KEY CALLOUTS
Ticker/Company: SLG
Headline: SLG 1Q 2021 Results
Key Takeaways: Reported rent collection rates have continued to stabilize particularly in the retail segment of the business (71.5% / 70.0% / 80.8% / 85.0% of gross billed amounts sequentially since 2Q 2020) while office collection rates (much larger NOI contribution) have remained in the mid-to-high 90% range through the pandemic. It is important to consider, however, that over time the “denominator effect” kicks in, i.e. as tenants walk away from leases and lease amendments are signed, the dollar denominator on which the % is calculated shrinks relative to cash collections. Looking at retail cash NOI, which is a better look through past the noise, the figure is down nearly ~40% Y/Y to $7.2 million. 350ksf of signed office leasing volume appears light relative to the full year target of 1.6msf, but leasing activity is lumpy and SLG historically finds ways to back into its full-year targets. It appears that most of the very severe pain has been taken in Manhattan, but market leasing volume needs to improve to stabilize net effective rents and ultimately drive a recovery.
Ticker/Company: REXR
Headline: REXR 1Q 2021 Results
Key Takeaways: Guidance appears conservative - expect gradual uptick in the Core FFO range throughout the year on further increases in the SS NOI range and additional acquisition activity. Reminder that current outlook does not reflect future acquisitions / capital raising, and right now REXR is doing exactly what it should be doing – using its cost of capital to acquire assets in its SoCal infill markets, including 11 assets in 1Q for $163.5 million on a prior base of 246 assets. Weighted average starting cash rents of $12.58psf (vs. $11.57 / $10.71 in 4Q / 3Q) show just how fast asking rents are moving up. Expect this trend to continue with replacement / development costs accelerating as cited by PLD, which increases the growth profile on a tail duration for the sector.
