Rexford Industrial Realty (REXR) 9 Feb 232022 Q4 Earnings call transcript

Greetings. Welcome to Rexford Industrial Realty, Incorporated Fourth Quarter and Full Year 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.

the Investor to Relations turn Vice Chang, now of President and will conference Aric over Senior I Capital Markets. you. Thank

begin. may You

We Rexford conference joining thank quarter you earnings XXXX Industrial’s call. fourth for

release In addition posted supplemental website Relations and package at yesterday Investor market presentation the on close, a in distributed investor section to we after rexfordindustrial.com. press the our

securities On statements as forward-looking questions may today’s contain call, management’s by remarks laws. federal and answers to your defined

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

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

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

such non-GAAP measures to and useful release financial package investors. earnings reconciliation supplemental why and GAAP are Our on present an explanation

by remarks, for the call Officer, Chief with Rexford Co-Chief Schwimmer; Executive and will then Financial prepared open and conference we Frankel is call make Industrial’s Officers, Howard your Michael Today’s questions. some together They Laura Clark. hosted will

I Now, over Michael. to the turn call

Aric. will and you, investment quarter everyone begin to will I introduction. to I’d financial our Laura, a welcome XXXX. fourth brief call. earnings by who followed will with discuss XXXX activity Howard guidance Rexford our for discuss results Industrial’s like Thank

California. as reflect results our Southern our value nation’s strong by Our U.S.-focused unique the REIT creating pure-play infill within driven position industrial largest entrepreneurial to approach

the year growth, XX%. We all other XX% enabled by average driven of by XX% growth our full REITs, increased grew compared our per repositionings lease-up three the earnings share accretive value-add years of full averaged Rexford earnings by internal by XXXX, a the For over and external to XX%, year in FFO This per which the core exceeding or growth increase substantially earnings strong consolidated brings FFO. NOI prior XX%, growth. prior to share industrial

a lease a square cash We basis and feet completed year, on on XX% of XX% GAAP leasing spreads activity of the million basis. during X.X achieving

Our the off-market $X.X of billion of return enabling team for acquired record through lightly investment. closed or transactions, projected investments XX% thereby year, on were above-market full marketed on a which substantially

potential face year, to level uncertainty economic see we a continue tenant strong Although demand. higher we of this

California about structural market operating well vacancy above infill and X% in at Southern any highest market of rent year-over-year growth occupancy with full are markets the the Our major industrial nation. of market

that experience continues imbalance Southern Infill supply. in a of due levels. incurable material new increase markets industrial many scarcity to experiencing major stark extreme supply, demand In constraints increased California reaching new to other prevent supply virtually land are and record an any development contrast,

Looking forward, next Rexford contribution is rents embedded further exceptionally further incremental acquisitions $XXX months million NOI assuming the internal XX%, growth. NOI today’s of an to XX without no of well-positioned and assuming with growth market equal over

investments closed our incremental embedded million million on $XX two mark-to-market $XX NOI This XX projected driven months during from of and includes by incremental redevelopment of the incremental NOI and year-to-date. our rent stabilizing million fourth next over NOI over and leases contractual projects annual recent of the next $XX and years repositioning quarter the plus the steps from

growth during highly with We to with a company external continue net accretive low the value. also the dual internal achieves enterprise positioning continue balance capitalize sheet operate and our opportunities. to outcomes debt to at total about protecting XX% This business to while economic upon leverage associated times uncertain

per represents among share, industry. which share XX%, announce REIT over increase, Rexford in of the averages the Thanks to the our $X.XX hard prior a first highest growth With to per five-year are team, which our to in quarter year. ranks increase XX% increase dividend the this pleased work we an dividend the

deeply business. our team. our the is primary else, differentiate dedication great our that people and to acknowledge your quality continue creativity all determinant of success and Team future Rexford We that entrepreneurial we of collaborative work, extraordinary thank for the Above our

pleasure And my hand call now it is the Howard. to over to

team acknowledge you, I excellent for their Thank thank Rexford want XXXX our Michael. achievements. also to and

increased net operating we and our strong portfolio for continue on and metrics, on occupancy. we vacant historically activity entire Our a have is see low of tenant XX% XX% levels mark-to-market indication, stabilized XX% of By weighted of at cash for diversity portfolio Based in a XXXX. current available is of our over portfolio XX% average on vacancy, a effective internal basis market the space And now basis. rents on way leasing demand. to our

to infill of Two billion upwards X.X% Orange end year of Commerce X.X this Valley Vernon, Bay, County nearly square comprising dynamics X.X%. feet is markets vacancy County, the market According decline infill of was Southern we vacancy submarkets, across rent market these unique LA current South our still California and activity, have largest Based submarkets, quarter. the San on to below saw for within Fernando other markets. at believe there including Many and Mid-Counties, growth CBRE, our Ventura XX% fourth vacancy X%. leasing our potential our and

With and see to cycles. transactions X% outsized regard cap as still are to markets to rent at economic market’s mid-X% marketed rates buyers growth in stability the our investment our range infill through trading drawn low market, we within the continue to consistent

off-market data-driven opportunities to proprietary focus our selective highly originate sourcing. that on acquisition through we continue acquisition We our efforts

XX% the off-market in total lightly square for of year, For marketed acres investments generate we investments sourced land X.X% an XX.X transactions full of unlevered of completed are feet through projected which, yield totaling these transactions. or million redevelopment, and across to billion stabilized near-term aggregate, on were X.X XX cost. $X.X of

X% quarter, end, fourth yield about of projected transactions aggregate unlevered annum. are rent of Subsequent which $XXX per generate growing we currently on generating the $XXX to acquisitions, an unlevered to to yield, which X.X% million an totaling stabilized investment. contractual regard we completed stabilized of two With total closed X.X% are initial million, increases through quarter

yield growing or are subject $XXX which have a million We of pipeline cost. to strategy continues million origination accretive under of contract XXX of conditions. X% closing offer, projected opportunities substantial $XXX with stabilized to to feet in customary opportunities are on growth aggregate initial identified Rexford’s transactions catalysts methods. pipeline acquisition prospective million total million of square investments unlevered X%, currently with a our over year-to-date, through These and proprietary off-market accepted an to closed investments near-term $XXX differentiated yield our highly generate tracked of enable

for regard investment $XXX.X of million an at repositioning yield, year, stabilized activity, the stabilized estimated we X.X% in aggregate $XXX totaling X and generating overall to million unlevered With full projects our redevelopment value creation. an

are $X.X redevelopment square million and process feet within months. projects representing to another the incremental start have market have no XX generate of rent on an and million assuming rents or X.X%, we investments of further of estimated $XXX an a creation, to repositioning addition, spend aggregate yield growth. X.X $XXX remaining total These in and value unlevered representing today’s In million projected expected cost of billion next

the Laura I’m call over results. to Now financial discuss turn our pleased to to

a Howard. for acknowledge Same of you, was cash team growth a our I GAAP XX.X% basis on first exceptional expectations. want that and NOI produced property quarter Thank incredible to the basis. who quarter year exceeded X.X% an on results another and remarkable

spreads basis XX.X% on For and a a the of a by and cash property was GAAP basis cash same GAAP on on growth X.X% full XX% and year, XXXX respectively. driven our basis, NOI XX% leasing record

Annual coupled quality full driven of X.X% market the base for high strong quarter rent at ago. compared points year our of our year XX.X% average at the credit guidance Strong end high tenant the Bad exceptionally percent continue reversals was steps of for embedded to and for at the levels vacancy demand our property XX same our to basis revenue X.X% diverse low quarter portfolio as full remain by tenant executed a occupancy reserves. of in debt at expectations. record in fourth with prior a resulted and leases XX% the approximately positive year, for

that prior our full solid if percentage accretive of XX fourth would’ve reversals growth approximately debt Note well This of quarter a for the below over year drove of and core basis excluded, been points FFO points. these historical per X% year. operating were the performance XX% XX investments basis revenue share average combined with even bad as

of dividend commitment to Board per increase Rexford delivering the over declared result $X.XX quarter year. continued XX% a superior return, prior shareholder of our our and first As total strong performance annualized share, this representing a

NAV Turning to process capital investment the capital sheet growth. markets, fortress and delivers and allocation accretive our and that highly a long-term balance flow strategy cash selective sheet near and balance includes

growth to Our of sources attractive to flexibility and low-leverage debt times fund future internal and access sheet opportunity. tremendous accretive provides with EBITDA at net balance to capital external X.X

to and XXXX, in the to In and of upgraded recognition Fitch balance S&P strength from growth of and BBB+ quality our we were Moody’s. from sheet our BaaX

markets end, We In shares capital $XXX the a offering through stock number investment to the transactions of forward executed total million public on sold activities. XX.X for fund million. a of and on a gross quarter approximately basis fourth we a common and quarter ATM subsequent combined proceeds of

comprised shares a XX $X.X XX.X billion million in net under of for $X of of sales associated stock proceeds availability million XX and a equity $XXX proceeds. with billion, forward on In total total common million of settled have of We of liquidity addition, net cash settlement, we full for hand million forward revolver. currently remaining

outlook. to XXXX our Moving

midpoint per a range prior the $X.XX X% guidance year. share, over $X.XX at FFO core Our be is increase the to projected to representing

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

cash include to the to our a spreads full property a our leasing GAAP projected provided few to basis. include spreads highlights supplemental XX% and same drivers growth of XX%. range cash to X.X% same leasing package. X.XX% to forward XX%, Components guidance XX% GAAP revised of detailing property basis NOI on XX.XX% of and A have of on in is growth We year be X.X% roll our a

XX.X% is of XX XX% is with debt be Average occupancy Year-end property for year to expected to projected occupancy be the year-end projected to is same be points. percent basis occupancy. and bad same XXXX as property line revenue to a XX%, in

Finally, NOI. approximately in projected of our year-to-date to acquisitions million incremental are completed contribute XXXX and $XX

This we questions. your remarks and concludes Operator? welcome now our prepared

Thank with first Instructions] Please proceed. you. Citigroup. [Operator Mailman from comes Craig Our question

the gives assumption you Seems out put guys operating noticed of I It in some raised there. of you market that there’s you the Hey, just to everyone. XX in the rent guys average? Laura, you that today, days? invest I the XX% Could if like comfort in differences gave you and portfolio. Maybe also a noticed you relative time from last assumption. the growth first that with seeing have the update mark-to-market in submarkets that the what you’re give guys sense

kind about Yes, of And that that market talk project market. in we’re I that thanks did generating your part of activity yes, we forecast. it’s seeing went factors growth is And Craig. question, answer the in XXXX. rent that current your around XX% for important the Hey, of think question. To approximately to the

went that So first, three forecast. factors really into

First the and year. is pickup is to recent current the exceed our market beginning and within the activity of portfolio. activity on expectations. since the pace in We’ve a seen our Year-to-date

XX% We have growth while a in activity trend, doesn’t saw rent market on certainly month X.X%. one vacant sequential January represent over spaces, of our a and we about of

into into ongoing really an wide and factor take The deep demand the really to do going continue our can within infill in with demand. and – that And dive – continue expect persistent forecast as very a second into lastly supply a and then forecast and and we diversity demand tenant we We Southern balance of to ongoing tenant our we that that outreach. research always California, markets. we regional conducted we see infill the is account is a very

the output XX%? all this vacancy kind that’s just that Maybe that and on that an commentary is of the there activity guys just space-by-space or you have helpful. a with That’s you mark-to-market buildup is giving on of

over outlook [ph] we so that we quarterly in ago. another mark-to-market our We we get week and – as done we We as our – up had the possible. in mark-to-market portfolio – portfolio We from days XX from a about the posted mark-to-market of that a ago. did current to order the XQ bottom a do basis. Yes, about state-by-state that did that

that our over And that certainly a rents what portfolio wanted remains really we looks on And like and within resurgence days. the last in rent the X.X% to growth to update XX strong growth of outlook days. So saw sequential be able seen an tenant demand that’s we’ve strong. the XX forward provide over last we market market

and – about with stabilized over your the of guys Could gate and the And of strong the yields the higher. of mean, just market. how it’s and get these the then you seems guys coming you leases Could of the much couple a deals guys months out pressure spot continue and into to pressure. turn these just – acquisition like talk at you all I kind perspective X% kind million. rates with you basis over XXX on seeing from not getting more last you are market are shorter-term as maybe seeing longer-term cap it other place are

viewpoints any just that So on be helpful? would

It’s Craig. we’re Hi, deals be in of seeing transactions. Sure. the place and Howard. to There’s capital marketed still over that the seem market. all Yes, chasing plenty transactions

an relationships even, here in in our instances. manner. I low mentioned at market those As remarks the research lightly do, marketed to is are the the prepared ability sub X% X% Rexford really off transact still [ph] in trading sauce secret or in and some But we

year, the transacted market. we off XX% For

to And that For relationship able for yield needs transaction seller find the trading you a to a million – off by there’s achieve instance, capitalize to of had pay to off Empire the we were that a mentioned that, And in feet a with we’re because building X% West. and do a We situations had just quickly. able they the those a quarter see earnings able X X%. close seller. actually disclosures, market. closing on and were typically Inland where relationships in well below on and the need need we XXX% And

at you more stock on topic we’ve of is Xs, in guys you you the to in look you but recently, the been the stabilized did probably should look to stabilized maybe over of equity, think issuing and average brought guys a are NAV, kind last X%. or I and – term I’ve given sort And But that know yield, hearing capital work to in yields that It’s over we that mid-Xs. mark-to-market you XX yield year you basis to so your one your you up mid-to-high sub issuing stabilize your stabilized yield talk we seven on the year deal the guys think how when maybe And Could your putting portfolio, is equity? guys long versus the to yield versus what that about long yield yield that about give against stabilized long-term FFO, on your at NAV an yields you’re guys term right? as put accretion how average period stabilized where accretive right?

I’ll jump Hey, here. Laura, Craig. It’s in

redevelopment market a it’s question think I stabilized a think healthy asset expertise. think Rexford differentiates about and strategy. we value current our that repositioning, they create – about, our of And kind is acquiring we think represent yields. when through that about I at through it’s how above business what our market we’re model, our you our over sourcing, certainly management, yields how about we acquisition think through And when great yields very that spread today, And about growth.

we’re when investing, investing so, goods. basket think we of And a about

we’re looking at value add opportunities. so, and And plus core

acquire redevelopment. our You’ve us as as core seen repositioning some assets well

those compares And has cash peer when you of that per if annually, over last group together, we’re five been growth. XX%. very years, look flow generating put And to and CAGR the our you share FFO the XX% significant

us growth. cash generate to allows flow model So, business our that outsized

or exclusive. And And diversify so external contribute NOI about overall investing risk profile NAV mutually growth, growth think our both and accretive when to internal we are and not

and of, X.X% that plus stock? unlevered kind in you of you capital are you term way better to hurdles? your Is that playing maybe the look a hitting your out guys that digit capital guys longer versus are over a that? of that getting in life yield guys a stabilized you single high well of gauge half that there bumps Just five excess thoughts cost Is around terms of that any on where is beyond have

question, Yes, a good really point. great think I Craig. a that’s And

And these powerful. we pretty a are quote rent yields point within leases stabilized are when steps these our yields, the in So stabilized embedded time.

we the the at look our embedded steps quarter was average X.X%. leases, of you in the executed within all fourth If that signed

was year full the XXXX, step the X.X%. For average rent

the and steps, stabilized yields grow those look when compounding those time. So over at embedded effect you the power of considerably

those So that annualized to stabilized through X.X% steps. X.X%, going X% grow X.X%, yield is rent

Okay. Great. Thank you.

question next Our Capital Markets. with proceed. is from BMO John Kim Please

year. just compared little Thank you. every spreads very it quarter and going wanted healthy But leasing the was it to fourth it to did historically. moderate to I a ask seems next continue about last your those couple bit like quarters, in that’s comparing where

comment So just I wondering was if dynamic? could that you on

John. Yes,

In leasing a leasing fourth quarter, a we maybe fixed continue spreads. spreads, that our renewal X% option lease had were In spreads impacted increase. leasing strong our extremely one terms to of at see by the

fixed that option on So lease had of XXX leasing basis our impact, about an had points. impact an spreads

that So, to look full lease, if with we’ve without in leasing and you at cash spreads what look GAAP are you for really leasing were spreads at year. that line the experienced

Are your when rent at in it that it I look is portfolio expiring lease XXXX? expiration of is like leases overall looks and than And there like the years. higher subsequent in any $XX in your schedule,

spreads we could So in and that you if and wondering XXXX acceleration potentially was discuss an could if of XXXX? I see lease

and in a on terms on XX% a basis. of XX% mark-to-market GAAP Yes, is cash our for basis XXXX

to XX% leasing cash XX% XX% XX%. Our guidance spreads GAAP incorporates to and leasing spreads of of

guidance that – incorporate those our don’t have if if of within of would incorporate But there lot these a were would of we there fixed if options, portfolio. options had that any anomalies we that. So any were

with we leasing at when spreads leasing the spreads. for you XX% ended cash look year XXXX, projected the So

is guidance range. our XXXX that is so guidance the within And within –

over that two on into mark-to-market in the in basis. we mark-to-market within XXXX really cash the XXXX experiencing for area look next, a forward call As years. the area terms the XXXX The and we’re it XX% is

Appreciate the color. Thank you.

you. Thank

with Our next Nate Paribas. question from BNP Please Crossett proceed. is

Hey, rates, to dispose the guys lot Historically, I don’t thanks Or high doing change question. that of funding Would ever I part right as funding calculus? one for think the guys earlier. sell first to pricing support would dispose, what into. it, like now the just clearly have taking more question related was asked consider but there’s of Maybe a cap you for guess? my done you

Hi, today. Dispositions Thanks the Rexford so capital recycle recycling the Nate. us we’re and question. part we capital dispositions. continuously for through Thanks And Michael. process much an and joining program. where opportunity for constantly to It’s assessing the are of ongoing have

doing but us a will a program. it’s Rexford give of volumes, selective in that, part see on and terms you’ll So be the of We don’t it basis. guidance certainly

the a helpful. the That’s of in-place in level the just the you few of Maybe Okay. kind of to was if speak number of bidders? walls Production rents Avenue could Maybe interest [ph] What mark-to-market just I’m property? on the curious was on What what were on that. there? kind acquisition. the

it’s Yes. Hi Howard. Nate,

at for was able a opportunity all, a It’s building very to not this able location Inland of a capture. West in us. quality First – we’re to cross-dock unique to this the we’re often in that buy yield that strong to Empire like a able be

for that And had. to capital had they part some timing and do other it to close needs the with urgency really seller’s on

put we was This there the As far leaseback. a as upside believe in was sale some rent is that place. rent, the in

the closing. was So negotiated rent at the

is some that. there in So upside

were but the other the and priority to buyer ability buyers, a for perform seller. tenant there timing As the far pool, were as and

that to able some not other seller. willing the there that are of but from perhaps – eyes may pay there more the have been were were So buyers certainly to

others And seller seller the our relationship We play on this the achieve to terms – comfortable ability [ph]. to of in asset. in with that have our into were a absence perhaps particular pricing better really came and than the perform maybe ability getting

helpful. That’s Okay.

for curious. the tenant So guys is top this I’m now? And you just

will yes. It be. be, will It

concentrations. I’m Is new already a an trying or going to it get just is a additive to top tenant it tenant? top be of sense to

Well, will cycle. reporting be next in tenant our the it top

it’s tenant our Yes. in And today. not tenant. a new It’s top list

sense. Okay. That makes

one they maybe other have this Just sale last do leasebacks on you? could question potential tenant with this. Does

assets are some course, Southern have focus other do other They of don’t markets. property California. They tenants. in We, in markets. national They on other have those

a do opportunities. their other the expand. for pursue also those there’s you that. There’s for generated They’re discussing some to them that they is capital but a and might we we are in here possibility be mode, when as growth a So and for possibility growth. build-to-suit able some construction sale The

I’ll it there. you. leave Okay. Thank

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

the follow-up your Hi, Laura, projected comments earlier I on growth. rent around wanted to

consideration, And as potential lowest any see As our on or conversation. you what to sensitivity a is the be XX% key analysis you underappreciated you example, could to that continues base the that like, the be run this for case, upside level seems growth from that? we see do Have in assuming think rent projection? of

thanks for your Camille, Yes, question.

a actually forecast perspective. put out haven’t sensitivity We – haven’t in of – from a terms we

something in not today. guidance the including we’re So that

important have rent guidance forecast that is And today growth mention included in that to the not our metric. we

embed more our include it’s guidance. don’t in rent our to So practice how growth prospective – to into acquisitions guidance. not The we

year. through realized, is market as accordingly our guidance the adjust we’ll rent growth So

typical That’s understanding you’re outlook within your past very the and factored expectations expiry what’s better to downtime impact the and that a And you commencement, seeing of get update for helpful. compares us your trying timing year? on been guidance this the on into and guidance, from lease how factored portfolio the to just of could occupancy into to recent

great a that’s Camille, question. Yes,

our So is be flat occupancy to projected year-over-year.

this year. of of XX% compares projecting the in the XX% same-property to That So XXXX. occupancy at be at we’re end XXXX to end

occupancy projected XX points to to average at XXXX. decline compared mid-point our basis about is But the

is occupancy commencement. downtime projection expiration the lease and and our around between time average lease that impacting being downtime, what’s So

Our XXXX downtime was low. abnormally

and with put tenant proactive out we Our very to move-outs in XXXX little then someone new downtime by we place, and a was move driven a downtime. in XX was where tenant able that days, were had and

new In downtime leasing our feet XXX,XXX XX than days of square fact, less XXXX. had of in over

forecast, into days, XX two prior of look downtime. That’s put we we’ve years. with really XXXX into experienced XX days that’s downtime we’re To three the about perspective, that as the as projecting averaged months in that So line in our well. so about

if pre-COVID back over to four months. look levels you So was and –

days in continues XX XXXX So within certainly of the reflect to demand market. strength our

other in I’ll expirations our towards of of note Actually latter about the thing are the quarter. our The that are fourth expirations is the skewed X/X half year.

So updates expirations, get we year. as more we’ll the we through visibility into certainly our XQ go three and as guidance provide to

Really portfolio. Or me, finally appreciate forward? operating different from the million all was this And deal? foot asset of we these shift is the dynamics color your moving very of property just onetime a larger towards typical there. for X the more expect industrial Should a acquisitions square within the

and Camille, we our It’s great a been I has very strategy shift think question. model important and it’s Hey business consistent. Michael. Rexford’s a And strategy. don’t And our in number one, expect

expect the communicate a I way or IPO, think or is even average, on – portfolios to or strategy back of going business be to even should medium-sized some model smaller single one that our our volume we acquiring high portfolios. you large us assets the and

timing. portfolios. time, they And larger to or expect in larger once buy are heavily while terms portfolios to us of marketed. assets should substantial larger and substantially a also the you harder time be larger to predict tend And assets from to in The also

tend fewer we those. why to of see that’s So

of our assets some share investment our orientation should to XX% And should and to investment expect of or see expect have however, to value-add that blend we’re of on high to there, one yields. able one activity should include the larger yield average, a core-plus And profiles be really targeting portfolios. through relatively side activity activity. on a XX% with And larger

more XX%, over often long-term time times And include a larger might most then include over the will transaction. stabilized assets, maybe XX%

we you to would about think encourage So the activity. that’s how

you questions. Thank taking for my

Belcher Please next question is Our proceed. Wells from with Jason Fargo.

there. Good morning, out

could about your noticing tenant of if the across across also or a in portfolio if which any types and submarkets. differences talk within demand industry. And you size your Just tenants bit could on creating wondering you’re And you if today. are little maybe demand most touch

it’s Jason, voice. Hi to your Yes. Howard. hear Nice

today, I user as such – it’s really, markets that amount see to from bit more and demand in from. group. that There’s groups a we industries demand business point different a think there it’s not But varied are emerging of our yes, really particular typical any usual. activity to one we’re

We’ve seen well. beverage incremental heightened as building apparel from some electric fashion e-commerce and demand users. devices and materials, from like construction medical food industries manufacturing, demand stable vehicle and and There’s

a industries think, earlier, related the resurgence furniture we’ve related past, we see some some housing seen we’ve after seen the We’ve in in I demand In some otherwise, But strong goods. mentioned to sales. Year. associated household New and really demand with declines activity very Laura, home-type diversified the and change with of other in to And still. as seen

breakout And land place? give contracts, that be or you great. contract can portion the color value-add you and the have the That’s under us this at just deals on the any I might point, between core then on that mean, you. Thank acquisitions on

Yes. that report in Yes. like don’t to advance is. mix We like on what – really

Of course, And we’ll quarter-to-quarter. XX% value-add, mix to report generally, the vary bucket. referenced over then with and stabilized the these or from the of on in that year closing things seems XX% core the Michael core about because course to out plus just XX% blend

strong approximately – when X% acquisition seeing see that initial continue Hey we’re Jason, on $XXX add stabilized I million I’ll that, pipeline to yields and to our pipeline, X% yield mean, at look you that yields.

impact And on guys how from Great. costs? can higher you’re share dealing Thank Anything what me. and construction you. seeing labor or that? then for with be might And you lastly you just kind mitigating of

there saw we Sure. interesting and basically the using construction we year, Last costs. we that to of occurred terms escalation different year. are modeling topic. down it during It’s our really, escalating think were of Costs in here in that an coming And XX% categories. XX% of in

for underwriting we Today, at see come escalation, to and XX% potential looking further. that we’re down

our in supplemental and expected redevelopment instance, So our on our all include escalation. projects repositioning the for cost, of

So projected continues be able quarter-to-quarter costs actually forward, of some we those lower in. escalation as to going that come may to

issues But lingering under-resourced. the there are typically, permitting. Cities main are out still

takes and labor, longer there’s than of permitting occasionally So expected available a lack workforce.

really, start to project, you once we because the in So timing. of getting project generally about point terms going track where we’re the it’s all a to be start on can

that, gear, such to advance about are the a materials and delays in where place And HVAC avoid switch as strong in buying program a to we’re make forth. roofing any so that lot sure we’ve got electrical of materials, needed

all to to So trim we’re mitigate costs I can the escalations think the see And we’ve delays some to we forth. starting and so done pleased really back. of and

Encouraging Thank very to you much. hear.

question next is Baird. Please Our with from proceed. Rodgers Dave

about Maybe, since out But good have a back for going are rent to I’m I pushing about you more of market the from year. tenants growth quarter maybe Wondering reacceleration Yes, Michael, reacceleration market they of and but the fourth you concessions? rent back leasing it, kind in for get flatlined. the of morning pushback LA growth rents, talked guess always there. really in Howard, the end on sure

and health far late any since the debt just bad experience tenant which sense can’t the really this higher having overall. is early portfolio outlook bad XXXX. health, get so you I’ll kind And is just tenant a for XXXX to up? Laura, the about where of when just in debt And better keep of question churn I or more talk with XXXX in want tenants last a downtime, kind function in of then I’m talking for throw

been demand, Yes. then in? Why start, can yes, really strong. Laura and I don’t jump as As Michael tenant far and it’s

our pleased. XX% mentioned earlier, that’s we as really for we space activity on We’re vacant available of – have occupancy. have And Laura

encouraging. very that’s So

a bit wait growth. there this longer, that happened. think In fourth terms concerned down, of a think, going hasn’t have so and little attitude – happened go I obviously let’s some to people, economy. But There’s still I rents They’re what’s wait-and-see and is about pause are probably were and rent little inflation. and what’s a maybe a was thinking, slowdown concerned the of we from rates. were happening, hearing concerned quarter, were that They interest the about in people they about

space to And they the resurgence that so up. hearing brokerage people the rates they think, they wait can’t are really, really are something community because do their that and have from is I needs, going about realizing

renewal that record fact, think a buildings that lease – We we vantage our represents end, signed – subsequent just in on market we rate triple In building XX in from And leased from micro just renewed we on near-term Bay. XXX,XXX at that fairly the $X.XX the rent a foot days. – substantive growth I a in were at to past a similar that South lease quarter net. about state-of-the-art

So encouraged see. what with we’re we very

are vacancy product is an look you when alternative you at of little And And and around the and getting typical maybe I’ll a of space other was to bit and market availability expectations. in rents in the when tenant of given that just the much X.X%. overall to just if have words, available talk question your look we we what we to tenants, market, tenant, in at add in of that sort anecdotally, terms pushback

And Rexford? into are the if were the submarket the to as best invest again, below compete that with our well, many our well say, most much and how begins actually vacant also to functional X%. thanks typically you of product locations to in look those submarkets actually repositioning activity. even largest mentioned market, we’re we the Howard of in Because, buildings But earlier, each of vacancy and in,

our that on of product with a less locational than the on and stated compete begins vacancy And basis. we believe average even functional market half to

that, So space difficult identify eventually new we rent rate, hear the but market, exceedingly for to they it’s them they same or in hey, tenants, to is that just look so the the come the the may like from order around to they may alternative in not typically. short which continue pretty refrain table back

of years. And than if on three our we what like of we’ve indication occurred is comment I’d is other average footage subleases fewest a Dave, XXXX the And and health look One percentage down past about subleasing. our was tenants over as marketplace. it’s lower it Yes. a very half number seen we during of the year. at overall portfolio, That the quarter, of sublease drill the the fourth in saw on in add, pre-COVID, then good of square the to in and

very, health track, the a is that we of very that in speaks So market. tenants to close indicator which the really

around tenant I’ll Dave, debt. then, of questions specifically take then around the health And bad and your downtime the and

mentioned, not of that very state. demand. we proactive of It’s of these was as downtime, of really had low we’re seeing of in where abnormally little anything some terms XXXX it’s because move-outs I In that directly related the in downtime to very, market more terms the in

of the think underwritten experienced at haven’t But considerably we and possible that with which, is continue. forecast we as were still in the than those in but XXXX is it’s mentioned could that XXXX we our And those earlier, line downtime pre-COVID about point, less of XX days, experiencing I months. that this when XXXX, four-plus downtime we’ve

health XX reversals, strength if base Obviously, our about a to our XXXX. compared and pre-COVID basis basis points. was points tenant of to the tenant, of incredible of XX the in stability. debt exclude Even reflected full terms our the basis we bad continues bad positive as year In average exhibit was in XX debt points

So we our given economic increase our there’s early still is on year, at certainly note not in there. But I list. out basis some an prudent point, of think, forecast in I’ll the we’re have this seen that XX uncertainty tenants that points watch

even you quarter as fact, basis was points of only revenue In in debt when XX a fourth prior bad percent reversals. year exclude the

say, of the health the I’d ever. base, So than is stronger tenant

Thanks everyone.

from is next Please Zheng [Operator proceed. with question Jessica Green Instructions] Our Street.

external tax property how your any Good could morning. city has impact in the and values your might in transfer new I view impact wondering was the strategy? whether on growth on it LA share if you

much your so thanks Jessica, Hey, question. for

at early a impact the it’s impact transfer in But not tax. know the little this think I transaction full the of too to material point, market. a on valuations seeing we’re

note rates. that to tax does the impact rental not Importantly

to could be So on potentially actually on accretive the impact acquisitions. our yields valuation

a owners. us long-term less as for modest have impactful impact it’s on IRR, your could it While

So – city and only applies for us is to our In as about our in well, XX% of of the our about LA. exposure of is a portfolio bit city limited portfolio, LA. only there. – the This tax

XXX within markets. infill municipalities referenced our Just – just I

in LA city acquisitions, city. XXXX at look of our So And acquisitions, you if those. billion XXXX our just the X% is one of only the was of in over about $X.X

and watch material track the impacts municipalities. impacts at to other continuing But we’re across impact. not potential seeing and So this a point, we’re

from much. very just you a question Thank And Great. me. second then

kind more We’re in you the what’s of at seeing overall quarter. fourth it to if warehouses view trend few volumes impact falling XX% import next your LA Beach all? any kind And the the the year-over-year that trickling through on Are just of could then tenant what markets seeing months? of this ports Long at and in container of in persists mean than the demand for SoCal

Jessica, for joining us Thanks today. Michael. Hey, it’s

than of is volume. driven a year and last volume I globally. a through the reflection manufacturing bottlenecks and of greater First on all, of record the effect by comparison record and way think last was volumes port And year, of shipping and XXXX principally chains all best X% year for flows supply terms about sort was level it impacts reduction second indication. of and of the by the primarily And as in against volumes actually, core which the in whipsawing rest the the of COVID

noise So market. of still the lot a there’s in

the the to globally some We’re degree. chains has COVID – full is still still whipsaw supply – throughout resolving itself

is seen I because our still our to the but tenant and focused on base, consumption. disproportionately regard quite part importantly, an robust, because we the maybe impact to reasons more actually tenant regional base, volumes with are also base described and And that the tenant really to truly impact haven’t in

over they And are otherwise. how the by are of consumption. so the really or in less fundamental terms the or ocean, driven is our And that demand they’re portfolio come concerned through within where and from our about tenants ports more they’re goods business consumer received, regional whether

we’ve seen And or from a we’ve even to decades and prior or the tenant had when even demand so change we’ve port due in whatever, port in years shutdowns base. seen labor prior slowdowns never

not coming of a the ports. In I saying, even oh, my us can’t needs to example think of because tenant – have changed an fact, even of gee, and

respect. that in fortunate very we’re think I So

Great. Helpful you. color. Thank

is from Mike Our JPMorgan. final with Please proceed. question Mueller

Yes, hi.

I Just headcount, few given next front? curious, trends guess, acquisition G&A pace just be how the continued on should the thinking the we about, over years

Mike, nice hear to you. Hey, from

also footage. you of within platform And think G&A, when expansion of an about relative that’s XXXX, realize we NOI XX%, terms our in operating economies square grew to we In by we saw scale our to continue XX% and growth. our portfolio

time, at synergies operating but same growth, the we’re significant at accelerated pace. So an realizing

X.X% revenue, XXXX, G&A in XXXX in of revenue, XX.X% when compares was G&A our as a percent from of look to So about down XXXX percent projecting that you XX.X% a at XXXX. we’re as and and

is do operating as focused expect nearly our that very So out, to our for downward through efficiencies find we built and team as well technology. fully the to trend continue on platform continuing as innovation is

Got it.

Thank you. Okay.

you. Thank

would our to to management for turn conference end session. the comments. the question-and-answer back reached have like of closing over I We

we and Directors, the forward We three company we behalf a everyone. reconnecting you great Board about of thank in Thanks, to joining our want and On day, of today. look wish entire to for months. everybody

conclude does This you. today’s Thank conference.

your disconnect your for may lines participation. at you thank and You this time