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Rexford (REXR) Concludes 2020 With Acquisitions Worth $1.22B

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Rexford Industrial Realty, Inc. (REXR - Free Report) has been on a buying spree and the company acquired $1.22 billion in industrial properties in 2020, marking a whopping 5 million square feet of space.

Most recently, the company shelled out $103.1 million for the acquisition of a four-building industrial portfolio and an industrial outdoor storage property in prime in-fill Southern California markets. These acquisitions funded by using cash on hand and using newly-issued operating partnership units are a strategic fit for Rexford. Southern California is considered the nation's highly-valued industrial property market with supply constraints.

Particularly, in the San Fernando Valley, Mid-Counties and Inland Empire West submarkets, the company has acquired a portfolio of four high quality, modern single-tenant industrial properties for $86.3 million through an off-market transaction. Encompassing a total of 414,744 square feet of improvements on 25.23 acres of land, the properties are fully leased at rents that are below the current market rates, opening up scope for further rent growth. Per Rexford, the unlevered yield on total investment is expected to stabilize at 4.3% after near-term leases roll, with further cash flow growth over time.

Moreover, in Anaheim, within the Orange County — North submarket, the company acquired an industrial outdoor storage property at 1235 South Lewis Street for $16.8 million. Situated close to Anaheim's fast-growing Platinum Triangle area, this 4.83-acre low-coverage site contains a 62,480-square-foot building that is presently leased at a rent below market rates.

The industrial outdoor storage property buyout seems a strategic fit as Rexford has the scope to re-lease the property at expected higher market rental rates or construct a new, Class A distribution facility aimed to serve a vast array of tenants including last-mile logistics providers. For the two scenarios, the stabilized unlevered cash yield on total investment ranges 4.8-5.3%. Per CBRE Group (CBRE - Free Report) , at the end of third-quarter 2020, the vacancy rate in the 115 million square foot Orange County — North submarket was 1.4%, reflecting solid demand for industrial properties in the market.

The latest acquisitions also come as part of the company’s efforts to bank on buyout opportunities in a year of unprecedented events, thanks to the pandemic. In fact, the industrial asset class has grabbed the limelight for showing resilience amid the pandemic with low vacancy rates, high asking rents and robust rent collections.

Warehouse operations have become all the more essential with surging e-commerce customers in light of the coronavirus mayhem. Apart from the fast adoption of e-commerce, the logistics real estate is anticipated to benefit from the likely rise in inventory levels over the long haul. This is opening up prospects for Rexford and other industrial REITs like Duke Realty Corp. (DRE - Free Report) , Prologis (PLD - Free Report) and others.

Particularly, equipped with a well-capitalized balance sheet and an impressive acquisition track record, Rexford is well poised to gain traction from robust market fundamentals, although surplus supply of industrial real estate is a headwind in some markets.

Shares of this currently Zacks Rank #3 (Hold) company have gained 9.6% over the past six months, outperforming its industry’s rally of 4.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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