REXFORD INDUSTRIAL REALTY, INC. Rexford
Industrial
Realty
NYSE: REXR
www.rexfordindustrial.com
Investor Presentation
October 2023
2
REXFORD
INDUSTRIAL
INVESTOR PRESENTATION
Forward Looking Statements
This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. We caution investors that any forward-looking statements presented herein are based on management's beliefs and assumptions and information currently available to management. Such statements are subject to risks, uncertainties and assumptions and may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. These risks and uncertainties include, without limitation: general risks affecting the real estate industry (including, without limitation, the market value of our properties, the inability to enter into or renew leases at favorable rates, portfolio occupancy varying from our expectations, dependence on tenants' financial condition, and competition from other developers, owners and operators of real estate); risks associated with the disruption of credit markets or a global economic slowdown; risks associated with the potential loss of key personnel (most importantly, members of senior management); risks associated with our failure to maintain our status as a REIT under the Internal Revenue Code
of 1986, as amended; possible adverse changes in tax and environmental laws; and potential liability for uninsured losses and environmental contamination. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," or "potential" or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. The risks described above are not exhaustive and additional factors could adversely affect our business and financial performance, including those discussed in our annual report on Form 10-K, for the year ended December 31, 2022, and subsequent filings with the Securities and Exchange Commission. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise. Projections, assumptions and estimates of our future performance and the future performance of the industry in which we operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described above. These and other factors could cause results to differ materially from those expressed in our estimates and beliefs and in the estimates prepared by independent parties. Past performance is no guarantee of future results.
Rexford Overview
2001 | REXR | S&P 400 | $12.8B |
Founded | NYSE | Member | Entity Value1 |
100% | 45.0M SF | 68% | 20% |
Infill Southern | Owned2 | Rexford Total | Average Annual |
California | Shareholder Return | Dividend Growth | |
(Last 5 years)3 | (Last 5 years)4 |
3
REXFORD
INDUSTRIAL
INVESTOR PRESENTATION
A Superior, Highly Differentiated Strategy
Strongest Industrial Market
Opportunity
Irreplaceable Portfolio
Superior Cash Flow Growth Through
Value Creation
Low-Leverage Balance Sheet and
Substantial Liquidity
ESGi Purpose Drives Long-Term Value
Rexford Industrial
Largest Pure-Play US-Focused Industrial REIT
Equity Market Cap ($B)1
$100 | ||||||
$10 | ||||||
$8 | ||||||
$6 | $6 | $5 | ||||
PLD | REXR | EGP | FR | STAG | TRNO | |
% US5 | 76% | 100% | 100% | 100% | 100% | 100% |
% Direct | 58% | 100% | 100% | 100% | 100% | 100% |
Owned5 |
- Calculated as the market value of fully diluted common shares (including common shares outstanding, Operating Partnership units, unvested shares of restricted stock, and vested and unvested LTIP units and performance units) as of 10/17/2023, plus liquidation value of preferred equity and total debt at balance sheet carrying value as of 9/30/2023
- As of 10/17/2023
- Based on share price as of 9/30/2018 through 10/17/2023
- Based on dividends from 2018 to 2023, including annualized dividend declared on 10/16/2023
- Source: Company filings. Direct Owned represents percentage of consolidated and unconsolidated portfolio fully owned and not encumbered by joint ventures or co-investment vehicles
Rexford Positioned for Substantial Growth
Internal growth opportunity driven by value creation strategy
4
REXFORD
INDUSTRIAL
INVESTOR PRESENTATION
33% Projected Embedded
Internal Cash NOI Growth
2-year NOI growth assuming no further market rent
growth and no future acquisitions
$26M $731M | |||||||||||||
$28M | |||||||||||||
$58M | Embedded | ||||||||||||
Rent Steps | |||||||||||||
3Q/4Q | |||||||||||||
Acquisitions | |||||||||||||
$71M | |||||||||||||
Mark-to- | |||||||||||||
Market | |||||||||||||
$548M | |||||||||||||
Repo/ | |||||||||||||
Redev | |||||||||||||
3Q 2023 | 3Q 2025 | ||||||||||||
NOI | NOI | ||||||||||||
(Annualized)1 | (Annualized)2 |
Source: Company filings unless otherwise noted
$183 Million Cash NOI, 33% Growth
2-year projected embedded growth within in-place portfolio
$71M Repositioning / Redevelopment value creation at projected aggregate unlevered 6.4% yield
$58M 46% cash mark-to-market for in-place rents over next 2 years
$28M Acquisitions completed in 3Q/4Q
$26M Annual embedded rent steps of 3.5% for total portfolio
- Based on the annualized sum of 3Q23 cash NOI of $137M. Net Operating Income (NOI) is a non-GAAP measure. See Appendix for a reconciliation of non-GAAP measures used in this presentation
- Includes impact of (a) Repo/Redev: Stabilization of properties and spaces undergoing repositioning and redevelopment; (b) Mark-to-Market:Re-leasing of next 24-month expiring square footage,
not including repositioning properties, at projected re-leasing spreads; and (c) 3Q/4Q Acquisitions: Acquisitions closed 3Q23 to 4Q23 as well as two imminent transactions in the LA-San Gabriel Valley market not already included in 3Q23 cash NOI. Assumes no future rent growth, acquisitions, or changes in consolidated portfolio. The Company does not provide a reconciliation for its projected internal cash NOI Growth to net income available to common stockholders, the most directly comparable forward looking GAAP financial measure, due to the inherent variability in timing and/or amount of various items that could impact net income available to common stockholders, including, for example, gains/losses on debt extinguishment, impairments and other items that are outside the control of the Company
Sector-Leading Performance
Differentiated outperformance = The Rexford Alpha
Consolidated NOI CAGR1 | FFO/Share Growth3 |
33% | Values Indexed to 9/30/2018 | |||||||||
Peer Average: 16% | 15% | The Rexford Alpha | ||||||||
CAGR | 46% greater | |||||||||
FFO/share growth | ||||||||||
5 | driven by | |||||||||
REXR | REXR FFO / Share | differentiated, | ||||||||
REXFORD | PLD | TRNO | STAG | EGP | FR | 10% | value-driven | |||
INDUSTRIAL | Peer FFO / Share | CAGR | business model | |||||||
INVESTOR | ||||||||||
PRESENTATION | Dividend/Share CAGR2 | |||||||||
20% | 2024 Consensus | |||||||||
Peer Average: 10% | FFO/Share Growth3 | |||||||||
Rexford | Peer Average | |||||||||
12% | 6% | |||||||||
REXR | EGP | PLD | TRNO | FR | STAG | 2018 2019 2020 2021 2022 | 2023 |
- 5-yearCAGRs calculated using consolidated NOI through 9/30/2023 for REXR and published results for peers as of 6/30/2023. NOI is a non-GAAP financial measure. For a description of NOI and a reconciliation of NOI, please see the Appendix
- 5-yearCAGRs calculated using Dividend/Share for FY 2019 - 2022 and most recent quarterly dividend multiplied by four for 2023
- FFO/Share growth as of 9/30/2023. Peer group includes PLD, EGP, FR, STAG and TRNO. 3Q23 based on actuals for REXR and consensus estimates as of 10/17/2023 for peers. FFO is a non-GAAP financial measure. For a description of FFO and a calculation of these ratios, please see the Appendix. 2024 consensus estimates include analyst consensus estimates for 2024 FFO per share as of 10/17/2023 for Rexford Industrial and peer group. Estimates represent analyst projections and are not indicative of Company estimates and/or guidance. Note that Rexford Industrial consensus estimates include estimates for future acquisition activity and the Company does not provide guidance related to future acquisition, disposition or balance sheet related activities therefore consensus estimates may not be comparable with future company performance and guidance forecasts
Superior Market Backdrop Driven by Nation Leading Market Dynamics
Long term supply demand imbalance expected to position Infill Southern California for continued outperformance and future rent growth
Infill Southern California lowest vacancy in the nation | ||
and smallest sequential increase compare favorably | ||
to an average increase of 70 basis points to 5.1% | ||
vacancy in the top U.S. markets | ||
6 | ||
REXFORD
INDUSTRIAL
INVESTORVacancy Rate Changes
PRESENTATION
2Q 2023 - 3Q 2023 | +70 bps | ||||
+60 bps | |||||
4.8% | 5.1% | ||||
4.4% | |||||
4.2% | |||||
+30 bps | |||||
1.9% | 2.2% | ||||
2Q | 3Q | 2Q | 3Q | 2Q | 3Q |
Infill SoCal | US Average | Top 5 Markets |
Excluding Inill SoCal | Excluding Inill SoCal |
Inability to materially increase net supply insulates Rexford's portfolio more than other major U.S. markets experiencing record levels of new net supply
Industrial Supply Risk1
3Q 2023 | |||||
10.7% | |||||
8.8% | 8.8% | ||||
U.S. Supply Risk 7.1% | |||||
5.1% | 4.8% | ||||
4.0% | |||||
Dallas | Atlanta | Philly | NJ | Chicago | Infill |
SoCal |
Source: CBRE and Rexford internal portfolio metrics. Infill Southern California refers to Greater Los Angeles, Orange County, San Diego, and Inland Empire-West. Excludes Inland Empire- East. Other Top 5 Industrial Markets refers to Atlanta, Chicago, Dallas/Fort Worth, New Jersey and Philadelphia
1. Based on construction of new supply as a percentage of existing supply within each market
Differentiated Portfolio Drives Outsized Performance Within Infill Southern California
High-Quality Portfolio Outperforms Infill Southern California market
7
REXFORD
Rexford's
Differentiated
Portfolio
Only approximately 20% of properties that contribute to the market negative absorption YTD are of higher quality/ functionality comparable to the Rexford portfolio1
Rexford vacancy change over prior year outperforming market increasing by only +20 bps compared to Infill Southern California market of +110 bps
INDUSTRIAL
INVESTOR PRESENTATION
• Higher |
Functionality |
2023 Net Absorption | Cumulative Vacancy Change |
• Premium Infill |
Locations |
1.0% | 1.0% |
Rexford |
Values Indexed to 4Q 2022
Rexford Same Property Portfolio
• Active Asset |
Management |
• Limited Supply |
of Comparable |
Type/Size Product |
(Rexford Average |
Unit Size ~25K SF) |
Infill SoCal Market |
0.1% |
0.0% |
-0.2% |
-0.3% |
Infill Southern California
Infill SoCal
Vacancy Increase:
+110 bps
Rexford Vacancy Increase: +20 bps
1Q | 2Q | 3Q |
4Q 2022 | 1Q 2023 | 2Q 2023 | 3Q 2023 |
Source: CBRE and Rexford internal portfolio metrics.
1. Comparable property reflects similar quality, functionality and location that compares directly to the Rexford portfolio and is not a measure for the entire market, much of which is comprised of lower quality, less functional industrial property in less desirable locations due to the extensive size, age and geography associated with the 1.8 billion square foot Infill SoCal industrial market
Rexford
Value Creation
Opportunity
STRONGEST INDUSTRIAL MARKET OPPORTUNITY
Leading Market Dynamics Supported by Nation's Largest and Strongest Industrial Market
8
REXFORD
INDUSTRIAL
INVESTOR PRESENTATION
Largest U.S. Market
- Largest U.S. market and fourth largest global market
- Vast and diverse economy with ~22 million residents and over 600,000 businesses1
Nation-Leading Market Dynamics
- Lower vacancy experienced through all economic cycles2
- Lowest supply risk market in the nation3
17.7 | Largest Global Industrial Markets4 | |||||||
IN BILLIONS OF SF | ||||||||
7.5 | ||||||||
5.1 | ||||||||
2.2 | 2.0 | 1.7 | 1.5 | 1.5 | 0.8 | |||
USA | China | Japan | So. CA | Germany | UK | Canada | France | Italy |
Persistent Supply-Demand Imbalance | Size and Value of Top US Industrial Markets4 |
BASED ON IMPLIED MARKET ABR |
- Extreme scarcity of developable land within Infill SoCal, permanent natural barriers and restrictive zoning constrain supply
- Diminishing supply as industrial converts to other uses
Diverse Tenant Demand
- Mission-criticaltenant locations essential to businesses
- Exceptionally diverse array of industries with growing demand for those uses
NY/ | PHILADELPHIA |
NO. NEW JERSEY | |
$12B | |
$13B | |
SOUTHERN CALIFORNIA | ATLANTA |
$42B | |
$8B | |
CHICAGO | DALLAS/ |
FT. WORTH | |
$13B | |
$11B | |
- Source: U.S. Census Bureau for Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura Counties
- Source: CBRE and Rexford internal portfolio metrics. Infill Southern California refers to Greater Los Angeles, Orange County, San Diego, and Inland Empire-West. Excludes Inland Empire-East
- Source: CBRE, Truist Securities. Refers to Infill Southern California excluding Inland Empire-East. Based on construction of new supply as a percentage of existing supply within each market
- Source: CBRE, DAUM Real Estate Services citing CoStar Property Database. Southern California data includes Inland Empire-East
Rexford
Value Creation
Opportunity
STRONGEST INDUSTRIAL MARKET OPPORTUNITY
Scarce and Diminishing Supply Creates Persistent Supply-Demand Imbalance
9
REXFORD
INDUSTRIAL
INVESTOR PRESENTATION
Highest Barrier Market
- Lack of developable land within Infill SoCal, permanent barriers (mountains and oceans) and restrictive zoning constrain supply
- Majority of new supply is replacing existing obsolete supply and is not increasing absolute industrial net supply
Diminishing Supply
- Negative supply growth from industrial conversion to other uses
- Supply constraints increasing from development restrictions and housing mandates
Southern CA Industrial Demolished
or Converted to Other Uses1
(in millions of SF)
0
-20
-40
-60
SoCal Housing Mandates
State and local mandates to add approximately 1.5 million homes to Southern California by 20292
- Conversion of industrial further reduces supply
- Increases demand from construction trades for industrial space
- Increases population/consumption around Rexford's infill portfolio
Non-Infill Markets
Infill Markets
-80
Cumulative 125 | |||||
-100 | million square | ||||
feet of industrial | |||||
-120 | demolished or | ||||
converted since | |||||
-140 | 20011 | ||||
2001 | 2006 | 2011 | 2017 | 2023 |
- Source: CoStar/DAUM Real Estate Services. Infill areas represented by Greater LA, Orange County, San Diego, and Inland Empire-West.Non-infill represented by Inland Empire-East
- Source: Southern California Association of Governments - Regional Housing Needs Assessment
Rexford
Value Creation STRONGEST INDUSTRIAL MARKET OPPORTUNITY
Opportunity
Ventura County
MARKET SIZE
68M SF
VACANCY
1.6%
Ventura County
San Fernando Vly. |
MARKET SIZE |
177M SF |
VACANCY |
1.1% |
LosAngelesCounty
San Gabriel Valley
MARKET SIZE
161M SF
VACANCY
1.5%
10
Central LA
MARKET SIZE
271M SF
VACANCY
2.4%
SanBernardino
County
Riverside County
REXFORD
INDUSTRIAL
INVESTOR PRESENTATION
Nation's
Largest Market,
Lowest Vacancy
Infill Southern
California
MARKET SIZE
1.8B SF
VACANCY
2.2%
South Bay
MARKET SIZE
205M SF
VACANCY
2.0%
Mid-Counties
MARKET SIZE
105M SF
VACANCY
1.8%
Orange County
MARKET SIZE
261M SF
VACANCY
1.0%
IE West
MARKET SIZE
344M SF
VACANCY
3.4%
County
San Diego County
MARKET SIZE
183M SF
VACANCY
3.7%
Source: Market data per CBRE as of 3Q23. Downtown LA and Commerce/ Vernon submarkets are combined as Central LA from CBRE
Map data ©2023 Google
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Rexford Industrial Realty Inc. published this content on 18 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 October 2023 20:18:32 UTC.
