Rexford Industrial Realty (REXR) 21 Jul 222022 Q2 Earnings call transcript

Company Profile

Participants

David Lanzer	General Counsel and Corporate Secretary
Laura Clark	CFO
Michael Frankel	Co-CEO Officer and Director
Howard Schwimmer	Co-CEO Executive Officer and Director
Jamie Feldman	Bank of America
Craig Mailman	Citi
Blaine Heck	Wells Fargo
Connor Siversky	Berenberg
Vince Tibone	Green Street
Dave Rodgers	Robert W. Baird
Mike Mueller	JPMorgan

Call transcript

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Operator

Greetings. Welcome to the Rexford Industrial Realty Second Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. conference your the General David turn Counsel. now over host, to Lanzer, I'll

may You begin.

David Lanzer

for for joining quarter you thank We us conference XXXX Rexford call. earnings second Industrial's

Litigation we distributed In your in presentation questions Act answers statements today's Relations Reform website forward-looking after press call, to our Investor supplemental as release may on the rexfordindustrial.com. addition market and contain the the Private close, XXXX. defined to at posted section investor management's a package and Securities yesterday of in On remarks

address matters that statements those to that Forward-looking risks are today. and may differ subject uncertainties discussed results to cause actual from

statements about information the filings. more review Industrial future. our we and these For forward-looking encourage Rexford you to to in risk factors, obligation assumes SEC other no XX-K any update

on represents information financial In non-GAAP financial addition, certain this call presented measures.

earnings supplemental Our with Michael useful is Officer, explanation prepared Clark. Executive Industrial's reconciliations your of measures and open Laura Chief investors. Co-Chief such for GAAP remarks, hosted Today's some an will present questions. are Schwimmer, the non-GAAP They we together conference and call will Howard then financial Rexford call to and why and make Financial package by Frankel release Officers,

to Now, I turn Michael. the over will call

Michael Frankel

remarks guidance. then for activity, our on by Thank you transaction earnings brief provide Industrial call. I'll Howard, and David, and well. our joining We who will discuss and your thank you, followed you, second an and some performance everyone, provide hope Rexford will our quarter XXXX Laura families update are

Southern of half rent positive tenant to into we strong head growth California. levels continue market second the year, and the we As within infill of demand see

below continues average XX%. at our X%. occupancy perform with with well vacancy same full Demand property supply occupancy pool Our exceed market at overall portfolio tracking continues to over to essentially

continues Rexford's due within an the space Southern supply-demand California. developable our the lack land or within differentiate into infill to itself. of to extreme expect foreseeable persist performance markets imbalance infill to future available We

nation's increasing prior per within industrial functionality XX% infill regional year FFO growth exceeding vacancy a of FFO are of favorably any market, CAGR access model, focused the outperformance market, over the property five-year creating per of Rexford's quality value X and our positioned and industrial over to exceptionally to infill team grew highest share growth substantially brings two the by a to prior per lowest is prior industrial the share wealth California, in a share value throughout nation. reflection we foot an REIT basis, built Our square Southern creation with FFO on demand square of with XXXX, the billion of opportunities. proprietary billion nearly on compared entrepreneurial our quarter. industrial feet business This property by other deep to XX%

executing substantial the and tremendous over representing Leasing and upon a Our for the basis internal on spreads basis, strategies GAAP a full range of value. an were quarter. on team a external growth XX% cash first acceleration is to a XX% unlock quarter

billion of grew $X.X assets to income value core net the by compared opportunities On creation irreplaceable a quarter, operating and grew and full year over FFO our prior team strong year-to-date, growth by with front we acquired XX%. XX% external embedded the

entire mark-to-market basis Rexford XX% cash a at for forward, an From look we effective and growth basis. our to cash internal As rates grow XX% portfolio on value. on remains flow a estimated rental is positioned continue that to well net our and perspective, on

market contributed rates rents. NOI based place incremental million upon million we our today's XX% higher $XXX acquisitions equal approximately as of project $XX components we to growth embedded further in assuming annualized of no NOI months, XX cash The roll of our internal current same our next two and growth NOI property market $XX within redevelopment the Over annual over million rents growth acquisitions. portfolio, of include to we are approximately cash and repositioning incremental contractual NOI NOI and NOI years. we the incremental projecting NOI of XX% X% our growth, steps, ratchet $XX recent as projects to of annual stabilize our up and from million as Within rent embedded next

Rexford dynamic to continue In and extraordinary like to an to entire quarter addition, contract XX.X% growing with maintain to To balance leverage and $XXX well positioned to we great we in low million With over for thank accepted strong, net exceptionally regard at this to we'd acquisitions capitalize external dedication emerging currently growth, opportunities new company. ensure growth sheet offer. your or our talent, are the under to market, have closing today's we value. of upon that, approach team our debt enterprise fuel entrepreneurial

prior Rexford's is success cycle. demonstrated through performance believe our cycles, our our unique to differentiate favorable primary the As all ability of we team and phases of economic determinant the through

call to the over Now I'm turn very Howard. pleased to

Howard Schwimmer

today. was portfolio California by and us Michael, finished which ongoing record the internal Rexford's portfolio on construction the no therefore to X.X% quarter continue strength of exceptional opportunity XXXX low markets, prior which According near with rents Based no you, quarter higher infill mitigate infill at supply. flat the yet impacts high Rexford markets. land the the across and to vacancy comparable half CBRE, are of of and remained end at joining differentiated accelerate, availability space costs. over everyone virtually net year, for prior quality essentially our first of essentially increase you quarter our and thank levels compared XX% to to reflecting continues with to metrics, Thank of increasing another market for the results, Southern

net positioning foreseeable basis. with our a on we weighted feet in basis well at markets spreads our effective at is result, X.X lows, robust XX% million mark-to-market vacancy for square on lease demand, historical and us expirations of cash rates continuing capture average rent estimated tenant future. a portfolio strong consolidated to see As The remaining XXXX for XX% now this a

land, sourced XX Over acquisitions half near-term have in investment. second least end, totaling Over we a total of the added acquired an completed additional billion increasing an of proprietary our square $XX either acres our million investments acres including buildings we Year-to-date, of and an XX research-driven rents. acquired infill in transactions properties acquisitions Approximately we containing X.X% relationships. growth, X.X at on initial initial unlevered quarter an our deep acquisitions yield in XX% and to market $X.X million five stabilized $XXX generate grow redevelopment. unlevered quarter initially totaling through XX% value are through vacant of yield X.X Regarding properties, In of million million or investments. off or market of to on growing prime with quarter, square add aggregate, substantially of at NOI were for were of These of processes estimated projected feet stabilized projected XXXX second X.X% XX $XXX totaling acquisitions of our all were to nearly over expected contribute approximately yield market properties, time. to below million representing costs. Subsequent of acquisitions lightly XXXX, our and over further XX yield $XX marketed to X.X%. feet X.X% million external

closing million over to new we conditions. future, investments or currently which are LOI under of contract, $XXX have the towards customary Looking subject

the of have In extensive a these transactions. originations range on internal executing broad team growth Further, pipeline beyond accretive initiatives. is an addition, we

$X For These investment in are projects our or underway projected to on over start next billion. now about deliver And to incremental pleased bringing $XXX XX creation. projected that, an total million value return investment estimated of with aggregate $XXX turn estimated we expected the the call over months, representing projects I'm of add and an million value Laura. total X.X% to to over to approximately redevelopment investment have incremental

Laura Clark

Thank Howard. you,

Before details our and published second communities. report our would foundational further quarter community reinvent to value like progress our model quarter, properties At and reinvigorate ESG to to creating commitment discussing business results, our accelerating legacy as impacts. during our and add is was highlight which environmental economic, the ESG value Rexford we that I

basis. same performance, strong the growth NOI was and a a property cash for on GAAP Now to a quarter turning basis XX.X% on our X%

overall occupancy quarter XXX and achieved prior record property on up led a Our leasing in have respectively. results we the and spreads of Average GAAP Year-to-date, outperformed cash environment. projections over year. by XX.X% the same in operating points XX% basis was strength basis continued XX%

Additionally, annual quarter and rent second increase our steps embedded executed continue with leases X.X%. average at to steps

debt quality over to internal $X.XX. tenant high recorded through as by exceptionally continues performance prior value This the half FFO with of our per to bad robust share zero first year. core the drove growth creation and of well Our external combined demonstrated XX% year perform base

we more At position to ATM increasing to Also, low revolving to fortress below of six we to spots liquidity of shares for first At position a sold the four the sector the and facility, common common long-term Our EBITDA unsecured through X.X billion execute markets. half and $X in our of to reduced million drive and which balance sales, issuing for Rexford our obtaining linked opportunistically million. active range of $XXX favorable terms, equity the creation the We for access continues associated $XXX forward of targets. and including end shares half stock net strong strategy on and settled XX substantial pricing proceeds million end million. quarter capital to favorable net occurred quarter debt basis an recast ATM rates We the value quarter, with times. borrowing sustainability of was our year, a on in shareholders. sheet, completed a four the while our times size credit capital target like forward

proceeds reduce loan credit expiring our a and facility. in under repay XXXX, XXXX term expiring borrowings loan We used in million also $XXX to with added to $XXX our million term revolving

$XX financing quarter to incorporating $XXX for to our revolver. we credit $XXX forward closed equity million which to reduced new currently in a options. end, Proceeds on revolving term fund one remaining have our extension end, we two, $X.X of year transaction subsequent of expiring XXXX our used Finally, activities and available cash, activity and quarter facility subsequent borrowings were with and in liquidity, $XXX After loan settlement closed of under billion million includes acquisition million million facility.

turning to our Now guidance. full-year

per $X.XX $X.XX of a a FFO share guidance We $X.XX are a from our increasing a to $X.XX. to range range previous our to core

range XX% guidance revised the midpoint. year-over-year represents at earnings growth Our

our activities include that have closed. or sheet dispositions As related acquisitions, guidance not a balance not reminder, does

provided X.X% growth increased points highlights to at have NOI on same When to normalized range GAAP A X% X.XX% now our package. on cash roll be same midpoint. include be COVID-related of to few cash midpoint. detailing up the basis basis Same supplemental We points for been has property a is basis the and a projected to X.XX% to repayments, a XXX our drivers the forward is to growth revised growth XXX up X% property projected basis NOI NOI guidance at X.X%. property

Assumption property and XX% the GAAP of spreads include striving same occupancy spreads leasing up XX.X% to XX.X approximately XX.XX% XX%. growth midpoint, cash approximately points at of leasing of basis average

XX projection points driven in the a now is quarter revenue property approximately bad Incremental be to the than year in growth of to of to which the property end XXXX. Same a for our lower percent related projected to strength point projected Our full be million increased debt basis prior basis same is is in guidance, the for basis and expectations, as quarter as $XX compared by NOI to re-tenant second subsequent XX base. contribution expense points XX closed represents to acquisitions guidance. NOI prior

an to $XX related in to be of expense range search our increase welcome the million is prepared projected acquisition and net Operator? by $XX driven we million funding. now your completes questions. This debt Finally to in remarks

Operator

of from with first Feldman line proceed your question. Bank [Operator instructions] Jamie Our the of question Please with comes America.

Jamie Feldman

Great. Thanks call. my taking for you. Thank

or acquisition So I nice risks forecast here, downturns prices your picture credit of think you credit, you today and the you and guess may money at in put a discovery? the prior are if about occupancy your see to for And when do comfort as kind with portfolio. to gives think to big price the work recession cycles you you still, what where we the future pipeline changes are, have putting here,

Michael Frankel

of maybe Michael. Hey, see give Jamie, the I'll occupancy. Jamie, thanks us, so it's and for Thanks kind just joining on the context brief Laura, Michael, it's we market a how much.

the near great think may I they market bring in relate term. And shock concern aggregate of demand that great us financial environment today's comparing there's just to then You can dive with great potential first a from or was first what the may XXXX what And into lot crisis, briefly, put to of crisis. ability true and actually the may a with tenants or credit to question as part many can take the in tenant experience economy recent as talk the questions; I may tremendous -- we obviously to the Jamie, bring first in for financial of today And great I prior all, today, a lot we money work of this would flows most the the back to what the and obviously, to in the downturn of order And think about was and cycles. the in quarter not takeaways market the which see the compared the think environment. stopped.

what infill And that We California very market in supply was that it that terms a We Southern a California. was before. have infill never manner counterintuitive. was problem of in performed the never interesting Southern saw seen in

great vacancy The the X% Southern to into California. financial X%. worst crisis, was infill, ever X.X% was to Going X% throughout got it

just X% the go different, supply a a empire, to market then have Eastern vacancy worse the infill markets, and X.X% was double, one, had an great around substantial is today and so call great during vacancy problem the as so where didn't compared metrics. problem. today never, market average far was. crisis. stronger going or the situation California; the crisis, box to it financial throughout Number X%, by Southern times, In well, even even we preparedness is how The of in into that was X.X% see supply than we worst ourselves, terms the big is So different I the we market market the as in Today we're And to X%. prepared then? market never very ask The to or mentioned, of tripled very financial today much vacancy. positioning inland during at you many

and location actual of were to to market begins the vacancy you vacancy things functional look Rexford, If at less with than to drill with Rexford's probably compete half vacant the compete even into portfolio a down or that stated are the basis. on

an vacant strong we're options So today space. take And And in a while, of other where no X% diversity although that to an literally Tenants then and they of is tenants market. than market, options. a is have them. X% find but the environment is crisis the very different It extremely could financial could today big find difference demand. going other might compared as into the deep great terms

of transformation segments driven looking before incremental that crisis. a going new space their that never driving we're like have exist financial demand e-commerce, business exploration, businesses, is business did the models, not and three into of demand. vehicle at electric We Many them substantial of even technology, reinventing PL the embracing great industry, by

delivery. same-day delivery, food have, We

today the that financial they demand five even not degree years to crisis or today. the ago, factors great did into So frankly, driving many exist exist going

So very, do today. bit Laura, you market to talk little about different And tenant a very want credit? backdrop

Laura Clark

rent saw in to of needs. pay our not our essentially Hey today. anticipated pay the Jamie, Yeah, spaces unilateral when things ongoing The disruptions tenants strength demonstrated our COVID to through at and have our joining to some as critical their has for were never to of markets. tenants pretty cycles have thanks tenant our us some collections are These But business such been right base rent. significant continued really, we could we through and given as economic the impact start absolutely. no

the of to be selective lack do demand credit of to say Clearly credit increase base and supply, We've the prior able strength the I'd with fact and the couple ways. opportunity in that base tenant few in you've to is very that competing the had that that many extreme Also on to for and of years, that space than been example, got tenant tenants growing given growing offers a putting coupled over our got and best get select credit. tenants. took higher we've underperforming of that quality our spaces, opportunity we're we've the we're when portfolio the to our the highest been the So, tenants we during quality for strong multiple COVID, that's the use We able with rents. stronger ever. quality higher and tenants we of the with replace those business pull tenants further paying

of and bad are quality indication of finally tenant So, our a our our great think levels low of and increased base, strength tenant I the the debt of base. then

revenue debt at XX to as it's months, of points year projecting the XX to full we're over look you compares basis bad and for XXXX XX pre-COVID. percentage the basis a zero XX If points trailing that

disruption really our market what So, given may through resilient the proven in well has we tenant for today, dynamics summary, strong base we're and feel be ahead. positioned

Howard Schwimmer

say, and provided on I Michael today recession, it's last the out their that in that find whether more during buying asking seeking. happy everyone of cap and some just a being was sale of with inbound to we've of looking didn't that and have in at opportunities. that's to a I some adjustments a should stabilize that but on for opportunity. materialized. access yields. of There and people seen there reference prices turn those the cap be well for it you're but was and to few terms more your a And waited And and we of as moderate other sellers really and the really demand able product wholesale to in to what things never there wait, part there, being we're incredibly industrial at the lot the of going here of we're and to really market reset driving question, we're those thought think mark-to-market recession, your going finding able discounted the very adjust or that the yields others market, at We've and, in buy assets rates for to us what's we're don't was accretive happening -- are thinking opportunities opportunities terms buying into rates, just finding

in here, still values terms change there's strong much I and expect opportunities dramatic our rent and vacancy market we and a demand So, demand growth. see great see don't the really to a of in shift in of unless

Michael Frankel

There's I'll is additional And cost the opportunities slightly a you everybody. off so the interesting economic other a I investment maybe that volume capital's so little actually our yields a is, wanted that little ironic seeing, today marginally Last to phases think pressure and up know, can is bit as threat to cost Jamie, amount had common always capital just model. in than capital. we're I and the markets the of add yields things buy low about uncertainty add tremendous talk the or low selected for capital was that extremely about extra I just gone marginally allows the rates of bit a and really, are about but be And do tremendous market, that's continue And capital competitive, better a markets What's low, marginally question can bit originations it And Cap pay market, bit, all goes of pressure this cost intense of inclusive more we in cost six on are how during cycle. of seeing investing we really on we what's really higher And any of and identify color. year capital. you of player business in months and We think are ago, the the a question, and is margins despite goodness; well, for higher a and right? of question color. year question more last because or so cost of you're us to this inflation environment? of yielding do create there's work that, comfortable my in value? and little currently Rexford arguably of research of to the competition that we opportunities

Jamie Feldman

were? moved your thanks now versus So do to guess yields cost and you maybe step color, helpful. required for I change How about the take back, just, to capital compare the how in think IRRs you today to versus all pre-pandemic from a you very do where have your where

Michael Frankel

we relative slightly are can ago. at find about we're a talk minute, we a little levels capital IRRs be that cost basis, looking probably better at, it Well, frankly. that Laura today call attractive XX a And on we on to IRRs which at can our actually than historical months still bit talk, were looking opportunities

also historical exit your IRRs cap Boulevard a exit ago, generally rate And example to exit rental other on that interesting assumptions, rate every basis seen relative our to IRRs. an the cost market i.e. underwrite on a example, can conservative debt property also we what the our I just capital. close rent not disclose when rate be which and cost basis. and than XXX months to you on we our the has performance, underwrite Rexford and ultimate in cap underwrite underwrite or more compared assumptions bought experienced market as couple cap cycle very West a higher steady anywhere number don't points we underwriting by a and but actually to on that with, to some institutional that or and in one underwrote is from circling that what speaking spot lot of basis, a yet, state $X.XX maybe to the We is typically we were looks it that deal be cap protecting based drives I rent, biggest capital, that drive see even X.X% there's of basis we those what $X.XX rates, being tell our triple inbound of And we is driving cost XX that improvement tenants exit under but don't would a we point potential. a And to basis think So have, we've of current but we we the today market our different buyers in have or your than will this X% at We we net piece of whole interest lock and also, on respect anything like, a driver rate. perceive the very impact. are state we there. rates strong steady yield which we the equity, the done and points in higher hope a expect just think about the I cap We a really not way, a rent we'll cap in market a rates

we So, that's a underwrote, property recently. very and

So the that kind goes see you underwriting conservatism can of into company. of the the

Laura Clark

Yeah. bit that. And Jamie, little I'll just just, to a add I'll

attractive. over increased capital equity prior the debt quarter, continues be cost of very cost and our our to has While

we fact, In loan swap morning at a five-year this term a X.X%. $XXX attractive rate very million executed of all-in fixing our

contribution going be cycle. by to FFO growth flow maybe cash we the We're to drive to range. really, source grow saw So, to evaluate to able to we be accretive all above we acquisitions past. acquisitions. that going are we're points in That's platform we're demonstrated have that which the going value that creation our continue in very generate market guidance But positive through that going are are ensure through from going selective and as to continue yields, the increased opportunities FFO to that

Jamie Feldman

sure, long Okay, it. we'll great. continue Thank I'm have have time. this Appreciate -- for to a you. conversation

Michael Frankel

Jamie, so so, you much. hope We thank

Operator

proceed line comes question. Craig question Please Mailman Citi. of next the your Our with from with

Craig Mailman

up Maybe bit little everyone. cost a picking the here. capital on of Hey,

liquidity I through contract, have updated and about future re-dev your on on You and the at $XXX remaining ran there. what guys guys plus spend think $X.X you look ongoing the you your billion if gap have million of re-dev, about I

swap best your in as threes. we funds view source kind curious have being mid to equity debt I'm or apply three-seven, able at rates of with, on cap of debt What's here? So the the your

Laura Clark

for today Yeah. and Thanks Craig. Hey welcome. on us joining

equity think past. we we going So versus opportunistic to a take very when about we capital raises to debt about we're have -- in continue think the approach to as when

were Our low the in We attractive very on to of able to take of leverage attractive fee sources able those be to balance past $XXX that to end. over allows quarter subsequent million and term and us quarter of close loans do advantage equity. to

So, grade but a targeting focus EBITDA to leverage on really to investment We're low four times four our to be the continues net in our half sheet. what area. balance debt and maintaining a

that's So low continue the balance focus number one is us to sheet allows leverage which opportunistic. maintaining that be to

Michael Frankel

today. I'll that just for joining and And again thank that. add just to add you I'll to

when we or a an That hadn't been these Another source though, across funding opportunistic have which tremendous of we're of capital lot at on XX% and GAAP and drive the entire quarter, increasing able GAAP And through are would portfolio, our be recycling capital literally re-tenting through a selling said XX% it. leasing to in by XX% not speaking, dispositions, we mark-to-market that with asset continue by amount cash every look to incremental generally activity turn an of is sourcing tremendous a leasing secretion an spreads, way, capital capital, we of requirements. the basis. percentage the

of favorable also source that internally. capital So, very we're seeing another as

Craig Mailman

glad spreads, and brought my that question next because was you No, I'm up here. the

cash You a XXX basis. on sequentially guys at points mark-to-market portfolio basis the kind you're on of

doing market end markets, rents trend by could guys so are called think? in you your As what the of mark-to-market that where at look do you this year,

Michael Frankel

that comment, feel seen Laura free upwards I honest, probably minus but to to way year really of to plus Howard, or growth don't be think we XX% we've rent in Well, market prognosticate seen, date. probably we've but

we year-over-year or XX% about market think we disclosed, I rent saw growth. XX%

page more of gives trending. that things an So maybe

Howard Schwimmer

but is rank been Yeah. growth Craig, pace albeit going the brokerage lately. the is what's and that that Howard. minute at growth, still And, a strong little still the but plenty it's every community out when a conservatively outperforming as there's the an We're hi, projecting of we have on this you feels the in market same not there. day. grow maybe reforecast at one Market rent however, obviously Michael at, it's still slower described ground, portfolio bit example of ago look pace, rents happening we're to asset,

So the upside. to we ourselves may surprise

Craig Mailman

your just just but obviously on question cost It's. Craig's your sort basis the issuing term, portfolio, about longer the how yet in quick we're of given maybe just and something there's that a investors, of in a it. earnings, current significant also equity Michael like mark-to-market back, call. upside issuing on of the a that equity, you today do thinking current it and happy buying that very Mailman more five think But has about diluting stepping year

got the portfolio current that and your today, equity, that giving issuing equity XX% such mark robustness how in up balance which has knowing that some you're that you by future of so However, do it? has to market growth selling

Michael Frankel

the said word, today. you thanks think right and for I much Well, so joining us

see forget think growth recent in and that You our don't said word, incredible right that has all try the that opportunity do balance this the acquisition we in because activity years balance today. it's we to internal strike the I capitalizing in provided

forward. don't that -- going aren't position assets to And accretion frankly -- don't company buying that so, we're of deliver kind the not that

And so, that think we just question. an try it's balance strike I to and important

Craig Mailman

You and if you… Michael,

Howard Schwimmer

Michaels. going just comment add was to on top one I of

terms year, billion place, was mark-to-market, assets far market of those of so look the bought at $X.X there the product below in we XX%, about for rent in you If this

Craig Mailman

arguably year been we model, selling And rent So don't than that's grow, arguably the equity your you're up markets, it That's or five that the assets XX% vacancy very know at But given if XX all. the less current, portfolio, arguably low gains just you're more out banking know right? but look if with And in on, than on that's very, much obviously to on trade today. XX% year you've on Right. equity. goes you're, heavy that mark in you're far, our in the I but market XX. the buying diluting that market, in the

produce so returns. shareholder going you're you And wanna understand so I to that just balance that better continue that for

Michael Frankel

to only have I partially accretion. that of And some business, think our hold business. we questions drive those many relying important statement analysis indicative are if water, could on that I were other maybe we our think that so is and probably but run things mark-to-markets

repositioning yields in value rolling of that to might yield. market the We substantially add just drive have are what that excess

of on So than GAAP impacts activity and try term And is a again, it's that expect, we the a you these a accretive driving the way earlier term really might combination but this balance a, longer not frankly. by metric terms on it is impacts. things near in and of basis, to

again, and a that's that driving indicator. So, not

Craig Mailman

questions. Thanks for Right. the all taking

Operator

Our the Heck next with comes proceed question from line Wells Blaine Please with your question. of Fargo.

Blaine Heck

you starting with NOI are the comps are chunky known visibility same from to at we cash the move occupancy great you and the about think the year your Good to any little bit there continues how as up to think bought that I to just guys Great, that slowdown of can the year, of about in large, a guys you, this you store cadence second there. outs thanks. talk get XX.X% have whether half? guidance year in and here meaningful for out Laura, morning should but occupancy hit on start a year, tougher; midpoint on remainder be a date, on

Laura Clark

And is mentioned, second you as thanks us Blaine for to projected occupancy so today. much. thanks Yeah, our half. Yeah. the joining in decelerate Hey,

half end though XX.X the our basis units the very of up But average about we previously in you think be factors year. few full occupancy that for half at and I strong. about quarter, driven full increased to by continue a when visibility the we had It's year, there's that of today, the think XX.X% is, second on that. fundamentals that fact, have decline. we we this to quarter. the the we And driving into market It's occupancy important do are were very of At points projected vacate. occupancy guidance second are One to four sitting know levels. at

had at So of year. of this the the expectations this is that isn't, not our outside beginning we

projected XX%. those those leasing four is though, on Importantly units spreads about

half but second, say impact some the second the impact. obviously of a some in alone. comes to drive are occupancy creation, year it and December near-term that So value opportunity is second driving our I'd the the expirations downtime significant of for occupancy with us presents for XX%

have our those economic embedded uncertainty we more as overall the forecast think the into be to yeah, to certainty lastly, accordingly. as renewals our I units, on that fact the update So then we'll environment. And in guidance does is there continue

assumption of half for So, the in we feel year. second occupancy embedded we've the prudent a

Blaine Heck

owners or properties low changed of Switching that ownership year or volatility guys industrial fragmented you anything Do Howard, sell highlighted the make of into coming consistently willing the it be color. the their the your market helpful industrial? very we're or warehouses converted buildings you out or how ownership. that market this that in has Michael more to That's the over and level other to seeing less pandemic have private institutional would think with even could in is of the during Great.

Michael Frankel

had real the in we've growth very That years. we've kind next has generation of sell some past that ownership just transactions the in owners generational been aging at I'd our catalyst certainly Well, prices say seen and great success the in that and convincing has couple their to of been selling. interested shift private the in the estate largest

interest. would most changes, up values exactly have a we're the think sellers even seems value that thought are industrial from and people down. more in in ride a it bit change today of any It terms the getting we're enjoyed and people more seeing now to as, And far calls that bit, As in those moderating future those values a talking interested lot increases in growth slow selling. I of that continue never seems, that are of type those a of to more they put

We have transactions. a lot type discussions about of upright still

feeding cultivating, markets. that market model still terms hard of track the our relationships we the in in do those So, the in into business data the we seems and work to establishing be

Howard Schwimmer

in joining ownership we've the you you among all Michael, fragmented time for that just for did thank why on a add pursuing because so family decide base to described, been Blaine much who decade. they're partners And with today. It recall a sort into now, that interesting needs to is with respect to seller are property, a us And him, getting we thing. I people a of very different aging Why a increasingly for conversation recent in have and the I now this Rexford younger is said, increasingly this out they're you the I and over not think, time can the And that at asked group very marching and said, and time. fold of I long answer well, sell? I purchase, we've known our these a lot was, finally for point

like, had income just stepping deaths he we XX that into actually now family flow different and the family. cash level of several and they the this family could up. support and think through valuation, the securities I errors in and And the adequate investments said, replace of generations investment generating generate owners family, at to

now And opportunities market a some great And Howard's out. to the increasingly aging they're to going palpable these more so that catalyzing point, this in aging, a in owner fear in played with miss population. there's has of role out valuation the combination

on brokers And that so we're are and as well. capitalizing

to base. very respect So us interesting ownership for with that it's a time

XXXX, value As just I replete that creation square one mentioned in remarks, in base feet ownership Southern was among is opportunities. until is billion California that my with that prepared built before

creation for in sweet in the market spot of really us. that's the So value opportunity terms

Blaine Heck

a other me. labor, to Thanks. talk to materials? you other for the delays disruption problem reasons? zoning, and the there bit in refer Can the about in procuring color. That’s those great forwards? project chain delays supply one entitlement, you Are guidance construction guys related attributable are to that roll little Or mostly delays raw Last next

Howard Schwimmer

look a process contractors holding out all you because the escalating That cost there, I entitlement and substantially construction think for like up. they their time five happening longer what's and now then you seems and extra permits. of at them taking little know, moving are prices costs, are keep to cities as escalation it's days

adds So just it really up.

the got meetings, commission that unions are up planning a sudden. You've lot of all showing of a to

some You've a in that markets. moratoriums got of these of working lot through you're occasionally

doing those risks. different of lot lot built a from coming job We've good our really directions. we're a a But into it's projections. go mitigating forward really some that escalation in So of of of

the forward those some time land of opportunity or we're I of construction. our type A here, delays. commission degree of terms we're more frankly on the there a and terms I what We've team very in think new being think lot some escalations great cost lead we those marketplace terms our that's the of as we've in though, adjusted repositioning as components job projects, of taken approvals, and take those in approach available. literally of of any those doing timing building we've are and planning buying will Interestingly doing going bigger see of simple. really a It no is continue. materials increases conservative some the out experiencing well long as of our in projects doesn't obstacles described not

of Michael mark-to-market type develop, that that there's in opportunity the repositioning as and in base opportunities limited out, but a there's, huge So opportunity pointed supply. just product there's to has existing

Laura Clark

to I'll thing one add add I'll that. that. thing to one Blaine, Hey Yeah. Blaine,

out delays risk they're of, our all, job, think to shout well, I amazing wherever doing terms construction an just a of possible. In working and of really diligently reduce team, first development to

not of related not related -- to lease but got timing think point the, that's in all of terms delays So rates. phenomenal set in terms it's related to guidance, at important that to to erosion the so -- and that in we a not there, place one of we've our -- team saw in I out

X.X% we're continue and developments. quarters yields to market in rank that's at consistent point prior see us with within, around increases growth to some these rental continue costs helping lead rates We overcome and and construction our at in seeing on our our portfolio represents be of repositioning this

Blaine Heck

Great. Thanks everyone.

Operator

Berenberg. the from comes with question of next question. Our with Siversky Connor Please your line proceed

Connor Siversky

adding background, on of or other retention sequentially call. for much the Page Two delta the unforeseen how then footnote seeing to just it is that much wondering there. segment then an that maybe out I'm this from attributable how move repositioning me supplemental, quick was the on having ones and something nature. and of but of XX Thanks and previously, down in answers calculation, missed the rate the to from of apologies quarter, last if on was Hi your me the

Laura Clark

Actually for Connor move expected all calculation the wasn't prior driver. Really so us a over excludes was outs. so quarter repositioning, today. thanks retention joining retention our due lower then to Hey much that driver of and an the

not So leasing as we outs to drive continue in unexpected spreads. move no there

we had, new and two a lease a impacted That we weeks example good new an retention of vacate. square leasing spread. only leasing out rate, had XX% GAAP XX,XXX tenant XXX% a our we had spread with of really but one cash think executed downtime. I foot kind We of

on really impact So no impacted that occupancy, but reported. rate retention as

deal just excluded our with the for you retention that you in prior is would XX% one several So the to over XX% from which quarters. line retention, been that about if seeing quarter, what get we've

Connor Siversky

Got it.

pertains that for labor the a provider, more example. one from to much fuel exceedingly dynamics question, logistics of in And of an terms favorable abatement Okay. follow or up as costs market, just then are we in understanding of your kind seen earlier supply haven't but it

the any some they there much these get wouldn't such in able that point XX% point that afford is be So releasing spread your right a direction view? still squeezed very that or budgets of to sense from at is trending

Michael Frankel

like cost transportation the one, a rent drainage distribution their and of Connor, are forget than things is. a two things, tenant those typical much bigger Well, for that, cost, cost, percentage don't oriented fuel economics

actually securing locations expenses. on expense larger points the base, they're find so by the to these distribution able both and much And which oriented is the end to are transportation ports, efficiencies the closer that of

seeing continue any not answer growth. absorb rental they strong We're can the cannot. to indications rate So they that

that's the interesting the maybe is could were of PLs three favorable basically cases sort PL into price what rent. moving see it one market, some to whether throughout want different. consumer to that for raise with rack of more We was delivering to they earlier, of also that mentioned to services, of that or business because transformation historically materials where the cost elasticity from of is a lot if embracing unbelievable margin a and a and arbitraging much the more ability business And in and transparency profitable a add to million think items increasing because commodity. it's providing rent, charge very becoming item businesses they're chain. production, up pretty ability solutions. old in to of line their our I raw market value end a supply you chain, to level delivery, delve ranging had low They're space they're a they're such In end sort technology, three shipping, businesses very look to terms value to very to frankly. their experiencing, I Today space rack continue that as providing pay And you that

driven. somewhat very, So is that to helpful technology some is which us, very transformation

ability So any increasing we we're potential to pay these seeing a not rent. due indication reduction to really their rent in where see

Laura Clark

projections. every And last to X.X% good rent and one believe take number continue We've, from the for that signing to That's continued sign annual quarter ability those in that their X.X%. the add several peninsula for steps growth thinking average steps And push these rent I'll quarters. that about a they're think I for the we steps -- to higher. are the see annual Yeah. is embedded up business prior are leases in quarter rent that how last were has quarter. And to the I rent thing future indication and of steps up

to think how term it's able business. and increases a longer tenants and continuing of escalations indication viewing their those are we're to I push good So be

Michael Frankel

Laura, average. steps, the I quarter the the June a correct but me be think that on average rent full at which if I'm were end X.X% wrong, of

over even So the again, a pretty nice acceleration or quarterly average.

Connor Siversky

Got it.

there. That's you. color. helpful leave I'll it Okay. Thank

Operator

Vince Our Tibone your foresee question. Street. what next comes Please question of line from Green the

Vince Tibone

construction lost pricing of that in in additional on when good specifically you see, And was provide think color morning. [ph] the curious west around that West? market acquisition? current -- merge new the to today transaction, do some Could just pricing for Hi, the you on is reflective IU

Michael Frankel

progressed, join and even ability that Yeah, targeting the were Vince. work when buyers. other for had and some at thing And on later transaction. and and actively us They an fell a Hi stabilized were get to a the that not a we done no, they transaction the literally bit have several a they apart so around yield concern return and you initially a looked a We had they at hoop. little We Nice incredibly deal. back market, was said, placed tied didn't had thank buyer going sellers seller X% of actually This about it another the forgot months up you. having hang about Sure. as was us. interesting it higher just returns. to people's we at apparently and on, those over does

in a in being of some obviously achieve we we've And things. into to was you able looking perform the highest stabilized holdbacks off at there project, few few this a offsite know and the to And, a phone construction so returns. on transactions why price was, of we there finish opposed price some than so, was and ago. really so sellers point little less days X% agreed this bit work as projected vacancy and step which pieces occupied, other performance think call lot the the established up you. I of moving on We an brokers, it literally the was whether really for a to and I were would call with still can things able transaction work some and market Rexford in came XX% were the with some to it though, were had terms XX we're said, that There we to done a

that At So believe leasing of probably the higher remaining last little their and construction and we the and marketplace, completed that than that provide X% some bit transact bit bit of was achieved work of still transaction needed stabilize. able that's actually as to if the project we with we solution work that done a was actually today a to -- were would return needs well. was and going is that the in

bought And was quality, a there another not the so interesting, same -- days transaction a square clear on X.XX% but in I was $XXX this closed it's building. had building, just and in a rate, lease about it a at deal literally think This foot transaction referring $XXX which foot. place. and I'm foot, before five-year other We was it that the West we a XX cap a foot closed to XXX,XXX

transaction So, when bought what data you is look at, our is, to very compared attractive. at very, that, that we still point

Vince Tibone

Yeah. just switching market to you rent or more, little and for you mentioned, has for has a portfolio pretty minus across rather out growth or than average? that XX%. portfolio being jump are that consistent been or been submarket, your that any Has there plus or as a better really worse think gears color. year you One helpful date, That's been little your that. all bit, me, Thank in

Michael Frankel

portfolio, think they're West of all obviously XXX%. Empire performing standout in the almost incredibly Well, has Inland Empire been was more the we've the rates were increases the rent up XX.X% when about markets County you and rent that's in markets, well. been and up, really year-over-year, In the performing performing really, are the West. really the think dive all seen in of probably but been are Yeah. I well about growth these I into is But terms strong quarter-over-quarter some very well. quarter-over-quarter But Orange X% and our around West lowest LA just Inland markets growth. i.e. stats, still pretty

Operator

of question what line Please comes from with Our is. Baird. question Rodgers Robert proceed next your the W. Dave

Dave Rodgers

credit you credit Yeah, on, on that all details something and up me for you want so around thanks system to have started of vague, historical you this and for government everybody. the that the credit feel but all financial kind profile investors, the we Do and of us early information and people kind do all can that with of far, that how the you you your went a out it's of great so kind should about target. sense give kind details a have with morning for the just stimulus and notwithstanding good tenant the obviously side, be about profiling look detailed really some able a Thanks guys months, as one you XX global I crisis, is as you of that thinking where follow credit of supported strong kind the tenant appreciate from help you to are but think been acquisitions sophisticated credit last the forward, give fairly but be the greatly that as with us any guys or can Michael, that, that. there, tracks guys issue there that similar all guys around details out you've Jamie comfortable system you would elevate obviously that

Michael Frankel

go but finish It's a little Go ahead, up. Howard. bit I'll vague, ahead.

Howard Schwimmer

where you an Yeah, no, to X% or a jump credit and environment plenty market is let you want sub of for There's of tenants In you right? type you just focus, Laura extreme add comments in. vacancy going that a I'm whatever to this building. are pay willing couple have

extreme had quality. focus on past an the for years, credit tenant So, we've

has outperformance they've had a of of amongst it examples before on And we even or out competing team a of the space individual credit way overriding compared our finalists fact so literally back process interested that's them going in and on I gotten to side gone factor consider the terms we're and and and where an somebody credit a to on think in many tell one many, an would building, the rates. space. offers rental And of very to we've of can multiple always rigorous when been runs parties

to And the take to of in seriousness of continuing quality, portfolio. so about that's and really the our improve it in the we credit always terms our credit level

Michael Frankel

to little and And add your for just Dave, Thanks voice today. joining it's a hear bit, great us. I'll

you I Rexford read, far the aggregate investors think different. just objective, should last asset the how can that be over just find credit, in better industrial try at of market credit , Rexford just our separate to the not is years in and and the think investor's from I myself class, other the was, and myself XX tenant very industrial any and question the than look period shoes about credit in tenant any data best if Your put the

If rates. cash more by function, sector, our flows other any industry type you industrial look at of by the just of about diversity by than diverse tenant,

through pay terms you that authorities during they They in that to tenants, there to how performed rent cycles, the mentioned longer didn't and the they pandemic, don't the they told place. pandemic have and the the did you that data If our at rent. do? paid Well, that that's all was of look forget fact no stimulus and consumers in what

not of onto For most the the all that they why, locations, paid they rent. because And diverse essentially all purposes, financial pandemic source -- crisis, and businesses, space. because great it's for They I don't -- operate saw we and it's We overused to times practical they practical these all a locations if that but industry truly they that hard these this have didn't would during function hold have but just saw the the during literally phrase, these for or my their businesses mission-critical are, because tenants. our locations. time could by flow are of or cash these these of in like not have uncertain view,

for this than the crisis. believe have, is into We it financial so market can factors better positioned is again, substantially going that And period. best the credit was a of today and whole range the great you that

Dave Rodgers

That's on color the appreciate I Yeah. that. helpful.

continue great mark-to-market. embedded the will I No, supply, to new growth, thing Rexford focus that people one right. think great that's on

guys and appreciate something focus extra it. thought so So, to that's big given if you to I on some going the you're time and think focus

Michael Frankel

during And question. there important that are was data small research said, going first tenants. really to an And back that out I large was some started, it's remember more there oh, pandemic hit when papers No, there the to tenants than up. get no

tenants in strongest tenants the saw well. In incredibly we have and fact, your market perform And that California info etcetera. performed far Southern the spreads, the country these And growth, touch substantially in it's leasing then looked if Infill nobody pandemic, during our the box downturns, just by we can quite in you contrary, aggregate. big the at than prior better through data the FFO

So clearly tenant in the data infill has spoken the and indicates that there is just like nothing country. base this

Operator

next with your of question. question line Please [Operator comes from Mike Our Mueller the instructions] proceed JPMorgan. with

Mike Mueller

Yeah. Hi.

out to are You curiosity answered how those most other on the in compared things, expectations but yield of are or closed just so million on acquisitions the $XXX stabilized of quarter? works, past the next this what that

Howard Schwimmer

some opportunities finding to Mike. yields. in I'd anything we've we earlier typically disclose yields, some say stabilized mentioned are he transactions, we better Hi of, Michael's that Well increasing place don't right now until but, I really comments, with think closed increasing

finding succeeding LOIs more our have I think these the we've buying But year. them forward testament last team, at going attractive more more our ability doing very, us about that to And to well, and toward selective and we those And what I'll this it's point of so -- certainly are the and buy. playing we're transactions know those say time we've I and did capture very we So, we've opportunities and written opportunities. that is than though, point LOIs, at right think same really what we market written we some I now probably, in yields this

Laura Clark

for to joining it's I'll Hey today. that. add thanks us just Mike, Laura,

-- half we about the what focused earlier got of And if on buy. I either to what we've is yielding. balance the think we're really really at we is vacant of is look what low you or balance over of date talked year it

forward into when portfolio look we that's so a -- the balance And flow for a accretive and focus team. our into of cash that's acquisitions investment opportunities focus a bringing

Operator

turn question-and-answer the I'll reached end remarks. call have of now the over to back and And session, the management we for closing

Michael Frankel

Rexford forward months. we behalf everybody And we focus on about three in great team, the today you. for and to reconnecting summer, your Rexford. wish a look everybody of on Thank for entire thank want us we joining to And

Operator

And time. for this concludes lives today's conference your this and you disconnect participation. may Thank you your at

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