Leases  ·  Sales

Rexford Tempers Acquisitions, Reports Rising Revenue

The L.A.-based REIT slowed its rapid buying spree in the second quarter, but reported higher operating income


Rexford Industrial Realty, the real estate investment trust that controls 2 percent of Southern California’s warehousing market, tempered its furious buying spree in the second quarter this year while the landscape normalizes compared to the past few years.

Rexford reported Thursday that it closed three deals worth $83.3 million during the second quarter, followed by another two deals for $59.4 million in July. Compare that to $762.2 million closed in the first quarter.

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The firm also reported $235 million of additional acquisitions under contract, including the “imminent closing” of a $210 million acquisition near the Los Angeles-Orange County border. Rexford has completed $904.9 million of investments in the first six and a half months of the year. (The REIT completed $2.4 billion in acquisitions in 2022.)

Rexford’s portfolio is 98 percent occupied, which is up 10 basis points since the first quarter, after 450,000 square feet of positive net absorption in the second quarter. That’s in contrast to the uptick in vacancy and weakening absorption in Southern California overall.

“As expected, we are seeing our infill markets normalizing in terms of market occupancy compared to the extraordinary levels achieved during the pandemic,” co-CEO Michael Frankel said Thursday during Rexford’s second-quarter earnings call. “Directionally, occupancy is approaching pre-pandemic levels, which, at that time, also represented a very strong market.”

Rexford continues to redevelop and reposition properties and push increased lease spreads. Frankel said Southern California benefits from the lowest threat of disruption from new supply of any major market in the nation, driven by an extreme scarcity of developable land and “an essentially incurable supply-demand imbalance.”

Rexford recorded 129 leases in the second quarter for more than 2.1 million square feet, including 53 new leases for more than 960,000 square feet. Rents on those properties were increased 97 percent on a GAAP basis.

“With regard to market rents, also as expected, we are seeing some normalizing in the torrid rent growth experienced during the pandemic, which exceeded 100 percent market rent growth in our markets,” Frankel said.

Rexford reported a net operating income of $149.8 million, which is an increase of 31.9 percent compared to the second quarter last year, and it’s $7.5 million higher than the first quarter. It reported $108.4 million in funds from operations, an increase of 32.8 percent as compared to the prior year’s second quarter, and almost $6 million more than the previous quarter this year.

As of June 30, Rexford reported $2.2 billion of outstanding debt, with an average interest rate of 3.6 percent, an average term to maturity of 5.1 years, and no floating-rate debt exposure. Rexford said it has no significant debt maturities until 2026.

Gregory Cornfield can be reached at