Rexford Industrial Realty (REXR) 20 Oct 222022 Q3 Earnings call transcript

Greetings. And welcome to the Rexford Industrial Realty Inc.

Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. reminder is a recorded. As Instructions] this being conference [Operator your pleasure It my introduce host, is now to Mr. Senior Relations and Chang, Capital Aric Vice Markets. President of Investor you. Thank

may You begin.

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

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

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

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

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

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

to will turn the Now, I call Michael. over

you, Thank well. Industrial We Eric, third our you for joining hope you, everyone, quarter are and Rexford thank call. XXXX earnings

our XX% we XX%. and a transaction and XX% increased record. sustained of and increased Rexford performance enabling FFO Laura Year-to-date, Compared operational leading then the strongest of activity, our FFO per over our to per sector an level will continuing XX% update quarter, discuss grew by FFO will core by by on I'd guidance. and FFO by by year-to-date performance. contributed we and core share financial perspective Howard share grew the prior performances like on From quarterly towards an remarks our my to one Following team. team acknowledging provide begin year

markets within due industrial historically at third the well supply California fundamentals, over imbalance future the Our continue expected occupancy infill remains of to infill and foreseeable a time. The to into strong high quarter, our is with Southern market demand during market strong XX%. markets land The historical supply demonstrate ongoing pace growth but developable rent levels. moderated and of to extraordinary above diminishing dearth persist

and Our to metrics demonstrate occupancy portfolio or robust full a landlords our continues near at operate market. leasing

team and over feet for X.X to drove million spreads quarter. reflecting accelerated basis, the activity a leasing also acceleration XX% volume Our cash of square XX% the extraordinary quarter. on of basis, GAAP a prior on Leasing

contractual the underscore to executed Our average. annual on the increased importance thoughtful economic during investments. indicators our of and team's rent Irrespective results, approach and increases to leases of extraordinary operations for our quarter broader today's X.X% geopolitics

and quarter, projects derives from and projected over investment our from upon growth redevelopment the of million growth, through well-positioned NOI remains acquisitions the based $XXX comes project may NOI within sheet, opportunities Rexford a million embedded to repositioning years. of since of two from the incremental on annual cash no growth to Rexford place steps. beginning embedded substantial with regard $XX external to months deliver or forward NOI shifts XX today's additional rents, our Looking next equal closed creative higher market third incremental to rolling result this growth incremental NOI NOI derives balance expiring million we an embedded to us our portfolio well-positioned our $XX and fortress acquisitions. $XX With low and opportunistically million to the rents further uncertainty. remains continue that like enables growth, assuming from of market next leases incremental contractual market and rent of leverage over in XX% capitalize

our from an tenant emanates infill also Southern exclusive position base. strong California focus on Our

infill array in operations the the a exceptionally industries, of have tenants our regional critical serving Our across the diverse proven world. an of to as be of largest one through to economy locations cycles that ranks

also believe tenants with base exceedingly factors most contribute are market dynamic space. operating industrial and the an available within be to what to scarce nation. These most stable infill Our the in strongest, tenant we

vacancy, over Finally, highly most call pursuit Southern differentiator, thanks driven model passion within the continued Rexford on Rexford California, to and to team barrier, quality the greatest creation the extraordinary Howard. unique I'm turn sought for together and happy Tremendous of nation's your our entire our with infill excellence. value that, business team represents market. after entrepreneurial by to executing of highest a the industrial lowest And

metrics, vacancy also average Thank low vacancy to on levels for across estimated Rexford's and for I applaud everyone cash to up portfolio space rents Based teams continued strength market net effective on our year. and X%. performance. of The Southern joining portfolio mark markets entire are over and by weighted you, California their was internal continue The you for basis. at XX% XX% Michael. thank a comparable is and infill basis quarter rent infill prior historically CBRE, markets on XX% the a market and increase our by for And now high According the our is today. evidenced to us growth. sustained thank strong

some we moderation the volume. in transaction market, have industrial seen Regarding acquisitions

performance. cap differentiated continue and proprietary to However, quality assets see our selectively rates focusing in to access to leverage market's by as modest accepted investment offers achieve closings multiple some market with in markets creative at our opportunities. term fundamentals reflection continue some record our on and quality, continue pricing most cap occurring the highest rates low levels market a despite as we X%, and rates. interest offers At Marketed Rexford, still recent expansion transactions rising of long

approximately building vacant of quarter, square unlevered $XXX XXX% Southern stabilized stabilized cost markets. yield our the activity on the total million, XX,XXX end, unlevered prime to we brings Class closed that of $X.X cost. year-to-date investments, and we $XX During X.X% quarter a in A industrial Subsequent where within completed also California projected X%. infill located on are of million yield foot on to to billion total we a aggregate generate industry, investments This of city projected in

we under or currently pipeline generate to over aggregate unlevered a addition, customary transactions accepted which total stabilized These on have of contract of are subject are to investment offer, investments projected In million of $XXX conditions. X.X%. prospective closing an deal

redevelopment repositioning to and Moving activity.

X.X% We within process have cost. XX billion investments months. projected of to expected aggregate start and yield on in are the redevelopment $X total projects an are to unlevered generate next These repositioning

in XXX,XXX where we XXX,XXX Submarket, total we a Mid building X.X% square the building County a and stabilize stabilized During return the quarter, LA projected last stabilized projects, two a foot repositioning return Both achieved on were Orange unlevered as a of square foot of where stabilized in as achieved points on projects total higher ahead of recently schedule yield County, basis XX.X%. XXX we cost quarter. about than and unlevered at cost

Our assets reflects thoughtful on capital date X.X% redevelopments point return $X of term repositioning yields fully is aggregate near basis stabilized allocation least investment. to stabilized approximate current unlevered plus projected of market combining billion and rents. yield year over acquisitions This billion an to premium XXX today's total market $X.X for at our generate a

results. to to call the hand over financial to pleased I'm our discuss Laura Now,

Thank you, Howard.

GAAP X.X% was exceeding Our Same expectations. a third and a for leasing Rexford produced on quarter spreads. cash quarter a X.X% property another outstanding the by NOI driven strong basis, basis team of results quarter our on growth extraordinary with

year leasing Record have executed guidance the We debt year-to-date initiatives full in expectations. of of consecutive on and drew FFO quarter, our tenant and seven spreads the are quarter, risen continue $X.XX. strong line to near our in performance leases leasing at our a internal dynamic to external third essentially year-to-date and XX% X.X% tenants. our property growth at operate steps occupancy on combined basis. core the with solid to and Annual of highlighting rent the over environment average credit in diverse to continue prior cash to a and zero, and same leasing Bad GAAP XX% per with of occupancy contribute the our with operating base. XX.X% growth embedded With is stability XX% reflecting in This outperformance. and basis share strength quarter spreads quarters

of Our allocation capital the result growth Rexford sector strategy. disciplined is leading

As generate long and investment our and is process on a assumption conservative cash maintaining selective while NAV highly to balance of focus the underwriting growth, flow extremely accretive term fortress also our investments commitment foundation sheet. that to unwavering are our

recognition to the of strategy. capital we the a During balance strength and BBB+ BAAX from receive our of allocation from sheet quarter, Moody's, and rating S&P upgrades

As range low and of a term times. was EBITDA XX, our and X.X X of net to X.X target long time September within debt sector

capital turning to Now, markets activities.

forward basis. sold common we quarter stock the of through ATM a million the During shares on third X.X

settled loan For a term average of to the May. year swap effective for and of in At million end, closed five proceeds. million of loan $XXX quarter In XX.X a fix transactions million shares rate in sales new and related $XXX interest in $XXX an executed with at X.X%. per closed ATM we at prior common associated an we XXXX with term option, net one million $XXX two stock $XX.XX million total extension year current These price on five expiring our July, share. that quarter swaps we

on proceeds on we including As total cash of of $X.X billion of full million had revolving availability remaining XX, settlement facility. $X a billion credit equity liquidity, of and for million September $XX $XXX hand,

provide Finally, update I'll of an guidance. full year our

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

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

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

our Both has We on and XXX to forward midpoint. package. increased to include cash detailing range property A basis, a X% approximately have at supplemental basis and to provided points same drivers NOI highlights the few XX% of roll X.XX% X.XX% growth a basis. GAAP guidance the on our a been revised

GAAP year growth include spreads leasing approximately spreads and approximately Assumption striving same cash of XX%. of XX% leasing full property

for than property property to is basis expense NOI point year. bad Our XX as the a guidance. Same prior contributing lower expectations, projected for zero to growth is of percent a full projection revenue same improvement debt now be

forward rent are our internal XX% effective on Looking we're approximately on growth. The a and embedded X.X% NOI a XXXX net basis, portfolio superior leases our growing. positioned is entire into cash XX% Annual for well on throughout steps and basis. exceptionally XXXX expiring mark-to-market

and representing $XXX are report. to are are we with million We yield of generate to our X.X% prepared concludes our and Operator? in questions. XXXX. fourth $XX approximately welcome This remarks We million NOI XXXX earnings of forward detailed look to your NOI nearly incremental unlevered XXXX, providing approximately that when These million XXXX. $XX of guidance expected compared quarter of aggregate projected stabilized and acquisitions an redevelopment contribute in repositioning to have stabilize year-to-date projects to XXXX expected projects now

you. Thank be At time, session. this and the Instructions]. conducting answer question will [Operator we

Our with question. coming first with question is Heck from Wells Fargo. line your Blaine of proceed the Please

out a can touch tenant Thank I creating also today. And Great. you there. hoping you the demand and any about And by bit morning your are little the tenants was could if across good maybe that differences in talk types you. demand industry. you're of submarket? then, portfolio most on size And noticing

today. tenants. Hi, us it's in of joining diverse vehicle demand, Blaine. We see today. demand of is It's represents prepared Michael. an really electric tenant terms base delivery The aerospace. great that It's significant from Thank instance, They're area. driven coming diverse incremental in you still food incredibly It's a a question. consumer so products, amazingly for industry. businesses much array e-commerce And the healthcare, for

think true attributes the and that's long-term characteristics one the of of market. I So,

related Yes. And any particular tenants think labor guess guess, an tenant to would you and seeing are impact how I other you on costs do the your those recession? profile in of a in the side portfolio? outsized that, from on and fare higher rates coin, I

the lease can for not fundamental paying we space. I about any base. rates increased We're need mean, think, really they're for seeing terms the space from lot tenant of for that direct I talk impacts costs the tenants the in the a

learned clouds locking we tenant we're are surprising from fared of for we think sort their is, tenants base the instance, naturally. spreads, the that more early experienced we these in, was financial elasticity you far and see continues great strongly when anticipated, the where the rent. dark I somewhat crisis, bumps XXXX. And substantial operations to economy in to pay And concerned locations pretty As interesting could counterintuitive. we of price during more of truly can the about continued, these In given the horizon, rental go ability that instance, our demonstrate the tenants. contractual for that I about were general the their market what somewhat on think leasing terms then what's was to what essential And than it and think we our to

tougher rates, that due they the they higher So et requires their understand speaking, cycle. these still business become believe generally locations. that And demand, a interest emerge to through also have But they they will businesses may inflation, cetera. business lower their as

are we've state was that again, paid result through saw the control their had they would rent. they And if seen of because They just essentially, We space. want all governments the lose sticky pandemic, they so, renew that the tenants. local, gave have tenancy they paid rent, through rent. our building their pay out options And And not lost to didn't their incredibly when cycles. to

et But can that to has is a demonstrated truly think go cycles the level I the marketplace. of base cycle, cetera. exceptional, differentiates tenant the XXXX through think resilience I So and that back cycles, through we

Thanks, Michael. from color. that's last helpful question. very my That's, gears Switching

You at were again this did rising point at quarter under the million of lower versus notice $XXX little million all despite were that second a recorded that contract but investments results. when amount of $XXX board, we're very quarter quarter across this capital cost we the you this seeing acquisitive, that

So, being I acquisitions conservative in more might guys the guys a if a you pull bit I'm of And make back? that's little future. with guess the in you signals what market wondering sign

it's Blaine, Thanks us for Hey, Laura. today. joining

about extremely how approach decisions. of make to deployment. important really selective cost capital an capital it's think take I We think to we

on on and on back, we take cost a successfully term our points And where how so, And of We executed focus growth, to model at think in our view our evaluate that we're opportunities the cash capital those and cost cycle basis model no Rexford about cost I not an were our is marketed of expertise. the flow accretive sit what when it's a capital. creative during of business market which rent selectively think And we reliant rent upon, to our built opportunities is important and the long and and on ability much really acquisition awesome development rent lightly market transactions business and than today. market and create growth, through way, a higher the on we really grew and drive long our of we growth, is little through NAV basis, capital, -- through look repositioning proprietary on growth. value, even of approach, in to experiencing times, Rexford face actually term by

our excess about So investments, acquisitions, includes if generate we a to yield, yields a are can look capital. in well when invest at repositioning projected redevelopment, today. have and we then holistic how think aggregate stabilized well approach capital allocation, X.X% XXXX that as you of And those as market and a is which we to

When you our consider are stabilized yields. it's stabilized yields. initial to look behind stabilized yields, the these think at also assumptions I important these

initial And quarter, the annual about embedded returns growth yields. exceed will long rents when and leases the you the that's this embedded by these average driven far And today, that's our annual the stabilized term is think annual those X.X%. in So, leases. embedded, that

year-to-date outpace market So also fundamentals. And that's initial But continue to of yields. to our within million, compares yields targets, see think relative said, cognizant million. mentioned, that yields stabilized this continuing future. at the to $XXX And of of our further I our I secondly, projecting the we're grow be to growth you yield as remain mean, as conservative considerably to capital. X.X%. and those And in will you X.X% projected to contributing underwriting cost stabilized that contribute we assumptions yields the $XXX of that And above you can

the focused capital allocation extremely over drive on we accretive term. that So value shareholder long

Very helpful, all. Laura. you Thank

you. Thank

next is your Bonnel proceed Bank question. Our with of Camille question Please from coming America. with

read this the see top Is the was majority lease the one lease of of tenants Hi. expiring a who Hi, square question. nearly here, I my what's for any is LA, $XX given per lease? everyone. ABR year. Thank of mark-to-market the early space be will on space, taking opportunity there county And next you your foot? to

This Howard. your that play probability that we the yet. we actually has bought Nice They come is an high acquisition was a in exercise do have the not for hear planned voice. that period a to Hi That there's Camille. redevelopment. renew recent but County will have space. that And into option,

as in outcome perfectly a very prepared we how do we're frankly, they the getting of and that would execute renew, And well. accretive So fine terms redevelopment. if be would on

this looks And XXXX majority other and redevelopment color. falling next were year. projects reflection Is that decision start this Thank down to macro the you Or one are of out for factors backdrop? starts? it slightly pushed to the the the project my into the were a next as of were is any these supposed delay a is, question there driving like starts quarter

Camille, again. it's Howard

of for our projecting with waiting of we And back delays just A of them in on move actually permitting And people cities I these as added work projects, them working entitlement push have can. to just cities risk, through hard we getting these is as their challenges offices, upfront. accurately it's looking to think these we And, remotely. We're still we not months municipalities. greatest and one forward at more about the can aren't just that trouble permits. process. a it's and and the lot frankly, months

and get seen why bit a there. pushed that's things here so And you've

Okay. you for my taking Thank question.

you. Thank

question question. comes with proceed Baird. Rodgers Dave from Please next Our your with

But in heard grow don't from recognizing about quarter. you is what's the moderation rent your consistent about ask just growth? I pushback a that I'm one tenant and comments of think third Obviously, growth, I strong prepared of to out trees sky Are had kind push in Yes. there. to you wanted how the the just tenants, driving made back about forever. thinner things rent what something the given Good remarks morning are? macro your I on group? curious some driving there broader getting of still the Is comments

us seeing hear tenants. much Its think great Yes, Dave. your the from we're don't I It's think, so what strength voice. thanks I to for Hey, is continued joining Michael. today,

to up period period I that think we was extreme not we're expected just the recently growth sustainable. rent never frankly, over very until it experiencing continue,

want say are concerns that we it's So, of think economy. see probably to obviously, for to say is same literally general opportunities of if the seeing outbidding of space. side a not moderation, lot driver our the to we're slight extreme spaces. I level quite on there of that other what a It's not But on frenzied you continue significant the one hard our most activity probably tenants each

of So and in of pace it's just little lot above demand debt in activity out reversion the I levels of a still we et a that that low earlier historical cetera of and extreme velocity. a of terms year. well downtime, saw tenant But it's frenzied pricing bit think

our consecutive it last year. bonds quarters. rent to past seven when number add contractual rent to year-to-date is X.X% we're Dave. executing XX%, at also strong that, annual still rent I which I'll has compares you I of think continued look our And at that Yes. growth growth. the That to mean, X.X%, And increase portfolio for within leases we've seen the that X.X% increased actually, market that extremely and on

because So, pricing strong the demand. have market, the power we do continue in to of

do longer more yields? here Or the more term, risk, yield yield, year to that terms anticipate little of stabilized in in - have a rollover that's And on risk Laura, In do X.X% near versus sorry, more you a bit in near just term? the for you just development or question more by acquisition the of taking maybe do term I'm then kind of of to on X.X% your maybe that. all your do buying taking view earlier vacancy risk kind or to you necessary? Thanks date. not portfolio those the answer about with that think margins getting follow-up your But

May Laura. on help you I that one

on. Oh, sorry. go Howard, Yes,

Yes.

So on Dave, physical we're highly in value. right the focused We're opportunities the focused on marketplace. very

we our taking we're said, mind that stabilize lower I in that's very we're highly yields And little go And how think see right going about little substantially sometimes asset are we bit indicative yield if capital. now the accretive. more we to we're cost how the approach an a that yield, you that aware don't at a of as thinking But higher forward. a to pipeline of market

I ahead Go am sorry. Laura.

Yes, certainly we're add I that. mean, risky I taking Michael. Sorry to think not just I'll on Dave, more that deals.

business proprietary upon market function and really and of through acquisition Rexford it's And built think approach and a I model was how value it's built. redevelopment. above over our the repositioning our creating yields

reflected, that's cost Rexford go and indication you account and look yields that funding. interesting this the represent spreads takes alpha it's years, And our And past per which the what, a that call we've is it's historically. that really of as share and market above our those yields. been great into what stabilized Rexford five that at doing you over alpha, growth current think I Rexford And if because, is And of yields So, really strategy. earnings over back been the [ph]. market to ability healthy to differentiates like generate we

XX%. our entire time has period the years, peer And over that five three even Rexford has past So, for market has compared CAGR to CAGR alpha growth years, well. over I per reflects been that FFO of the group. three-year average share been been the is of X% CAGR. And exceedingly XX% more the to annually, past at indicative XX%, the performing peer compares think industrial earnings the FFO the the and our And that obviously

Rexford to and a of value. I create ability expansion alpha our And so, outsized continued think that that represents

those our market us more I function is of outsized yields, ability a X.X taking So risks. and of not return think a to create on the above function outsized, certainly generate

everyone. Thanks,

you. Thank

your question Citi. next Mailman with from with Pleased is proceed coming Our question. Craig

taking follow prepared question. spot just the Appreciate in yield. the to are But the the least not XX on moving, market, the I in to basis market that wanted guys Earlier stabilized follow-up everyone. transaction you're up you made really want valuations on cap rate remarks, commentary but [Indiscernible]. discussion, discussion? getting the points at Hi call the improvement

So of of there. the Number of questions couple relative a rates So, what's going of kind get follow-up one, timeframe trying to for sense you of how the initial kind a just period? yield, in on given versus to initial be general much that? has delta cap capital of kind that? I'm what's your AFFO in cost dilution of may -- the stabilizing there rising the the And

Hi Craig. Yes. It's Howard.

and rates, expanded have obviously, marketplace. cap So, in the moderated

I'm to interest in just Before directly necessarily what seen we've doesn't question, rate is occur. movements your cap through increase lockstep rates follow the answering that prior point how cycles to out going

land that Southern generate it's as just constrained. cetera, markets all to perform in are the And the because well going et really the of as California, cap lot fundamentals not able differently opportunity specific, that right. creation or upside, to value on a really we're far than aware a in you're deal property, rates, depend of, tends

substantially having I at is higher to be term in that and up us obviously, the this repositioning limited require have cycle we're cap near or we if what we yield. buying creation, a going vacant X.X% achieving a than to something, look let's is, a So, we're lower something say, going rate with aggregate mean to value point current the moves the which us seen look yield. typically, you buy we'll portfolio buy We'll [Audio recently, stabilized the redevelopment property at yields as of a Gap]. And you've you repositioning know some

kind ask AFFO to neutral, you capital? your of dilutive, about another is, the maybe mean, I accretive against think to impact, And how are this cost we should XXXX going be So, that? X.X it from way on of to

it's important joining Craig, talking Hey, terms I capital consider to us Yes, back allocation. about in today. what's aggregate how we of I for go Craig, Thanks was really Laura. to earlier what think

certainly allocating are -- entire think we we're how thinking our portfolio. we across so, And about capital

So those accretion it's acquisitions, our are redevelopments to to ability how across our value. add to our and not but contribute repositioning our just on going also and

which that we bucket So, when invest of the we about we're accretive cash investing, to are opportunities growth. looking want in that at we fact at, flow going we're certainly think kind to the drive in looking are

we on accretion. at opportunities into that's focused look as So making our we bringing focus. we're at we're the sure that very that opportunities, as what portfolio, driving And look

So, guess versus today I you to year, capital your another earlier last of to of cost way it return the required ask maybe this underwriting year, underwriting guys your is, was as what late were given kind with XXX cost rates cost to how underwriting up, of does to through perspective, that ultimately equity up because a to return the cap your basis points, of debt are kind just from flow of model rate. required about IRR

capital prices [ph] the you acquisitions deployment, you remains about than that is relationship versus return think we as So just between think think of priced guys even you expensive, then the how side today, of guys developed equity head acquisition guys as getting to development how a where your rep point, into incremental burn off understand the about also solid you kind more equity you on fund about And the and as layered how is the trying to XXXX, the of how is stock also debt side, right? more much attractive required expensive?

that our mean, Craig, to of significantly and a basis, we're seeing goes pipeline. in how I Yes we current even We and are, still over selective selective, on announced you're the more but it in pipeline going be just reposition, relative significant, I our not opportunities selective, to continue to back million, think opportunities about those focused not bringing than to terms in sure to there's that's year. very in we've was that but the be are making accretive NAV. less the because available market, pipeline in There's talked flow of we're as on earlier And cash this chosen we certainly opportunities available. $XXX

that And that stabilized think basket of And to that in required we've can X.X% certainly moved return within our those up. about see yields we're so, hurdles, when aggregate you acquisitions. you underwriting

though, how So think continue I that, what's obviously, capital how going we those to that and allocate we're fund opportunities. and important the, we that to and and that's really selective, be fund I fund how we how think is we

So we of it to a would be acquisitions safe in to level XXXX? XXXX should expect say, similar not

we that don't into that Currently, to function we give those said, Craig, NAV it If forward fund acquisitions we XXXX. going guidance. have could we set. bring cost of our acquisition something based opportunity it's we us. being acquisition the capital. on give attractive to can on the give and really, But really We are aren't cash an mean don't accretive long to and So in going be to That's that I that driving a opportunity term guidance. basis be of flow accretion

it's depends us, in the of going continue selective. be set all to we're front and on to So opportunity

Great. Thank you.

Thank you.

Mike is your question. with coming Our question next from proceed with Mueller JPMorgan. Please

rates go stabilized market because guess threes or generally substantially I are is, that being presentation to just Hi. trying forward that on rents you mid private still in compare is your question asking, and talked seemingly to And that expectation at mid on rents the comments, guess cap Yes. market And market? about yield the are I the that pull? in threes. X% below just that

Hi, Howard. to voice. Mike. Nice your hear It's

Yes.

I But that them. yields left have did them on Those they in some Yes. term they also. have was mentioning, did mark-the-market interestingly,

available perhaps space. market. just mentioned most land our of than here. how look bit any really current a dearth looking strength expand about of just others, and around it different you at And as the markets that we to we testament countless the And through of So, have impossible have nearly this We've base markets the a times cycle. all don't we supply quality people today, and to in more infill looked our

people through rent so, proven And stronger willing which in take lower yield. still has expect Southern California, and a growth to been cycles, they're

asset as of to of But the seen Now, not that term. not rates the institutional. that are going you've comments does say mentioned as we've some in interest most stabilized, stabilized really those in changes in I'm same really where are that yes, rates a have cap by impacted is near more increase [ph]. prior buyers They fully micro and

stronger look would ability at So see a you the bit higher those do that to deals if restabilize you in return. have of a not a movement to were comparatively,

it. Got

Okay.

upside in threes implied market, there's So and some in is basically mid are at rents that there. not

stabilized but, or Yes, at I market still number. X% occurring X rates deals seen but we've describing sub and still was that that around

Got it.

Okay. That was it. you. Thank you. Thank Operator

Lucas next Chris with One Capital with proceed Our your is question. Securities. coming question from Please

Hey, good there. morning out

of the this audience I ones. quick of Is conversation given the I all, macro the relates guess, last -- two say is XXX having about sort to if change with potential it What's -- that that think the sellers? in the shifted when XX, is you're Just days, conversations how the target expectations? oh, question. over at Howard,

growth. have Yes. It's that dramatically, we of growth. increasing upsize to some interesting. because Values rent theoretically But strong have rent values been because still grow, still room have

people conversations, that bit and But yes, and growth. wants do shooting lot like a Now was able market saw we interest But bit we yes, able assets low actually really do somebody numbers of their the those rates, moon not some reliant that favorable. different, create have we're course, that rents of obviously, looks We're that able we are able that to the buy And quarter rent a moderated market conversation, a even with work think sell with growth past over it'sXX% or to past a assets number different. opportunities quite rent annualized still sellers had that the still for most moved those where the have and in sequential Rents, on industrial they're a the dreamed at it never worth. couple at conversations these of to are their was with growth, growth. that's the transact asset over a to years. rent still very yield quite they're even to value, substantially to still and

in people a conversations. are lot So of to continuing engage those

buyer affording pursue, pricing incremental example, that in we're where level that at And to Hey, where instances the And instances able in just other of have close, And bit you're chosen been drive very very is had brand the either back and none. seeing higher to we might we're like are a or a not is through of Rexford, months, of coming re-enter coming increase they like and we any point that we're sale that processes those to that to flavor incurring buyers Chris, Rexford. Rexford process and because are to the lightly the some a capture or to off coming that their we it's capture the give they're seeing us. gotten come and you we're where or to had in able a And us. where last of running coming Michael, little have few they we've back Rexford been those risk performing. are add without buyer to those thank exciting hearing we previously, for actually going joining In a tremendous Rexford us to even reliable, now. to only better not market. right not those have market processes and opportunities earlier able they're going to basis, extra we're I'd you pipeline. penetration market buyers second in on because it's a sellers They're shift to than marketed the sellers to elected an know that where where from yields particular pricing away transactions couple seen to had from for we to what to again they Laura's substantially the for because kind opportunity just

have to market a all? at I or opportunity using not on refinancing people more guess follow-up, because Are up? to They come they issue just you it that. based a rates, maybe to higher seeing as the now relates Great, you specific And coming maybe have thank willing a for opportunity. was Is changed is of --- because leverage. sort really becoming or guys in you didn't of the the buyer case more a that component prominent for through the that go deal of a the that

the market all constantly could at know, Rexford like that drives this of That's sort as is certainly research activity market in at one point a pursue off we you cycle. dynamics that originations point our that the And well. for aggressively or of potentially that and to owner be not market perform where able the looking can is for competition leading for catalysts sell as meet opportunities or in the more buyer to want favorable this

So driver opportunities that is incremental of today. a certainly

be than a Okay. a maybe -- mentioned a reminder you expectations of to structure growth gross triple sort kind and lease what's less of differently of just as point? exposure. gross and -- of And for should the expense between was your to give question just you earlier, in sort Laura breakdown expense last how lease sort structure the spread expense Are growth of me to can we but growth as on thinking industrial already relates me net modified some and going curious just forward? sort little there what about at between structures expected, this are your it or

come thanks Chris, Yes, in. you expense for Hey, guidance Yes. growth mentioned, to our as question. continued has the

about to the in points year, expenses the quarter, beginning impact our it's impact basis quarter to to increase expenses basis last [ph], point included declined of XXX this declined about year. for started the we XX that of basis As XX recoveries full net point

that original tax our really And growth, that's had projection. by expenses, the and property around lower associated bond of One immediately. lower the driven half we drivers non-recoverable city continued industry, a of then, also associated to scale, costs as of team of eliminated about a tax overhead a of lower economies we've and The result is protected related operating realize really really, focus and this that expense areas. as year. and So, And was efficiencies property couple as that of But repaid improvement. expenses. was a the overhead tax But with our allocation innovation. decrease increased on and reminder, drove to timing able of growth, hiring labor the increasing allocation, to we've been

the your or of so then question gross about our net around minimal about that about gross leasing terms and are In X%. pretty leases lease with triple is of and structure, are XX% modified XX% remaining

that. Appreciate Great, thank it. you for

[Operator Thank Instructions]. you.

Our of questions. your with with Jamie is Wells line proceed Please coming next question from the Feldman Fargo.

my taking call. for Thanks Great.

get and earlier, this discussing were I it. on and we'd to your love Blaine thoughts So

up think your Now that landscape Prologis U.S. you competitive what do even the then markets? importantly is this big more a for on and industrial? too Duke know And the opportunities I is guess the a impact I has you merged, with overall, in play combined? little those different do investment what of does sandbox. But two in picture bit with open you think companies position? And actually it

us changed second the now to Hey, it's so great Rexford, It's Thank you your joining Jamie, much in country. largest the hear landscape. REIT certainly for again, become voice. the today. industrial

Prologis we rare. this been public And it's we exciting us an of since the our company head-to-head opportunities so will compete them. for or activity, acquisition number frankly, took Duke against And probably on do against we that the diminish path directly think in exceedingly rarely XXXX. And growth I competed either further

probably, acquisitions an from terribly but for nominally So, it's improvement us, material. not perspective,

Okay, you. great. Thank

additional no appears questions at It we have you. this Thank time.

So remarks. I'd closing like to additional for over turn any the floor to management back

we everybody in just forward well about for wish We joining three you to and thank reconnecting We look us. months. like to

gentlemen, lines thank for your Thank you. We your you at participation may and concludes this and you time. this disconnect Ladies teleconference. today's