Rexford Industrial Realty, Inc. Q4 FY2025 earnings call

• Rexford re-underwrote its near-term development pipeline, identifying 6 projects (~850,000 square feet) to dispose of, allowing redeployment of capital into more accretive opportunities.
• A programmatic disposition plan is in place, targeting $400 million to $500 million in dispositions in 2026 to support recycling capital to accretive opportunities.
• The company is driving operating efficiencies, with G&A as a percentage of revenue expected to be 6% in 2026, in line with the commitment to be below peer average.
• Strategic actions include the early renewal of Tireco's lease, derisking cash flow and preserving occupancy.
• Rexford's portfolio continues to outperform the broader market, with confidence in long-term fundamentals of infill Southern California despite near-term pressure.

In the fourth quarter, Rexford Industrial delivered solid results with core FFO per share of $0.59, in line with expectations. For the full year, after adjusting for nonrecurring costs, core FFO per share was $2.40. The company signed approximately 2 million square feet of repositioning and development leases in 2025, generating nearly $40 million of annualized incremental NOI. Total portfolio occupancy ended the quarter at 90.2%, down 160 basis points. Market rents within the portfolio were down 1% in the fourth quarter, having fallen 20% since the peak in early 2023.

• 2026 core FFO per share guidance is $2.35 to $2.40.
• Expect to stabilize and commence rent on ~1.2 million square feet of value-added projects, generating $20 million of annualized NOI, with majority online by midyear; ~$12 million of annualized in-place NOI offline due to new construction starts.
• Same-property NOI growth on net effective basis expected to decline ~2%.
• Expect to sell roughly $450 million of assets, with nearly $230 million already under contract or accepted offer.

• Macro-economic forces and elevated market availability impacting tenant demand.
• Tenant financial difficulties leading to move-outs.
• Longer downtime for repositioning and development projects affecting occupancy.
• Impact of tariffs on tenant decision-making and operating efficiencies.

Q: Any particular industries in the bad debt watch list?

A: John Nahas said there's concentration in logistics, with tenants contending with changing rates from customers causing disruption.

Q: How to marry leasing expectations with rent signs?

A: Michael Fitzmaurice said it's a mix issue, expecting to sign leases between $16.75 and $17 per square foot, with net effective re-leasing spreads 5% to 10%.

Q: Expectation for occupancy end in 2026?

A: Michael Fitzmaurice said midpoint of guide is ~95%, decelerating throughout the year with slight acceleration in Q4.

Q: Clarification on cash same-store guide?

A: Michael Fitzmaurice broke down components including occupancy decline, NOI margin, Tireco impact, bad debt, concessions, and bumps to explain the negative 1% to 2% cash guidance.

Q: What's the measurement of success and time line?

A: Laura Clark said success is driving outsized shareholder returns, with focus on executing strategic priorities over time to see fruits of labor.

Q: Thoughts on mark-to-market and dispositions?

A: Michael Fitzmaurice said offsetting items in mark-to-market, and Laura Clark discussed disposition strategy including identified $230M under contract and programmatic sales neutral to accretive to FFO and NAV.

Q: Bidder pool and pricing on dispositions?

A: Laura Clark said buyer pool includes developers for near-term development sites and user sales for operating properties, with near-term development sites sold at ~4% cap rate and operating properties under contract at ~4% cap rate.

Q: View on port exposure and tariffs?

A: Laura Clark said tenant base focused on local consumption, with tariffs affecting tenant expense structures and decision-making around consolidation and space rationalization.

Q: Tireco lease roll down comparison to ABR?

A: Michael Fitzmaurice said new lease shifted from triple net to gross, resulting in ~30% unfavorable impact including rent and triple net charges.

Q: Expected sources and uses of cash in 2026?

A: Michael Fitzmaurice said sources include $450M in dispositions ($230M under contract) and $166M cash, uses include ~$203M in development/repositioning spend, leaving ~$413M for redeployment.