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Rexford Industrial Realty, Inc. (REXR - Free Report) recently announced the acquisition of around 3 million square feet of industrial properties in Southern California from Blackstone Inc. (BX - Free Report) . The total acquisition was valued at $1 billion or $332 per square foot on average.
The combined portfolio of 48 properties is 98% leased. With 99% of the property square footage located within the core, infill submarkets in Los Angeles and Orange counties, this buyout seems a strategic fit for Rexford.
The properties are sold in separate transactions by multiple subsidiaries of Blackstone, namely, Blackstone Property Partners, Blackstone Real Estate Partners and Blackstone Real Estate Income Trust.
The investments are anticipated to generate a weighted average initial unlevered cash yield of 4.7% and a stabilized unlevered cash yield of 5.6%. The proceeds of Rexford's recent exchangeable senior notes offering and cash on hand were used to finance these investments.
Per Howard Schwimmer and Michael Frankel, co-CEOs of Rexford, "These strategic investments in exceptionally well-located, high-quality assets within infill Southern California, the nation's highest-barrier and lowest supply industrial market, represent a significant opportunity to drive accretive cash flow growth, increased operating margins and long-term value creation."
According to Howard Schwimmer and Michael Frankel, its total pipeline comprises nearly $300 million of investments under contract or accepted offer, aggregating $1.4 billion of investments from the beginning of 2024 through Mar 28, 2024, which are completed or in the pipeline.
Southern California is the fourth largest industrial market globally. This market is characterized by high demand and low supply in the United States. Rexford creates value by investing in, operating and redeveloping industrial properties throughout infill Southern California. Hence, the company’s expansion efforts are encouraging.
However, the elevated supply of industrial real estate in several markets is likely to fuel competition, create pressure on vacancy levels and curb Rexford’s pricing power, thereby restricting rent growth momentum to some extent. High interest rates also add to its concerns.
Over the past three months, shares of this Zacks Rank #4 (Sell) company have declined 10.7% compared with the industry’s downside of 4.6%.
The Zacks Consensus Estimate for SLG’s 2024 funds from operations (FFO) per share has been raised 12.2% northward over the past two months to $6.06.
The consensus estimate for WELL’s current-year FFO per share has moved marginally northward over the past week to $4.08.
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 Blackstone Properties, Bolsters Growth
Rexford Industrial Realty, Inc. (REXR - Free Report) recently announced the acquisition of around 3 million square feet of industrial properties in Southern California from Blackstone Inc. (BX - Free Report) . The total acquisition was valued at $1 billion or $332 per square foot on average.
The combined portfolio of 48 properties is 98% leased. With 99% of the property square footage located within the core, infill submarkets in Los Angeles and Orange counties, this buyout seems a strategic fit for Rexford.
The properties are sold in separate transactions by multiple subsidiaries of Blackstone, namely, Blackstone Property Partners, Blackstone Real Estate Partners and Blackstone Real Estate Income Trust.
The investments are anticipated to generate a weighted average initial unlevered cash yield of 4.7% and a stabilized unlevered cash yield of 5.6%. The proceeds of Rexford's recent exchangeable senior notes offering and cash on hand were used to finance these investments.
Per Howard Schwimmer and Michael Frankel, co-CEOs of Rexford, "These strategic investments in exceptionally well-located, high-quality assets within infill Southern California, the nation's highest-barrier and lowest supply industrial market, represent a significant opportunity to drive accretive cash flow growth, increased operating margins and long-term value creation."
According to Howard Schwimmer and Michael Frankel, its total pipeline comprises nearly $300 million of investments under contract or accepted offer, aggregating $1.4 billion of investments from the beginning of 2024 through Mar 28, 2024, which are completed or in the pipeline.
Southern California is the fourth largest industrial market globally. This market is characterized by high demand and low supply in the United States. Rexford creates value by investing in, operating and redeveloping industrial properties throughout infill Southern California. Hence, the company’s expansion efforts are encouraging.
However, the elevated supply of industrial real estate in several markets is likely to fuel competition, create pressure on vacancy levels and curb Rexford’s pricing power, thereby restricting rent growth momentum to some extent. High interest rates also add to its concerns.
Over the past three months, shares of this Zacks Rank #4 (Sell) company have declined 10.7% compared with the industry’s downside of 4.6%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are SL Green Realty (SLG - Free Report) and Welltower (WELL - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for SLG’s 2024 funds from operations (FFO) per share has been raised 12.2% northward over the past two months to $6.06.
The consensus estimate for WELL’s current-year FFO per share has moved marginally northward over the past week to $4.08.
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.