REXR

• Strategic Portfolio Realignment

  • Management completed a comprehensive asset-by-asset portfolio review and identified $2 billion of non-core assets (8 million square feet) for disposition, representing 15.7% of the firm's total 51 million square foot portfolio.
  • Non-core assets were selected for sale due to limited value creation opportunity, elevated competitive supply, shorter remaining lease durations, and in-place rents more than 20% above current market rates, with high upcoming rent roll down risk.
  • The remaining core portfolio of 43 million square feet of high-quality infill Southern California assets has stronger embedded long-term growth potential and cash flow durability.
  • A competitive disposition process is already underway, with the firm in advanced negotiations on a substantial portion of the assets, and management expects the vast majority of sales to close by the end of 2026. The current valuation gap between public and private real estate markets creates an attractive window to execute this plan.

• Market Fundamentals

  • The broader infill Southern California industrial market recorded positive net absorption in Q2 2026, with overall market vacancy declining 30 basis points.
  • Positive absorption was seen in IE West, San Diego, and Greater Los Angeles (second consecutive positive quarter), while Orange County still posted negative absorption amid elevated existing supply, though tour activity has picked up recently. Market rents declined just over 1% sequentially, but management views positive net absorption as a precursor to a market inflection.
  • New supply under construction is at multi-decade lows, and recent regulatory changes have increased barriers to future development, supporting long-term asset scarcity and value.

• Leasing Execution

  • Q2 2026 leasing volume totaled 2.1 million square feet, bringing year-to-date 2026 volume to 6.2 million square feet, a 50% increase year-over-year compared to H1 2025.
  • Demand is healthy for spaces under 50,000 square feet across most submarkets, and activity is picking up for spaces over 100,000 square feet driven by corporate demand for Class A product. Flight-to-quality to functional modern space is supporting Rexford's leasing pipeline.

• Operational and Capital Efficiency

  • The firm identified an additional $3 million of G&A cost savings in Q2 2026, bringing total cumulative G&A savings since 2025 to $22 million. One new development project (16,400 square foot Gale project in City of Industry) was started this quarter, expected to deliver in late 2027 and meets the firm's return thresholds.

• Capital Allocation

  • $1 billion of expected disposition proceeds will be used to repay 2027-maturing debt rather than refinancing at current higher interest rates, which will reduce net debt to adjusted EBITDA to 3.5x from 4.5x, strengthening the balance sheet.
  • Remaining proceeds will be allocated to highest risk-adjusted return opportunities, including opportunistic share repurchases at a discount to intrinsic value, and selective investment in high-yield portfolio repositioning and development. The board authorized a new $1 billion share repurchase program; year-to-date 2026 the firm repurchased $100 million of shares, and over the last 12 months total repurchases hit $550 million (approximately 6% of outstanding shares).

• Full year 2026 core FFO per share guidance midpoint was raised by $0.01, driven by better-than-expected same property NOI growth, lower G&A, and Q2 settlement proceeds, partially offset by modest near-term dilution from projected capital recycling timing.
• Same property NOI growth guidance midpoint was raised 75 basis points on both a cash and net effective basis, primarily due to the removal of lower-growth non-core assets included in 2026 planned dispositions, combined with continued leasing momentum.
• Average full year 2026 same property occupancy guidance was raised to a range of 95.3% to 95.7%, an increase of 15 basis points at the midpoint.
• Full year 2026 cash releasing spreads guidance is now -15% to -10%, adjusted to reflect a change in the expected mix of leases to be executed in 2026.
• Full year 2026 G&A guidance was lowered to $57 million from the original $60 million target, reflecting ongoing cost discipline.
• 2026 interest expense guidance was reduced to $105 million, as the firm plans to pay off all but $575 million of 2027-maturing debt in 2026, with minimal prepayment penalties.
• Full year 2026 disposition guidance is set at a range of $1.5 billion to $2 billion.

Rexford Industrial is a single-market industrial real estate firm focused entirely on infill Southern California, so it does not report separate product segments. Overall consolidated Q2 2026 results: core FFO per share of $0.63, up $0.02 from Q1 2026. Same property NOI growth was 1.5% on a cash basis and -0.5% on a net effective basis, both above internal expectations. Ending same property occupancy was 95.1%, up 30 basis points year-over-year. Cash releasing spreads for Q2 2026 were -11.3%, driven by rent roll downs from leases signed at the 2021-2022 market peak. The company reported a $625 million non-cash impairment charge related to planned non-core asset dispositions, which has no impact on core FFO or cash flow. Total liquidity at quarter end was $1.3 billion, with net debt to adjusted EBITDA of 4.5x.

• Non-core assets included in the disposition plan face material upcoming rent roll down risk, with in-place rents more than 20% above current market rates; retaining these assets would have resulted in negative NOI impact in 2027 and 2028 as leases roll over.
• Market rents remain under moderate sequential pressure, and Orange County still has elevated supply that is taking time to absorb, with continued negative net absorption in that submarket as of Q2 2026.
• Even after portfolio realignment, releasing spreads for the retained core portfolio will remain under pressure over the next two years from peak-market leases rolling over, though this headwind is shrinking and well understood.
• Disposition pricing and timing depend on market interest and negotiation outcomes, and there is a risk that final sale pricing could differ from current expectations, impacting long-term accretion.
• The market recovery is not expected to be linear, with some submarkets and product segments improving faster than others, creating uneven performance across the portfolio.
• Occupancy may see quarter-over-quarter volatility from large unplanned move-outs (such as tenant bankruptcies) that temporarily reduce reported occupancy.

Q: What is the expected 2027 accretion/dilution from the disposition program, what cap rates are expected for sales, and how will proceeds be allocated between 2027 debt paydown and immediate share repurchases? / A: Management declined to disclose current cap rate expectations during ongoing negotiations to avoid impacting optimal execution, but they expect pricing will result in 2027 FFO per share that is neutral to accretive, not dilutive. Most $1.5-$2 billion in dispositions are expected to close by mid-Q4 2026; $500 million of the planned $1 billion debt paydown can be completed quickly, while the remaining $575 million of 2027 debt will be repaid at maturity in March 2027. Remaining capital will be deployed opportunistically to share repurchases based on share price, consistent with the firm's active buyback program over the past year.

Q: Can you elaborate on where market improvements and weaknesses are located across Southern California submarkets and product sizes? / A: Strength is consistent across all submarkets for spaces under 50,000 square feet, with stable or growing pricing. In the Inland Empire, most positive net absorption is in spaces over 500,000 square feet, a size range Rexford has limited exposure to, as its average unit size is ~30,000 square feet. In Greater Los Angeles, most positive absorption is in spaces under 200,000 square feet, which aligns well with Rexford's portfolio. The primary pocket of weakness is Orange County Class A product, which has high leftover supply from peak development and continues to see negative absorption and outsized rent pressure. Management notes recovery is not linear, with improvement occurring unevenly across submarkets.

Q: Can you walk through how the transaction can be neutral to accretive to 2027 FFO, and confirm that the dividend remains safe? / A: The $1 billion debt repayment cuts annual interest expense at an average 4.1% in-place rate, creating a certain quantifiable benefit. The non-core assets being sold have large known upcoming rent roll down risk (20%+ above market in-place rents) that would have negatively impacted earnings in 2027 and 2028, which this transaction eliminates. Remaining proceeds deployed into share buybacks have historically yielded 6-7%, which adds to accretion. This plan strengthens the balance sheet and improves cash flow durability, so the dividend is fully safe and management remains confident in continued dividend growth.

Q: Is the Q2 2026 occupancy decline at Rexford (while overall market vacancy fell) explained by timing, and should we expect occupancy to grow in H2 2026? / A: The 60 basis points quarter-over-quarter occupancy decline was driven by just two large move-outs in IE West (~200,000 square feet each): one unplanned from a bankruptcy, and one expected and budgeted. The bankruptcy-vacated unit was already re-leased as of the call, with occupancy resuming in September 2026, so the decline will reverse in next quarter's data. Management expects occupancy to decline another 50-100 basis points in Q3 from planned move-outs, then reaccelerate in Q4 2026.

Q: Can you confirm the current 4% overall portfolio mark-to-market includes the non-core assets for sale, and what is the long-term profile after realignment? / A: The -4% overall portfolio cash mark-to-market does include all assets currently held, including the non-core assets planned for sale. Management expects the mark-to-market position will improve after portfolio realignment, as the assets with the steepest upcoming rent resets are being sold. This transaction leaves the firm with a cleaner, lower-risk core portfolio, a stronger balance sheet, and more liquidity to deploy into high-return opportunities, while existing retained repositioning and development pipelines already carry $50 million in annualized NOI upside once fully leased.