Rexford Sees Record Leasing, Lower NOI in First Quarter Under New Leadership

Rexford Industrial Realty embarked on a new era for the company when it entered 2026, as it pivoted sharply from aggressive acquisitions to recycling capital and preserving occupancy.

The Los Angeles-based industrial real estate investment trust reported net income of $87.9 million in the first quarter of 2026, up from $68.3 million a year earlier. Property sales and record leasing propelled the rebound after a net loss in the fourth quarter of 2025 that stemmed from the company’s CEO transition, with Laura Clark taking over for Howard Schwimmer and Michael Frankel.

Clark officially stepped into the role April 1, while the investment and development firm was already well into its new focus on efficiency rather than expansion.

As such, Rexford continued to lean heavily into dispositions rather than acquisitions. The company sold five properties totaling roughly 315,000 square feet for $127.4 million during the quarter, including sites it chose not to develop. The firm had an additional $170 million of assets under contract or with accepted offers at the end of March, and maintains a $400 million to $500 million target for total dispositions in 2026.

“Through these strategic dispositions, we are de-risking cash flows, capturing premium valuations and avoiding future dilutive capital spend,” Clark said Friday on Rexford’s earnings call.

That differs significantly from the REIT’s acquisition-heavy strategy in prior years, when Rexford would spend at least $1 billion to $2 billion per year scooping up industrial development properties around Southern California.

Rexford also pumped the brakes on its development pipeline. The firm stabilized two projects totaling nearly 145,000 square feet during the quarter, and expects to start roughly 1.2 million square feet of development in 2026, representing $160 million to $170 million in total costs. But, Rexford removed a development in City of Industry and another in the Inland Empire from its pipeline.

“We continue to rigorously evaluate the strategy for each asset in our pipeline, with a focus on maximizing risk-adjusted returns,” Rexford Chief Operating Officer John Nahas said.

Rexford’s core funds from operations (FFO) totaled $139.8 million for the quarter, down 0.9 percent year-over-year from $141 million. On a per-share basis, FFO came in at 61 cents, a 1.6 percent decline from 62 cents reported in the prior-year period. Compared to the previous quarter, FFO rose from $136.2 million.

Rexford’s total rental income for the period reached $242.1 million, down slightly from $243.2 million in the fourth quarter of 2025, and from $248.8 million in the first quarter of 2025. Net operating income (NOI) declined 4.2 percent year-over-year to $185.4 million.

The firm also expects same-property NOI growth to decline 1 to 2 percent for the year, although Rexford expects its occupancy will increase slightly to a range of 95.1 percent to 95.6 percent.

Leasing activity, however, remained a bright spot, with Rexford reporting 4.1 million square feet of new and renewed leases. And most of the leases were executed in the second half of the quarter, suggesting market momentum going into the second quarter.

“We set a record for leasing activity … reflecting increased tenant activity and demand for our higher-quality portfolio,” Clark said. “First-quarter leasing activity for the Rexford portfolio was over 70 percent higher year-over-year.”

The stronger-than-expected leasing activity helped push Rexford to modestly raise its full-year 2026 guidance, increasing its core FFO outlook to a range of $2.37 to $2.42 per share, up from $2.35 to $2.40 previously.

The REIT’s portfolio occupancy remained relatively stable. Same-property occupancy stood at 96.1 percent at quarter’s end, with average occupancy at 96.3 percent.

But, comparable rental rates declined 10 percent on a net effective basis and 15.4 percent on a cash basis, driven largely by the 1.1 million-square-foot Tireco extension. Excluding that deal, net effective rents rose 5.5 percent, while cash rents fell 1.8 percent.

“[The Tireco renewal] was financially advantageous to preserve the occupancy,” Nahas said. “While this renewal generated an approximately 30 percent negative spread, it was amplified by the above-market in-place rent … and is not indicative of future leasing spreads in the portfolio.”

Rexford reported $1.3 billion in liquidity, and approximately $3.3 billion of debt with no significant maturities until 2027.

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