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Rexford Industrial Realty, Inc., (REXR - Free Report) in July and August, closed on the buyout of three industrial property through off-market transactions in the prime infill Southern California submarkets for $46.2 million using cash on hand. Post these acquisitions, the company’s investments from the beginning of 2023 through Sep 6 totaled $1.2 billion.
Given that Southern California is the largest industrial market in the United States and the fourth largest market globally, characterized by highest-demand and lowest-supply, REXR’s expansion efforts here seem a strategic fit.
Within the LA — South Bay submarket, the company acquired 2500 Thompson Street, Long Beach, for $20.3 million and 422 Rosecrans Avenue, Gardena, for $2.9 million.
The 2500 Thompson Street site spans 6.1 acres and comprises three buildings aggregating 174,691 square feet. The buildings are leased to a single tenant at rents estimated to be 40% below the current market rates. REXR’s investment generates an initial unlevered cash yield of 5.3%.
The purchase of 422 Rosecrans Avenue, a 0.4 acre site, adds to the company’s redevelopment site, which is immediately adjacent and is underway. This concludes the assemblage of 6.3 total acres of land in the high demand South Bay submarket. The redevelopment features a cross-dock building covering 57,000 square feet and a large, secured yard for container storage. An unlevered cash yield on total investment of 5.3% is expected to be generated from this project.
Expanding in the Orange County, REXR acquired 14650 Hoover Street, Westminster — a Class A, single tenant building spanning 59,679 square feet — situated on 2.9 acres of land. The property is subject to a short-term sale leaseback.
Additionally, the existing tenant pre-leased the company’s property at 17311 Nichols Lane in the OC — West submarket, which is being repositioned into a highly-functional industrial property encompassing 114,912 square feet. The combined investment is likely to generate an unlevered stabilized cash yield of 7.5%.
Per Howard Schwimmer and Michael Frankel, co-chief executive officers of the company, “Rexford Industrial's investment activity demonstrates the company's unique access to well-located, off-market opportunities and ability to capitalize upon dynamic market conditions to drive favorable cash flow and net asset value growth. The company is also favorably situated with substantial embedded internal growth and a low leverage balance sheet, positioning the company to deliver long-term value creation for shareholders.”
The demand for industrial real estate space is escalating, given the growth in industries and an e-commerce boom. Also, companies’ endeavors to improve supply-chain efficiencies amid the rising demand for logistics infrastructure and efficient distribution networks have aided the need for industrial real estate space.
Given this backdrop, REXR’s high-quality portfolio of industrial properties continues to benefit from the favorable industrial real estate market fundamentals, driving healthy operating performance.
Also, the company’s focus on boosting its external growth via acquisitions augurs well. It has a near-term investment pipeline of more than $300 million of acquisitions under contract or accepted offers.
Nonetheless, the stabilization of e-commerce sales growth and a high interest rate environment pose concerns for the company.
REXR currently carries a Zacks Rank #4 (Sell).
Shares of the company have lost 1.5% in the past three months compared with the industry’s 2.7% decline.
The Zacks Consensus Estimate for Welltower’s 2023 funds from operations (FFO) per share has been raised marginally over the past month to $3.53.
The consensus estimate for SBA Communications’ current-year FFO per share has moved marginally northward over the past month to $12.88.
The Zacks Consensus Estimate for Americold Realty Trust’s ongoing year’s FFO per share has been raised 3.3% over the past month to $1.26.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Rexford (REXR) Acquires Properties Worth $46M, Bolsters Growth
Rexford Industrial Realty, Inc., (REXR - Free Report) in July and August, closed on the buyout of three industrial property through off-market transactions in the prime infill Southern California submarkets for $46.2 million using cash on hand. Post these acquisitions, the company’s investments from the beginning of 2023 through Sep 6 totaled $1.2 billion.
Given that Southern California is the largest industrial market in the United States and the fourth largest market globally, characterized by highest-demand and lowest-supply, REXR’s expansion efforts here seem a strategic fit.
Within the LA — South Bay submarket, the company acquired 2500 Thompson Street, Long Beach, for $20.3 million and 422 Rosecrans Avenue, Gardena, for $2.9 million.
The 2500 Thompson Street site spans 6.1 acres and comprises three buildings aggregating 174,691 square feet. The buildings are leased to a single tenant at rents estimated to be 40% below the current market rates. REXR’s investment generates an initial unlevered cash yield of 5.3%.
The purchase of 422 Rosecrans Avenue, a 0.4 acre site, adds to the company’s redevelopment site, which is immediately adjacent and is underway. This concludes the assemblage of 6.3 total acres of land in the high demand South Bay submarket. The redevelopment features a cross-dock building covering 57,000 square feet and a large, secured yard for container storage. An unlevered cash yield on total investment of 5.3% is expected to be generated from this project.
Expanding in the Orange County, REXR acquired 14650 Hoover Street, Westminster — a Class A, single tenant building spanning 59,679 square feet — situated on 2.9 acres of land. The property is subject to a short-term sale leaseback.
Additionally, the existing tenant pre-leased the company’s property at 17311 Nichols Lane in the OC — West submarket, which is being repositioned into a highly-functional industrial property encompassing 114,912 square feet. The combined investment is likely to generate an unlevered stabilized cash yield of 7.5%.
Per Howard Schwimmer and Michael Frankel, co-chief executive officers of the company, “Rexford Industrial's investment activity demonstrates the company's unique access to well-located, off-market opportunities and ability to capitalize upon dynamic market conditions to drive favorable cash flow and net asset value growth. The company is also favorably situated with substantial embedded internal growth and a low leverage balance sheet, positioning the company to deliver long-term value creation for shareholders.”
The demand for industrial real estate space is escalating, given the growth in industries and an e-commerce boom. Also, companies’ endeavors to improve supply-chain efficiencies amid the rising demand for logistics infrastructure and efficient distribution networks have aided the need for industrial real estate space.
Given this backdrop, REXR’s high-quality portfolio of industrial properties continues to benefit from the favorable industrial real estate market fundamentals, driving healthy operating performance.
Also, the company’s focus on boosting its external growth via acquisitions augurs well. It has a near-term investment pipeline of more than $300 million of acquisitions under contract or accepted offers.
Nonetheless, the stabilization of e-commerce sales growth and a high interest rate environment pose concerns for the company.
REXR currently carries a Zacks Rank #4 (Sell).
Shares of the company have lost 1.5% in the past three months compared with the industry’s 2.7% decline.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the real estate investment trust (REIT) sector are Welltower (WELL - Free Report) , SBA Communications (SBAC - Free Report) and Americold Realty Trust (COLD - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Welltower’s 2023 funds from operations (FFO) per share has been raised marginally over the past month to $3.53.
The consensus estimate for SBA Communications’ current-year FFO per share has moved marginally northward over the past month to $12.88.
The Zacks Consensus Estimate for Americold Realty Trust’s ongoing year’s FFO per share has been raised 3.3% over the past month to $1.26.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.