Rexford to Sell $1.2B SoCal Portfolio to EQT

Rexford Industrial Realty is significantly slimming down its portfolio in Southern California.

The Los Angeles-based industrial real estate investment trust (REIT) announced it has agreed to sell a portfolio of properties to an affiliate of EQT Real Estate for approximately $1.2 billion. The deal is expected to close by the end of the third quarter.

The sale is part of Rexford’s plan to unload $1.5 billion to $2 billion in non-core properties, and improve its portfolio and balance sheet. 

Rexford did not disclose the properties included in the portfolio, but said more details will be provided when the transaction closes. The assets were described as having limited long-term growth potential, greater competing supply, shorter remaining lease terms or above-market rents. The portfolio sold to EQT is expected to generate a 5.5 percent cash net operating income yield in 2027 due to anticipated move-outs and the drops to what are now above-market rents.

“By strategically recycling capital from select non-core assets, we are concentrating our portfolio around the properties we believe offer the strongest long-term cash flow growth and value creation opportunity,” Rexford CEO Laura Clark said in a statement.

Rexford plans to use the proceeds to pay down debt maturing in 2027, potentially repurchase shares under its $1 billion buyback program, and fund its redevelopment and development pipeline.

Including the EQT deal, Rexford has now closed or has under contract about $1.5 billion of dispositions this year, and is in negotiations on more properties for sale.

As of June 30, Rexford owned 409 properties encompassing approximately 49.9 million rentable square feet, all concentrated in infill Southern California.

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