Rexford Industrial Realty, Inc. Q1 FY2025 earnings call

• Rexford's team executed well, with strong first quarter performance. - Leasing activity included 2.4M sq ft of leases, with net effective and cash spreads 24% and 15%. - Tenant retention was 82%, highest in past year. - Portfolio market rents declined but outperformed overall market. - Capital allocation focused on stabilizing assets at above-market yields and selling properties at low cap rates. - Stabilized 5 repositioning projects (560k sq ft) at 7.6% unlevered yield and completed $103M in dispositions. - Value-add repositioning/redevelopments expected to contribute $70M incremental NOI from 3.2M sq ft in construction/lease-up. - Balance sheet has over $1.6B liquidity, net debt to EBITDA at 3.9 times.

Rexford delivered solid first quarter performance. They executed 2.4 million square feet of leases with net effective and cash rent spreads of 24% and 15% respectively, and embedded rent steps averaged 3.6%. 400,000 square feet of new leasing activity in the quarter was from five repositioning and redevelopment projects. Overall absorption was positive 125,000 square feet, and tenant retention was 82%. Market rents across the portfolio declined 2.8% sequentially and 9.4% year over year. The portfolio outperformed the overall market, with smaller format spaces under 50,000 square feet showing relative resilience.

• Core FFO was $0.62 per share, 7% growth QoQ and YoY. - Maintaining full-year 2025 core FFO outlook $2.37-$2.41. - Lease-up timing increased to 9 months from 8 due to tariff disruption, offset by short-term lease extensions. - Revised leasing spread assumptions to ~25% net effective and 15% cash. - Credit facility recast to extend duration, lower interest expense, expected to close in May 2025.

• Tariff announcements causing tenants to defer decision making amid economic uncertainty. - Market rent softness, particularly in spaces over 100k sq ft in certain submarkets. - Uncertainty around near-term impacts of tariffs on leasing activity.

Q: Blaine Heck asked about rent decline and impact of tariffs.

A: Laura Clark said while challenging to predict, 11% of portfolio rolls through year-end, demand diverse. Michael Frankel added tenant base insulated due to regional consumption.

Q: Sameer Khanal asked about guidance low end.

A: Mike Fitzmorris said they stress tested with variables like lease-up timing, market rent, bad debt, same property occupancy, feeling good about low end of FFO guidance.

Q: John Kim asked about cash leasing spreads.

A: Laura Clark said small sample size, primarily one unique lease caused negative spread.

Q: Mike Mueller asked about redevelopment pace.

A: Mike Fitzmorris said $30M incremental NOI in 2025, back half weighted, redevelopment cadence ratable throughout year.

Q: Omo Tayo asked about lease terminations.

A: Mike Fitzmorris and Laura Clark said tied to office property redevelopment, favorable term fee.

Q: Craig Mailman asked about dispositions.

A: Howard Schwimmer said unsolicited offers, owner users paid premium, traded at ~4% cap rate.

Q: Greg MacKinnon asked about rent escalators.

A: Laura Clark said 3.6% embedded rent steps, focused on over 100k sq ft spaces, smaller spaces hold closer to 4%.

Q: Anthony Hau asked about location resilience.

A: Howard Schwimmer said Southern California is fully built-out, scarcity of space, different dynamic than other markets.

Q: Brendan Lynch asked about redevelopment in market weakness.

A: Laura Clark said repositioning/redevelopments drive accretive cash flow and long-term value, achieving 15% incremental returns.

Q: Michael Griffin asked about occupancy expectations.

A: Mike Fitzmorris said same-store occupancy 95.7%, portfolio occupancy to end year ~90-91%.

Q: Vikram Malhotra asked about asset sales and buybacks.

A: Mike Fitzmorris said repositioning/redevelopments offer highest returns, $30M under contract in dispositions, attractive capital use.

Q: Blaine Heck asked about stress test assumptions.

A: Mike Fitzmorris said variables include lease-up timing, market rent, bad debt, same property occupancy.

Q: Otayo Okusanya asked about 3PL exposure.

A: Howard Schwimmer said limited 3PL exposure, selective credit analysis in portfolio.