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 the end of 2024 was 91.3%.
• Same Property Portfolio average occupancy for the year was 96.6%, with ending occupancy at 94.1%.
• Executed 436 new and renewal leases totaling 8.1 million 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 square feet of buildings on 218.3 acres of land.
• Sold five properties with 170,293 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 square feet.
• As of the end of 2024, had 12 repositioning/redevelopment properties with 1.2 million square feet in the lease-up stage.

Equity and Financing

• Issued 12.7 million shares of common stock for $650.2 million in net proceeds through various equity transactions.
• Completed the issuance of $1.15 billion in exchangeable senior notes with 4.375% and 4.125% coupons.

Market and Portfolio Fundamentals The company’s Southern California infill markets continue to exhibit favorable long-term supply-demand fundamentals, with limited new supply and strong tenant demand. While market rents have declined approximately 12.5% in 2024 after significant increases in prior years, Rexford’s portfolio has outperformed the broader market, with an 8.3% rent decline.

The company’s focus on acquiring and improving industrial properties in prime 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.

Acquisitions and Value-Add Repositioning Acquiring and repositioning properties is a key part of Rexford’s growth strategy. The company targets properties with value-add potential, such as those operating at below-market occupancy or rents, or that can be improved through physical or functional repositioning.

As of the end of 2024, Rexford had 22 properties undergoing repositioning or redevelopment, with an additional 12 properties in the lease-up stage following completion of such work. The company also has a pipeline of 21 additional properties it plans to begin repositioning or redeveloping in the near future.

These value-add projects are expected to be an important driver of future growth, as Rexford completes the work and leases up the properties at higher occupancy and rental rates.

Leasing Activity and Rental Rates Rexford’s leasing activity in 2024 was strong, with 436 new and renewal leases totaling 8.1 million square feet. Leasing spreads were 38.9% on a GAAP basis and 28.6% on a cash basis, demonstrating the company’s ability to capture higher rents.

The company’s Same Property Portfolio occupancy was 94.1% at the end of 2024, down from 97.1% a year earlier, as some space was taken offline for repositioning projects. However, the weighted average occupancy for the year was 96.6%, indicating the portfolio remains well-leased.

Liquidity and Capital Resources Rexford has a strong balance sheet and ample liquidity to fund its growth initiatives. As of the end of 2024, the company had:

• $56.0 million in cash and cash equivalents
• $995.0 million available on its unsecured revolving credit facility
• $3.4 billion in total consolidated debt, with a weighted average effective interest rate of 3.835%

The company’s sources of liquidity include cash flow from operations, borrowings under its credit facility, proceeds from equity issuances, and selective property dispositions. Rexford plans to fund future acquisitions, capital expenditures, and other obligations through a combination of these sources.

Outlook and Conclusion Rexford’s strong financial and operational performance in 2024 demonstrates the company’s ability to capitalize on the favorable market conditions in its target Southern California infill markets. The company’s focus on acquiring and improving high-quality industrial properties, combined with its active management approach, has enabled it to outperform the broader market.

Looking ahead, Rexford’s pipeline of repositioning and redevelopment projects, as well as its acquisition pipeline, position the company for continued growth. While the company may face some near-term volatility due to macroeconomic factors, the long-term fundamentals of its markets remain favorable.

Overall, Rexford’s 2024 results highlight the strength of its business model and the company’s successful execution of its strategy. Investors can look forward to Rexford’s continued growth and strong financial performance in the years to come.