Rexford Industrial Realty (REXR) 20 Jul 232023 Q2 Earnings call transcript

Greetings. Welcome to Rexford Industrial Realty, Incorporated Second Quarter 2023 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 to turn Counsel. Lanzer, now will conference David over General I you. Thank

You may begin.

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

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

remarks answers your by questions Securities today’s Federal contain forward-looking On Laws. and call, may management’s defined to statements as

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

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

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

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

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

Michael. call the turn over I Now, to

welcome you, will discuss XXXX with Laura, Howard metrics. I’d introduction. Thank our David. will brief on operations, a everyone like followed focus call. to I who earnings by our second financial begin quarter Industrial’s Rexford will to

by quarter. quarter, acknowledging and increase year to team like an increase Rexford in exceptional XX% a I’d start quarterly earnings delivering over share which prior the for XX% a FFO included our in for FFO per

and external driven were results strategies. by value Industrial’s creation growth strong internal of Our all across Rexford

growth internal an maintained property XX%. From we of same average pool perspective, occupancy

with spreads XX% basis on of square basis. of and a million GAAP was occupancy feet leasing and positive square supported of achieved net activity cash high by absorption a XX% feet Our XXX,XXX on lease X.X record

grow our that and completed projected four perspective, weighted annual of on our embedded contribution, million to our growth stabilized annual the value-add of $X During years through team rent growing investments $XX.X million NOI reposition initial investments stabilized basis. of million the by are is estimated From million which a steps. as $XXX value-add average external are X% an team an to contributing properties incremental FFO over over X.X year-to-date generating annualized approximately estimated next quarter, $XX

key The performance maximizing our infill and the overall strength supply lower largely premium relative highest of include value. by on functionality superior entrepreneurial infill in three of our portfolios functional an which submarkets product, to lowest market is focus factors, of each approach driven locations ongoing comprised our demand to product categories older, and our our

our markets to that of at With the regard experience as seeing represented market infill also from expected, approaching strong XXX% pre-pandemic the growth terms regard the market. levels normalizing time extraordinary market occupancy some are growth occupancy With rent in compared pandemic. also very during market which we expected, torrid to levels, to during a conditions as exceeded Directionally is rent rents we are normalizing the our which pandemic, in seeing market achieved markets.

growth post-pandemic short-term our environment, submarket, product expect category and depending adjust volatility rent quality, on the the to market in very As markets some size. in we

over longer-term, to rent infill position underlying our medium the California favorable superior for time. in However, growth fundamentals Southern

to Just within superior as rent strongest demand drive the through pandemic. drove underlying fundamentals superior in the our growth Those underlying infill within Southern fundamentals market California markets. nation the same continue long-term

from demand to located in supply incurable continues by an the The lowest space. new market from driven of market California for benefit high nation, disruption industrial major infill Southern any the quality supply threat imbalance of well essentially

the population. for mission close providing on the nation’s regional their nation’s diverse tenant largest Additionally, critical and industrial we most to locations base serving requiring locations focus infill customers, largest

representing project well-positioned years. is XX% $XXX rents NOI rent in-place growth, and incremental embedded no within assuming today’s portfolio look the substantial we future our two NOI next in-place embedded forward, portfolio the internal over company growth we growth, As for million within our of

Our largest our about $XX to repositioning value-add over growth million contribute is of two projected which pipeline, the driver from next comes years. internal incremental NOI

of market and project recent as leases to In $XX we NOI $XX market incremental NOI and during incremental rents below quarter are higher roll expected million to generated investments quarter of the end million to addition, contribute we subsequent completed growth.

total strategy our a maintain the internal closing company at XX% company with the the execute position, leverage corridor enterprise sheet, against liquidity to capitalize to the uncertainty us growth to addition to In billion while operating positioning $X.X accretive of best-in-class upon economic net to balance favorable continues and external fortress-like, on to about affording ability protect value opportunities. our

our thank work apart. to team your business set we our dedication else, all continue great for and tremendous Above Rexford that

and turning the Rexford Monday value preceding remind see the NAREIT action. property to call Day in we’d team over memorable hosting Howard, like Before Investor this will informative, we the to both on that an will our opportunity tour Angeles investors be in the to We and November creation fun, Los and XX, our be promise Conference.

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

portfolio. and market joining quarter. Michael, outperform the demonstrating with our portfolio second us and Rexford Thank in to today. thank Southern high results finished continued the everyone overall sustained of strength to creating for strong value you, California quarter quality the industrial infill our entrepreneurial Rexford you, the second property approach

occupancy up prior ended the points basis the XX to property Our compared same quarter. quarter

This market basis the is market, to occupancy in which ended in CBRE infill and contrast point X.X% experienced XX with decrease according the quarter vacancy. a to overall

also XXX,XXX prior highly year we’ve rent our quarter. X% Rexford compared square market rent portfolio. to portfolio, comparable net product to the Our Rexford of quality to in our observed for market growth feet outperformance regard functional included absorption positive for growth With

market Rexford observed digit sequential rent high-single product growth this of functional the quality its approximately to extent the growth market to of well year, year-to-date bringing the In product, at growth would half rent mid we this growth second located the portfolio. For rent current X% year-over-year continues regard high for to X%. to imply analogous to pace,

in our XX% of a recently to on compared NOI is years on moderation embedded market in cash effective growth, a significant prior experienced to rent rent. net pandemic portfolio XX% growth of growth remarkable few future long-term driven even growth in-place a the mark-to-market basis basis projected without we’ve and the estimated any While contribute for

the projected years again market NOI embedded fact, zero over out In over two years, look over XX% we within growth portfolio four to XX% grows growth. assuming next our rent the in-place if next the

acquisitions. to Turning

These transactions to initial year-to-date closed million an investment of three on an million, are yield generating collectively stabilized During $XX bringing a the total total X% transactions projected end, over million. to approximately and two just of a closed quarter, and we quarter for cost. activity we of for $XX subsequent X% yield additional unlevered investments $XXX about

$XXX have total stabilized million imminent X% closing of a contract yield currently million transactions subject of we projected accepted conditions. which initial submarket and the forward, of or in with are transaction under cost. offer, to a customary $XXX yield Looking X.X% includes the on over Mid-Counties This unlevered closing a

point foot regard of Storage achieved to growth as our and redevelopment compared initiatives, square the quarter, stabilized an well Outdoor reforecast These to X.X%, made quarter. square our XXX,XXX a approximately stabilized aggregate With in projects projects last basis XXX,XXX outperformance we yield internal as representing unlevered a Industrial feet XX site. representing four repositioning

deliver We in total XX to next an to aggregate start redevelopments value-add within months, process value of or have the projected X.X unlevered $X.X million X.X%, creation. estimated of and are square feet yield repositioning representing over cost expected an which of on billion

portfolio million over next currently X projects we project If square feet substantial representing total creation. a years, look four our of value out in-place and redevelopment within repositioning projected over we of value-add the embedded

thank Finally, I’d to for Rexford like excellence our quarter. their acknowledge team this and continued

call Laura discuss results. that, financial with our And over pleased turn I’m to to to the

quarter. Howard. was quarter, capital our a basis on Same growth over core and performance the X% the basis. XX% a FFO In prior you, per second property Thank growth NOI on cash GAAP operating of strong XX% drove and share allocation accretive year

mark-to-market continue we convert growth. our embedded NAV NOI As and portfolio into to significant

incremental second as below we rates. to million $X.XX incremental alone, we rents rolled generated per the market of FFO $XX NOI growth quarter In share or of annualized market

portfolio net feet strong XXX,XXX activity, Our steps resiliency of experience quarter, the XX increase quarter evidencing our executed bringing second healthy portfolio our high and X.X%, leasing quality by positive the square increased spreads, tenant X.X% in to year our represented to demand of absorption of points to our total as continues markets to compared an leases steps basis a for annual rent contractual rent record ago.

rates we as market points The represents below portfolio is debt The conversion tenant mark-to-market the at XX basis rents base of market revenue with roll XX of approximately our basis historical higher in strong. also a bad to average as remains of of percentage points. in-place NOI below health substantial forecast future Year-to-date, our our growth. line

effective to $X.XX XX% million term portfolios mark-to-market share equal net our in-place estimated remaining growth of lease of weighted $XXX forward, basis nearly equates of Looking over a four contribution growth incremental about to FFO average NOI on years. or incremental XX% of per

include this on balance allocation and rent growth. rent not and a that asset capital value substantial Most to accretive with market and strategy drives any our executing investment sheet does net are regard per future importantly, we focus the today’s In assumes funding, on earnings share judicious growth.

was uniquely and current XXX in X.X billion. debt times to balance of fortress EBITDA the sheet net [ph], Our as environment positions liquidity was Rexford total $X.X

of October and XXXX. source approximately opportunities. the capital and XX.X a acquisitions spend a to selectively stabilized as accretive equity fund total on incremental as growth continue yield total external selling offering, which the projects used internal we Proceeds projected shares investments. remaining that have pipeline gross to in as fund million can be forward process repositioning will of a to we assets approximately by settled million proceeds, for our a In of $XXX be disposition a addition, well of $XXX end unlevered In redevelopment quarter, X.X% and executed prospective on evaluate of million

Turning to guidance.

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

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

of or discussed. closed range included transaction balance related guidance acquisitions our sheet guidance in acquisitions, Howard quarter imminent the including the activities updated further to Our dispositions No includes Mid-Counties are subsequent end range. closing

expected GAAP guidance is be X.X%. property growth is NOI to is same property same to to and property X.XX% for unchanged. to NOI XX.XX% growth Components NOI of expected Cash X.X% be our growth our include forecast same XXXX

the spreads XX% spreads year, For of year-end occupancy XX a to project same basis and of occupancy GAAP to XX%, average to points of property we as full XX.X% XX%, revenue and leasing XX% of XX% XX%. debt cash to around leasing bad of percent continue

transaction NOI incremental in Mid-Counties of $X since XXXX. including closing are closed million projected guidance to $XXX million the imminent the our Acquisitions of contribute approximately previous

as timing components outside equity And with issuance of lastly, with our pool. lease funding impact well up associated property the our same of guidance as the associated acquisition of includes

I to an of I your we carbon reporting, emissions published ESGi an the way impacts XXXX, we report, buildings. call differentiated value environmental, our innovative recently and we positive estimated for highlight ESG tons turn quantifying by XX,XXX approach governance societal the of vintage environmental Before substantial over our of example, questions, want By in took to strategies. created mitigating as transformed where urban

large We in by work. generated estimated robust driven and value through created an our We redevelopment through and local practices, accountability. $X governance governance value enduring cultivating reinvigorating communities transparency societal our billion of part

Our XXXX forward many maximize impacts exciting our our we achievements ESGi stakeholders. for path all and ESGi report outlines as

on pursuit of incredible continued special team. drives for and excellence to value success. innovation very Rexford creation Operator? future our thanks a Thank Finally, focus that your and Rexford’s you

Our Thank America. Bonnel Please Camille you. first of question is with proceed. Bank Instructions] from [Operator

quarter. during timing from this Hi, delayed last activity leasing pickup are good Was had like weeks you notable morning. you a into the the of pickup two decision interest in just July? or making It a in looks seeing

Hi Camille.

Michael. it’s Camille, ahead, Go Hi Howard.

start see end was sporadic see we We that nice to leasing pickup a I there Yes, and Yes, we great yes. did the some transactions of that toward think think your hear Nice stops to what you’re bit the and right. quite I did activity, spreads. some and voice. is some a some of

continue like sure not you Sorry, moderating demand we’re the this July market? trends or seeing the seeing in you hear me. into are so And that can if

anything Sorry, sure the not to post safe similar disclosed haven’t say to Camille. levels if that of but question, Yes, is heard quarter, demand. Howard continues the no, market but I’m again, we

tenants activity, leasing are teams trends, market some completing can the reportings, contrast lease provide the how retain around balance now to net absorption bit and Rexford The great. thoughts or downtime? That’s you you driving brokers what’s continue to more occupancy really offering concessions versus more a Okay. having your to with

the not, part But as maybe do just we seeing I of to are nominal. activity the of on as of quantify we fact the I’ll can the little And leasing help leasing touched see Michael. compared but what’s or they’re Laura, to to and leasing it’s that first you difference for the dramatic with continue with the we’re a key level why Rexford which of Rexford compared quality regard give number the Camille, activity on why again, sort prepared thanks color Yes, market. to level think and a remarks, that the concessions market of be the tenants has, portfolio our our factors terms one, in portfolio. it’s in several you with

is the to as southern model our every the product of that And submarket the most the if functional, Our mandate you our California. way we really property, we flows space. that acquire of in provide work well is located it not proactively our to make strategy, operate so and it most can as they’re business I every And in in metrics. that through we results company think to get the soon see and when aspect

who fully the real Rexford then Rexford. in unique to people strategy our – have we it’s driven not a it’s value by think the I real I And business acknowledge And estate, really we is at by think the driven that attributable estate. team team. the create

who of the different our not We’re estate other by very vast owned I entrepreneurial to it’s and as professionals. our approach in market private And real a owners compared are remember, think the very is to majority market. players market

So want a we little say create you advantage concessions? terms field of that we on creating we of playing the to terms in bit like that unfair driving leasing to in competitive Laura, an relative have touch do activity.

absolutely. your for Yes, Hi, Camille. question. Thanks

is concessions X.XX into the with concessions year we our will full our consistent still embedded be forecast. of terms and – That’s our for year, what’s anticipate months. quarter prior In forecast prior

up leases average of increase pick driven X.X was quarter continue In executed But this still average by they the you duration in about normalizing normal concessions quarter in concessions, still second but the looking X.XX years. to two levels. lease to that months a to the quarter terms than months we a healthy lower to saw longer compared – five concessions see prior of forward, that pre-pandemic years,

significant in to your investment just without I along. of platform you’ve pass space capacity Could G&A date, With to operating helpful. platform? is final And before That’s question increasing it your your your talk much in guidance. still activity a onboarded the amount left you to how

thanks question. Hi, Camille, your for

our We growth. especially within continue relative economies platform to still realize our operating economies our to within portfolio operating –

G&A. creates for about represents corresponding I you square two to notice as has our past the with the of quarters. think stayed no for feet G&A portfolio square that of – million our added footage X% that’s and we’ve expansion guidance you’ll probably X even that portfolio, of And flat the year-to-date a

we’ve through and And down that seeing continues realize in grow. you’re expect of G&A also the past percent as the the as a communicated as we’ll that synergies has operating as revenue continued as over do in come we – quarter So well. go to past, down our gone we

we’re excited team’s on So platform. and the operating innovation our all these their about hard through efficiencies in work realizing focus

you. Thank

Thank you, Camille.

Heck next proceed. with Please Our Fargo. Blaine is from Wells question

there. out morning Great, Good thanks.

you expected for and into think you of can and think your forecast remain headwinds in the year market digit off, updated those the decrease of and First between forecast next even the rest the just the initial single mid rent difference whether to place talk drivers upper XX% in are you year? and to expectations about were the what major

your so Blaine, Hi much question. thanks for

prior based forecast of XX% on was rent or range we at what certainly experiencing That time the XX.X%. our was and QX were was So our year-over-year projection. growth the prior in

So of comparable Rexford quarters X% performance, now full benefit growth year-over-year have for two quarter we is products. rent the second of our

mid high market is area, that pace current to in digit to things When that mid the a on we year-over-year at digit based growth, consider. into look single of rent area. the the think few single there’s So to I our XX% high of drivers trending growth

in that one to think the and that while we’ve some rent and I markets, sell necessarily XXX% strong today, persists and expect normalization won’t that outperformance market that our number as linear. is that led fundamentals discussed we accelerate we that over growth we see would would normalization be

feel So though, our at fundamentals of great the about day market. we end of continue to the the

virtually The incurable our and by our portfolio and demand to high the and strong, locations continues of year-to-date. that’s the that imbalance markets supply. quality, from new a insulates We for be outperformance net have high [indiscernible] our demand supply market demonstrated functional infill

prepared So unlocking our business growth mentioned to rent today. to million the in continue to we’ve NOI in growth in be the our our over next that’s we with and importantly, portfolio. that on of XX% substantial remarks, assume being we’re embedded And going market driver does the have That’s – NOI focus and the going not years We value growth within two embedded redevelopment. over $XXX we’re – largest future growth. repositioned

if we that flow end our significant $XXX XX% this two of per million NOI again you FFO, as share further look NOI embedded earnings $X.XX or mark-to-market, assumes of years growth growth even a cash And rent that’s no in FFO to beyond that’s convert growth.

California great the feel returns we our to market infill the summary, long-term. and outsides value and drive in over Southern ability about So creation

helpful. Great, that’s really

back more come on profitable? port think if that velocity be a portfolio? do a you I any might that, as negotiations effect demand the pent Just the market within related little resolution your up to bit And could you seems there do think guess, so, to had leasing any

port the happy question. in you box that it’s contracts impact positive all or super so Hey, Michael. larger having national market. for regional trade to are said, that Empire markets, And the the the they’re negotiated, obviously issues really we’re certainly have Inland really the joining And properties located very Blaine, more like and oriented it’s much port markets, our Thank big less big and box disproportionately overall for East for or impact distribution other been tenants.

it’s and infill they the little therefore how about definitely serving tenants Our goods Southern disproportionately a said, consumption haven’t California benefit are That a in and markets bit concern been less there. the regional get for everybody. in

And comfortable don’t with with because the I think does to sort your And up seen with I making feel it’s term have of and we decisions. we it longer theme the to through help decision think season forget, more unlocked the it’s whole and point, for end making think contribute we of have going brings it people replenishment. holiday certainty a year, that seasonal the coming positively ability

So it’s timely resolution. ready was think and for the I market really this

a it’s positive development. So very

Michael. that, for thanks Great,

was I little noticing you and in size created, can hoping today. bit touch types you’re demand by any on and could portfolio. are just differences also your And portfolio tenants then tenant of guys the you Lastly, maybe a that industry if across most about within talk your the demand submarket

that vehicle the products, of sector, products, a type sector a driven housing and related estate we also one activity the as to and might so medical feel continue things or sort contractor, would the taken demand tenants, housing you reflects bit e-commerce demand, really the substantial and I submarket our electric a actually I’ll diverse about aerospace, developer, see real tenants, rates. And it such that’s lot an even you types frankly to rates then little driven increasing But tenant distribution interest see Howard, where tenant though Laura Maybe to free demand way food XPL see so pharmaceuticals, of see the touch think off demand, we and continue is about specific talk an dispersion moderating products, environment of the that. consumer where demand is broad. on bit of don’t interest that of amazing environment the the market substantial little hasn’t

do medium-term. that’s mandate very to be units required something California, near that housing have going in the and by like million southern long to increase to remember it’s – But XX%, take over here we time X.X units actually a to a housing I that. developed But to are that in Southern think California

good interest So continue we environment, the rate the we continue from housing demand – to despite see trades. actually to

drivers very perspective. demand from broad based that So

maybe rent in strength of hi, that it’s growth actually And square at mentioned. contributed a I’ll an surprisingly, market, in Rexford XXX,XXXin South a West, XX,XXX you’re not spreads of look it’s because that of Blaine, Howard. the net focus is terms a of growth, mention significantly that really even in X.X% to those some supplied sub-markets X%, in if just there’s under that in we meaning interesting the actually supply mid-counties, larger our lack that Bay that story Empire But is you’re size market foot literally was and of that’s the market had Yes. product, buildings. Inland nearing the stronger the which terms portfolio We whereas which in being basically the absorption. feet, square

of market. all got those outperformance So we’re strong, the even and product like and say, for all very, each of most that that with performance sizes. the the the still market is they firing maybe we’re albeit, forward. strong fighting for cylinders But think pandemic markets, we space there’s were still plenty have demand why otherwise, demand quite I’d our pleased Rexford’s performance, I in really very That’s outlook in not people or still going over and the the during right

all. you Thank helpful. Very Great.

Thank you, Blaine.

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

economy. new how know first today to wondering I was really can’t where and environment mark-to-market, softening you you was much lot events versus know and what Thank rental quarter. which your on deceleration portfolio. this have are which versus to you. I Good some of the the that there temporary influence of But market the between a morning. difference just mean, a the growth, I attribute from market control second you is I there’s given

question. Yes. so your Hey John, much thanks for

the In terms of in that’s mark-to-market, expected. look our when change you quarter-over-quarter,

into converting is which We’re significant cash for flow, our us. mark-to-market really exciting

the mark-to-market rent see sequential then a growth, XX% mark-to-market, quarter. of which the some X% the when growth quarter X.X we but XX% so had net feet We on first was you look million at the significant end of We in basis, about increased effective market did square of leasing And it the activity. signed leasing of at spreads. at

when into the and you XX% spreads So at the take the that the growth of the well, in and as second rent embedded consideration to portfolio brings those effective steps in mark-to-market portfolio the net quarter. end your

into more significant years, we produce it’s some mark-to-market think provided FFO per contribution. the net focus to We that on fact this important visibility to the going effective is our mark-to-market expectations to continue share five around projected into next because

assumes And so no rent future that with that growth. mark-to-market contribution

significant And last embedded so realize FFO in and mark-to-market. that answer again, per contribution mentioned as my I share that equates XX% growth we that to

Okay.

that rather should on be we are. where the focusing rents than So market

the where our within Absolutely. and out portfolio of next mark-to-market we it’s additional to years I some And years. that’s how that and disclosure lies I conversion did over provide materials really for mean, our many there mentioned, investor representing the opportunity plays come. as five that growth,

of you year? the how you leases – market Where market? this many think much this relatively at do how find your do – the figure The end quarter up mark-to-market considering ends up held by well

that end this move XX%. mark-to-market was rent around the FFO $X.XX at of net And assuming projecting, the year. $X.XX quarter this we’re be will year, growth no effective the that by contribution the the further – the Yes, of to end year will and again, cumulative

It’s pipeline in you’re where is that – the in and bit to acquisition fully attracted size what was I wondering you on But little of asset $XXX million to potential? marketed terms question close. upside final it My this and atypical the your about was and leased. a

we’re tenant largest a it’s the a spaces It’s around feet. to. XXX,XXX it in think in tenants and what phenomenal space about building. asset. It’s rents rare XXX,XXX foot lease There’s of of one doors. the lease the to It’s quality to terms building, the There’s market. very push It’s two below John. the Hi, like Santa about building frankly And really Howard. is I attracted us that’s Yes, the Springs. to upside the feet, XXX,XXX dock XX Fe really XX% other’s able in this find

move again, of about a stabilized find in And from really size type in yield. rare just market. X.X% the And X.X% product to so to ranges mid it there’s this and performs period a to the well three-year exceptionally counties

That’s great. Thank you.

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

kind Hey, today if think of thanks last wondering you do can expect X.X% directionally, investment far I visibility I you X.X%. the on in was steps, you And stands think mentioned there on like talk this that quarter the quarter, I going? any so question. X.X% ones. was Maybe XQ. can just about taking pricing where that how you Couple for leasing was give been have what spreads then

so on answer embedded for rent Hey, the question Nate, I’ll thanks the rent– much the step. your question.

XX – years four steps. was embedded – sorry, basis embedded rent our is and quarter steps sorry, – it leases and – were rent executed on our they embedded rent and the our points. I’m percent, X.X% XQ was increased our executed Last actually was quarter, So then this for X%, leases steps X.X years not where actually we

it’s which these I steps annual the new embedded that X% in think signing we’re As resiliency the like indicative the of we really rent it about today, rent area the And market embedded fact are feels the four the market. years. and steps of of think where strength

does projections rent that’s we’ve does there really to larger and change forecast your a what first GAAP imply XX% a really to What that assumptions XX%. mix imply and And is Those for cash we’re of lower to terms leases, have compared not of question leasing a our that spreads In the market – the in purely second the and in our around in around quarter are that leasing from last spaces is second that our of spreads, quarter. fourth important implied full the spaces year, half. XX% our the assumptions of XX% year-to-date. to and is our tackled for most lower that function going spread not spreads change we are half signed

Our second that half expirations recently shortage are that were smaller more weighted leases more towards have duration mark-to-market. spaces

to the duration. longer So half first that have compared expirations

front see year change full of of terms not again, for as half function rolling a is the what leasing in the the what’s forecast, you’ll a and the our spreads in of guidance year a our is back function year of of the for see So versus you unchanged. half can

that’s helpful. Okay,

on a debt. bad Just question

think it’s year-to-date. I basis XX points

think I was points. it zero last basis quarter,

So, this the where increased Is anyone portfolio were three what’s the quarter. just And last of I’m there list? credit the space the list in today? watch percent Has then watch sublease issues months? the on also curious the

Yes, I’ll Yes. tackle with both you. those Nate, with

debt this our basis points XX so property, same So quarter. bad quarter. to That was the for last points compares XX total basis portfolio

I in at points the unchanged my as year. guidance, prepared full mentioned Our for remarks is XX basis

lower average XX Importantly, points. the basis historical that’s than of

for we in was It tenant one that a quarter, on did we second year, have tenant, we’ve that since been surprise. this been a list recognize bad has been pre-watch our did our tenant That forecast. debt the has not tenant. where In watching earlier

a you last percent quarter exclude tenant, very as XX debt with do much that revenue was XX points, bad line our points. If at basis in basis of

XX basis remains full the guidance year. at unchanged points for again, So

percent our it’s base tenant is strong, years. the today in revenue that lowest bit been strength, remains of current a about incredibly watch stability tenant list Importantly, our actually the a past exhibiting base, several our little as

It that’s ABR. We represents about out seven our X,XXX. of points tenants have list on watch basis XX over of

list healthy year, put strength. tenant context looking that watch really watch Last of XX even average our And pre-watch is list, around was basis smaller. on points ABR. levels some our really, Again, into of that. about just to list Just

year. So we was the and the in tenant base, no of full expectations feel around… great then change about our health And again, last question your for our

Yes, subleasing.

prior total subleasing at the in and look we in with subleasing of percent is in really a when Yes, Subleasing. and line year last subleasing our portfolio. current right year XXXX as quarter, the

helpful. very Thank that’s Okay, you.

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

A here. hi. Yes, things few

are that’s First, term the I the $XXX on guess, for of as million that next now? maturing what plans loan sheet balance the year, for

has at our Mike options extension loan term that option. Yes, two one-year

this extend, XXXX this point, point. plan through would of to loan at that fixed term So at we’ve July we actually

Got it.

normal then of you notable, course take I slow in down finish terms guess, leasing, of terms any in to And line? seeing are just timeframe over the Okay. leases the

Howard. of sort it ebbs Yes, Hi it’s and flows. Mike,

think big will I make I as rents to decisions so hoping making they’re long off some think as tend waiting possible. hold changes, they’re people

the to the end So, than see the we But part. lot I the quarter toward more is think of otherwise, in activity pretty lately velocity early tend a steady. overall

it. Got And maybe… then

three below signed give Hey, down I can in visibility Mike, of think which we’re half me downtime because you bit of bit the a what low portfolio, we’ve terms projecting was a renewals color in provide more or year downtime that let around of little In pretty more the first months. days some the of there. amount the

three between out that And We full perspective, months. about lease to tenant downtime dates year pre-pandemic continue forecast downtime new moving to and or will put for be commencing the down the tenant for a rent that into four-plus just was months.

So downtime we more healthy saw that we days. see a much market to in even than pre-pandemic exhibits the continue what

Got it.

just what the sign you And being last you about clarification. you Okay. about on for the X% quarter. were was talking bumps, talking – annual during one When leases were about escalator thing rent

Yes.

Is that correct? Okay.

correct. that’s Yes,

Xs? like look overall And the is number low then portfolio, if you at that

It’s X.X%.

okay. X.X%,

it’s it’s that’s from, for grow. have year to these a continued by able escalators that X.X%, points of been yes, driven ago. sign about we’ve basis up to that, up And the couple past that And and years from XX

Great.

you. Thank Okay.

Vikram is Malhotra Please Our from Mizuho. from question proceed. next

the Thanks questions. for taking

want understand, peers, on I asked the in I I just the again, last last similar So to the to differentiation and your call between market. your portfolio when about guess,

You absorption to relative positive referenced the negative.

five rent in mid-to-high You referenced the digits single in the growth.

of what What as So, to things average to up other with is segment, and that is rent they’re not I’m in product just starting pick incentives growth. the terms the see product? And just quality you in compete wondering trying seeing to the Rexford are competitive average Rexford?

a creating Rexford product. terms this our renovate in assets, of earlier we in do thing the Yes, marketplace. – other hi really many does when in them. we functional, landlords mentioned and fragmented about It’s Howard. highly there’s buy that Michael it’s the modernize modernized will bifurcation market Not Vikram, same

And in now different product the types. those difference is what so of you see performance the

in quality the tracking not within We’re rent performance. terms I of on in results, that doing portfolio growth of or think, themselves for is terms metrics the But the other these markets of some what lesser-quality product. speak our our

prior I portfolio. quality, the the absorption. the probably we XXX,XXX we do instance, the is it, is compared the absorption predominance But negative is XX% when what’s what frankly, buildings. at, when at, within that feet made up Rexford absorption, X.X less of absorption million of interesting the think lower of look of for the almost over to for quarter, negative was But of negative functional positive look difference track we feet market And

is and So it’s differentiating out actually an interesting story market that the laying our product.

Interesting.

the Just to like are products that XX% it quality, rest that higher meaning so is is the high of to that XX/XX is quality to less that, fair you, subset is split, clarify comparable comparable? all say

driving I market terms of the yes, speak just I couldn’t the the quarter But what really the of of made up on the space. that referencing the entirety to lesser negative happened in came in in space market older that market. absorption. general, Well, was quality is

then market modernized private these of terms it, typically been fact, them the real greater estate you tenants, of through quality. the in don’t renovated. was more XXXX, differential and think space But has in prior about of and drive half some one-off trying in obviously, and But they capacity most In to the the the really reinvest about utility built to value and if landlords just achieved not throughput the enables to terms in cubic of the in rents quality utilization?

change rent built rent in. you’re any acquisitions, Got then now mark-to-market, But a know of cap growth over acquisitions looking term, you subset growth sort things the changing the for it. prices, lower terms know looking of long would growth have of trajectory et it’s given you’re it new rent way are future, you said in in couple are sort of forward, that possibly cetera? don’t your looking you in rates, acquisitions? looking the what is I at And smaller forecast. And Just at of a I be a But in years. you as great. changing product forward from here? terms

has extremely around growth rent our in we – been conservative. specifically of So actually are we And well market – we’ve within actually acquisitions within saying very below why terms always much just very experienced what market. what the

Vikram, really continue market that So cash conservative we’re and from growth. rent are really, very perspective. underwrite really drive to on, that continuing that focused selective and to extremely accretive be What not changing a to growth focused going and we on flow NAV is opportunities

can accretive dollar transactions. investments those attractive really you at at as to And to so we’ve invest last drive when cost we’re mean, every today, able X% today, it’s – you year. stabilizing or earnings the really And $X.X FFO able we’ve account capital, accretive about today of core XX% we yields to are to And going investment drive yields higher billion, today, and our compared really I more take in been see X%. been attractive at even today’s which to into higher solving for year-to-date

overcoming today another are, we’re solving again, and on growth. driving substantial market rent not are way, which So cost I at than today’s of to capital, yields dependent accretion the said more

it. so last question. And Laura, much. just Got Thanks

two-year want flow I or growth clarify, missed the So, XX% have in do NOI I in average? to still maybe embedded presentation, baked at you this on just expected cash over period the but

Yes. Yes.

you mark-to-market stated you XX% NOI plus at the imply should that look if occupancy. cash we’ve at look same-property I at mean, look and prior, assuming embedded you this – static If if growth, the mark-to-market,

Okay. Thanks so much.

question Nick Please Thillman is Baird. from next with proceed. Our

good guys out material been redevelopment question past for in Hey on you line? has those any on underwriting positioning. on and that the there. time morning And Maybe are a lease-up projects? there lines What months six time change

in this of stabilized, four the yes, really, time Nick, lease-ups. I I’d say thinking six-month in inside we repositionings of typically underwrite the we’ve quarter range terms been think, the that some just Hi about we’ve And lines. those

looking starting maybe know lease then some issue there were but turnover And kind wondering the it net see some is as of it, component I though or helpful. Laura effectives. softening to free also like at up quarter-over-quarter, a rent of costs if looks we’re the talked That’s of just and there about if mix economics, I’m some

rent our higher record really direct leasing by spreads. in in and being the rent No. a driven reflection the That’s continued of growth commissions, change markets

the In we’ve a what dollars, haven’t and have terms of been seen really significant net in quarters line with past there. experienced improvement largely several change in

Thanks.

is next Vince Our question with from Please Tibone Street. Green proceed.

around up trends. follow to wanted I Hello. sublease

I [ph] submarkets and you are that what activity around levels? if of to was you’ve think particularly comments kind how SoCal broader it where sublease pre-COVID any sublease late or compare portfolio is does some I made but market changes seen just there your And in elevated. specifically, the of curious any space

going There’s terms be put you significantly and back for to generate building you’re to very of inventory excess it’s just gone of the can buildings in case time. about sublease happening quickly not We’ve just out many it, space in you getting would from say, I market terms thinking subleased. obviously as Inland them. some Empire. people in those have that of in Vice, a capacity if of Yes. on of in are to few revenue vacant your trying or And

for that And find I well. tenants to of as the infill I versus the space think tighter lesser of we what downsize the most just leave, is Inland think space, currently occupied out but really also sublease maybe higher could they infill – if versus is some of but is areas find seems more put different quality over that space they be Empire quality then in space. would take some it people that to West the

look Vince, year our of a me to activity at percentage that. portfolio. saw Hey we within When terms of during what XXXX let couple portfolio, things consistent our you subleasing just with the very of in of full add again

our significant or material really any subleasing seen So activity in not increase have we portfolio. within

within talked – and we’ve look negative but the literally look when we what absorption, would net absorption we net that the within of includes negative the that so it that absorption and subleasing we deem absorption Only space. space And activity, market – you single drilled high that overall represented are functional think the market every into high-quality this quarter. about market. as I when into into contributes net XX%

quality of a you I in product the there put into of an that, the market kind functionality the So sense give subleasing is that being that in and market. think can where increase of that’s

it. for color. One more That’s helpful that. really me. appreciate Got I

pretty deal So have acquire. under Mid-County to closes, after contract you little the

curious current of So to what the your the half I’m of appetite acquire kind in cost back is year just capital? of at your

I Yes. lot Well, are terms all on the the we’re I’ll in can looking at. see excited But really we’re profiles. that bought a of it you And think think yield got what we we say about and the selective. I quite We’ve plate. opportunities

very very, you’re think feeling forward, still I like we’re trying not busy. we’re going acquisition if Our ask. team is that’s to what done, And

that still to we are able highly seen recently. going find that we’re to what be you’ve to similar accretive, remain more so buy optimistic opportunities us And

makes And do recent at has pricing months, in all then sense. – moved the given of you kind normalization just just That of fundamentals?

Michael. ahead, – I bit spend Go go little ahead. a

or area. to rates, No, going cap in cap years. just able as re-tenanting are to tightening very capital a into and years they at no, and that And to not was market get as And accept below I we to X% to maybe inbound rents. that’s situation definitely to bit the willing higher that’s I mean, and six high-quality maybe long buyers starting product back in rents I rates be think where flow nine think rates a to rents X.X% into have related cap low may the to situations substantially of renewal as some pricing say fine. seeing indicative for seen market, leased increasingly addition, low I we

market could back rates. seeing come that tightening further will, in more you capital, if is which patient if a into market, are trend we to contribute cap starting the So towards

of were by Vince willing the Yes. pay. to in bid think we’ve can that market some is another one of I on. mentioning, of literally, these we value in was versus XX% off Michael buyer transactions, terms what portfolio

the that’s obviously Well, crazy. Appreciate is Wow, time. now helpful. this

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

We Well, months. we we’d wish three like Thanks, quarter about call for great thank earnings to joining everybody to everybody. summer, today. and second a you in Rexford forward Industrial’s reconnecting look

Thank you. today’s This conference. conclude will

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