Rexford Industrial Realty(REXR) - 2021 Q3 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements 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 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 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 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 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] - 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][44] - 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] Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] - In the first nine months of 2021, the company acquired 34 properties for an aggregate purchase price of $1.3 billion[202] - 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] Factors That May Influence Future Results of Operations 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] - 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] 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 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 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 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] - 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][310] 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 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] - 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] Item 4. Controls and Procedures 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] - No material changes to the company's internal control over financial reporting occurred during the quarter[366] PART II OTHER INFORMATION Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[373] Item 4. Mine Safety Disclosures This item is not applicable as the company has no mine safety disclosures to report - No mine safety disclosures were reported[373] Item 5. Other Information The company reported no other information for this item - There was no other information to disclose[374] Item 6. Exhibits 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] - 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]