Rexford Industrial Realty, Inc. ((REXR)) has held its Q1 earnings call. Read on for the main highlights of the call.
Rexford Industrial Realty, Inc. recently held its earnings call, revealing a balanced sentiment. The company showcased strong leasing performance and strategic capital allocation, backed by solid financials. However, challenges such as declining market rents, tariff impacts, and extended lease-up periods were also highlighted.
Strong Leasing Performance
Rexford Industrial Realty, Inc. executed 2.4 million square feet of leases, achieving net effective and cash rent spreads of 24% and 15%, respectively. The company also reported an impressive 82% tenant retention rate, marking the highest level over the past year.
Accretive Capital Allocation
The company completed five repositioning projects totaling 560,000 square feet, yielding a 7.6% unlevered return. Additionally, Rexford disposed of assets totaling $103 million at low 4% exit cap rates, showcasing strategic capital allocation.
Solid Financial Position
Rexford reported a Core FFO of $0.62 per share, reflecting a 7% growth both sequentially and year over year. The company maintained a low leverage balance sheet with a net debt to EBITDA ratio of 3.9 times.
High Liquidity
Rexford boasts more than $1.6 billion in liquidity, including $608 million in cash and nearly full availability on a $1 billion unsecured line of credit, ensuring financial flexibility.
Decline in Market Rents
The company faced a 2.8% sequential decline and a 9.4% year-over-year drop in market rents. Larger spaces over 100,000 square feet experienced excess supply, impacting overall market rents.
Impact of Tariffs
Recent tariff announcements have led to some tenants deferring decision-making, reducing leasing activity on vacant spaces from 90% to 80%, affecting the company’s leasing dynamics.
Extended Lease-up Timing
The projected lease-up timing for repositioning and redevelopment increased to nine months due to tariff disruptions, indicating potential delays in occupancy.
Forward-Looking Guidance
Rexford’s guidance anticipates a potential increase in lease-up timing due to recent tariffs, with a projected $15 million net NOI contribution from repositioning and redevelopment. The company remains optimistic about long-term value creation, supported by its strong liquidity position and plans to recast its credit facility in May.
In summary, Rexford Industrial Realty, Inc.’s earnings call presented a balanced outlook. While the company demonstrated strong leasing performance and strategic capital allocation, challenges such as declining market rents and tariff impacts were acknowledged. The company’s robust financial position and liquidity provide confidence in navigating current economic uncertainties.