Rexford (REXR) Leases 1.3M Square Feet, Acquires $143M QTD

Rexford Industrial Realty, Inc. REXR is experiencing decent demand for its properties. This industrial REIT recently announced that so far in the second quarter of 2024, it has executed 1.125 million square feet of new and renewal leases, with an average size of 16,000 square feet. This included around 675,000 square feet of renewal leases and 450,000 square feet of new leases.

What is encouraging is that the comparable rental rates on new and renewal leases increased by 68% compared to prior rents on a net effective basis and by 51% on a cash basis. This is also in line with expectations.

The REIT also experienced solid occupancy, with the same property portfolio occupancy reaching 96.5% as of May 22, 2024, representing a 10-basis point increase compared to the prior quarter end.

Rexford also continues to focus on a disciplined approach to highly accretive capital allocation through strategic investment and disposition activity. The company completed two industrial property investments for a total of $143 million. In the same month, REXR completed the disposition of three properties for a total of $27 million. The company funded the acquisitions using cash on hand and 1031 exchange disposition proceeds.

Rexford’s acquisitions included the purchase of 1901 E Rosslynn Avenue, Fullerton, in the North Orange County submarket, for $94.3 million, and 16203-16233 Arrow Highway, Irwindale, in the LA — San Gabriel Valley submarket, for $48.5 million.

With these transaction activities, Rexford Industrial has completed $1.3 billion of investments and $37 million of dispositions year to date. Also, REXR presently holds a near-term acquisition pipeline, with around $40 million in new investments either under contract or with accepted offers within the prime infill Southern California industrial markets.

These acquisitions are a strategic fit for Rexford as Southern California is considered to be a highly valued industrial property market with supply constraints in the United States. Going forward, Rexford is poised to gain traction from its healthy market fundamentals, with a decent balance sheet strength and selective approach to capital allocation.

However, the elevated supply of industrial real estate in several markets is likely to fuel competition, create pressure on vacancy levels and curb Rexford’s pricing power, thereby restricting rent growth momentum to some extent. High interest rates also add to its concerns.

Shares of Zacks Rank #2 (Buy) REXR have risen 4.6% over the past month, outperforming its industry’s growth of 1.4%.

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Other Stocks to Consider

Some other top-ranked stocks from the broader REIT sector are American Tower AMT and Cousins Properties CUZ, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for American Tower’s 2024 FFO per share is pegged at $10.39, which suggests 5.27% year-over-year growth.

The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share has been revised two cents upward over the past month to $2.63.    

Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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