Rexford Industrial Realty(US:REXR)2024-04-18 20:48Financial Data and Key Metrics Changes - In the first quarter of 2024, core FFO per share increased by 12% year-over-year to $0.58 per share, aligning with expectations [8] - Same-property NOI growth was reported at 8.5% and 5.5% on a cash and net effective basis, respectively [8] - The company anticipates cash NOI to increase by $282 million or 47% over the next three years, reaching a total of $876 million [13] Business Line Data and Key Metrics Changes - Tireco's in-place rent increased by 4%, with leasing spreads for the quarter at 53% on a net effective basis and 34% on a cash basis [5] - The retention plus backfill rate was exceptionally high at 87%, with tenant interest remaining strong for higher-quality products [6] Market Data and Key Metrics Changes - Vacancy in infill markets increased by 45 basis points to 3.2%, while Rexford's portfolio showed positive net absorption of 30 basis points, contrasting with the overall market's negative 20 basis points [103] - The average size of spaces in Rexford's portfolio is 26,000 square feet, with market rent growth flat sequentially and down approximately 2% year-over-year for comparable products [109] Company Strategy and Development Direction - The company is focused on value creation and overcoming cost of capital challenges, with a strategy that includes renovations and modernizations to enhance cash flow [23][51] - Rexford plans to execute on expected 11% to 13% average annual core FFO per share growth through 2026, assuming no future acquisitions [13] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing volatility in the market due to interest rate uncertainty and geopolitical unrest, but remains confident in the strength of the infill Southern California industrial tenant base [121] - The company expects to see continued differentiation in performance compared to larger products in non-infill markets, driven by the unique characteristics of its tenant base [122] Other Important Information - The company maintains substantial liquidity of $2.1 billion, which includes $1 billion revolver and $837 million of forward equity remaining for settlement [26] - Full-year 2024 core FFO per share guidance has been increased to a range of $2.31 to $2.34, reflecting positive contributions from first-quarter investment activity [43] Q&A Session Summary Question: What is the outlook for the timing of a rebound in activity in Southern California? - Management indicated that the fundamentals of the infill markets are significantly different from larger space markets, contributing to a more stable outlook [144] Question: How do you determine market rents and market rent growth within your portfolio? - The company conducts a bottoms-up analysis of over 1,600 spaces quarterly, comparing current market rents to previous estimates [30] Question: What is the expected impact of the Tireco lease extension on future performance? - The Tireco extension includes a fixed increase and a five-year option at fair market value, which is expected to enhance future performance [134]