Rexford Industrial Realty NYSE: REXR www.rexfordindustrial.com Investor Presentation July 2022 2 Forward Looking Statements REXFORD INDUSTRIAL INVESTOR PRESENTATION 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, un ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-36008 Rexford Industrial Realty, Inc. (Exact name of registrant as specified in its charter) Maryland 46-2024407 (State or othe ...

Rexford Industrial Realty, Inc. (NYSE:REXR) Q1 2022 Earnings Conference Call April 20, 2022 1:00 PM ET Company Participants David Lanzer - General Counsel and Corporate Secretary Michael Frankel - Co-Chief Executive Officer and Director Howard Schwimmer - Co-Chief Executive Officer and Director Laura Clark - Chief Financial Officer Conference Call Participants Manny Korchman - Citi Jamie Feldman - Bank of America Blaine Heck - Wells Fargo Connor Siversky - Berenberg Mike Mueller – JPMorgan Dave Rodgers - Ba ...

Rexford Industrial Realty NYSE: REXR www.rexfordindustrial.com Investor Presentation April 2022 2 Forward Looking Statements REXFORD INDUSTRIAL INVESTOR PRESENTATION 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, u ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________________________________________________________________ .._______________________________________________________________________________________________ FORM 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR Rexford Industrial Realty, Inc. (Exact name of registrant as specified in its charter) .____ ...

Rexford Industrial Realty, Inc. (NYSE:REXR) Q4 2021 Earnings Conference Call February 10, 2022 1:00 PM ET Company Participants David Lanzer - General Counsel Michael Frankel - Co-CEO & Director Howard Schwimmer - Co-CEO & Director Laura Clark - CFO Conference Call Participants Jamie Feldman - Bank of America Manny Korchman - Citi Connor Siversky - Berenberg Dave Rodgers - Baird Mike Mueller - JPMorgan Chris Lucas - Capital One Securities Blaine Heck - Wells Fargo Disclaimer*: This transcript is designed to ...

Financial Highlights - Net Operating Income (NOI) for Q4 2021 reached $100.5 million, a 51% year-over-year growth[15] - Company share of Core FFO for Q4 2021 was $69.6 million, a 61% year-over-year increase[16] - Adjusted EBITDA for Q4 2021 amounted to $95.8 million, reflecting a 47% year-over-year growth[18] - Adjusted Funds From Operations (AFFO) for Q4 2021 totaled $59.1 million, a 53% year-over-year increase[19] Portfolio Performance - Total number of properties in the portfolio reached 296[11] - Total rentable square feet in the portfolio amounted to 36,922,021[11] - Total portfolio occupancy stood at 96.3%[11] - Same Property Portfolio occupancy was 99.1%[11] - Same Property Portfolio NOI growth was 10.0%[11] - Same Property Portfolio Cash NOI growth was 6.8%[11] Capitalization and Debt - Net debt to total combined market capitalization was 9.1%[11] - Net debt to Adjusted EBITDA was 3.6x[11]

PART I FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Rexford Industrial Realty, Inc.'s unaudited consolidated financial statements, including balance sheets, statements of operations, cash flows, and notes, for the periods ended September 30, 2021 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$6.22 billion** by September 30, 2021, from **$4.95 billion** at year-end 2020, driven by real estate investments, with liabilities and equity also rising Consolidated Balance Sheet Highlights (Amounts in thousands USD) | Account | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$6,223,757** | **$4,951,174** | | Investments in real estate, net | $5,903,565 | $4,572,532 | | Cash and cash equivalents | $60,154 | $176,293 | | **Total Liabilities** | **$1,696,081** | **$1,420,582** | | Notes payable | $1,386,649 | $1,216,160 | | **Total Equity** | **$4,527,676** | **$3,530,592** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Total revenues for Q3 2021 increased to **$115.4 million**, leading to **$31.5 million** net income, while nine-month revenues reached **$319.5 million** with net income of **$77.0 million** Consolidated Statements of Operations Highlights (Amounts in thousands USD, except per share data) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$115,403** | **$83,856** | **$319,526** | **$241,486** | | Rental income | $115,260 | $83,622 | $319,140 | $240,882 | | **Total Operating Expenses** | **$77,983** | **$58,959** | **$219,660** | **$170,150** | | **Net Income** | **$40,186** | **$31,197** | **$96,866** | **$62,740** | | **Net Income Attributable to Common Stockholders** | **$31,545** | **$25,901** | **$76,993** | **$48,110** | | **Net income per share - diluted** | **$0.23** | **$0.21** | **$0.57** | **$0.40** | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased to **$179.9 million**, while investing activities used **$1.35 billion** and financing activities provided **$1.06 billion**, resulting in a cash decrease to **$60.2 million** Consolidated Statements of Cash Flows Highlights (Amounts in thousands USD) | Cash Flow Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$179,943** | **$146,648** | | **Net cash used in investing activities** | **($1,352,721)** | **($222,098)** | | Acquisition of investments in real estate | ($1,316,905) | ($188,134) | | **Net cash provided by financing activities** | **$1,055,459** | **$282,599** | | Issuance of common stock, net | $1,092,158 | $374,359 | | **Increase (decrease) in cash** | **($117,319)** | **$207,149** | | **Cash, cash equivalents and restricted cash, end of period** | **$60,204** | **$286,006** | [Notes to the Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section details the company's accounting policies and provides further information on financial statement figures, covering organization, real estate investments, debt, derivatives, equity, and EPS calculations - The company is a REIT focused on owning and operating industrial properties in Southern California infill markets, with a consolidated portfolio of **278 properties** and approximately **34.9 million rentable square feet** as of September 30, 2021[33](index=33&type=chunk) - Property acquisitions are generally accounted for as asset acquisitions, with costs allocated to individual assets and liabilities based on relative fair value, including land, buildings, lease intangibles, and assumed debt[43](index=43&type=chunk)[44](index=44&type=chunk) - The company granted COVID-19 rent relief in 2020, primarily through deferrals, with approximately **98.0%** of the **$4.2 million** in deferred payments due by September 30, 2021, having been collected[72](index=72&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and operating results, highlighting 2021 activities, future influencing factors, comparative operating results for total and same properties portfolios, non-GAAP reconciliations, and liquidity [Company Overview and 2021 Highlights](index=43&type=section&id=Company%20Overview%20and%202021%20Highlights) Rexford Industrial, a REIT with **278 properties** in Southern California, actively engaged in **$1.3 billion** in acquisitions, **$47.6 million** in dispositions, and significant equity and debt financing activities in 2021 - As of September 30, 2021, the company's portfolio comprised **278 properties** with approximately **34.9 million rentable square feet**, primarily in Southern California infill markets[198](index=198&type=chunk) - In the first nine months of 2021, the company acquired **34 properties** for an aggregate purchase price of **$1.3 billion**[202](index=202&type=chunk) - Significant 2021 financing activities included redeeming Series A Preferred Stock, increasing the revolving credit facility to **$700 million**, and issuing **$400 million** of 2.150% Senior Notes due 2031[205](index=205&type=chunk) [Factors That May Influence Future Results of Operations](index=45&type=section&id=Factors%20That%20May%20Influence%20Future%20Results%20of%20Operations) Future results will be influenced by strong Southern California industrial market fundamentals, robust tenant demand, the company's value-add repositioning strategy, and the ongoing impact of the COVID-19 pandemic - The Southern California industrial real estate sector shows strong fundamentals with approximately **98% occupancy** and limited new supply, creating superior long-term supply/demand dynamics[211](index=211&type=chunk) - As of September 30, 2021, the company has **nine properties** under repositioning or redevelopment and a pipeline of **12 additional projects**, driving long-term future growth[225](index=225&type=chunk) Leasing Spreads for Nine Months Ended Sep 30, 2021 | Lease Type | GAAP Leasing Spreads | Cash Leasing Spreads | | :--- | :--- | :--- | | New Leases | 41.3% | 26.7% | | Renewal Leases | 46.8% | 32.7% | [Results of Operations](index=54&type=section&id=Results%20of%20Operations) Q3 2021 Total Portfolio rental income grew **37.8%** to **$115.3 million**, and Same Properties Portfolio rental income increased **7.7%**, driven by acquisitions, higher rates, and increased occupancy Comparison of Results for Q3 2021 vs Q3 2020 (Amounts in thousands USD) | Portfolio | Metric | Q3 2021 | Q3 2020 | % Change | | :--- | :--- | :--- | :--- | :--- | | **Same Properties** | Rental Income | $80,278 | $74,543 | 7.7% | | | Net Income | $37,806 | $31,610 | 19.6% | | **Total Portfolio** | Rental Income | $115,260 | $83,622 | 37.8% | | | Net Income | $40,186 | $31,197 | 28.8% | Comparison of Results for Nine Months Ended Sep 30, 2021 vs 2020 (Amounts in thousands USD) | Portfolio | Metric | YTD 2021 | YTD 2020 | % Change | | :--- | :--- | :--- | :--- | :--- | | **Same Properties** | Rental Income | $236,442 | $219,630 | 7.7% | | | Net Income | $109,961 | $91,662 | 20.0% | | **Total Portfolio** | Rental Income | $319,140 | $240,882 | 32.5% | | | Net Income | $96,866 | $62,740 | 54.4% | [Non-GAAP Supplemental Measures](index=63&type=section&id=Non-GAAP%20Supplemental%20Measures) The company reports non-GAAP measures, with Q3 2021 FFO attributable to common stockholders at **$55.3 million** and nine-month FFO at **$155.7 million**, alongside NOI and Cash NOI figures FFO Reconciliation (Amounts in thousands USD) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income | $40,186 | $31,197 | $96,866 | $62,740 | | **FFO** | **$65,160** | **$46,339** | **$179,602** | **$133,786** | | **FFO attributable to common stockholders** | **$55,335** | **$40,489** | **$155,681** | **$116,821** | NOI and Cash NOI Reconciliation (Amounts in thousands USD) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income | $40,186 | $31,197 | $96,866 | $62,740 | | **Net Operating Income (NOI)** | **$87,759** | **$62,938** | **$243,509** | **$183,200** | | **Cash Net Operating Income** | **$78,703** | **$57,099** | **$219,316** | **$164,406** | [Liquidity and Capital Resources](index=65&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2021, the company had **$60.2 million** in cash and **$700.0 million** available on its credit facility, actively managing liquidity through equity offerings, debt issuances, and maintaining **$1.4 billion** in consolidated debt - As of September 30, 2021, liquidity sources included **$60.2 million** in cash and cash equivalents and **$700.0 million** available under the unsecured revolving credit facility[305](index=305&type=chunk) - During the nine months ended September 30, 2021, the company raised **$415.5 million** in net proceeds from its **$750 million** ATM Program through direct sales and forward equity sale agreements[308](index=308&type=chunk)[310](index=310&type=chunk) Consolidated Indebtedness as of September 30, 2021 | Metric | Value | | :--- | :--- | | Total Consolidated Debt (USD) | $1.4 billion | | Weighted Average Interest Rate | 2.83% | | Average Term-to-Maturity | 7.8 years | | Fixed-Rate Debt Percentage | 96% | | Unsecured Debt Percentage | 91% | [Quantitative and Qualitative Disclosures About Market Risk](index=76&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk from variable-rate debt, though **96%** of its **$1.40 billion** consolidated debt is fixed-rate, with a 50 basis point LIBOR increase impacting annual interest expense by **$0.3 million** - As of September 30, 2021, **96%** of the company's **$1.40 billion** total consolidated indebtedness had an effectively fixed interest rate, minimizing exposure to fluctuations[359](index=359&type=chunk) - A hypothetical **50 basis point** increase in LIBOR would increase annual interest expense on the company's variable-rate debt by approximately **$0.3 million**[359](index=359&type=chunk) [Item 4. Controls and Procedures](index=77&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting identified during the quarter - The Co-Chief Executive Officers and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2021[365](index=365&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the quarter[366](index=366&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=78&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business, financial condition, or results of operations - The company is not currently involved in any legal proceedings reasonably expected to have a material adverse effect on its business[368](index=368&type=chunk) [Item 1A. Risk Factors](index=78&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes have been made to the risk factors as set forth in the company's 2020 Annual Report on Form 10-K[369](index=369&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=78&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered equity sales but repurchased **609 shares** of common stock at an average of **$62.35** per share in Q3 2021 to satisfy employee tax withholding obligations Issuer Purchases of Equity Securities (Q3 2021) | Period | Total Shares Purchased | Average Price Paid per Share (USD) | | :--- | :--- | :--- | | July 2021 | 30 | $60.53 | | August 2021 | 176 | $61.15 | | September 2021 | 403 | $63.01 | | **Total** | **609** | **$62.35** | - The repurchased shares were tendered by employees to satisfy tax withholding obligations upon the vesting of restricted stock[372](index=372&type=chunk) [Item 3. Defaults Upon Senior Securities](index=78&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[373](index=373&type=chunk) [Item 4. Mine Safety Disclosures](index=78&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable as the company has no mine safety disclosures to report - No mine safety disclosures were reported[373](index=373&type=chunk) [Item 5. Other Information](index=78&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item - There was no other information to disclose[374](index=374&type=chunk) [Item 6. Exhibits](index=79&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including corporate governance documents, debt agreements, forward transaction confirmations, and Sarbanes-Oxley Act certifications - Exhibits filed include certifications from the Principal Executive Officers and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[375](index=375&type=chunk) - The filing includes confirmations of registered forward transactions with Bank of America, N.A. and JPMorgan Chase Bank, National Association, dated September 22, 2021[375](index=375&type=chunk)

Financial Data and Key Metrics Changes - Rexford Industrial reported over $880 million in acquisitions during Q3 2021, bringing year-to-date investments to over $1.3 billion, with a projected stabilized unlevered yield about 50% higher than current marketed transactions for similar quality products [12][14]. - Consolidated NOI grew by 39% and core FFO increased by 47% compared to the prior year quarter, with FFO per share rising over 30% year-over-year [13][32]. - The company maintained a low leverage balance sheet with leverage at 12.7% of total enterprise value, and net debt to EBITDA was 3.8 times, below the target leverage of 4 to 4.5 times [13][33]. Business Line Data and Key Metrics Changes - Same-property cash NOI growth averaged 9.7% on a GAAP basis and 13.3% on a cash basis, driven by strong leasing spreads of 45% and 30% on GAAP and cash basis respectively [31]. - The company achieved record leasing performance with cash and GAAP rent spreads on new leases of about 28% and 42% respectively, and renewal leases of about 44% and 61% respectively [22][23]. Market Data and Key Metrics Changes - The target markets ended the quarter with a 1.2% vacancy rate, indicating historically high demand, while market rents within the portfolio increased by 24% over the prior year [22]. - The company’s same property cash NOI growth has averaged 9% over five years, with FFO per share growth averaging 13% and dividend growth averaging 12% over the same period, all exceeding the average of other industrial REITs [14]. Company Strategy and Development Direction - Rexford Industrial focuses on infill Southern California, the highest demand logistics market, benefiting from extreme scarcity of available product and a long-term supply/demand imbalance [16][19]. - The company projects approximately $94 million in embedded NOI growth from its in-place portfolio over the next 18 to 24 months, assuming no further acquisitions [18]. - The company has a mere 1.9% market share within its 2 billion square foot market, indicating substantial growth opportunities ahead [19]. Management's Comments on Operating Environment and Future Outlook - Management noted that the pandemic-driven expansion of e-commerce and shifts in supply chains are driving warehouse demand in prime locations [15]. - The company anticipates continued strength in market conditions, with demand and market rent growth at unprecedented levels [14]. - Management increased the full-year projected core FFO guidance range to $1.60 to $1.61 per share, representing a 22% year-over-year earnings growth per share [37]. Other Important Information - The company issued a $400 million 10-year unsecured Green Bond at a 2.15% coupon, marking its first Green Bond issuance [34]. - At quarter-end, liquidity was $1.1 billion, including $60 million in cash and full availability on a $700 million credit facility [36]. Q&A Session Summary Question: What is driving the rental rate growth in the portfolio? - Management attributed the rental rate growth to low vacancy rates and high demand for quality space, with the highest rent growth in the Inland Empire West at 52% year-over-year [42][44]. Question: How does the company evaluate alternate use value in its portfolio? - Management indicated that while there are opportunities for alternate uses, the focus remains on capturing rising industrial rents, as industrial land values have grown significantly [47][53]. Question: Can you provide more details on the projected NOI growth? - The projected $94 million NOI growth over the next 18 to 24 months is derived from existing acquisitions, leasing spreads, and ongoing repositioning projects [62]. Question: What is the company's strategy regarding financing and capital needs? - Management emphasized maintaining a low leverage balance sheet and being opportunistic in capital raises, with no debt maturities until 2023 [65]. Question: How does customer economics influence rent pricing? - Management explained that rent is a small percentage of overall costs for tenants, allowing them to absorb higher rents, especially in critical locations [66][72].

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited consolidated financial statements and detailed notes for Rexford Industrial Realty, Inc. as of June 30, 2021 [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202021%20%28unaudited%29%20and%20December%2031%2C%202020) Consolidated Balance Sheet Highlights (in thousands): | Indicator | June 30, 2021 | December 31, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | $5,265,726 | $4,951,174 | 6.35% | | Investments in real estate, net | $4,981,495 | $4,572,532 | 8.94% | | Cash and cash equivalents | $64,219 | $176,293 | -63.58% | | Total Liabilities | $1,432,954 | $1,420,582 | 0.87% | | Notes payable | $1,219,021 | $1,216,160 | 0.23% | | Total Equity | $3,832,772 | $3,530,592 | 8.56% | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202021%20and%202020) Consolidated Statements of Operations Highlights (in thousands): | Indicator | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $104,360 | $79,950 | 30.53% | | Net Income | $26,037 | $16,271 | 60.02% | | Net Income Attributable to Common Stockholders | $20,551 | $11,421 | 79.94% | | EPS - Basic | $0.15 | $0.10 | 50.00% | | Indicator | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $204,123 | $157,630 | 29.49% | | Net Income | $56,680 | $31,543 | 79.70% | | Net Income Attributable to Common Stockholders | $45,448 | $22,209 | 104.63% | | EPS - Basic | $0.34 | $0.19 | 78.95% | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202021%20and%202020) Consolidated Statements of Comprehensive Income Highlights (in thousands): | Indicator | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Net income | $26,037 | $16,271 | 60.02% | | Other comprehensive income (loss): cash flow hedge adjustment | $1,797 | $(226) | N/A | | Comprehensive income | $27,834 | $16,045 | 73.48% | | Indicator | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Net income | $56,680 | $31,543 | 79.70% | | Other comprehensive income (loss): cash flow hedge adjustment | $5,706 | $(15,194) | N/A | | Comprehensive income | $62,386 | $16,349 | 281.69% | [Consolidated Statements of Changes in Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202021%20and%202020) - Total Equity increased from **$3,530,592 thousand** at December 31, 2020, to **$3,832,772 thousand** at June 30, 2021, primarily driven by the issuance of common stock and net income[21](index=21&type=chunk) Key Equity Changes (Six Months Ended June 30, 2021, in thousands): | Item | Amount | | :--- | :--- | | Balance at December 31, 2020 | $3,530,592 | | Issuance of common stock, net of offering costs | $309,444 | | Net income | $56,680 | | Common stock dividends | $(65,190) | | Balance at June 30, 2021 | $3,832,772 | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202021%20and%202020) Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands): | Activity | 2021 | 2020 | Change (2021 vs 2020) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $101,677 | $71,179 | +$30,498 | | Net cash used in investing activities | $(449,158) | $(210,317) | -$(238,841) | | Net cash provided by financing activities | $234,203 | $314,721 | -$(80,518) | | Increase (decrease) in cash, cash equivalents and restricted cash | $(113,278) | $175,583 | -$(288,861) | | Cash, cash equivalents and restricted cash, end of period | $64,245 | $254,440 | -$(190,195) | - The significant increase in cash used in investing activities was primarily due to a **$250.3 million** increase in cash paid for property acquisitions and related deposits, and a **$16.3 million** increase in capital expenditures[334](index=334&type=chunk) - The decrease in cash provided by financing activities was mainly attributable to a **$64.9 million** decrease in net cash proceeds from the issuance of common stock and a **$16.0 million** increase in dividends and distributions paid[335](index=335&type=chunk) [Notes to the Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) [Note 1. Organization](index=13&type=section&id=1.%20Organization) - Rexford Industrial Realty, Inc. is a self-administered and self-managed REIT focused on owning and operating industrial properties in Southern California infill markets[31](index=31&type=chunk) - As of June 30, 2021, the consolidated portfolio consisted of **266** properties with approximately **33.0 million** rentable square feet, and an additional **20** properties with **1.0 million** rentable square feet were managed[31](index=31&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=13&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) - Property acquisitions are generally accounted for as asset acquisitions, with costs allocated to individual assets and liabilities based on relative fair value[41](index=41&type=chunk)[42](index=42&type=chunk) - Direct costs incurred in developing, renovating, rehabilitating, and improving real estate assets, including certain general and administrative costs, interest, real estate taxes, and insurance, are capitalized during redevelopment and construction periods[47](index=47&type=chunk)[48](index=48&type=chunk) - The company elected to account for COVID-19 related rent relief agreements (accelerated future rent concessions and/or rent deferrals) as lease modifications under ASC 842, with no material impact on financial statements to date[69](index=69&type=chunk) - As of June 30, 2021, **$3.9 million** (**97.6%**) of **$4.6 million** deferred contractual base rent payments from 2020 due by June 30, 2021, have been collected, with **$0.6 million** outstanding[70](index=70&type=chunk) [Note 3. Investments in Real Estate](index=21&type=section&id=3.%20Investments%20in%20Real%20Estate) Wholly-Owned Property Acquisitions (Six Months Ended June 30, 2021): | Metric | Value | | :--- | :--- | | Number of Properties | 21 | | Rentable Square Feet | 1,547,367 | | Number of Buildings | 41 | | Contractual Purchase Price | $420,400 thousand | Property Dispositions (Six Months Ended June 30, 2021): | Metric | Value | | :--- | :--- | | Number of Properties | 3 | | Rentable Square Feet | 117,463 | | Contractual Sales Price | $28,956 thousand | | Gain Recorded | $13,610 thousand | - As of June 30, 2021, the company did not have any properties classified as held for sale, compared to one property at December 31, 2020[96](index=96&type=chunk) [Note 4. Acquired Lease Intangibles](index=24&type=section&id=4.%20Acquired%20Lease%20Intangibles) Acquired Lease Intangibles (in thousands): | Category | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | In-place lease intangibles, net | $80,837 | $83,864 | | Above-market tenant leases, net | $8,723 | $8,308 | | Acquired lease intangible assets, net | $89,560 | $92,172 | | Below-market tenant leases, net | $(65,646) | $(67,256) | | Acquired lease intangible liabilities, net | $(65,646) | $(67,256) | Amortization of Acquired Lease Intangibles (Six Months Ended June 30, in thousands): | Category | 2021 | 2020 | | :--- | :--- | :--- | | In-place lease intangibles (depreciation & amortization expense) | $14,697 | $11,574 | | Net below-market tenant leases (increase to rental income) | $(6,098) | $(5,071) | [Note 5. Notes Payable](index=25&type=section&id=5.%20Notes%20Payable) Total Unsecured and Secured Debt (in thousands): | Date | Amount | | :--- | :--- | | June 30, 2021 | $1,226,083 | | December 31, 2020 | $1,223,494 | Contractual Debt Maturities (as of June 30, 2021, in thousands): | Period | Amount | | :--- | :--- | | July 1, 2021 - December 31, 2021 | $1,065 | | 2022 | $2,177 | | 2023 | $289,815 | | 2024 | $13,415 | | 2025 | $250,961 | | Thereafter | $668,650 | | Total | $1,226,083 | - On June 30, 2021, the company increased the authorized borrowing capacity of its unsecured revolving credit facility by **$200.0 million** to **$700.0 million**[107](index=107&type=chunk) - The company was in compliance with all required quarterly debt covenants as of June 30, 2021[117](index=117&type=chunk) [Note 6. Leases](index=28&type=section&id=6.%20Leases) Rental Income from Operating Leases (Six Months Ended June 30, in thousands): | Category | 2021 | 2020 | | :--- | :--- | :--- | | Fixed lease payments | $163,600 | $127,500 | | Variable lease payments | $34,200 | $24,700 | | Total rental income | $197,800 | $152,200 | Undiscounted Future Minimum Base Rents (as of June 30, 2021, in thousands): | Year | Amount | | :--- | :--- | | 2022 | $325,484 | | 2023 | $290,684 | | 2024 | $238,078 | | 2025 | $186,072 | | 2026 | $142,768 | | Thereafter | $358,438 | | Total | $1,541,524 | - As of June 30, 2021, total ROU assets were approximately **$4.9 million** and lease liabilities were approximately **$5.8 million**[122](index=122&type=chunk) [Note 7. Interest Rate Swaps](index=30&type=section&id=7.%20Interest%20Rate%20Swaps) - The company uses interest rate swaps as part of its interest rate risk management strategy to add stability to interest expense and manage exposure to interest rate movements[128](index=128&type=chunk) Interest Rate Swaps Notional Value (in thousands): | Effective Date | Maturity Date | LIBOR Interest Strike Rate | Current Notional Value (June 30, 2021) | | :--- | :--- | :--- | :--- | | 2/14/2018 | 1/14/2022 | 1.3490 % | $125,000 | | 8/14/2018 | 1/14/2022 | 1.4060 % | $100,000 | | 7/22/2019 | 11/22/2024 | 2.7625 % | $150,000 | | Total | | | $375,000 | - An estimated **$5.7 million** will be reclassified from Accumulated Other Comprehensive Income (AOCI) into earnings as an increase to interest expense over the next twelve months[132](index=132&type=chunk) [Note 8. Fair Value Measurements](index=31&type=section&id=8.%20Fair%20Value%20Measurements) Fair Value of Interest Rate Swaps (in thousands): | Category | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Interest Rate Swap Liability | $(12,694) | $(17,580) | Fair Value vs. Carrying Value of Notes Payable (in thousands): | Date | Total Fair Value | Carrying Value | | :--- | :--- | :--- | | June 30, 2021 | $1,255,250 | $1,219,021 | | December 31, 2020 | $1,276,217 | $1,216,160 | [Note 9. Related Party Transactions](index=33&type=section&id=9.%20Related%20Party%20Transactions) Management, Leasing and Development Services Revenue from Related Party (in thousands): | Period | 2021 | 2020 | | :--- | :--- | :--- | | Three Months Ended June 30 | $0.1 | $0.1 | | Six Months Ended June 30 | $0.2 | $0.2 | [Note 10. Commitments and Contingencies](index=33&type=section&id=10.%20Commitments%20and%20Contingencies) - As of June 30, 2021, the company had commitments of approximately **$26.2 million** for tenant improvement and construction work[150](index=150&type=chunk) - All properties are located in Southern California infill markets, exposing the company to regional economic, regulatory, and social factors, including the impact of COVID-19[152](index=152&type=chunk) - No single tenant accounted for more than **5%** of total consolidated rental income during the six months ended June 30, 2021[154](index=154&type=chunk) [Note 11. Stockholders' Equity](index=34&type=section&id=11.%20Stockholders%27%20Equity) - Under its **$750 Million** ATM Program, the company directly sold **2,415,386** common shares for **$118.3 million** net proceeds and settled forward equity sales for **1,797,787** shares for **$91.2 million** net proceeds during the six months ended June 30, 2021[156](index=156&type=chunk)[158](index=158&type=chunk) - Approximately **$508.1 million** of common stock remains available to be sold under the **$750 Million** ATM Program as of June 30, 2021[159](index=159&type=chunk) - The company partially settled Forward Sales Agreements by issuing **1,809,526** common shares for **$100.0 million** net proceeds in June 2021, with **7,190,474** shares remaining to be settled for an estimated **$395.5 million**[161](index=161&type=chunk)[162](index=162&type=chunk) - Noncontrolling interests, representing approximately **4.5%** of the Operating Partnership as of June 30, 2021, include OP Units, fully-vested LTIP units, and performance units[165](index=165&type=chunk) [Note 12. Incentive Award Plan](index=36&type=section&id=12.%20Incentive%20Award%20Plan) - Stockholders approved the Second Amended and Restated 2013 Incentive Award Plan on June 17, 2021, with **3,121,463** shares/units remaining available for issuance as of June 30, 2021[167](index=167&type=chunk)[168](index=168&type=chunk) - Total unrecognized compensation cost related to unvested share-based awards was **$27.1 million** as of June 30, 2021, expected to be recognized over a weighted average remaining period of **27 months**[174](index=174&type=chunk) [Note 13. Earnings Per Share](index=38&type=section&id=13.%20Earnings%20Per%20Share) Net Income Attributable to Common Stockholders Per Share - Basic: | Period | 2021 | 2020 | | :--- | :--- | :--- | | Three Months Ended June 30 | $0.15 | $0.10 | | Six Months Ended June 30 | $0.34 | $0.19 | [Note 14. Subsequent Events](index=39&type=section&id=14.%20Subsequent%20Events) Properties Acquired Subsequent to June 30, 2021: | Property | Submarket | Date of Acquisition | Rentable Square Feet | Contractual Purchase Price (in thousands) | | :--- | :--- | :--- | :--- | :--- | | 4181 Ruffin Road | San Diego - Central | 7/8/2021 | 150,144 | $35,750 | | 12017 Greenstone Avenue | Los Angeles - Mid-Counties | 7/16/2021 | — | $13,500 | | 1901 East Via Burton | Orange County - North | 7/26/2021 | — | $24,211 | | Total | | | 150,144 | $73,461 | - On July 12, 2021, the company announced the redemption of all **3,600,000** shares of its **5.875%** Series A Cumulative Redeemable Preferred Stock on August 16, 2021, for a total payment of **$90.7 million**[183](index=183&type=chunk) - On July 19, 2021, the board declared a quarterly cash dividend of **$0.24** per common share/OP Unit, payable October 15, 2021[184](index=184&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion of financial condition, operations, key highlights, future influences, non-GAAP measures, liquidity, and debt resources [Forward-Looking Statements](index=40&type=section&id=Forward-Looking%20Statements) - The report contains forward-looking statements identified by words such as 'anticipates,' 'believes,' 'expects,' 'intends,' and 'may,' reflecting current views and assumptions about future plans and strategies[187](index=187&type=chunk) - Actual results may differ materially due to various risks and factors, including competitive environment, real estate risks, decreased rental rates, tenant defaults, acquisition risks, natural disasters, economic conditions, interest rates, regulatory changes, financing risks, and the ongoing COVID-19 pandemic[187](index=187&type=chunk)[188](index=188&type=chunk) [Company Overview](index=41&type=section&id=Company%20Overview) - Rexford Industrial Realty, Inc. is a self-administered and self-managed REIT focused on acquiring, owning, improving, redeveloping, leasing, and managing industrial real estate primarily in Southern California infill markets[190](index=190&type=chunk) - As of June 30, 2021, the consolidated portfolio comprised **266** properties with approximately **33.0 million** rentable square feet, and an additional **20** properties with **1.0 million** rentable square feet were managed[191](index=191&type=chunk) - The company's goal is to generate attractive risk-adjusted returns by capitalizing on scarcity of available space and high barriers to new construction in Southern California infill markets through value-add renovations and redevelopments[192](index=192&type=chunk) [2021 Year to Date Highlights](index=41&type=section&id=2021%20Year%20to%20Date%20Highlights) - Acquired **21** properties (**1.5 million** rentable sq ft) for **$420.4 million** during the first six months of 2021[90](index=90&type=chunk)[194](index=194&type=chunk) - Sold **3** properties (**0.1 million** rentable sq ft) for **$29.0 million**, realizing **$13.6 million** in gains[95](index=95&type=chunk)[194](index=194&type=chunk) - Issued **2.4 million** common shares for **$118.3 million** net proceeds via ATM program and settled forward equity sales for **1.8 million** shares for **$91.2 million** net proceeds. Entered into new forward equity sales for **9.0 million** shares (**$497.6 million** initial price), partially settled **1.8 million** shares for **$100.0 million**[156](index=156&type=chunk)[158](index=158&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[198](index=198&type=chunk) - Increased unsecured revolving credit facility to **$700.0 million** and amended **$150 million** unsecured term loan to reduce LIBOR margin[107](index=107&type=chunk)[112](index=112&type=chunk)[198](index=198&type=chunk) - Stabilized **0.4 million** rentable square feet from redevelopment projects and completed repositioning/redevelopment of several properties, with many becoming **100%** leased or pre-leased[198](index=198&type=chunk) [Factors That May Influence Future Results of Operations](index=42&type=section&id=Factors%20That%20May%20Influence%20Future%20Results%20of%20Operations) [COVID-19 Update](index=42&type=section&id=COVID-19%20Update) - Most Southern California municipalities mandated commercial eviction moratoriums and rent deferral rights due to COVID-19, with many restrictions set to expire by September 30, 2021[197](index=197&type=chunk) - As of July 22, 2021, the company collected **98.7%** of its second quarter 2021 contractual billings[199](index=199&type=chunk) - As of June 30, 2021, the company collected approximately **$3.9 million** (**97.6%**) of deferred rent payments due, with **$0.6 million** outstanding (**$0.4 million** due through remainder of 2021). No additional rent deferrals were granted in 2021[200](index=200&type=chunk)[207](index=207&type=chunk) [Market and Portfolio Fundamentals](index=43&type=section&id=Market%20and%20Portfolio%20Fundamentals) - The infill Southern California industrial real estate sector continues to exhibit strong fundamentals, with approximately **98%** occupancy and limited new supply due to high barriers and land scarcity[203](index=203&type=chunk) - Tenant demand is robust across diverse sectors (consumer products, healthcare, aerospace, food, construction, logistics, electric vehicle industry) and is increasingly driven by e-commerce growth and last-mile distribution needs[204](index=204&type=chunk) [General Market Conditions](index=43&type=section&id=General%20Market%20Conditions) - Los Angeles County, Orange County, San Diego, Ventura County, and Inland Empire West all experienced strong market fundamentals in Q2 2021, with increased average asking lease rates and decreased or historically low vacancy rates[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk) - Current market conditions indicate rents are likely to continue increasing throughout 2021 due to strong demand, near-capacity occupancy, and limited new development[208](index=208&type=chunk)[209](index=209&type=chunk)[211](index=211&type=chunk) [Acquisitions and Value-Add Repositioning and Redevelopment of Properties](index=44&type=section&id=Acquisitions%20and%20Value-Add%20Repositioning%20and%20Redevelopment%20of%20Properties) - The company's growth strategy involves acquiring stabilized properties and those with value-add opportunities, including properties with below-market occupancy/rent or near-term lease roll-over, and land for ground-up redevelopment[212](index=212&type=chunk)[213](index=213&type=chunk) - As of June 30, 2021, seven properties were under current repositioning/redevelopment, and three were in the lease-up stage. An additional **12** projects are in the pipeline for construction between Q3 2021 and Q3 2022[217](index=217&type=chunk) - Capitalized **$1.6 million** of interest expense and **$0.8 million** of insurance and real estate tax expenses during the six months ended June 30, 2021, related to repositioning and redevelopment projects[221](index=221&type=chunk) [Rental Revenues](index=47&type=section&id=Rental%20Revenues) - Operating results are primarily dependent on generating rental revenue, influenced by occupancy levels and rental rates, and the ability to lease vacant space and re-lease expiring space at favorable rates[222](index=222&type=chunk) [Occupancy Rates](index=48&type=section&id=Occupancy%20Rates) Occupancy Rates (as of June 30, 2021): | Portfolio Type | Occupancy Rate | | :--- | :--- | | Consolidated Portfolio (inclusive of repositioning space) | 95.4% | | Stabilized Consolidated Portfolio (exclusive of repositioning space) | 98.2% | - Vacant space at properties under current repositioning/redevelopment or in lease-up represents **2.9%** of the total consolidated portfolio square footage[224](index=224&type=chunk) [Leasing Activity and Rental Rates](index=49&type=section&id=Leasing%20Activity%20and%20Rental%20Rates) New Leases (Six Months Ended June 30, 2021): | Metric | Value | | :--- | :--- | | Number of Leases | 123 | | Rentable Square Feet | 2,117,210 | | Weighted Average Lease Term | 5.5 years | | Effective Rent Per Square Foot | $14.21 | | GAAP Leasing Spreads | 40.8% | | Cash Leasing Spreads | 25.8% | Renewal Leases (Six Months Ended June 30, 2021): | Metric | Value | | :--- | :--- | | Number of Leases | 138 | | Rentable Square Feet | 2,031,328 | | Weighted Average Lease Term | 4.3 years | | Effective Rent Per Square Foot | $12.46 | | GAAP Leasing Spreads | 39.2% | | Cash Leasing Spreads | 26.7% | | Retention Rate | 76.6% | [Scheduled Lease Expirations](index=50&type=section&id=Scheduled%20Lease%20Expirations) Scheduled Lease Expirations (as of June 30, 2021): | Period | Percentage of Total Owned Square Feet | | :--- | :--- | | Remainder of 2021 | 5.4% | | 2022 | 14.6% | - In-place rents for leases expiring in the remainder of 2021 and 2022 are estimated to be below current market asking rates, suggesting potential for positive renewal rates and leasing spreads[236](index=236&type=chunk) [Conditions in Our Markets](index=51&type=section&id=Conditions%20in%20Our%20Markets) - The company's properties are primarily located in Southern California infill markets, making overall performance susceptible to regional economic and other conditions, including the ongoing COVID-19 pandemic[237](index=237&type=chunk) [Property Expenses](index=51&type=section&id=Property%20Expenses) - Property expenses, including utilities, real estate taxes, and insurance, are generally recovered from tenants through triple net provisions or modified gross expense reimbursements[238](index=238&type=chunk) - Most leases include contractual **3%** annual rental rate increases, which help mitigate potential increases in property expenses over time[238](index=238&type=chunk) [Taxable REIT Subsidiary](index=51&type=section&id=Taxable%20REIT%20Subsidiary) - The Operating Partnership indirectly owns Rexford Industrial Realty and Management, Inc., a taxable REIT subsidiary (TRS), which provides non-customary services to tenants and engages in activities not permitted for a REIT[239](index=239&type=chunk) - The TRS is subject to federal and state income tax but has a cumulative unrecognized net operation loss carryforward, resulting in no income tax provision for the six months ended June 30, 2021 and 2020[239](index=239&type=chunk) [Critical Accounting Policies](index=51&type=section&id=Critical%20Accounting%20Policies) - No material changes were made to the critical accounting policies identified in the Annual Report on Form 10-K for the year ended December 31, 2020[241](index=241&type=chunk) [Results of Operations](index=51&type=section&id=Results%20of%20Operations) - Consolidated results are impacted by property acquisitions, dispositions, and repositioning/redevelopment activities, leading to separate presentation of 'Total Portfolio' and 'Stabilized Same Properties Portfolio' results for comparability[243](index=243&type=chunk) Stabilized Same Properties Portfolio Occupancy: | Period | Occupancy Rate | | :--- | :--- | | June 30, 2021 | 98.4% | | June 30, 2020 | 97.4% | | 3 Months Ended June 30, 2021 (weighted average) | 98.5% | | 3 Months Ended June 30, 2020 (weighted average) | 97.5% | | 6 Months Ended June 30, 2021 (weighted average) | 98.4% | | 6 Months Ended June 30, 2020 (weighted average) | 97.7% | [Comparison of the Three Months Ended June 30, 2021 to the Three Months Ended June 30, 2020](index=52&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202021%20to%20the%20Three%20Months%20Ended%20June%2030%2C%202020) Total Portfolio Financial Performance (Three Months Ended June 30, in thousands): | Indicator | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Rental income | $104,236 | $79,770 | 30.7% | | Total Revenues | $104,360 | $79,950 | 30.5% | | Property expenses | $24,555 | $18,884 | 30.0% | | General and administrative | $10,695 | $8,972 | 19.2% | | Depreciation and amortization | $36,228 | $28,381 | 27.6% | | Interest expense | $9,593 | $7,428 | 29.1% | | Gains on sale of real estate | $2,750 | $— | N/A | | NET INCOME | $26,037 | $16,271 | 60.0% | Stabilized Same Properties Portfolio Financial Performance (Three Months Ended June 30, in thousands): | Indicator | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Rental income | $79,376 | $72,682 | 9.2% | | NET INCOME | $37,107 | $30,315 | 22.4% | - Total Portfolio rental revenue increased by **$19.5 million** (**28.9%**) due to incremental revenues from **59** acquired properties, while Stabilized Same Properties Portfolio rental revenue increased by **$5.1 million** (**8.3%**) due to higher average rental rates, increased occupancy, and bad debt recoveries[250](index=250&type=chunk) - Total Portfolio property expenses increased by **$5.7 million** (**30.0%**) due to incremental expenses from acquired properties and increases in repairs, real estate taxes, allocated overhead, and insurance[255](index=255&type=chunk) - Total Portfolio interest expense increased by **$2.2 million** (**29.1%**), primarily due to the issuance of **$400.0 million** senior notes in November 2020[259](index=259&type=chunk) [Comparison of the Six Months Ended June 30, 2021 to the Six Months Ended June 30, 2020](index=56&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202021%20to%20the%20Six%20Months%20Ended%20June%2030%2C%202020) Total Portfolio Financial Performance (Six Months Ended June 30, in thousands): | Indicator | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Rental income | $203,880 | $157,260 | 29.6% | | Total Revenues | $204,123 | $157,630 | 29.5% | | Property expenses | $48,130 | $36,998 | 30.1% | | General and administrative | $22,175 | $18,289 | 21.2% | | Depreciation and amortization | $71,372 | $55,904 | 27.7% | | Interest expense | $19,345 | $14,877 | 30.0% | | Gains on sale of real estate | $13,610 | $— | N/A | | NET INCOME | $56,680 | $31,543 | 79.7% | Stabilized Same Properties Portfolio Financial Performance (Six Months Ended June 30, in thousands): | Indicator | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Rental income | $156,724 | $145,648 | 7.6% | | NET INCOME | $72,471 | $60,358 | 20.1% | - Total Portfolio rental revenue increased by **$37.1 million** (**28.0%**) due to incremental revenues from **59** acquired properties, while Stabilized Same Properties Portfolio rental revenue increased by **$8.5 million** (**6.9%**) due to higher average rental rates, increased occupancy, and bad debt recoveries[265](index=265&type=chunk) - Total Portfolio property expenses increased by **$11.1 million** (**30.1%**) due to incremental expenses from acquired properties and increases in real estate taxes, repairs, allocated overhead, insurance, and utilities[270](index=270&type=chunk) - Total Portfolio interest expense increased by **$4.5 million** (**30.0%**), primarily due to the issuance of **$400.0 million** senior notes in November 2020[274](index=274&type=chunk) [Non-GAAP Supplemental Measure: Funds From Operations](index=60&type=section&id=Non-GAAP%20Supplemental%20Measure%3A%20Funds%20From%20Operations) FFO Attributable to Common Stockholders (in thousands): | Period | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $52,398 | $38,818 | 34.98% | | Six Months Ended June 30 | $100,346 | $76,332 | 31.47% | [Non-GAAP Supplemental Measures: NOI and Cash NOI](index=60&type=section&id=Non-GAAP%20Supplemental%20Measures%3A%20NOI%20and%20Cash%20NOI) Net Operating Income (NOI) (in thousands): | Period | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $79,681 | $60,886 | 30.87% | | Six Months Ended June 30 | $155,750 | $120,262 | 29.51% | Cash Net Operating Income (Cash NOI) (in thousands): | Period | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $71,455 | $52,005 | 37.40% | | Six Months Ended June 30 | $140,613 | $107,307 | 31.04% | [Non-GAAP Supplemental Measure: EBITDAre](index=62&type=section&id=Non-GAAP%20Supplemental%20Measure%3A%20EBITDAre) EBITDAre (in thousands): | Period | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $69,108 | $52,080 | 32.69% | | Six Months Ended June 30 | $133,787 | $102,324 | 30.75% | [Supplemental Guarantor Information](index=62&type=section&id=Supplemental%20Guarantor%20Information) - The company's **$400.0 million** of **2.125%** senior notes due 2030, issued by the Operating Partnership, are fully and unconditionally guaranteed by the company[289](index=289&type=chunk) - Separate financial statements for the Operating Partnership are not presented as its assets, liabilities, and results of operations are not materially different from the consolidated financial statements of the company[290](index=290&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) [Overview](index=62&type=section&id=Overview) - Short-term liquidity needs are met through available cash, cash flow from operations, unsecured revolving credit facility, and equity issuances[291](index=291&type=chunk) - Long-term liquidity needs for acquisitions, capital expenditures, and debt maturities are satisfied through cash flow, long-term financings, revolving credit facility, and equity/debt issuances[292](index=292&type=chunk) - As of June 30, 2021, the company had **$64.2 million** in cash and cash equivalents and **$700.0 million** available under its unsecured revolving credit facility[293](index=293&type=chunk) [Sources of Liquidity](index=63&type=section&id=Sources%20of%20Liquidity) - Cash flow from operations is a key source, dependent on occupancy, lease rates, operating costs, and ability to pass through expenses, with potential impacts from the COVID-19 pandemic[294](index=294&type=chunk) - Under its **$750 Million** ATM Program, **$508.1 million** of common stock remains available for sale as of June 30, 2021[299](index=299&type=chunk) - The company expects to physically settle remaining **7,190,474** shares under Forward Sales Agreements for **$395.5 million** cash proceeds by November 23, 2022[303](index=303&type=chunk) - Capital recycling through property dispositions generated **$27.7 million** net cash proceeds in H1 2021, used to fund five acquisitions via 1031 Exchange transactions[305](index=305&type=chunk) - The company maintains investment grade ratings (Baa3 from Moody's, BBB from S&P, BBB from Fitch), which are crucial for obtaining financing[307](index=307&type=chunk) - The unsecured revolving credit facility was increased by **$200.0 million** to **$700.0 million** on June 30, 2021, with **$638.0 million** available for future borrowings as of the filing date[308](index=308&type=chunk)[312](index=312&type=chunk) [Uses of Liquidity](index=65&type=section&id=Uses%20of%20Liquidity) - Acquisitions are a significant liquidity need; year-to-date, **24** properties were acquired for **$493.9 million**, with over **$650 million** of acquisitions under contract or letter of intent[313](index=313&type=chunk) - Estimated **$201.0 million** in capital is required over the next three years (2021-2023) to complete repositioning/redevelopment projects[314](index=314&type=chunk) Capital Expenditures (Six Months Ended June 30, 2021, in thousands): | Type | Cost | Square Feet | Per Square Foot | | :--- | :--- | :--- | :--- | | Non-Recurring Capital Expenditures | $38,552 | 18,826,541 | $2.05 | | Recurring Capital Expenditures | $4,594 | 32,065,289 | $0.14 | [Contractual Obligations](index=66&type=section&id=Contractual%20Obligations) - No material changes to contractual obligations outside the ordinary course of business during the six months ended June 30, 2021[316](index=316&type=chunk) [Notice of Redemption of Series A Preferred Stock](index=66&type=section&id=Notice%20of%20Redemption%20of%20Series%20A%20Preferred%20Stock) - The company announced the redemption of all **3,600,000** shares of its **5.875%** Series A Cumulative Redeemable Preferred Stock on August 16, 2021, for **$90.7 million**[317](index=317&type=chunk) [Dividends and Distributions](index=66&type=section&id=Dividends%20and%20Distributions) - To maintain REIT qualification, the company must distribute at least **90%** of its REIT taxable income annually[318](index=318&type=chunk) Quarterly Cash Dividends/Distributions Declared (July 19, 2021): | Security | Amount per Share/Unit | | :--- | :--- | | Common stock | $0.24 | | OP Units | $0.24 | | 5.875% Series B Cumulative Redeemable Preferred Stock | $0.367188 | | 5.625% Series C Cumulative Redeemable Preferred Stock | $0.351563 | | 4.43937% Cumulative Redeemable Convertible Preferred Units | $0.505085 | | 4.00% Cumulative Redeemable Convertible Preferred Units | $0.45 | [Consolidated Indebtedness](index=68&type=section&id=Consolidated%20Indebtedness) Consolidated Indebtedness (as of June 30, 2021, in thousands): | Category | Principal Balance | | :--- | :--- | | Total Unsecured Debt | $1,100,000 | | Total Secured Debt | $126,083 | | Total Consolidated Debt | $1,226,083 | Debt Composition (as of June 30, 2021): | Category | Average Term Remaining (years) | Effective Interest Rate | Principal Balance (in thousands) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Fixed Debt | 6.4 | 3.05% | $1,167,584 | 95% | | Variable Debt | 2.1 | 1.80% | $58,499 | 5% | | Secured Debt | 4.0 | 3.03% | $126,083 | 10% | | Unsecured Debt | 6.4 | 2.98% | $1,100,000 | 90% | - Total consolidated indebtedness was **$1.2 billion**, with a weighted average interest rate of **2.99%** and an average term-to-maturity of **6.2 years** as of June 30, 2021[324](index=324&type=chunk) - The company was in compliance with all quarterly debt covenants as of June 30, 2021[330](index=330&type=chunk) [Cash Flows](index=71&type=section&id=Cash%20Flows) Changes in Net Cash Flows (Six Months Ended June 30, in thousands): | Activity | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Cash provided by operating activities | $101,677 | $71,179 | +$30,498 | | Cash used in investing activities | $(449,158) | $(210,317) | -$(238,841) | | Cash provided by financing activities | $234,203 | $314,721 | -$(80,518) | - The increase in cash used in investing activities was primarily due to a **$250.3 million** increase in cash paid for property acquisitions and related deposits[334](index=334&type=chunk) - The decrease in cash provided by financing activities was mainly due to a **$64.9 million** decrease in net cash proceeds from common stock issuance[335](index=335&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=72&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages interest rate risk on its variable-rate debt, with 95% of its $1.23 billion debt fixed as of June 30, 2021 - The company's primary market risk is interest rate risk, arising from variable-rate debt (LIBOR-based), which is managed using interest rate swaps[337](index=337&type=chunk) - As of June 30, 2021, **$1.17 billion** (**95%**) of the total **$1.23 billion** consolidated indebtedness had an effectively fixed interest rate, with the remaining **$58.5 million** (**5%**) being variable-rate debt[340](index=340&type=chunk) - A hypothetical **50 basis point** increase in LIBOR would decrease annual earnings and cash flows by approximately **$0.3 million**, while a **50 basis point** decrease (assuming a **0%** floor) would increase them by approximately **$0.1 million** annually[340](index=340&type=chunk) [Item 4. Controls and Procedures](index=73&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirmed effective disclosure controls and procedures as of June 30, 2021, with no material changes to internal control over financial reporting - The company's disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of June 30, 2021[346](index=346&type=chunk) - No changes in internal control over financial reporting were identified that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting during the period[347](index=347&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=74&type=section&id=Item%201.%20Legal%20Proceedings) No legal proceedings are expected to materially adversely affect the company's business, financial condition, or operations - The company is not currently a party to any legal proceedings that are reasonably expected to have a material adverse effect on its business, financial condition, or results of operations[349](index=349&type=chunk) [Item 1A. Risk Factors](index=74&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for 2020 - No material changes to the risk factors as set forth in the Annual Report on Form 10-K for the year ended December 31, 2020[350](index=350&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=74&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales or proceeds were reported; 188 common shares were repurchased for employee tax withholding - No unregistered sales of equity securities or use of proceeds were reported[351](index=351&type=chunk)[352](index=352&type=chunk) - The company repurchased **188** shares of common stock at an average price of **$55.31** per share in April and May 2021 to satisfy employee tax withholding requirements on vesting restricted stock[353](index=353&type=chunk) [Item 3. Defaults Upon Senior Securities](index=74&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - No defaults upon senior securities were reported[354](index=354&type=chunk) [Item 4. Mine Safety Disclosures](index=74&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were applicable or reported - No mine safety disclosures were reported[354](index=354&type=chunk) [Item 5. Other Information](index=74&type=section&id=Item%205.%20Other%20Information) No other information was reported in this section - No other information was reported[355](index=355&type=chunk) [Item 6. Exhibits](index=75&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with Form 10-Q, including organizational documents, agreements, and certifications - The exhibits include Articles of Amendment and Restatement, Bylaws, Articles Supplementary for preferred stock, partnership agreements, forms of stock certificates, forward transaction confirmations, credit agreement amendments, incentive award plans, and various certifications[356](index=356&type=chunk) [Signatures](index=76&type=section&id=Signatures) The report was signed on July 26, 2021, by the Co-Chief Executive Officers and Chief Financial Officer - The report was signed by Michael S. Frankel (Co-Chief Executive Officer), Howard Schwimmer (Co-Chief Executive Officer), and Laura E. Clark (Chief Financial Officer) on July 26, 2021[359](index=359&type=chunk)