Rexford Industrial Realty’s Strong Financial Performance in 2024

Rexford Industrial Realty, Inc. is a real estate investment trust (REIT) that owns and operates industrial properties in Southern California. The company had an impressive year in 2024, reporting strong financial and operational results.

Financial Highlights

• Net income attributable to common stockholders increased by 15.6% to $262.9 million in 2024 compared to 2023.
• Core funds from operations (Core FFO), a key metric for REITs, increased by 15.0% to $511.7 million.
• Net operating income (NOI) increased by 17.3% to $711.8 million.

Operational Highlights

• Total portfolio occupancy at year-end was 91.3%.
• Same Property Portfolio average occupancy for 2024 was 96.6%, with ending occupancy at 94.1%.
• Executed 436 new and renewal leases with a combined 8.1 million rentable square feet, with strong leasing spreads of 38.9% on a GAAP basis and 28.6% on a cash basis.

Acquisitions and Dispositions

• Completed $1.5 billion in total investments, representing 56 properties with 4.6 million rentable square feet.
• Sold five properties with 170,293 rentable square feet for $44.3 million, recognizing $18.0 million in gains.

Repositioning and Redevelopment

• Stabilized 10 repositioning/redevelopment properties with a combined 826,442 rentable square feet.
• As of year-end, had 12 repositioning/redevelopment properties with 1.2 million rentable square feet in the lease-up stage.
• Identified a near-term pipeline of 21 additional repositioning and redevelopment projects with 3.4 million estimated rentable square feet.

Equity Transactions

• Issued 12.7 million shares of common stock for $650.2 million in net proceeds through various equity offerings and forward equity sales.
• As of the filing date, had 8.2 million shares, or $401.1 million, remaining for settlement under the March 2024 forward equity sale agreement.

Financing

• Completed the issuance of $575 million in 4.375% exchangeable senior notes due 2027 and $575 million in 4.125% exchangeable senior notes due 2029, raising $1.1 billion in net proceeds.

Market and Portfolio Fundamentals Rexford’s Southern California industrial markets continue to exhibit favorable long-term supply-demand fundamentals, characterized by limited new supply and strong tenant demand. While the company has seen some normalization of market rents and vacancy rates post-pandemic, its portfolio has outperformed the broader market.

The company’s focus on acquiring and improving industrial properties in prime infill locations has enabled it to maintain higher occupancy and rental rates compared to the overall market. Rexford’s entrepreneurial approach and active property management have also contributed to its strong performance.

Liquidity and Capital Resources Rexford has a diverse set of liquidity sources, including cash flow from operations, availability under its $1 billion unsecured revolving credit facility, proceeds from equity offerings, and selective property dispositions. The company maintains an investment-grade credit rating, which provides access to the debt capital markets.

As of year-end 2024, Rexford had $56 million in cash and no outstanding borrowings under its revolving credit facility, leaving $995 million available for future acquisitions and other investments. The company’s total consolidated debt of $3.4 billion reflects a net debt to total combined market capitalization of 26.5%.

Rexford’s liquidity needs include funding for acquisitions, capital expenditures, tenant improvements, and dividends to shareholders. The company expects to meet its short-term liquidity requirements through available cash, cash flow from operations, and its revolving credit facility, while funding long-term needs through a combination of debt and equity financing.

Outlook and Risks Rexford’s management is optimistic about the company’s long-term prospects, citing the favorable fundamentals in its target Southern California industrial markets. However, the company acknowledges that it may face some near-term volatility due to macroeconomic and political uncertainty, including interest rate fluctuations, inflation, and global geopolitical events.

The company’s growth strategy focuses on acquiring stabilized properties as well as value-add opportunities for repositioning and redevelopment. Rexford believes its vertically integrated platform and expertise in these areas will enable it to capitalize on the opportunities in its markets.

Risks to Rexford’s performance include changes in economic conditions, tenant demand, and competition, as well as the ability to successfully execute its repositioning and redevelopment projects within budget and on schedule. The company’s financial results may also be impacted by its ability to pass through increases in property expenses to tenants.

Overall, Rexford’s strong financial and operational performance in 2024, combined with its strategic focus and healthy balance sheet, position the company well to continue growing and delivering value to its shareholders.