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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from       to
 Commission file number 001-34603
 Terreno Realty Corporation
 (Exact Name of Registrant as Specified in Its Charter)
 Maryland
    
    27-1262675(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer
Identification Number)16 Maiden Lane, Fifth Floor 
San Francisco, CA(Address of Principal Executive Offices)
    
    94108(Zip Code)
 Registrants telephone number, including area code: (415) 655-4580
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Exchange on Which RegisteredCommon Stock, $0.01 par value per share
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act:
None
 o þ
 o þ
 o þ
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   Documents Incorporated by Reference




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Terreno Realty Corporation
 Annual Report on Form 10-K
for the Year Ended December 31, 2009
 Table of Contents
 Part I:Item 1
    
    Business
    
    
    2Item 1A
    
    Risk Factors
    
    
    8Item 1B
    
    Unresolved Staff Comments
    
    
    28Item 2
    
    Properties
    
    
    29Item 3
    
    Legal Proceedings
    
    
    29Item 4
    
    (Removed and Reserved)
    
    
    29Part II:Item 5
    
    Market for Registrants Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
    
    
    29Item 6
    
    Selected Financial Data
    
    
    31Item 7
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    32Item 7A
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 8
    
    Financial Statements and Schedules
    
    
    36Item 9
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    36Item 9A
    
    Controls and Procedures
    
    
    36Item 9B
    
    Other Information
    
    
    36Part III:Item 10
    
    Directors, Executive Officers and Corporate Governance
    
    
    36Item 11
    
    Executive Compensation
    
    
    40Item 12
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    47Item 13
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    48Item 14
    
    Principal Accounting Fees and Services
    
    
    49Part IV:Item 15
    
    Exhibits and Financial Statement Schedules
    
    
    50Index to Financial Statement
    
    
    F-1SignaturesExhibit IndexEX-10.3EX-10.7EX-21EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2
  1




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FORWARD-LOOKING STATEMENTS
   
    
    the factors included in this Annual Report on Form 10-K, including those set forth
under the headings Risk Factors, and Managements Discussion and Analysis of
Financial Condition and Results of Operations;
    
    our limited operating history;
    
    our ability to identify and acquire industrial properties on terms favorable to us;
    
    general volatility of the capital markets and the market price of our common stock;
    
    adverse economic or real estate conditions or developments in the industrial real
estate sector and/or in the markets in which we acquire properties;
    
    our dependence on key personnel;
    
    our ability to source off-market deal flow in the future;
    
    availability of investment opportunities in the industrial real estate sector;
    
    our reliance on third parties to property manage our industrial properties;
    
    general economic conditions;
    
    our dependence upon tenants;
    
    our inability to comply with the laws, rules and regulations applicable to
companies, and in particular, public companies;
    
    our inability to manage our growth effectively;
    
    defaults on or non-renewal of leases by tenants;
    
    decreased rental rates or increased vacancy rates;
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
    
    tenant bankruptcies;
    
    increased interest rates and operating costs;
    
    declining real estate valuations and impairment charges;
    
    our expected leverage;
    
    estimates related to our ability to make distributions to our stockholders;
    
    our failure to obtain necessary outside financing;
    
    future debt service obligations;
    
    our failure to successfully hedge against interest rate increases;
    
    our failure to successfully operate acquired properties and operations;
    
    our failure to maintain our status as a real estate investment trust, or REIT;
    
    possible adverse changes to tax laws;
    
    uninsured or underinsured losses relating to our properties;
    
    environmental uncertainties and risks related to natural disasters;
    
    financial market fluctuations; and
    
    changes in real estate and zoning laws and increases in real property tax rates.
 
 PART I
 
 Item 1.
    
    Business
 Overview
    2




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Our Investment Strategy
   Industrial Facility General Characteristics
 Warehouse / distribution
 
    
    Single and multiple tenant facilities that typically serve tenants greater than 30,000 square feet of space
    
    Less than 10% office space
    
    Typical clear height from 18 feet to 36 feet
    
    May include production/manufacturing areas
    
    Adequate interior access via dock high and/or grade level doors
    
    Adequate truck court for large and small truck distribution options, possibly including staging for a high
volume of truck activity and/or trailer storage
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Flex (including light manufacturing and R&D)
 
    
    Single and multiple tenant facilities that typically serve tenants less than 30,000 square feet of space
    
    Facilities generally accommodate both office and warehouse/manufacturing activities
    
    Typically has a larger amount of office space and shallower bay depths than other classes of industrial
facilities
    
    Adequate parking consistent with increased office use
    
    Adequate interior access via grade level and/or dock high doors
    
    Staging for moderate truck activity
    
    Sometimes has a showroom, service center, or assembly/light manufacturing component
    
    Enhanced landscaping
 Trans-shipment
 
    
    Includes truck terminals, cross docking and airport on-tarmac facilities, which serve
both single and multiple tenants
    
    Typically has a high number of dock high doors, shallow bay depth and lower clear height
    
    Staging for a high volume of truck activity and trailer storage
  
    
    located in high population coastal markets;
    
    close proximity to transportation infrastructure (such as sea ports, airports, highways and railways);
    
    situated in supply-constrained submarkets with barriers to new industrial development, as a result of
physical and/or regulatory constraints;
    
    functional and flexible layout that can be modified to accommodate single and multiple tenants;
    
    acquisition price at a significant discount to the replacement cost of the property;
    
    potential for enhanced return through re-tenanting or operational improvements; and
    
    opportunity for higher and better use of the property over time.
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Competitive Strengths
  
    
    Executive Officers with Deeply Specialized Industrial Expertise.Our executive
officers have deep industrial real estate expertise across markets and cycles, as
well as extensive public REIT operating experience, from Mr. Bairds eight years of
experience and Mr. Cokes nine years of experience most recently as president and
chief financial officer, respectively, at AMB Property Corporation (AMB). In 2007,
our executive officers jointly founded Terreno Capital Partners LLC, and
subsequently assembled a team of real estate professionals that began actively
analyzing and seeking industrial investment opportunities in our targeted markets.
Each of our executive officers has approximately 20 years of commercial real estate
industry experience.
    
    Focused Investment Strategy with No Legacy Issues.We selected our target
markets based upon the experiences of our executive officers investing and operating
in over 50 global industrial markets located in North America, Europe and Asia and
also in anticipation of trends in logistics patterns resulting from population
changes, regulatory and physical constraints, potential long term increases in
carbon prices and other factors. Initially we will be an all-cash buyer, and we are
not restricted by the operational or liquidity issues that some of our private and
public peers are presently facing, and our management can focus on new investment
opportunities.
    
    Conservative Targeted Leverage with Growth Oriented Capital Structure.We expect
to maintain financial flexibility and a conservative capital structure using
retained cash flows, long-term debt and the issuance of common and perpetual
preferred stock to finance our growth. We intend to limit the sum of the outstanding
principal amount of our consolidated indebtedness and the liquidation preference of
any outstanding preferred stock to less than 40% of our total enterprise value and
to maintain a fixed charge coverage ratio in excess of 2.0x.
    
    Highly Aligned Compensation Structure.We believe that executive compensation
should be closely aligned with long term stockholder value creation. As a result,
all of the incentive compensation of our executive officers will be based solely on
our total stockholder return exceeding certain rolling targets versus benchmarks.
Our executive officers will not be eligible to receive any payouts under our
long-term incentive program until early 2012. Our executive officers also purchased
in the aggregate 350,000 shares of our common stock at a price per share of $20 in a
private placement concurrently with our initial public offering.
    
    Commitment to Strong Corporate Governance.We are committed to strong corporate
governance, as demonstrated by the following:
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
    
    all members of our board of directors will serve annual terms;
    
    we have adopted a majority voting standard in non-contested director
elections;
    
    we have opted out of two Maryland anti-takeover provisions and, in the
future, we may not opt back in to these provisions without stockholder
approval;
    
    we designed our ownership limits solely to protect our status as a REIT
and not for the purpose of serving as an anti-takeover device; and
    
    we have no stockholder rights plan. In the future, we will not adopt a
stockholder rights plan unless our stockholders approve in advance the
adoption of a plan or, if adopted by our board of directors, we will submit
the stockholder rights plan to our stockholders for a ratification vote
within 12 months of adoption or the plan will terminate.
 Our Financing Strategy
  
    
    limit the sum of the outstanding principal amount of our consolidated
indebtedness and the liquidation preference of any outstanding
perpetual preferred stock to less than 40% of our total enterprise
value;
    
    maintain a fixed charge coverage ratio in excess of 2.0x;
    
    over the long-term, limit the principal amount of our outstanding
floating rate debt to less than 20% of our total consolidated
indebtedness; and
    
    have staggered debt maturities that are aligned to our expected
average lease term (5-7 years), positioning us to re-price parts of
our capital structure as our rental rates change with market
conditions.
  Our Corporate Structure
  Our Tax Status
  6




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Competition
  Environmental Matters
      Employees
  7




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Available Information
 www.terreno.com
 
 Item 1A.
    
    Risk Factors.
  Risks Related to Our Business and Our Properties
 We have a limited operating history and may not be able to successfully operate our business or
generate sufficient operating cash flows to make or sustain distributions to our stockholders.
   Other
than with respect to one industrial property that we recently
acquired and one industrial property that we recently agreed to acquire, subject to
the satisfaction of closing conditions, stockholders will be unable to evaluate the allocation of
net proceeds of our initial public offering and the concurrent private placement or the economic
merits of our investments prior to investing in our company.
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Our senior managements past experience in operating a publicly traded REIT may not be sufficient
to successfully operate our company.
  Our investments will be concentrated in the industrial real estate sector, and our business would
be adversely affected by an economic downturn in that sector.
  Events or occurrences that affect areas in which our properties will be located may impact
financial results.
  We depend on key personnel.
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Failure of the projected improvement in industrial operating fundamentals may adversely affect our
ability to execute our business plan.
  Our long-term growth will depend upon future acquisitions of properties, and we may be unable to
consummate acquisitions on advantageous terms, the acquired properties may not perform as we
expect, or we may be unable to quickly and efficiently integrate our new acquisitions into our
existing operations.
   We may be unable to source off-market deal flow in the future.
  Our real estate redevelopment strategies may not be successful.
  
    
    the risk that redevelopment projects in which we have invested may be abandoned
and the related investment will be impaired;
    
    the risk that we may not be able to obtain, or may experience delays in
obtaining, all necessary zoning, land-use, building, occupancy and other governmental
permits and authorizations;
    
    the risk that we may not be able to obtain financing for redevelopment projects
on favorable terms;
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
    
    the risk that construction costs of a renovation project may exceed the
original estimates or that construction may not be concluded on schedule, making the
project less profitable than originally estimated or not profitable at all (including
the possibility of contract default, the effects of local weather conditions, the
possibility of local or national strikes and the possibility of shortages in materials,
building supplies or energy and fuel for equipment);
    
    the risk that delays in completion of construction could also give tenants the
right to terminate preconstruction leases for space at a newly redeveloped project;
    
    the risk that the contractors failure to perform may result in legal action by
us to rescind the purchase or construction contract or to enforce the contractors
obligations;
    
    the risk that, upon completion of a renovation, we may not be able to obtain,
or obtain on advantageous terms, permanent financing for activities that we have
financed through construction loans;
    
    the risk that occupancy levels and the rents that can be charged for a
completed project will not be met, making the project unprofitable;
    
    the risk that we may expend funds on and devote managements time to projects
which we do not complete; and
    
    the risk that we may be unable to complete redevelopment and/or leasing of a
property on schedule or on budget.
 Actions of our joint venture partners could negatively impact our performance.
  
    
    that our co-member, co-venturer or partner in an investment might become
bankrupt, which would mean that we and any other remaining general partners, members or
co-venturers would generally remain liable for the partnerships, limited liability
companys or joint ventures liabilities;
    
    that such co-member, co-venturer or partner may at any time have economic or
business interests or goals that are or become inconsistent with our business interests
or goals;
    
    that such co-member, co-venturer or partner may be in a position to take action
contrary to our instructions or requests or contrary to our policies or objectives,
including our current policy with respect to maintaining our qualification as a REIT;
    
    that, if our partners fail to fund their share of any required capital
contributions, we may be required to contribute such capital;
    
    that joint venture, limited liability company and partnership agreements often
restrict the transfer of a co-venturers, members or partners interest or may
otherwise restrict our ability to sell the interest when we desire or on advantageous
terms;
    
    that our relationships with our partners, co-members or co-venturers are
contractual in nature and may be terminated or dissolved under the terms of the
agreements and, in such event, we may not continue to own or operate the interests or
assets underlying such relationship or may need to purchase such interests or assets at
an above-market price to continue ownership;
    
    that disputes between us and our partners, co-members or co-venturers may
result in litigation or arbitration that would increase our expenses and prevent our
officers and directors from focusing their
time and effort on our business and result in subjecting the properties owned by the
applicable partnership, limited liability company or joint venture to additional risk; and
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
    
    that we may in certain circumstances be liable for the actions of our partners,
co-members or co-venturers.
  If we invest in a limited partnership as a general partner, we could be responsible for all
liabilities of such partnership.
  We will utilize local third party managers for day-to-day property management.
  We may not realize any investment opportunities from our use of third parties to manage our
properties.
  The availability and timing of cash distributions is uncertain.
  We will be dependent on tenants for our revenues.
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We may not have funding for future tenant improvements.
  We may be unable to renew leases, lease vacant space or re-lease space as leases expire.
  We face potential adverse effects from the bankruptcies or insolvencies of tenants.
  Declining real estate valuations and impairment charges could adversely affect our earnings and
financial condition.
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If we cannot obtain financing, our growth will be limited.
   Future debt service obligations could adversely affect our overall operating results, may require
us to sell industrial properties and could adversely affect our ability to make distributions to
our stockholders and the market price of our shares of common stock.
  
    
    our cash flows from operations will be insufficient to make required payments
of principal and interest;
    
    our debt may increase our vulnerability to adverse economic and industry
conditions;
    
    we may be required to dedicate a substantial portion of our cash flows from
operations to payments on our debt, thereby reducing cash available for distribution to
our stockholders, funds available for operations and capital expenditures, future
business opportunities or other purposes;
    
    the terms of any refinancing will not be as favorable as the terms of the debt
being refinanced; and
    
    the use of leverage could adversely affect our ability to make distributions to
our stockholders and the market price of our shares of common stock.
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Failure to hedge effectively against interest rate changes may adversely affect results of
operations.
  Our senior revolving credit facility contains, and we expect that our future indebtedness will
contain, covenants that could limit our operations and our ability to make distributions to our
stockholders.
   We may acquire outstanding debt secured by an industrial property, which may expose us to risks.
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Adverse changes in our credit ratings could negatively affect our financing activity.
  Our business could be adversely impacted if we have deficiencies in our disclosure controls and
procedures or internal control over financial reporting.
  We may make acquisitions, which pose integration and other risks that could harm our business.
  
    
    the possibility that we may not be able to successfully integrate acquired
properties into our operations;
    
    the possibility that additional capital expenditures may be required;
    
    the possibility that senior management may be required to spend considerable
time negotiating agreements and integrating acquired properties;
    
    the possible loss or reduction in value of acquired properties;
    
    the possibility of pre-existing undisclosed liabilities regarding acquired
properties, including but not limited to environmental or asbestos liability, of which
our insurance may be insufficient or for which we may be unable to secure insurance
coverage; and
    
    the possibility that a concentration of our industrial properties in the Los
Angeles Area, the San Francisco Bay Area and the Seattle Area may increase our exposure
to seismic activity, especially if these industrial properties are located on or near
fault zones.
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Our property taxes could increase due to property tax rate changes or reassessment, which would
impact our cash flows.
  The conflict of interest policies we have adopted may not adequately address all of the conflicts
of interest that may arise with respect to our activities.
  Risks Related to the Real Estate Industry
 Our performance and value are subject to general economic conditions and risks associated with our
real estate assets.
  
    
    downturns in national, regional and local economic conditions (particularly
increases in unemployment);
    
    the attractiveness of the properties we acquire to potential tenants and
competition from other industrial properties;
    
    changes in supply of or demand for similar or competing properties in an area;
    
    bankruptcies, financial difficulties or lease defaults by the tenants of the
properties we acquire;
    
    changes in interest rates, availability and terms of debt financing;
    
    changes in operating costs and expenses and our ability to control rents;
    
    changes in, or increased costs of compliance with, governmental rules,
regulations and fiscal policies, including changes in tax, real estate, environmental
and zoning laws, and our potential liability thereunder;
    
    our ability to provide adequate maintenance and insurance;
    
    changes in the cost or availability of insurance, including coverage for mold
or asbestos;
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
    
    unanticipated changes in costs associated with known adverse environmental
conditions or retained liabilities for such conditions;
    
    periods of high interest rates and tight money supply;
    
    tenant turnover;
    
    general overbuilding or excess supply in the market area; and
    
    disruptions in the global supply chain caused by political, regulatory or other
factors including terrorism.
  Actions by our competitors may decrease or prevent increases in the occupancy and rental rates of
the properties we acquire.
  Real estate investments are not as liquid as other types of assets, which may reduce economic
returns to investors.
  Uninsured or underinsured losses relating to real property may adversely affect our returns.
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Contingent or unknown liabilities could adversely affect our financial condition.
  
    
    liabilities for clean-up or remediation of adverse environmental conditions;
    
    accrued but unpaid liabilities incurred in the ordinary course of business;
    
    tax liabilities; and
    
    claims for indemnification by the general partners, officers and directors and
others indemnified by the former owners of the properties.
 Environmentally hazardous conditions may adversely affect our operating results.
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Costs of complying with governmental laws and regulations with respect to properties we acquire may
adversely affect our income and the cash available for any distributions.
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The impacts of climate-related initiatives at the U.S. federal and state levels remain uncertain at
this time but could result in increased operating costs.
  We are exposed to the potential impacts of future climate change and climate-change related risks.
  Compliance or failure to comply with the Americans with Disabilities Act and other similar
regulations could result in substantial costs.
  We may be unable to sell a property if or when we decide to do so, including as a result of
uncertain market conditions, which could adversely affect the return on an investment in our common
stock.
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If we sell properties and provide financing to purchasers, defaults by the purchasers would
adversely affect our cash flows.
  Risks Related to Our Organizational Structure
 Our board of directors may change significant corporate policies without stockholder approval.
  We could increase the number of authorized shares of stock and issue stock without stockholder
approval.
  Certain provisions of Maryland law could inhibit changes in control.
  
    
    Business Combinationprovisions that, subject to limitations, prohibit
certain business combinations between us and an interested stockholder (defined
generally as any person who beneficially owns 10% or more of the voting power of our
shares or an affiliate or associate of ours who, at any time within the two-year
period prior to the date in question, was the beneficial owner of 10% or more of our
then outstanding voting shares) or an affiliate of an interested stockholder for five
years after the most recent
date on which the stockholder becomes an interested stockholder, and thereafter may impose
special appraisal rights and special stockholder voting requirements on these
combinations; and
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
    
    Control Shareprovisions that provide that control shares of our company
(defined as shares which, when aggregated with other shares controlled by the
stockholder, entitle the stockholder to exercise one of three increasing ranges of
voting power in electing directors) acquired in a control share acquisition (defined
as the direct or indirect acquisition of ownership or control of control shares)
have no voting rights except to the extent approved by our stockholders by the
affirmative vote of at least two-thirds of all the votes entitled to be cast on the
matter, excluding all interested shares.
   Our rights and the rights of our stockholders to take action against our directors and officers are
limited.
  
    
    actual receipt of an improper benefit or profit in money, property or services; or
    
    a final judgment based upon a finding of active and deliberate dishonesty by
the director or officer that was material to the cause of action adjudicated.
  Risks Related to Our Status as a REIT
 Failure to qualify as a REIT would cause us to be taxed as a regular corporation, which would
substantially reduce funds available for distributions to stockholders.
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
    
    we would not be allowed a deduction for distributions paid to stockholders in
computing our taxable income and would be subject to federal income tax at regular
corporate rates;
    
    we could be subject to the federal alternative minimum tax and possibly
increased state and local taxes; and
    
    unless we are entitled to relief under statutory provisions, we could not elect
to be taxed as a REIT for four taxable years following the year during which we were
disqualified.
  Even if we qualify as a REIT, we may face other tax liabilities that reduce our cash flows.
  REIT distribution requirements could adversely affect our liquidity and may force us to borrow
funds or sell assets during unfavorable market conditions.
  Dividends payable by REITs generally do not qualify for reduced tax rates.
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We may in the future choose to pay dividends in our stock instead of cash, in which case
stockholders may be required to pay income taxes in excess of the cash dividends they receive.
  Complying with REIT requirements may cause us to forego otherwise attractive opportunities or to
liquidate otherwise attractive investments.
   If we fail to invest a sufficient amount of the net offering proceeds of our initial public
offering and the concurrent private placement in real estate assets within one year from the
receipt of the proceeds of the offering, we could jeopardize our REIT status.
  Our relationship with any TRS will be limited, and a failure to comply with the limits would
jeopardize our REIT qualification and may result in the application of a 100% excise tax.
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The ability of our board of directors to revoke our REIT qualification without stockholder approval
may subject us to federal income tax and reduce distributions to our stockholders.
  We may be subject to adverse legislative or regulatory tax changes that could reduce the market
price of our common stock.
  Risks Related to Our Common Stock
 Level of cash distributions, market interest rates and other factors may affect the value of our
common stock.
  
    
    the market for similar securities;
    
    the attractiveness of REIT securities in comparison to the securities of other
companies, taking into account, among other things, the higher tax rates imposed on
dividends paid by REITs;
    
    government action or regulation;
    
    general economic conditions; and
    
    our financial condition, performance and prospects.
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The number of shares of our common stock available for future sale could adversely affect the
market price of our common stock.
  An active public market for our common stock may not develop or be sustained.
  The market price and trading volume of our common stock may be volatile.
   
    
    actual or anticipated variations in our quarterly operating results or
distributions;
    
    changes in our funds from operations (as defined by NAREIT and discussed in
Managements Discussion and Analysis of Financial Condition and Results of Operations
elsewhere in this Annual Report on Form 10-K) or earnings;
    
    publication of research reports about us or the real estate industry;
    
    increases in market interest rates that lead purchasers of our shares to demand
a higher yield;
    
    changes in market valuations of similar companies;
    
    adverse market reaction to any additional debt we incur in the future;
    
    additions or departures of key management personnel;
    
    actions by institutional stockholders;
    
    speculation in the press or investment community;
    
    the realization of any of the other risk factors presented in this
prospectus; and
    
    general market and economic conditions.
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Future offerings of debt, which would be senior to our common stock upon liquidation, and/or
preferred stock which may be senior to our common stock for purposes of dividend distributions or
upon liquidation, may adversely affect the market price of our common stock.
  We have not established a minimum distribution payment level and we may be unable to generate
sufficient cash flows from our operations to make distributions to our stockholders at any time in
the future.
  
    
    our inability to invest the net proceeds of our initial public offering and the
concurrent private placement;
    
    our inability to realize attractive risk-adjusted returns on our investments;
    
    unanticipated expenses or reduced revenues that reduce our cash flow or
non-cash earnings; and
    
    decreases in the value of our industrial properties that we acquire.
  
 Item 1B.
    
    Unresolved Staff Comments.
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Item 2.
    
    Properties.
  
 Item 3.
    
    Legal Proceedings.
  
 Item 4.
    
    (Removed and Reserved).
 
 PART II
 
 Item 5.
    
    Market for Our Common Stock and Related Stockholder Matters.
 Market Information
  Price RangeHigh
    
    LowFirst Quarter 2010 (February 10, 2010 through March 15,
2010)
    
    $
    19.46
    
    
    $
    18.52
  Issuer Repurchases of Equity Securities
  Recent Sales of Unregistered Securities
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Use of Proceeds from Registered Securities
      Distribution Policy
  (i)
    
    90% of our REIT taxable income (determined before the deduction for dividends
paid and excluding any net capital gain); plus(ii)
    
    90% of the excess of our after-tax net income, if any, from foreclosure
property over the tax imposed on such income by the Code; less(iii)
    
    the sum of certain items of non-cash income.
  30




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##### Table of Contents




    
    actual results of operations;
    
    our level of retained cash flows;
    
    the timing of the investment of the net proceeds of our initial public offering
and the concurrent private placement;
    
    any debt service requirements;
    
    capital expenditure requirements for our properties;
    
    our taxable income;
    
    the annual distribution requirement under the REIT provisions of the Code;
    
    our operating expenses;
    
    restrictions on the availability of funds under Maryland law; and
    
    other factors that our board of directors may deem relevant.
   Equity Compensation Plan Information
  Performance Graph
  
 Item 6.
    
    Selected Financial Data.
  31




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##### Table of Contents



Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Overview
   Results of Operations
  Recent Developments
    32




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##### Table of Contents



Liquidity and Capital Resources
  
    
    limit the sum of the outstanding principal amount of our consolidated
indebtedness and the liquidation preference of any outstanding perpetual preferred
stock to less than 40% of our total enterprise value;
    
    maintain a fixed charge coverage ratio in excess of 2.0x;
    
    over the long-term, limit the principal amount of our outstanding floating rate
debt to less than 20% of our total consolidated indebtedness; and
    
    have staggered debt maturities that are aligned to our expected average lease
term (5-7 years), positioning us to re-price parts of our capital structure as our
rental rates change with market conditions.
   Quantitative and Qualitative Disclosure About Market Risk
  Critical Accounting Policies
  33




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##### Table of Contents



Property Acquisitions.
   Revenue Recognition.
 Income Taxes.
 34




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##### Table of Contents



Share-Based Compensation.
 Recently Issued Accounting Standards
  Off-Balance Sheet Arrangements
  Contractual Obligations
  Non-GAAP Financial Measures
   
 Item 7A.
    
    Quantitative And Qualitative Disclosures About Market Risk.
  35




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##### Table of Contents



Item 8.
    
    Financial Statements And Supplementary Data.
  
 Item. 9. Changes In And Disagreements With Accountants On Accounting And Financial Disclosure.
  
 Item 9A.
    
    Controls And Procedures
 Evaluation of Disclosure Controls and Procedures
  Internal Control over Financial Reporting
  Changes in Internal Control Over Financial Reporting
  
 Item 9B.
    
    Other Information.
  
 Part III
 
 Item 10.
    
    Directors, Executive Officers and Corporate Governance.
 Our Directors and Executive Officers
  36




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##### Table of Contents



Name
    
    Age
    
    PositionW. Blake Baird
    
    
    49
    
    
    Chairman, chief executive officer and directorMichael A. Coke
    
    
    42
    
    
    President, chief financial officer and directorLeRoy E. Carlson
    
    
    64
    
    
    Independent DirectorPeter J. Merlone
    
    
    53
    
    
    Independent DirectorDouglas M. Pasquale
    
    
    55
    
    
    Independent DirectorDennis Polk
    
    
    43
    
    
    Independent Director
 Biographical Information
  
    
    W. Blake Bairdhas served as chairman of our board of directors and our chief executive
officer since February 2010. Mr. Baird was managing partner and co-founder of Terreno
Capital Partners LLC, a private real estate investment firm, from September 2007 to
February 2010. Mr. Baird served as president of AMB, a leading global developer, owner and
operator of industrial real estate, from January 2000 to December 2006. Mr. Baird also
served as a director of AMB from 2001 to 2006 and chairman of its investment committee.
Mr. Baird joined AMB as its chief investment officer in 1999. Prior to that, Mr. Baird was
a managing director of Morgan Stanley & Co., most recently as head of Real Estate
Investment Banking for the Western United States. Mr. Baird spent 15 years at Morgan
Stanley and Dean Witter, the last 11 focusing on real estate. Mr. Baird currently serves as
a director of Alexander & Baldwin, Inc. (NYSE: ALEX), a Honolulu-headquartered ocean
transportation, real estate and agribusiness company. Mr. Baird is a member of the Young
Presidents Organization and a former member of the Board of Governors of the National
Association of Real Estate Investment Trusts. Mr. Baird holds a B.S. in Economics from the
Wharton School (magna cum laude) and a B.A. in History from the College of Arts and
Sciences (magna cum laude) at the University of Pennsylvania. He also holds an M.B.A. from
New York University. Our Board of Directors has determined that Mr. Bairds qualifications
to serve on our Board of Directors include his deep industrial real estate expertise across
markets and cycles, as well as extensive public REIT operating experience, from his
eight years of experience most recently as president of AMB.
    
    Michael A. Cokehas served as our president and chief financial officer and as a director
since February 2010. Mr. Coke was managing partner and co-founder of Terreno Capital
Partners LLC, a private real estate investment management firm, from September 2007 to
February 2010. From January 1999 to March 2007, Mr. Coke served as chief financial officer
of AMB, a leading global developer, owner and operator of industrial real estate. While at
AMB, Mr. Coke also served as executive vice president until May 2007, and was AMBs chief
accounting officer from 1998 until January 2007. Mr. Coke was a member of AMBs investment
committee and was responsible for capital markets, accounting, tax, information systems,
dispositions, valuations, risk management and financial planning groups totaling more than
130 officers and associates in five countries. During his tenure at AMB, Mr. Coke was a
three time recipient of Realty Stock Reviews Annual Outstanding CFO Award. From October
2005 to May 2007, Mr. Coke served as president and chief executive officer of IAT Aviation
Facilities, Inc., a listed Canadian Income Trust. Prior to AMB, Mr. Coke spent seven years
with Arthur Andersen LLP, where he most recently served as an audit manager. At Arthur
Andersen, he primarily served public and private real estate companies, including several
public real estate investment trusts, and specialized in real estate auditing and
accounting, mergers, initial public offerings and business acquisition due diligence.
Mr. Coke is a director and chairman of the audit committee of DuPont Fabros Technology, Inc.
(NYSE: DFT), a leading owner, developer, operator and manager of wholesale data centers
headquartered in Washington, D.C. Mr. Coke received a bachelors degree in business
administration and accounting from California State University at Hayward. He is a former
Certified Public Accountant. Our Board of Directors has determined that Mr. Cokes
qualifications to serve on our Board of Directors include his
deep industrial real estate expertise across markets and cycles, as well as extensive public
REIT operating experience, from his nine years of experience most recently as chief financial
officer of AMB.
 37




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##### Table of Contents




    
    LeRoy E. Carlsonhas served on our board of directors since February 2010. Mr. Carlson
has been a principal of NNC Apartment Ventures, LLC, a well established firm specializing in
the long-term investment in multi-family assets on the West Coast, since 1999. Mr. Carlson
formerly served as executive vice president, chief operating officer, chief financial
officer and board member of BRE Properties, Inc. BRE Properties, Inc. is a large
multi-family NYSElisted real estate investment trust based in San Francisco, California. In
his role as chief operating officer, Mr. Carlson oversaw the companys capital market
activities, asset management and development and played a key role in two company mergers
with an aggregate value of two billion dollars. Mr. Carlson retired from BRE Properties,
Inc. in October 2002. Prior to joining BRE Properties, Inc., Mr. Carlson served as vice
president, chief financial officer and as a director of Real Estate Investment Trust of
California from 1990 to March 1996. He was a partner and chief financial officer of William
Walters Company, a southern California based asset management company and investor, from
1976 to 1990. Mr. Carlson is a Certified Public Accountant in California. He is a graduate
of the University of Southern California where he serves as a member of the board at the
Lusk Center for Real Estate. Our Board of Directors has determined that Mr. Carlsons
qualifications to serve on our Board of Directors include his over 30 years of experience in
the real estate industry and his prior experiences as a director, chief operating officer
and chief financial officer of a NYSE-listed REIT.
    
    Peter J. Merlonehas served on our board of directors since February 2010. Mr. Merlone is
a founder, co-owner and co-managing partner of the general partner entities of Merlone Geier
Partners, or MGP, a private real estate investment firm focused on the acquisition,
development and redevelopment of retail and mixed-use properties in California and other
western states, and Merlone Geier Management, or MGM, which provides all management, leasing
and construction services for all MGP and M&H funds. Mr. Merlone is also a founder, co-owner
and president of the general partner entities of M&H Realty Partners, or M&H, the
predecessor to MGP, and was a founder and president of M&H Property Management, or MHPM, the
predecessor to MGM. From 1986 to 1993, prior to the formation of the first M&H fund,
Mr. Merlone was the founder and owner of The Merlone Company, MHPMs predecessor.
Mr. Merlones primary responsibilities are to formulate and oversee the strategy, financial
and operating affairs of MGP and the activities of MGM. Since 1993, Mr. Merlone has overseen
nine institutional limited partnerships with aggregate equity capital commitments of
$1.6 billion which have acquired approximately 70 operating properties aggregating more than
11 million square feet of retail improvements, and land developments totaling 1,500 acres.
Mr. Merlone graduated from UCLA in 1979, simultaneously earning an undergraduate degree in
economics, summa cum laude, and a masters degree in education; he was also elected to Phi
Beta Kappa. Mr. Merlone is a member of the International Council of Shopping Centers and is
a licensed real estate broker. Our Board of Directors has determined that Mr. Merlones
qualifications to serve on our Board of Directors include his over 20 years of experience in
the real estate industry and his experience operating a real estate investment firm.
    
    Douglas M. Pasqualehas served on our board of directors since February 2010.
Mr. Pasquale has served as president and chief executive officer of Nationwide Health
Properties, Inc., or NHP (NYSE: NHP), a publicly traded real estate investment trust that
invests in senior housing facilities, long-term care facilities and medical office buildings
throughout the United States, since April, 2004 and as executive vice president, chief
operating officer and a director of NHP since November 2003. On February 10, 2009,
Mr. Pasquale was elected to serve as chairman of the board of NHP, effective immediately
prior to NHPs annual meeting on May 5, 2009. Mr. Pasquale served as the chairman and chief
executive officer of ARV Assisted Living, an operator of assisted living facilities, from
December 1999 to September 2003. From April 2003 to September 2003, Mr. Pasquale
concurrently served as president and chief executive officer of Atria Senior Living Group.
From March 1999 to December 1999, Mr. Pasquale served as the president and chief executive
officer at ARV, and he served as the president and chief operating officer at ARV from June
1998 to March 1999. Previously, Mr. Pasquale served as president and chief executive officer
of Richfield Hospitality Services, Inc. and Regal Hotels International  North America a
hotel ownership and hotel management company from 1996 to 1998, and as its chief financial
officer from 1994 to 1996. Mr. Pasquale is a director of Alexander & Baldwin, Inc. (NYSE:
ALEX), a Honolulu-headquartered ocean transportation, real estate and agribusiness company.
Our Board of Directors has determined that Mr. Pasquales qualifications to serve on our
Board of Directors include his over 20 years of experience in the real estate industry and
his experience as chairman, president and chief executive officer of a NYSE-listed REIT.
 38




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##### Table of Contents




    
    Dennis Polkhas served on our board of directors since February 2010. Mr. Polk joined
SYNNEX Corporation (NYSE: SNX) in 2002 as senior vice president of corporate finance and
chief financial officer. In July 2006, he was promoted to his current position of chief
operating officer. SYNNEX is a business process services company, including the distribution
of information technology products, manufacturing and logistics services and business
process outsourcing. Prior to SYNNEX, Mr. Polk held senior executive positions in finance
and operations at DoveBid, Inc. and Savoir Technology Group. Prior to Savoir, Mr. Polk was
an audit manager for Grant Thornton LLP. A graduate of Santa Clara University, Mr. Polk
received his bachelors degree in accounting. Our Board of Directors has determined that
Mr. Polks qualifications to serve on our Board of Directors include his current experience
as a chief operating officer and his prior experience as a chief financial officer of a
NYSE-listed company.
 Board of Directors and Committees
  Audit Committee
   
    
    assist our board of directors in its oversight of (1) the integrity of our
financial statements, (2) our compliance with legal and regulatory requirements,
(3) the qualifications, independence and performance of our independent auditors and
(4) our internal audit function; and
 
    
    prepare the report required by the rules of the SEC to be included in our
annual proxy statement.
  Compensation Committee
   
    
    discharge our board of directors responsibilities relating to compensation of
our directors and executives;
    
    oversee our overall compensation structure, policies and programs;
 39




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##### Table of Contents




    
    review our processes and procedures for the consideration and determination of
director and executive compensation; and
    
    prepare the compensation committee report to be included in our proxy statement
in accordance with the applicable rules and regulations of the SEC, the NYSE and any
other rules and regulations applicable to us.
 Nominating and Corporate Governance Committee
   
    
    identify individuals qualified to become members of our board of directors,
consistent with criteria approved by our board of directors, and recommend that our
board of directors select the director nominees for election at each annual meeting of
stockholders;
    
    review and make recommendations to our board of directors for committee
appointments to our board of directors;
    
    develop and recommend to our board of directors a set of corporate governance
guidelines applicable to us and periodically review and recommend any changes to such
guidelines; and
    
    oversee the evaluation of our board of directors.
 Lead Director
  Code of Business Conduct and Ethics
  Section 16(a) Beneficial Ownership Reporting Compliance
  
 Item 11.
    
    Executive Compensation.
 COMPENSATION DISCUSSION AND ANALYSIS
  40




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##### Table of Contents




    
    align the interests of our executives and stockholders by motivating executives
to increase stockholder value and rewarding executives when stockholder value
increases;
    
    motivate our executives to manage our business to meet our near , medium ,
and long-term objectives; and reward them for meeting these objectives and for
exceptional performance;
    
    assist in attracting and retaining talented and well-qualified executives;
    
    be competitive with other industrial real estate investment trusts; and
    
    encourage executives to achieve meaningful levels of ownership of our stock.
  Summary of Executive Officer Compensation
  Annual Base Salary
  Annual Cash Incentive Bonus
  Long Term Incentive Compensation
  41




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Equity-Based Incentive Compensation
  2010 Equity Incentive Plan
           42




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Other Compensation
   Name and
    
    
    
    
    
    
    
    
    
    Non-EquityPrincipal
    
    
    
    
    
    Stock
    
    Incentive PlanPosition
    
    Salary ($)
    
    Awards ($)
    
    Compensation ($)
    
    Total ($)W. Blake Baird
    
    
    400,000
    
    
    
    200,000
    (1)
    
    
    
    (2)
    
    
    600,000Chairman and Chief Executive OfficerMichael A. Coke
    
    
    400,000
    
    
    
    200,000
    (3)
    
    
    
    (2)
    
    
    600,000President and Chief Financial Officer
 
 (1)
    
    At the completion of our initial public offering on February 16, 2010,
Mr. Baird received shares of restricted stock with an initial value of
$1,000,000, vesting ratably in annual installments over a five-year
period commencing on the completion of the offering, with the first
vesting to occur on the first anniversary of the offering. See
 Narrative Discussion of IPO Grants. Amount represents the expected
compensation expense associated with these awards that will be
recorded in 2010. Dividends will be paid on the time-based shares of
restricted stock when declared and paid on our common stock generally.(2)
    
    Mr. Baird and Mr. Coke will participate in the long-term incentive
compensation program. The first payout, if earned, will be in early
2012. See  Narrative Discussion of IPO Grants.(3)
    
    At the completion of our initial public offering on February 16, 2010,
Mr. Coke received shares of restricted stock with an initial value of
$1,000,000, vesting ratably in annual installments over a five-year
period commencing on the completion of the offering, with the first
vesting to occur on the first anniversary of the offering. See
 Narrative Discussion of IPO Grants. Amount represents the expected
compensation expense associated with these awards that will be
recorded in 2010. Dividends will be paid in cash on the time-based
shares of restricted stock when declared and paid on our common stock
generally. Introduction
  43




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##### Table of Contents



IPO Grants of Plan-Based Awards
 Estimated FuturePayouts
    
    All Other StockUnder Non-Equity
    
    Awards; Number of
    
    Grant DateIncentive Plan Awards
    
    Shares or Stock or
    
    Fair Value of ShareName
    
    Grant Date
    
    Target ($)
    
    Maximum ($)
    
    Units (#)
    
    Awards ($)W. Blake Baird
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    50,000
    (2)
    
    
    1,000,000
    (3)(4
    )
    
    
    400,000
    
    
    
    1,200,000(5
    )
    
    
    400,000
    
    
    
    1,200,000Michael A. Coke
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    50,000
    (2)
    
    
    1,000,000
    (3)(4
    )
    
    
    400,000
    
    
    
    1,200,000(5
    )
    
    
    400,000
    
    
    
    1,200,000
 
 (1)
    
    Each of the awards was issued upon completion of our initial public offering on February 16, 2010.(2)
    
    Represents shares of restricted common stock that were issued upon completion of our initial
public offering on February 16, 2010, which will vest ratably in equal installments over a
five-year period commencing on the first anniversary of our initial public offering. See
 Narrative Discussion of IPO Grants.(3)
    
    Represents the estimated grant date fair value of the restricted common stock.(4)
    
    This represents the payout under our long-term incentive program for the performance period
beginning on the closing of our initial public offering and ending on December 31, 2011. The size
of the actual award will depend on our achievement of specified performance metrics during the
performance period. Actual awards, if earned, are measured in dollars but will be paid out in
shares of our common stock in early 2012. See  Narrative Discussion of IPO Grants. No
dividends will accrue or be paid on performance shares during the performance period.(5)
    
    This represents the payout under our long-term incentive program for the performance period
beginning on the closing of our initial public offering and ending on December 31, 2012. The size
of the actual award will depend on our achievement of specified performance metrics during the
performance period. Actual awards, if earned, are measured in dollars but will be paid out in
shares of our common stock in early 2013. See  Narrative Discussion of IPO Grants. No
dividends will accrue or be paid on performance shares during the performance period. Narrative Discussion of IPO Grants
    44




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##### Table of Contents




    
    50% of the determination will be based on our total stockholder return for the
performance measurement period, measured at the end of the period compared to the total
stockholder return for the same period of the MSCI U.S. REIT Index; and
    
    50% of the determination will be based on our total stockholder return for the
performance measurement period, measured at the end of the period compared to the total
stockholder return for the same period of the FTSE NAREIT Equity Industrial Index.
  Severance Agreements
    45




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Section 162(m)
  Director Compensation
   
    
    our lead director will be paid an annual fee of $15,000;
    
    the chair of our audit committee will be paid an annual fee of $12,000;
    
    the chair of our compensation committee will be paid an annual fee of
$10,000; and
    
    the chair of our nominating and corporate governance committee will be paid an
annual fee of $5,000.
     COMPENSATION COMMITTEE REPORT
  Submitted by the Compensation Committee
 
 46




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##### Table of Contents



Compensation Committee Interlocks and Insider Participation
  
 Item 12.
    
    Security Ownership Of Certain Beneficial Owners and Management And Related Stockholder
Matters.
 PRINCIPAL STOCKHOLDERS
  
    
    each person who is the beneficial owner of 5% or more of the
outstanding shares of our common stock;
    
    each of our directors and named executive officers; and
    
    all directors and executive officers as a group.
  Number of SharesBeneficially
    
    Percent ofName of Beneficial Owner
    
    Owned(1)
    
    All Shares(2)T. Rowe Price Associates, Inc.(3)
    
    
    933,200
    
    
    
    10.1
    %APG Asset Management US Inc.(4)
    
    
    906,000
    
    
    
    9.8
    %W. Blake Baird(5)(6)
    
    
    312,000
    
    
    
    3.4
    %Michael A. Coke(5)(7)
    
    
    162,000
    
    
    
    1.8
    %LeRoy E. Carlson
    
    
    5,000
    (8)
    
    
    *Peter J. Merlone
    
    
    5,000
    (8)
    
    
    *Douglas M. Pasquale
    
    
    5,000
    (8)
    
    
    *Dennis Polk
    
    
    5,000
    (8)
    
    
    *All directors and executive officers as a group (6 persons)
    
    
    494,000
    
    
    
    5.3
    %
 
 *
    
    Represents less than 1% of the shares of common stock outstanding as of March 15, 2010.(1)
    
    Beneficial ownership is determined in accordance with Rule 13d-3 of the Exchange Act.
A person is deemed to be the beneficial owner of any shares of common stock if that
person has or shares voting power or investment power with respect to those shares, or
has the right to acquire beneficial ownership at any time within 60 days of the date
of the table. As used herein, voting power is the power to vote or direct the voting
of shares and investment power is the power to dispose or direct the disposition of
shares.(2)
    
    Based on a total of 9,253,250 shares of common stock outstanding as of March 15, 2010.(3)
    
    Based solely on information contained in a Schedule 13G filed by T. Rowe Price
Associates, Inc. with the SEC on March 10, 2010. The address of T. Rowe Price
Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202. The Schedule 13G filed
by T. Rowe Price Associates, Inc. states that T. Rowe Price Associates, Inc. has sole
voting power with respect to 46,700 of such shares and sole dispositive power over all
of such shares. The percentage beneficial ownership has been readjusted to reflect
our actual shares of common stock outstanding as of March 15, 2010.(4)
    
    Based solely on information contained in a Schedule 13G/A and a Form 4 filed by APG
Asset Management US Inc., on behalf of itself and certain of its affiliates, with the
SEC on February 24, 2010 and March 5, 2010, respectively. The address of APG Asset
Management US Inc. is 666 Third Avenue, New York, NY 10017. The percentage beneficial
ownership has been readjusted to reflect our actual shares of common stock outstanding
as of March 15, 2010. 47




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##### Table of Contents



(5)
    
    We sold 250,000 shares to Mr. Baird and 100,000 shares to Mr. Coke in a private
placement concurrent with the closing of our initial public offering on February 16,
2010 at the same price per share as in the offering but without payment of any
underwriting discount. Includes 12,000 shares of common stock that were issued to
Terreno Capital Partners LLC in exchange for the contribution of fixed assets.
Mr. Baird and Mr. Coke were the managing partners and co-founders of Terreno Capital
Partners LLC and have shared voting and investment power of such shares. These shares
may be distributed to each of Mr. Baird and Mr. Coke. See Part III, Item 13 Certain
Relationships and Related Transactions  Contribution of Fixed Assets in this Annual
Report on Form 10-K.(6)
    
    Includes 50,000 shares of restricted common stock granted to Mr. Baird at the
completion of our initial public offering on February 16, 2010, which vest ratably in
annual installments over a five-year period commencing on the date of grant, with the
first vesting to occur on February 16, 2011.(7)
    
    Includes 50,000 shares of restricted common stock granted to Mr. Coke at the
completion of our initial public offering on February 16, 2010, which vest ratably in
annual installments over a five-year period commencing on the date of grant, with the
first vesting to occur on February 16, 2011.(8)
    
    We granted 5,000 shares of restricted common stock to each independent director upon
completion of our initial public offering on February 16, 2010, which shares will vest
on the first anniversary of our initial public offering. 
 Item 13.
    
    Certain Relationships And Related Transactions and Director Independence.
 Purchase of Shares of Common Stock by Certain Executive Officers
  Severance Agreements
  IPO Grants and Performance Shares
  48




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##### Table of Contents



Contribution of Fixed Assets
  Indemnification of Officers and Directors
  Other Benefits to Related Parties and Related Party Transactions
  Related Person Transaction Approval Policy
   
 Item 14.
    
    Principal Accounting Fees and Services.
 AUDIT FEES AND ALL OTHER FEES
  Types of Fees
    
    November 6, 2009  December 31, 2009Audit Fees
    
    $
    43,000Audit-Related Fees
    
    
    Tax Fees
    
    $
    7,150All Other Fees
    
    
    Total
    
    $
    50,150
 Audit Fees
  Audit-Related Fees
  49




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##### Table of Contents



Tax Fees
  All Other Fees
  AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
 Part IV
 
 Item 15.
    
    Exhibits and Financial Statement Schedules.
 1.
    
    Financial StatementsIncluded herein beginning on page F-1.2.
    
    Financial Statement SchedulesNone.3.
    
    Exhibits
  50




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##### Table of Contents



INDEX TO FINANCIAL STATEMENT
 PageReport of Independent Registered Public Accounting Firm
    
    
    F-2Balance Sheet
    
    
    F-3Notes to Balance Sheet
    
    
    F-4
 F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 F-2




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##### Table of Contents



Terreno Realty Corporation
 
 Balance Sheet
 December 31, 2009AssetsCash
    
    $
    1,000Total Assets
    
    $
    1,000Liabilities & Stockholders EquityLiabilities
    
    
    Stockholders Equity 
Common shares ($0.01 par value, 100,000 shares
authorized, 1,000 shares issued and
outstanding)
    
    $
    10Additional Paid in Capital
    
    
    990Retained Earnings
    
    
    Total Stockholders Equity
    
    $
    1,000Total Liabilities & Stockholders Equity
    
    $
    1,000
  F-3




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##### Table of Contents



Terreno Realty Corporation
 
 Notes to Financial Statement
December 31, 2009
 Note 1. Organization
   Note 2. Significant Accounting Policies
 Basis of Presentation.
 Use of Estimates.
 Underwriting Commissions and Offering Costs.
 Organization Costs.
 Cash.
 Note 3. Subsequent Events.
 
    
    Terreno completed an IPO of 8,750,000 shares of its common stock at a price of
$20.00 per share and a concurrent private placement of 350,000 shares of common stock
at a price of $20.00 per share on February 16, 2010. The net proceeds were
approximately $169.8 million.
    
    In connection with the completion of the IPO, Terrenos executive officers,
employees and directors were granted 141,250 shares of restricted common stock with an
aggregate value of $2.8 million, which will vest ratably in annual installments over a
five-year period commencing with the completion of the offering.
    
    In connection with the completion of the IPO on February 16, 2010, Terreno issued
12,000 shares of common stock to Terreno Capital Partners LLC, an entity owned by
Terrenos executive officers, in exchange for the contribution of fixed assets to
Terreno with a net book value of $240,000.
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##### Table of Contents




    
    On March 24, 2010, the Company consummated a $50.0 million senior revolving credit
facility with KeyBank National Association, as administrative agent, and KeyBanc
Capital Markets Inc., in its
capacity as the lead arranger (the Facility). The amount available under the Facility
may be increased up to $150 million, subject to the approval of the administrative agent
and the identification of lenders willing to make available additional amounts. Interest
on the Facility will generally be paid based upon, at the Companys option, either
(i) LIBOR, subject to a floor of 1.50%, plus the applicable LIBOR margin or (ii) the
applicable base rate which is the greater of the administrative agents prime rate plus
1.00%, 0.50% above the fed funds effective rate, or thirty-day LIBOR (incorporating the
floor of 1.50%) plus the applicable LIBOR margin for LIBOR rate loans under the Facility.
The applicable LIBOR margin will range from 3.00% to 4.25%, depending on the ratio of
the Companys outstanding consolidated indebtedness to the value of the Companys
consolidated gross asset value. The Facility includes a series of financial and other
covenants that the Company must comply with in order to borrow under the Facility.
Terreno has agreed to guarantee the obligations of the borrower (a wholly-owned
subsidiary) under the senior revolving credit facility.
    
    On March 9, 2010, the Company agreed to acquire, subject to the satisfaction of
closing conditions, an industrial property located in San Jose, CA aggregating
approximately 72,000 square feet for a total purchase price of approximately $5.6
million.
    
    On March 26, 2010, the Company acquired, an industrial property located in Fremont, CA aggregating
approximately 140,000 square feet for a total purchase price of approximately $7.3
million.
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##### Table of Contents



SIGNATURES
  Terreno Realty CorporationBy:
    /s/ W. Blake BairdW. Blake BairdChairman and Chief Executive Officer Power of Attorney
   Signature
    
    Title
    
    DateChairman, Chief Executive Officer and Director/s/ W. Blake Baird
    
    (principal executive officer)
    
    March 29, 2010W. Blake BairdPresident, Chief Financial Officer and Director/s/ Michael A. Coke
    
    (principal financial and accounting officer)
    
    March 29, 2010Michael A. Coke/s/ LeRoy E. Carlson
    
    Director
    
    March 29, 2010LeRoy E. Carlson/s/ Peter J. Merlone
    
    Director
    
    March 29, 2010Peter J. Merlone/s/ Douglas M. Pasquale
    
    Director
    
    March 29, 2010Douglas M. Pasquale/s/ Dennis Polk
    
    Director
    
    March 29, 2010Dennis Polk




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##### Table of Contents



Exhibit Index
 ExhibitNumber
    
    Exhibit Description1.1
    
    Form of Underwriting Agreement (previously filed as Exhibit 1.1 to Amendment No. 3
to the Companys Registration Statement on Form S-11 on January 15, 2010 and
incorporated herein by reference)3.1
    
    Articles of Amendment and Restatement of Registrant (previously filed as Exhibit 3.1
to Amendment No. 2 to the Companys Registration Statement on Form S-11 on January
6, 2010 and incorporated herein by reference)3.2
    
    Amended and Restated Bylaws of Registrant (previously filed as Exhibit 3.2 to
Amendment No. 2 to the Companys Registration Statement on Form S-11 on January 6,
2010 and incorporated herein by reference)4.1
    
    Specimen Common Stock Certificate of Registrant (previously filed as Exhibit 4.1 to
Amendment No. 3 to the Companys Registration Statement on Form S-11 on January 15,
2010 and incorporated herein by reference)10.1
    
    Form of Severance Agreement between Registrant and W. Blake Baird (previously filed
as Exhibit 10.1 to Amendment No. 2 to the Companys Registration Statement on Form
S-11 on January 6, 2010 and incorporated herein by reference)10.2
    
    Form of Severance Agreement between Registrant and Michael A. Coke (previously filed
as Exhibit 10.2 to Amendment No. 2 to the Companys Registration Statement on Form
S-11 on January 6, 2010 and incorporated by reference herein)10.3*
    
    2010 Equity Incentive Plan of Registrant10.4
    
    Form of Restricted Stock Award Agreement for Executive Officers and Employees
(previously filed as Exhibit 10.4 to Amendment No. 2 to the Companys Registration
Statement on Form S-11 on January 6, 2010 and incorporated herein by reference)10.5
    
    Form of Restricted Stock Award Agreement for Non-Employee Directors (previously
filed as Exhibit 10.5 to Amendment No. 2 to the Companys Registration Statement on
Form S-11 on January 6, 2010 and incorporated herein by reference)10.6
    
    Form of Indemnification Agreement between Registrant and its Directors and Executive
Officers (previously filed as Exhibit 10.6 to Amendment No. 2 to the Companys
Registration Statement on Form S-11 on January 6, 2010 and incorporated herein by
reference)10.7*
    
    Long-Term Incentive Plan of Registrant10.8
    
    Form of Award Notice under the Long-Term Incentive Plan of Registrant (previously
filed as Exhibit 10.8 to Amendment No. 2 to the Companys Registration Statement on
Form S-11 on January 6, 2010 and incorporated herein by reference)10.9
    
    Form of Subscription Agreement (previously filed as Exhibit 10.9 to Amendment No. 2
to the Companys Registration Statement on Form S-11 on January 6, 2010 and
incorporated herein by reference)21*
    
    Subsidiaries of Registrant23.1*
    
    Consent of Independent Registered Public Accounting Firm24.1*
    
    Power of Attorney (included on the signature page to this Annual Report on Form 10-K)31.1*
    
    Certification of Chief Financial Officer, pursuant to Rules 13a-15(e) and 15d-15(e), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of Chief Executive Officer, pursuant to Rules 13a-15(e) and 15d-15(e), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1**
    
    Certification of Chief Financial Officer of, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.32.2**
    
    Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith.**
    
    Furnished herewith.