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Rexford's (REXR) Acquisitions Reach $585 Million in 2021 So Far

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Rexford Industrial Realty, Inc. (REXR - Free Report) recently shelled out $115.2 million for the acquisition of three industrial properties in prime in-fill Southern California markets. With these buyouts, the company’s 2021 acquisition activity has reached $585 million so far. The company also has more than $700 million of new investments under contract or accepted offer.

The above-mentioned buyouts, funded using cash-on-hand are a strategic fit for Rexford. The deal will likely strengthen the company’s foothold in Southern California, the highly-valued industrial property market of United States.

In July and August, the company acquired 1901 Via Burton, a 5.8-acre site in Fullerton within the Orange County-North submarket for $24.2 million. The company intends to redevelop the site into a new 139,000-square-foot warehouse with a secure storage yard. The investment is estimated to generate stabilized unlevered cash yield of 5.5% upon lease up.

In an off market transaction, in Ontario within the Inland Empire – West submarket, the company has acquired 1555 S. Cucamonga Ave, the fully leased 107,023 SF multi-building industrial property. With the near-term expiration of an in-place lease, Rexford intends to redevelop the site into a new 213,000–square-foot modern, Class A logistics building. The stabilized unlevered cash yield on total investment is expected to be 6% upon lease up.

In a lightly-marketed transaction, within the LA – South Bay submarket, Rexford has acquired 1800 E. Lomita Blvd for $70 million. The 22.3-acre industrial outdoor storage site is fully leased to credit tenants. Located near the Los Angeles-Long Beach port complex, the property is zoned for by-right outdoor container storage and stacking. The initial unlevered yield on total investment is 3.6% and is projected to increase as current in-place leases at rental rates of nearly 50% below market are rolled to higher market rents.

Per CBRE Group (CBRE - Free Report) , at the end of second-quarter 2021, the vacancy rate was 1.4% in the Orange County – North submarket, and 1% in Inland Empire West submarket. The vacancy rate in the LA – South Bay submarket was 0.6%, reflecting solid demand for industrial properties in these markets.

Amid the pandemic, the industrial asset class has grabbed the limelight with low vacancy rates, high asking rents and robust rent collections. 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. and Prologis (PLD - Free Report) .

While development boom of industrial real estate is a headwind in some markets, Rexford is likely to capitalize on its low leverage balance sheet and deep local market knowledge.

Shares of this currently Zacks Rank #2 (Buy) company have gained 18.2% over the past six months, outperforming its industry’s rally of 16.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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