Rexford Planning Up To $2B In Dispositions This Year
Rexford Industrial Realty plans to sell off up to $2B of its portfolio, using the proceeds to pay off debt that is set to mature next year.
Rexford increased its full-year 2026 disposition guidance to $1.5B to $2B, according to second-quarter filings submitted to the Securities and Exchange Commission last week. The increase in dispositions is a big jump from the $400M to $500M it was planning earlier this year.
The increase is the result of an extensive review of the company’s portfolio in the first half of the year, Rexford CEO Laura Clark told investors on a Friday earnings call. The review identifies about 8M SF of property, $2B in assets, “that do not align with our long-term strategy,” Clark said.
Properties tagged for sale have “more limited value creation opportunity, elevated competitive supply, shorter remaining lease durations, and substantially above-market in-place rents,” Clark said.
Many of them were bought at the height of the market, Rexford Chief Financial Officer Mike Fitzmaurice said.
Rexford has a portfolio of approximately 50M SF of rentable space, and a sale of 8M SF would represent 16% of its portfolio.
Rexford has sold 12 properties totaling approximately 886K SF and $265.3M this year, including six sites previously in the near-term development pipeline. Seven of those sales, worth roughly $138M, occurred in the second quarter, according to a release from Rexford.
The REIT is in “advanced discussions on a substantial portion” of the planned sales, Clark said.
The decision to sell more properties has made an impact on Rexford’s Q2 earnings. The REIT posted a net loss attributable to common stockholders of $506.9M, which is attributed to a noncash impairment resulting from the sales. Selling the properties sooner than previously planned changed their value on Rexford’s books, according to a release.
Rexford is taking the hit now to avoid one later: $1B of the projected proceeds from the sales of these noncore properties will go toward paying down debt that is set to mature in 2027. Rexford has $1B of debt — 31% of its total debt — maturing next year.
Tenants signed 117 leases with Rexford for 2.1M SF in the second quarter, and average same-property portfolio occupancy for the period was 95.7%.
Rexford focuses on industrial properties in infill markets in Southern California. The REIT said markets it operates in were experiencing positive net absorption and declining vacancy, though rent growth was down 1% in the quarter. But executives underscored that Rexford’s move to sell properties wasn’t motivated by a lack of faith in Southern California industrial real estate.
“Taken together, this portfolio realignment enhances our financial flexibility, improves the quality and consistency of our cash flows, and positions Rexford for long-term growth and value creation,” Clark told investors on the earnings call. “To be clear, these actions together reflect conviction around our long-term view of infill Southern California industrial real estate.”
