Rexford REIT Pivots From Being SoCal’s Biggest Buyer

Despite a record year of warehouse and logistics leasing, Rexford Industrial Realty, one of Southern California’s biggest heavyweights over the past decade, is transitioning into a significantly new era.

Instead of separate nine- and 10-figure buying sprees and persistent expansion, the Los Angeles–based real estate investment trust has shifted to a strategy defined much less by acquisitions and expansion, and much more by “recycling capital,” and slower, selective development, focused on occupancy and cash-flow instead of rent growth.

As such, the company did not acquire any properties in the fourth quarter of 2025 and had zero under contract. Conversely, Rexford sold seven properties in 2025 totaling $217.5 million, including just one property sold in the final period for $29.9 million.

Furthermore, the firm said it has another $230 million in additional dispositions under contract or accepted offer heading into this year, and it plans $400 million to $500 million in dispositions in 2026.

The major pivots reflect the bigger operational changes tied to activist investor Elliott Investment Management, which pushed Rexford to re-evaluate and cut costs. The firm’s fourth-quarter earnings call on Thursday included just a brief recording of outgoing co-CEOs Howard Schwimmer and Michael Frankel, who are handing over the reins to Chief Operating Officer Laura Clark on April 1.

“As we continue to refine our strategy, maximizing risk-adjusted returns remains a critical component of driving value creation,” Clark said Thursday. “All capital allocation decisions will be evaluated through our renewed, rigorous underwriting criteria that considers our current cost of capital and market dynamics.” 

Those personnel changes and their correlating executive transition costs of $60.2 million were a big driver to a quarterly net loss, even though Rexford notched a record year for leasing activity. Specifically, Rexford reported a net loss of $68.7 million in the fourth quarter, compared with positive net income of $59.4 million in the fourth quarter of 2024.

However, Rexford reported core funds from operations (FFO) of $136.2 million in the fourth quarter of 2025, up from $128.6 million in the same quarter of 2024, reflecting a 5.9 percent increase. For the year, core FFO reached $558.6 million, a 9.2 percent increase year-over-year, although the company forecasts core FFO per share to remain flat or decline slightly this year.

Rexford reported $264.4 million in total revenue in the fourth quarter, which is a 4.4 percent increase from the $253.2 million recorded in the previous quarter, and a 17.5 percent jump from $225.1 million in the last quarter of 2024.

The portfolio’s same-property net operating income increased just 0.4 percent in the fourth quarter and 1.1 percent for the full year. And, the REIT expects negative 2.5 percent to negative 1.5 percent same-property NOI growth this year.

Rexford executives noted early signs of market stabilization, but said they aren’t yet able to “call an inflection point in the market.”

“We’re certainly seeing some signs of stabilization … indicating that we’re still bouncing around the bottom here,” Clark said.

Rexford expects to start 1.1 million square feet of new projects in 2026, representing $130 million to $150 million in total costs.

The landlord also closed 3 million square feet of leases in the fourth quarter, and a record 10.4 million square feet for the full year. But the firm’s leaders noted that it’s taking longer to re-lease available space — up to roughly 10 to 11 months from about nine months previously.

“Tenant demand continues to be influenced by broader macroeconomic forces and elevated levels of market availability … contributing to a more measured pace of demand,” Clark added. “As a result, according to CBRE, market rents declined 10 basis points in the quarter, and 9 percent year-over-year. Vacancy also increased 30 basis points during the quarter.”

Rexford’s broader portfolio remained about 96 percent occupied excluding repositioning assets, but it expects average occupancy of 94.8 percent to 95.3 percent in 2026.

In an effort to preserve occupancy in the face of near-term pressure, Rexford announced an early three-year renewal for its largest tenant — Tireco, at a 1.1 million-square-foot property in California’s Inland Empire — as it came with a 30 percent negative mark-to-market adjustment.

Market rents in Rexford’s portfolio declined about 1 percent quarter-over-quarter and roughly 8 percent year-over-year, though the company still estimates about 9 percent mark-to-market upside between in-place rents and current market rents. The firm also has more than 14,000 acres of land controlled for future development.

“Rexford’s portfolio continues to outperform the broader market, and we remain confident in the long-term fundamentals of infill Southern California, despite near-term pressure impacting our 2026 growth expectations.” Clark said.

Gregory Cornfield can be reached at gcornfield@commercialobserver.com.