of Perseus Realty Partners

EVP

Former Transaction Officer at AMB

Jaime Cannon

Joined Terreno Realty Corporation in 2010

Former Vice President, Treasury at AMB

EVP and CFO

Former Audit Manager at PriceWaterhouseCoopers LLP

John Meyer

Joined Terreno Realty Corporation in 2010

EVP

Former Senior Vice President, Director of Transactions, Southwest Region for AMB

Linda Asante

Former Managing Partner at Jasper Ridge Partners

Director

Former Principal with The Townsend Group

Lee Carlson

Principal of NNC Apartment Ventures, LLC

Audit Chair

Former Executive Vice President, Chief Operating Officer, Chief Financial Officer and Board Member of BRE Properties (NYSE: BRE)

David Lee

Former founder and portfolio manager of T. Rowe Price Real Estate Fund

Director

Former founder and portfolio manager of T. Rowe Price Global Real Estate Fund

Gabriela Parcella

Managing Partner of Merlone Geier Partners and President of Merlone Geier Management, LLC

Independent Trustee of Dodge & Cox Funds mutual fund Board of Trustees

Nominating & Corporate Governance Chair

Former Chairman, President, and Chief Executive Officer of Mellon Capital

Doug Pasquale

Former President, Chief Executive Officer and Chairman of Nationwide Health Properties (formerly NYSE: NHP)

Chairman of Sunstone Hotel Investors, Inc. (NYSE: SHO)

Lead Director

Director of Alexander & Baldwin (NYSE: ALEX) and DineEquity, Inc. (NYSE: DIN)

Dennis Polk

President, Chief Executive Officer and Director of SYNNEX Corporation (NYSE: SNX)

Compensation Chair

Former Senior Vice President and Chief Financial Officer of Savoir Technology Group

25

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Appendix: Reporting Definitions

Adjusted EBITDA: We compute Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, gain on sales of real estate investments, acquisition costs and stock-based compensation. We believe that presenting Adjusted EBITDA provides useful information to investors regarding our operating performance because it is a measure of our operations on an unleveraged basis before the effects of tax, gain (loss) on sales of real estate investments, non-cash depreciation and amortization expense, acquisition costs and stock-based compensation. By excluding interest expense, Adjusted EBITDA allows investors to measure our operating performance independent of our capital structure and indebtedness and, therefore, allows for more meaningful comparison of our operating performance between quarters as well as annual periods and for the comparison of our operating performance to that of other companies, both in the real estate industry and in other industries. As we are currently in a growth phase, acquisition costs are excluded from Adjusted EBITDA to allow for the comparison of our operating performance to that of stabilized companies.

The following table reflects the calculation of Adjusted EBITDA reconciled from net income for the three months ended March 31,

2020 and 2019 (dollars in thousands):

Fo r t he T hree M ont hs

End ed M arch 3 1,

2 0 2 0

2 0 19

$ C hange

% C hange

Net income

$

12,856

$

15,532

$

(2,676)

(17.2)%

Gain on sales of real estate investments

-

(4,465)

4,465

n/a

Depreciation and amortization

11,100

10,415

685

6.6%

Interest expense, including amortization

4,006

4,264

(258)

(6.1)%

Loss on extinguishment of debt

-

-

-

n/a

Stock-based compensation

2,179

2,500

(321)

(12.8)%

Acquisition costs

52

-

52

n/a

Adjusted EBITDA

$

30,193

$

28,246

$

1,947

6.9%

26

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Appendix: Reporting Definitions

Adjusted Funds from Operations (AFFO): We compute AFFO by adding to or subtracting from FFO (see definition below) (i) acquisition costs (ii) stock-based compensation (iii) straight-line rents, (iii) amortization of above- and below-market lease intangibles and (iv) non-recurring capital expenditures required to stabilize acquired vacancy or renovation projects. We use AFFO as a meaningful supplemental measure of our operating performance because it captures trends in our portfolio operating results when compared year over year. We also believe that AFFO is a widely recognized supplemental measure of the performance of REITs and is used by investors as a basis to assess operating performance in comparison to other REITs. As a result, we believe that the use of AFFO, together with the required GAAP presentations, provide a more complete understanding of our operating performance.

Funds from Operations (FFO): We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts ("Nareit"), which defines FFO as net income (loss) (determined in accordance with GAAP), excluding gains (losses) from sales of property and impairment write-downs of depreciable real estate, plus depreciation and amortization on real estate assets and after adjustments for unconsolidated partnerships and joint ventures (which are calculated to reflect FFO on the same basis). We believe that presenting FFO provides useful information to investors regarding our operating performance because it is a measure of our operations without regard to specified non-cash items, such as real estate depreciation and amortization and gain or loss on sale of assets.

We believe that FFO is a meaningful supplemental measure of our operating performance because historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting alone to be insufficient. As a result, we believe that the use of FFO, together with the required GAAP presentations, provide a more complete understanding of our operating performance.

27

SACRAMENTO2013Investor PresentationTerreno Realty Roadshow Presentation (July 10, 2013) v7.pptx

Appendix: Reporting Definitions

Net Operating Income (NOI): We compute NOI as rental revenues, including tenant expense reimbursements, less property operating expenses. We compute same store NOI as rental revenues, including tenant expense reimbursements, less property operating expenses on a same store basis. NOI excludes depreciation, amortization, general and administrative expenses, acquisition costs and interest expense. We compute cash-basis same store NOI as same store NOI excluding straight-line rents and amortization of lease intangibles. The same store pool includes all properties that were owned as of March 31, 2020 and since January 1, 2019 and excludes properties that were either disposed of prior to, or in redevelopment as of March 31, 2020. As of March 31, 2020, the same store pool consisted of 202 buildings aggregating approximately 12.5 million square feet representing approximately 94.0% of our total square feet owned and 14 improved land parcels containing 54.2 acres. We believe that presenting NOI, same store NOI and cash-basis same store NOI provides useful information to investors regarding the operating performance of our properties because NOI excludes certain items that are not considered to be controllable in connection with the management of the property, such as depreciation, amortization, general and administrative expenses, acquisition costs and interest expense. By presenting same store NOI and cash-basis same store NOI, the operating results on a same store basis are directly comparable from period to period.

Stabilized Cap Rate: We compute estimated stabilized cap rates as annualized cash basis net operating income stabilized to market occupancy (generally 95%) divided by total acquisition cost. Total acquisition cost includes the initial purchase price, the effects of marking assumed debt to market, buyer's due diligence and closing costs, estimated near-term capital expenditures and leasing costs necessary to achieve stabilization.

28

Attachments

  • Original document
  • Permalink

Disclaimer

Terreno Realty Corporation published this content on 06 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 May 2020 20:28:01 UTC