REXR - Earnings call transcript Q4 2024 | Rexford Industrial Realty, Inc.

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Operator

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rexford Industrial's Fourth Quarter 2024 Earnings Conference Call.

[Operator Instructions] I would now like to turn the conference over to Mikayla Lynch, Director of Investor Relations and Capital Markets. Please go ahead.

Mikayla Lynch

to Fourth welcome Conference XXXX and Call. you, Rexford Quarter Industrial's Earnings Thank

yesterday's posted on release, and addition earnings In to we support remarks. in Investor to earnings the a Relations website section our today's presentation package supplemental

in responses SEC and As your contain and subject by securities to questions defined filings. based are outlined to laws, a risks as remarks which statements our on may other management's federal reminder, XX-K and and forward-looking certain uncertainties assumptions

differ, and any may assume no the As We'll update results such, non-GAAP call. we obligation to on forward-looking future. actual today's in statements financial also discuss measures

and presentation measures earnings as useful an GAAP of supplemental Our reconciliations are as well package provide to these why investors. explanation

our Michael Clark; Fitzmaurice. on guidance. Laura and Joining CFO, Mike financial Howard our and on COO, operations and Laura introduction, Co-CEOs, me market Howard today are followed Today, and Mike results provide Michael will an Frankel and by conditions Schwimmer, and

Co-CEO, It is my Frankel. Michael? pleasure introduce to Michael now

Michael Frankel

you thank us devastating to Angeles. Los and by today. impact wildfires that Mikayla, the begin to all acknowledging Thanks, want continue I joining for

our fortunate portfolio no damage. are we While sustained

portfolio Mike Laura's Our in as very to community. the new board, Mike pleased welcome expanding roles unlocking Both will Rexford to opportunities and Fitzmaurice supporting our Chief planned our completed full Mike on promotion With Officer. for and from We're key future our Operating to CFO. we be priority team potential Laura play continues growth. extended our our CFO of and

the I'll over call turn to Howard. Now

Howard Schwimmer

is our and driving they for and elevating continue Welcoming operational confident joining. a echo COO remarks. team to you will excellence Mike the for all Thanks, the forward we're Rexford across the key step thank platform. I Michael, and company Laura, Michael's

the over to the thank entire over Before to Laura. take and quarter moment move into now I team a Michael turn and call to will to XXXX. I strong we Rexford for our performance dedication past as Laura, turning and your want call the

Laura Clark

Thank you, market for all today. Howard, Starting joining and us thank you with conditions.

well to uncertainty. as navigate continue as political interest error macroeconomic, growth recent We rates choppiness and following pandemic

While and remain XXXX regional robust projected near-term these infill market California the supply/demand of fundamentals for consumption factors are long-term within Southern impacting intact. outlook our our levels growth,

have our redevelopment conditions to some are the the we have we our we since activity observed we lease-up Notably, tenant will remain portfolio. overall in the executed year, across a start within convert the vacant that timing and working embedded of market of and lease leases. occupancy repositioning pickup Although to value and projects, impacted spaces realize substantial growth and creation confident negotiations

X million observed markets. approximately and to of we declined CBRE. Consistent even infill West, markets with overall of where continued rents year-over-year. rate average rents rents, was XX% on compared more the larger trends, By activity higher square example, have when market quality of comparable in for which Regarding XX.X% Inland East a X% X.X% portfolio Rexford have year-over-year sequentially to favorably the taking compares the favorably box decline to down This market in and broader are to the products and averaging leasing functional feet square the executed the highly the our outperform. across to feet and executed locations historical infill Rexford's superior lease XX% way XX,XXX lease infill rate year-over-year than XXXX according

last expected steps executed results, effective at Turning by X averaging line in of leasing spreads our move-outs leasing of with XX% performance. driven cash Same-property by declined occupancies and net Rexford X.X%. million delivered sequentially to embedded fourth quarter. quarter of solid spreads XXX rent square annual average our leasing team basis feet The XX% with communicated We the points expectations.

X fourth exceeded and our or forecasted stabilization the Regarding quarter, activity, we yields. projects, timing met in repositioning stabilized investment which

an achieving repositioning and XX square investment. feet, full stabilized on stabilized yield the year, unlevered For projects XXX,XXX aggregate we X.X% redevelopment total across

the of for generate And $X.X projected the we year, full a $XXX to we closed billion completed million. for yields. acquisitions During quarter, X.X% acquisitions X unlevered stabilized

In for current of total closing recycling and contract addition, or XX.X% have no million, opportunities. repositioning In of market acquisition year, dispositions under a million IRR. and to maximizing light generating returns Separately, capital With under regard through of currently or capital we our sold offer strategy to we subject for accretion a focused acquisitions unlevered $XXX we $XX X conditions, full allocation properties contract the offer. our on of redevelopment have conditions. customary pipeline, accepted accepted is

under unlevered have stabilized projects construction X.X feet or total yield million our to square which and deliver we lease-up, projected investments. on Regarding in of are redevelopments, repositionings X.X% a

and XX% to points am internally I'm the to I shareholder profitability. Our team across value embedded my rent steps turn for role, portfolio, substantial of taking resulted projected further embedded that, increase end, averaging are year-over-year current incremental the into projected driving initiatives embedded NOI in and to XXXX our to cycle. With call These projects includes increase and we represents that work the actions no Rexford organization. G&A demonstrates market differentiate despite in NOI drive excited proactive efficiency in creation incremental the net expand to generate under basis step which to the NOI and portfolio focus growing through repositioning value an XX% over our greater Today, estimated with $XXX To our from $XX drive closing, mark-to-market currently construction total efficiency, conditions, upon or equal Mike. commitment happy annual a consolidated to COO business the Rexford in model recognizing the million total growth. in lease-up. In XX% effective million, continues and growth the redevelopment all to X.X% to NOI I on by lease effectiveness as up

We the to he for are Fitz to to Rexford. excited and all brings team welcome

Mike?

Michael Fitzmaurice

as growth. now in work comment to for year you results, on next of guidance full trust and you, walk through sheet. then balance Michael and and drive introduction, kind together placing conclude with quarterly me Thank we the for briefly you our XXXX I'll Rexford's thank the your To Laura. Howard, phase

expectations. results earnings in line were XXXX quarter fourth with our Our

For the both our same-property of in full share cash despite FFO resilience conditions. core we NOI delivered and challenging per X% earnings demonstrating market growth the year,

Moving on XXXX initial outlook. our to

additional the And does have guidance related walk clarity, I will today, disclosed For dispositions components be historical balance any I in the with assumption through not sheet as assumptions of our release. activities ranges as referring our not or of practice, yesterday's to earnings midpoint closed. include that for acquisitions, outlook consistent

range per We $X.XX of to are FFO our establishing share. $X.XX guidance core

NOI driven basis by longer property to downtime, be occupancy, of primarily key our of X.X%. with net debt growth resulting re-leasing begin revenues, X% expected Let's points same drivers. is of a cash XX% equating basis decline XX contractual points of projected spreads average in and rent bad to in effective Same-property increases XXX

the value-add we offset and $XX NOI of XXXX. This million coming projects is leased of of related in lease-up construction projects, commence projects, As $XX redevelopment we by off-line of $XX which million partially new projects. in incremental on NOI estimate our for repositioning million is to construction as

as months control to assume XXXX, our coming time prior expectations. Laura are For to And an highlighted, X costs. measures of at lease-up online proactive X compared we taking up average we months the quarter NOI

commitment keep So leverage. able XXXX, X.X compared last reinforcing G&A our our increasing by platform to to adding we million feet flat square year, scaled operating to we were

of quarter. continue liquidity. a million our to was revolver net totaled leverage $XXX sheet, At including billion and billion balance requiring by end, end Regarding our X.Xx. the on nearly maintain liquidity first quarter profile full settlement we $X forward the debt-to-EBITDA low of and Today, strong $X.X availability equity

reminder, per was As the share. raised in a forward March XXXX at equity $XX.XX

As redevelopment. no it million allocated $XXX debt maturities. needs capital have relates we for to repositioning material for and With XXXX,

million opportunities a to $XXX authorized further capital. share Board allocate program, our our repurchase Lastly, expanding

warm entire a Together, Before operator, I Southern for over such to upholds and turn as team welcome high excellence, join to truly team family teamwork. into the to my standard great thank call things. Operator? of I dedication going to and accomplish a settled want support we're and the California. I'm grateful that Rexford I their the

Operator

line Mike from our Mueller question JPMorgan. first take with [Operator the Instructions] We'll of

Michael Mueller

Yes, to in XQ supplemental on feet about bit from playing volumes for XX, real out I leasing and at million guiding looking square talk happening going XQ. was the based Can little you what down in what's million Page how that to you have on the time a where graph sequentially X you you're wondering, X.X see XXXX?

Laura Clark

Mike, thanks for joining today. us

quarter let's and in fourth we'll Just we're on touch the what into today. at market seeing then look

experiencing were of was as X the on expectations the So fourth feet our year. square with well half was last the slower million environment we by demand quarter around lease minimum our discussed expectations in level in the driven back leasing quarter, of really that the line of activity, we call terms expirations as it of in

leasing today repositioning includes XXX,XXX our QX. activity about of X and That in feet importantly, also what leasing to forward January, actually of represents market see all pickup in square we overall projects vacant today, in through look same did we activity our million around a level through yesterday, executed negotiations -- the we've on of which spaces. Year-to-date, the square of As of lease-up X our seeing redevelopment we're in feet.

-- So we're I'd seeing vacant the good about spaces. in of XX% say on activity market. our

on so activity We that have into activity and executed some level we're converting focused really of leases.

Operator

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

Blaine Heck

related the get to or just headwinds margins to wildfires. puts of our of rent bit debt I the to sympathies bumps, guess into some want if kind can that midpoint Great. us And pass components builds the all how the to by I about and same-store I are more to but takes with my and you in certainly, Obviously, bridge NOI to closer growth want occupancy, up possible. and the rent maybe even question, talk affected there guidance. to bad of dig spreads, everyone a little X along cash

Michael Fitzmaurice

start is major drivers. This Blaine. Sure, Mike. with I'll the

are follows: bad First, downtime, increased of elevated releasing are and for year. the items higher concessions, as XX% those components XXX again spreads, the debt points basis which from cash about it's

steps XXX which in in-place the driven rent points from basis portfolio. steps, we We have the are X.X% have by rent that

are playing offset X the concessions. XXX of those by basis drivers about positive So points

a to then we experiencing there's the XX basis up drag erosion of night. press another that of last year. you from average decline we And tiny down then then basis months we expenses concessions, our X the causing net higher noted about basis last points. about gets of points. about points is last And night. we're XX had X.X% release which month just X bad That Then XXX bit is that debt the in occupancy of about from profile And posted

Operator

of the America. line next Berger comes Our question Bank Andrew of from with

Andrew Berger

portfolio comparable But whether the declined minus on presentation, providing you or guys growth bottom we commentary you in to that to any if you obviously for rent I think market the how stopped curious close know you just and this forecast. have not the year. are stabilize during we'll highlighted that And X.X% high-level as I quarter. the see rents saw thoughts

Michael Frankel

is what so call a Yes, and big really, frankly. out the of I seeing you. tenants. of the regard Thanks small markets, box, think Great as California box can Southern side. what resiliency did our And the on the look, And in it's I tenant we're in to or hear lot bottom rents much seeing today. both supply a A And market of data disproportionately showing is sound. current markets with And the conditions. the dialing fundamentally job base least more It's of you're is is at think, that medium-sized Laura, a market to I Michael. drivers, rents. cover larger compared box great in larger lot there think describing from we market think tell I what also to hard the you with And to in to conditions for always demand today. tends respect to business terms

our X%. are Your year-over-year, about tenant is portfolio about larger box tenants quality on XX% down down whereas similar average,

we when that for and rent market to is just to ultimately backdrop inflection the It's it's hard the hard -- to there say start growth. call see point. So foundation

Operator

of Our next Steve from Sakwa Evercore with the question line comes ISI.

Steve Sakwa

Yes.

sort As of your known at X that are expirations, lease you ratios year? large I about this million there have the guess, you a in little would retention you move-outs on you've portfolio feet. that? look any 'XX think got, over How And

Laura Clark

us today. joining for thanks Steve,

in the In terms guiding of basis that average of portfolio The guidance, downtime. largest higher we are to points XXX is driver decline on about of really for XXXX. occupancy occupancy our portfolio projected occupancy

tenant So time that's rent move-out a a commencing. new of longer between a and

that and and that in months average for demand X.X downtime about that and projecting of decision-making it's we're associated about. on experienced longer we've to tenant really about factors the compares talked we with XXXX, months So around projected X XXXX

XX% into XXX in X is impacted Just fourth were spaces it question X of the the XXXX. tenants. your around point tenants, in other actually the about about drilling basis X of decline, those quarter then are specific X by expected vacates and vacates

Michael Fitzmaurice

Yes. my XXXX those of there, got And off would coming basis I so preparing add average NOI X in coming related come to I or quarter. about as offline $XX in Most for first reposition our Steve, off-line thing we've redevelopment. weighted remarks, at the prepared mentioned projects of and on a million

of year. relative of the of occupancy decelerate first start to the the and X the year, in months So in shape quarter reaccelerate from a to our going this it's back

Operator

with Markets. John comes Our next of Kim line Capital BMO from question the

John Kim

walk Congrats unclear why guidance. little as again, lower the us to be Can cash just be NOI likely I'm you bit that through, would spreads to than same-store higher GAAP The you, same-store GAAP a cash. Mike. than your would growth.

bad have but don't know than same-store I driving what went cash? be GAAP else rent and flat that the the debt, lower You free through GAAP you with cash. the occupancy would impacting

Michael Fitzmaurice

Yes.

of So on -- we in as between leases, and our where portfolio the are at off X% rent at our our were burn which back on midpoint leases our below-market we're cash of a evolution leases. really the net is in effective delta X.X% the in generally straight-line the half the

there. drag So that's the

Operator

Greg of Our next line the Scotiabank. with from McGinniss comes question

Greg McGinniss

beginning I out year, just and but -- somewhat has improved you that pushing leasing on the the could development offset lease-up understand if talk commentary your about the the sorry, then or on the trying view leasing of wondering was on has to by leasing. view improved this activity into

of going of more it. for those appreciate the recently on just leasing recently So on Or can kind is reconcile what's reflective of if X is you comments versus leasing? happened that development kind just us,

Michael Fitzmaurice

I'll perspective just as Laura week, today's just with early the realities from last on some the activity. We market. and in shared commentary of out night, the you a experiencing momentum specific We of here the over leasing the a align there Yes. that on bottle based asset. guidance every of the information up-to-date we range every it's with we're set last approach very the look this nice week that budgeting assumption with with lease, take every with risk most at

so few where all feel very about just with today it And we're up ago. at we a information range the and good account the days takes until into

Laura Clark

I'll I I this are number kind think increase what is a factors, what's of demand. -- and believe, we're Yes. there's of demand impacting that mean what add seeing I around in

been into market our on gain to to I space decisions And that's drive clarity the see quality, higher tenants really for we're take the their it the number being in Rexford how they're around that's environment, seeing think and to they their I delivering the that's demand highest space functional lease-up We're higher are rate product. We're driving space. some time as around efficiencies. And clarity space incremental allows market. demand well. we the the highest continuing happen seeing those that of one, the can But making are in -- focused interest about some revenue, needs and are decisions is tenants They're that's think, to space continuing and political the do very tenants expansion thoughtful in functional quality seeing some that market. valuing believe environment. I some some pent-up unlocking them

opportunities you'll through flow into our convert And that see executed results. so those leases, as

Operator

of from Baird. comes question the with line Our Nick Thillman next

Nicholas Thillman

the I redevelopment. on commentary Mike, appreciate

off-line. taking of the just some So NOI

guess, a that So just year? amount million little guys what's identified repositioning. feet. XXXX what I percentage bit, is of to feet drill this X.X million from the of But spend of you expirations expected redevelopment and X.X And the down square square the of that

Michael Fitzmaurice

Yes. we for The about development, it's million. $XXX and year have spend that this earmarked repositioning for

Operator

question Mizuho. Our of line next the Malhotra from comes with Vikram

Vikram Malhotra

guess touch I your just upon I to slide. wanted

key You've messages. given some

referred like acquisitions dispositions. allocation, capital One of to no is but them you

So sort Do just portfolio the that outlined, kind of buybacks? if act environment, X to presents perhaps stepping in you've peers maybe a maybe are itself, once of that? your that. One, you back superior is upon hurting generation quality capital in given parts about this there And what then more. allocation-wise,

Laura Clark

Vikram, all thanks us joining so allocation. capital much for questions today. Great around

talk take the just about step a and back Let's priorities.

and and our cost focused To our on redevelopments. light and executing on have changed of of rates capital capital. Our market today's that in are repositions increased, our recycling priorities end, we current hurdle and have

believe As we the attractive we source we have capital, $XXX be dispositions million recycling, of think an obviously by about or today. contract under accepted represented continue to capital offer that

accretive drive to includes potentially Those And have rates potentially through our into that that redeploy allow acquisitions substantial our in and share and capture meet yields, to repositioning very hurdle today's our us but certainly they and value repurchases that opportunities. redevelopment high own environment. stock incremental

Howard Schwimmer

And Vikram, it's Howard.

portfolio. a made in I the about think hurdle clear our once-in-a-lifetime to market. of no have something up certainly buy plenty meet as available asked were And to because we going But if rates You comes opportunities there's rates we've sale. are We monitor just rates. us hurdle for larger, And change a they reason portfolio absolutely hurdle those for up. those to

Operator

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

Craig Mailman

to with not near the capital of you mean, for pull here. use the use couple sense the spend on like from is months can go acquisitions, Why redevelopment trading? piece. that, us even the the not are Why that of through buybacks. acquisition a the -- have recent term Why capital stock for could on ATM at a use has guys you where money December and issuance on of yield guess seems stock you away you it the I punt given here for it's earnings then out of shying I follow-up that It least at a the Just But balance now. that depressed in sheet, and allocation keep been you your overly clearly dilutive some higher-yielding for acquisition. give just some on

Howard Schwimmer

was first that Well, location. an you at remind the has it's Craig, we the bought forward asset functionality. buying property was look about we equity And X.X% raised in yield. about year initial at if A that Howard. a It's the of a And that we're in-place is just X.X%. that yield I'll used by the capital fantastic you the all, transaction, And at $XX share. X, already

that's rent increases rates left currently So hurdle years different. X.X X% would about the on turning with of And and the term be lease. annually, the away there's obviously,

I think clear we that last was I if there comment, looking new start used, transactions, just on accretion. my that but made actually with at that we capital

Operator

follow-up the Blaine a Our of line with from next Wells is question Fargo. Heck

Blaine Heck

around Yes. to space industrial process see support effort impact early But Great. very share most kind rebuilding kind can you the and submarkets sizes think might the or wildfires of any of or for demand? the in Clearly, the of of early potential any region. we're anecdotes could building demand still incremental determining ultimate the reads arise that specific the you in whether

Michael Frankel

mandate housing. started trades, see the Michael. tragic from fact demand had if of a you million the marginal increase fires. Southern again these to early matter by building backdrop affordable already increase cetera. No, look the look, is to already it impacted in of by about and obviously, et California But our the question. at X.X everybody before hearts a It's we to the had significant in housing is, go thanks we Blaine, And fires, units out for

start from service in we're impact with wire. volume, phases conduit, And I that that of And And magnitude it that pipes, frankly, of no phases. tenants question the come there's to the with we going infrastructure, the think It's demand. rebuilding. I think see fires going drive will to have all

and home. steel affordable that this and tenants deploy install goes And We that appliances. to on have that store move that to affordable then and and units, and service finishes extensive just level deliver housing wood that these -- everything it's these extensive appliance, framing going that houses that and and is aren't a into are up and and homes of

demand no So time over I to going incremental for it's think there's question portfolio. the drive

Operator

Kim Capital question with from a Markets. Our BMO is line next follow-up the of John

John Kim

but question up to I follow did my you on the this GAAP like question rule, I on expect X year. do the spreads want --

I You that signed commence should imagine at XXXX. GAAP of what far we is modeling going XX% quarter. in be as lot in to as spreads? But fourth the a

Michael Fitzmaurice

to are spreads XX% GAAP XXXX. be about expected Yes. in

Operator

is follow-up Malhotra with Our next a the from of question line Vikram Mizuho.

Vikram Malhotra

X. Just

leasing. So first on

renewals had you square clarify you out said of million you've and break wondering if into was I the rents. done foot year-to-date. on think I new X kind taking could that comment and you

to I wondering think terms X.X% X% said does year-over-year. I'm and were sequentially in how in have rent you just you what compare of up comparable that the growth? deck

Laura Clark

Yes.

see the X/X activity what within quarter. typically today, of it's consistent leasing leasing terms about pretty is new, a renewals, In we X/X with which

Vikram Malhotra

growth was and second something sequentially. to growth rents you you your year-over-year X.X% that is in about X% what just taking what in -- just is deck, X.X% understand rent which like does X% put compared down rent Or I year-over-year, compare? sequentially. mentioned to how the and want The

Laura Clark

Yes. Rexford the ours product portfolio. within and the That's the portfolio we've market rent experienced to comparable growth within that

Michael Fitzmaurice

our just relative And rate what and guide XXXX, assuming from last the we're assumptions. growth . Yes. flat market to a in year we've for baked year perspective, throughout

Howard Schwimmer

And we'll details. give more

terms accomplished Next quarter of in et what in we cetera, lease quarter. spreads, this

Operator

question is Evercore line follow-up a from the Sakwa ISI. of Our Steve next with

Steve Sakwa

relating down. that overall has talked point of kind guidance? drift to decline to of decline, talked the wanted which when XXX portfolio, basis part the decline. which about Mike, you I when is the Or was clarify, Laura, -- occupancy or same-store that continued to about the XXX on you Was just basis

year. the I end think it was the little a of at over XX%

Michael Fitzmaurice

Yes, decline same of basis for it's points properties. occupancy XXX average

Operator

call back for Clark over turn conclude closing our will remarks. And any to question-and-answer the session. I'll Laura that

Laura Clark

like Before you all thoughts. to X leave we final up, with I'd wrap

California long-term despite challenges. and market Southern First is infill creation our that near-term portfolio are uniquely positioned value some market for

NOI, Our projected million to and embedded internal represents growth. incremental $XXX that XX% growth opportunity of remains substantial, equal

we accretion value. With strong all on approach a thank shareholder proactively while to drive we focus with for you returns joining position are also maintain capital that, a Second, us to enhancing maximizing efficiencies and taking a financial disciplined allocation and today. operational

Operator

will now That today's for you call. conclude Thank joining, you and may disconnect. all

Rexford Industrial Realty (REXR) 6 Feb 252024 Q4 Earnings call transcript