REITs DAILY BRIEF | 4/23/21 (REXR)

04/23/21 07:00AM EDT

KEY CALLOUTS

Ticker/Company: Rexford Industrial Realty, Inc. (REXR)

Headline: Notes from 1Q21 earnings call

Key Takeaways:

  • SoCal logistics portfolio is overlaid on top of perhaps the fastest growing submarkets in the U.S. – relative lack of developable land + high cost / barriers to new construction + unprecedented tenant demand = Los Angeles rental rates growing ~2.5x other major markets outside of Southern California over the next 4-5 years
  • Internal growth – projects approximately ~18% embedded NOI growth (~$54 million) within the existing portfolio from contractual rent bumps + commencing leases over the next 18-24 months
  • External growth – 2021 guidance does not include additional acquisition activity, however there is over ~$450 million of potential deals under LOI or under contract currently following ~$190 million executed to-date.  Assuming a ~5.0% average yield and that 70% of the pipeline converts to completed deals, could translate to potentially $7-10 million of incremental NOI in 2021 depending on timing of close
  • It appears that REXR will achieve roughly ~70% retention on its 20 largest 2021 lease expirations totaling just over 2msf, with the unleased portion (675ksf) to be placed into redevelopment / repositioning
  • Very likely that 2021 guidance will be raised gradually throughout the year given the pace of market asking rent increases + external acquisition activity, brining Core FFO growth above +8% at the midpoint currently.  By comparison, larger peer PLD is forecasting just over ~12% Core FFO growth at the midpoint

Please call or email with any questions

Rob Simone, CFA

Managing Director

Mobile:

@HedgeyeREITs

© 2024 Hedgeye Risk Management, LLC. The information contained herein is the property of Hedgeye, which reserves all rights thereto. Redistribution of any part of this information is prohibited without the express written consent of Hedgeye. Hedgeye is not responsible for any errors in or omissions to this information, or for any consequences that may result from the use of this information.