PROSPECTUS SUMMARY

The following summary highlights information contained elsewhere in this prospectus. You should read carefully the entire prospectus, including “Risk Factors,” our financial statements, pro forma financial information, and related notes appearing elsewhere in this prospectus, before making a decision to invest in our common stock.

Unless indicated otherwise, the information included in this prospectus assumes (i) no exercise of the underwriters’ option to purchase up to              additional shares of our common stock to cover over-allotments, if any, (ii) the consummation of the formation transactions and concurrent private placement described in this prospectus, (iii) the shares of common stock to be sold in this offering are sold at $         per share, which is the mid-point of the price range set forth on the front cover of this prospectus and (iv) the initial value of a common unit to be issued in the formation transactions is $         per unit. Each common unit is redeemable at the option of the holder for cash equal to the then-current market value of one share of our common stock or, at our option, one share of our common stock, commencing 14 months following the completion of this offering.

The historical operations described in this prospectus refer to the historical operations of our predecessor business. We have generally described the business operations in this prospectus as if the historical operations of our predecessor business were conducted by us.

Overview

Rexford Industrial Realty, Inc. is a newly organized Maryland corporation formed to operate as a self-administered and self-managed REIT focused on owning and operating industrial properties in Southern California infill markets. We were formed to succeed our predecessor business, which is controlled and operated by our principals, Richard Ziman, Howard Schwimmer and Michael Frankel, who collectively have decades of experience acquiring, owning and operating industrial properties in Southern California infill markets. Upon completion of our formation transactions, our initial portfolio will consist of 61 properties with approximately 6.7 million rentable square feet, including two properties that we currently have under contract to purchase, and we will manage an additional 20 properties with approximately 1.2 million rentable square feet.

Our goal is to generate attractive risk-adjusted returns for our stockholders by providing superior access to industrial property investments in Southern California infill markets. Our target markets provide us with opportunities to acquire both stabilized properties generating favorable cash flow, as well as properties where we can enhance returns through value-add renovations and redevelopment. We believe that Southern California infill markets are among the most attractive industrial real estate markets for investment in the United States. Significant fragmentation, scarcity of available space and high barriers limiting new construction all contribute to create superior long-term supply/demand fundamentals. We built our company from the ground up as an institutional quality, vertically integrated platform with extensive value-add investment and management capabilities to focus on this specific market opportunity.

We own both multi-tenant and single-tenant properties. Our properties are highly adaptable and appeal to a wide range of potential tenants and uses, which, in our experience, reduces re-tenanting costs, time and risk, thereby enhancing our return on investment. Our tenants generally are small and medium sized businesses that are structurally tied to the Southern California economy and therefore find that locating within our target markets is critical to the ongoing operations of their business. Our initial portfolio is highly diversified by tenant and industry. Of our 693 tenants, no single tenant accounted for more than 2.3% of our total annualized rent and no single industry accounted for more than 11.6% of our total annualized rent, as of March 31, 2013.

We benefit from our management team’s extensive market knowledge, long-standing business and personal relationships and research- and relationship-driven origination methods developed over more than 30

 

years to generate attractive investment opportunities. In our view, the fragmented and complex nature of our target markets generally makes it difficult for less experienced or less focused investors to access comparable opportunities on a consistent basis.

We plan to grow our business through disciplined acquisitions of additional industrial properties in Southern California infill markets, and believe that there are substantial and attractive acquisition opportunities available to us in our target markets. According to DAUM, the Southern California infill industrial property market consists of approximately 1.73 billion square feet of industrial properties. Our initial portfolio represents substantially less than 1.0% of this target market. Through our proprietary origination methods, we are actively monitoring, as of June 4, 2013, approximately 31.6 million square feet of properties in our markets that we believe represent attractive potential investment opportunities, including properties containing approximately 2.9 million square feet on which we have submitted non-binding offers that remain outstanding. In addition, we currently have two properties totalling 123,676 square feet under contract to purchase with the purchase expected to close before July 31, 2013. The closings are subject to satisfactory completion of our due diligence and customary closing conditions. As such, we cannot assure you that we will complete these acquisitions on the current terms or at all. Our predecessor’s most recent investment fund has acquired in excess of 3.1 million square feet in our target markets, sourced primarily through a combination of off-market and lightly marketed transactions, sale lease-backs and related transactions from illiquid owners and short sales and discounted note purchases from financial institutions. We believe the current market environment represents an attractive time in the real estate cycle to invest in our target properties as the many small and medium sized businesses that our properties seek to serve are just beginning to participate in the economic recovery. Despite being consistently one of the highest occupied markets in the United States with occupancy rates approaching 95% in recent years, particularly for multi-tenant properties, rental rates in our target markets have only recently begun to recover from their recessionary lows.

We intend to elect and qualify to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with the year ending December 31, 2013, and generally will not be subject to U.S. federal taxes on our income to the extent we annually distribute at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid, to our stockholders and otherwise maintain our qualification as a REIT. We are structured as an umbrella partnership REIT (“UPREIT”) and will own substantially all of our assets and conduct substantially all of our business through our operating partnership. We will serve as the sole general partner and expect to own an approximately     % interest in our operating partnership upon consummation of this offering.

Experienced Management and Vertically Integrated Team

Our predecessor business was founded in 2001 by our Chairman Richard Ziman, and our Co-Chief Executive Officer, Howard Schwimmer, to take advantage of what they believed to be a particularly attractive opportunity to invest in industrial properties in Southern California infill markets. Messrs. Ziman and Schwimmer were joined by Michael Frankel, our Co-Chief Executive Officer, in 2004. These three members of our senior executive management team have worked together for nearly a decade, and each has substantial experience investing in and managing Southern California industrial properties.

Mr. Ziman contributes over 40 years of experience owning and managing industrial real estate and a successful public company track record as the founding chairman and chief executive officer of Arden Realty, Inc. (“Arden”), a REIT, which at the time of its sale to GE Real Estate in 2006 was the largest publicly traded owner of office properties in Southern California. An investment in the common stock of Arden at the time of its initial public offering until its final sale generated a total return to stockholders of approximately 338% per share for each share purchased at the initial public offering price of $20.00 per share (assuming reinvestment of all cash dividends since the initial public offering in 1996) compared to a total return of 248% for the MSCI US REIT Index over the same period. Mr. Schwimmer has focused exclusively on owning, operating and creating value in infill Southern California industrial property throughout his 30 year career. Mr. Schwimmer has 12 years of experience managing and co-managing our predecessor business, with expertise including the acquisition,

 

value-add improvement, development, management, leasing and disposition of industrial property. Prior to establishing our predecessor business, from 1983 until 2001, Mr. Schwimmer held various positions including stockholder, board member, manager, executive vice president and broker of record for DAUM, California’s oldest industrial brokerage company. Mr. Frankel’s 28 year career has focused on real estate and private equity investment and senior management operating roles, including nine years co-managing our predecessor business, which almost exclusively focused on investing in industrial properties in Southern California infill markets.

Rexford’s vertically integrated company and team provides an entrepreneurial set of processes and personnel experienced in virtually every facet of industrial property investment and management, from originations, finance and underwriting, to asset, construction and property management.

Market Overview

Unless otherwise indicated, all information contained in this Market Overview section is derived from market materials prepared by DAUM as of March 31, 2013, citing CoStar Property Database, CBRE and other sources.

Southern California Infill Industrial Market

The Southern California industrial real estate market is the largest in the U.S., with approximately 2.0 billion square feet of space, approximately 1.7 times larger than the next largest industrial real estate market (Chicago, Illinois), as illustrated below:

 

Source: DAUM market materials, citing CoStar Property Database as of March 2013

Note: Southern California market comprised of Los Angeles, Orange, Ventura, San Bernardino, Riverside, and San Diego Counties

Southern California is generally segmented into infill and non-infill industrial markets. Infill markets are considered high-barrier to-entry markets and have characteristics that tend to limit new construction.

Our investment strategy focuses on the 1.73 billion square foot infill market comprised of Los Angeles County, Orange County, West Inland Empire, San Diego County and Ventura County. In 2012, over $5.9 billion of industrial property was sold in Southern California. We believe the market trends and conditions discussed below have created favorable investment opportunities that we are competitively positioned to capitalize upon.

Limited, Diminishing Supply with Substantial Barriers to Entry

Southern California is generally considered to be nearly fully developed and is characterized by a scarcity of vacant or developable land. Further, lease rates typically do not justify development of new industrial

 

properties for lease in infill markets, which presents an economic barrier for those seeking to develop new industrial properties. Consequently, there has been a dearth of new multi-tenant industrial properties built for lease since 1999, with infill development generally limited to relatively few owner-user and build-to-suit developments. Multi-tenant development represented only 0.6% of total new industrial property construction in Southern California markets during 2012. Further, as a majority of infill product is multi-tenant, substantially all new construction occurred in the Inland Empire, much of which is non-infill and generally outside of Rexford’s primary target markets.

 

Source: DAUM market materials, citing CoStar Property Database as of March 2013

Industrial use is not typically considered the “highest and best” economic use for the few development or redevelopment sites available within our target markets. As a result, the stock of infill industrial property in our target markets generally has diminished over time, as existing properties have converted to alternate uses, primarily multi-family housing and related development. Since 2001, Los Angeles and Orange Counties have seen more than 24.2 million and 5.8 million square feet of industrial property, respectively, demolished for redevelopment.

 

Source: DAUM market materials, citing CoStar Property Database as of March 2013

 

High Current Occupancy and High Rental Rates

The Southern California infill industrial market has consistently out-performed other national markets on the basis of occupancy and asking rents. As of March 31, 2013, occupancy was 95.0% and 94.7% for Los Angeles and Orange Counties, respectively, versus the national average of 91.3%. Since 2001, average Los Angeles and Orange County asking rents were 65% higher than the average of the next nine largest markets in the nation over the same twelve-year period. As shown in the charts below, the occupancy rates for Los Angeles and Orange County have consistently been above the other large markets in the United States since the fourth quarter of 2001 and the occupancy rates never dipped below 90%, even during the most recent recession.

 

Source: DAUM market report, citing CoStar Property Database and data provided by CBRE as of March 2013

 

Source: DAUM market report, citing CoStar Property Database and data provided by CBRE as of March 2013

Diverse Tenant Demand Base

Southern California is home to the nation’s largest and most diverse manufacturing and distribution sector, as well as the largest number of high-tech jobs. We draw our tenants from over 17 industry sectors. The trend of off-shoring domestic manufacturing to Asia further fuels Southern California industrial tenant demand,

 

as Asian goods pass through the Los Angeles-area ports and require regional warehousing and distribution to access the broader U.S. market. As of March 31, 2013, approximately 21.3% of our tenants imported product from outside the U.S. Additionally, the emergence of e-commerce and the growth of Internet retailers and wholesalers are expanding the universe of tenants seeking industrial space in our target markets. Forrester Research Inc. projects that online shoppers in the United States will spend $327 billion in 2016, up 45% from the $226 billion spent in 2012, increasing to an estimated 9.0% of total retail sales by 2016. As of March 31, 2013, approximately 17.4% of our tenants cited e-commerce as a component of their business.

Large and Growing Regional Population

Southern California represents the largest regional population in the U.S., with over 21 million residents, comprising over 57% of California residents. The population has increased by approximately 2 million since 2000 and is projected to increase to over 25 million residents by 2030. Our infill tenant base tends to disproportionately serve the direct consumption needs of this growing regional Southern California population.

Older Properties Tend To Outperform Newer Properties

Over one billion square feet of infill industrial space in our target market was built prior to 1980. These buildings are generally more centrally located, which reduces commuting time for our tenants’ employees and distribution times to the end consumers of the product. These locations are also typically more densely populated areas than locations that feature a greater proportion of newer construction. These factors have driven higher occupancy rates in pre-1980 buildings compared to post-1980 buildings. As of March 31, 2013, occupancy for pre-1980 buildings was 95.1% versus 92.9% for newer buildings. Pre-1980 buildings have maintained occupancy levels between 94.4% and 97.4% since 2001, while occupancy for post-1980 buildings has ranged from 89.6% to 94.5%.

Smaller Spaces and Multi-Tenant Properties Tend to Outperform Larger, Single-Tenant Properties

Our target infill markets feature a majority of properties valued below $25 million or sized below 300,000 square feet. We believe smaller spaces, generally under 40,000 square feet, are positioned for rental rate recovery as economic conditions improve for smaller- and mid-sized tenants in the face of ongoing scarcity of supply of these spaces. Occupancy as of March 31, 2013 for “big-box” buildings containing 100,000 square feet or more was 93.2%, while occupancy in buildings containing less than 40,000 square feet was 94.9%. Further, rental rates for larger, single-tenant spaces have recovered nearly to their pre-recession levels. Conversely, rental rates for small- and mid-sized tenants remain at cyclically low levels and have lagged in recovery compared to larger spaces. Consequently, we believe the potential for rental rates to increase in the smaller- and medium-sized spaces and buildings may be substantially greater in the near- to medium-term than for larger spaces fueled, in part, by improving liquidity and access to working capital for small and medium sized businesses as the economy continues to stabilize.

 

As shown in the charts below, occupancy and rental rates in the Southern California industrial infill market are projected to increase over the next three years. Moreover, multi-tenant space under 40,000 square feet, which has been slower to recover from the recent financial crisis, is projected to outperform single-tenant space containing 100,000 or more square feet according to DAUM, utilizing data provided by CBRE.

 

 

 

Competitive Strengths

In addition to our infill Southern California target market and asset focus, we believe that our investment strategy and operating model distinguish us from other owners, operators and acquirers of industrial real estate in several important ways, including the following:

Attractive Existing Portfolio with Diversified Tenant Mix: We have built a difficult-to-replicate portfolio of interests in 61 properties totaling over 6.7 million square feet, including two properties that we currently have under contract to purchase, almost all of which is located in Southern California infill markets. We will own 100% of the interests in 58 of these properties and will own a 15% interest in the remaining three properties. We believe our initial portfolio is attractively positioned to participate in a recovery in rental rates in our markets. Additionally, our portfolio is leased to a broad tenant base, drawn from diverse industry sectors. We believe that this diversification reduces our exposure to tenant default risk and earnings volatility. As of March 31, 2013, we had 693 individual tenants, with no single tenant accounting for more than 2.3% of our total annualized rent.

Superior Access to Deal Flow: We believe that we enjoy superior access to distressed, off-market and lightly marketed acquisition opportunities, many of which are difficult for competing investors to access. Approximately half of the acquisitions by deal count completed by our predecessor business since its inception were off-market or lightly-marketed transactions. Off-market and lightly marketed transactions are characterized by a lack of a formal marketing process and a lack of widely disseminated marketing materials. As we are principally focused on the Southern California market, our executive management and acquisition teams have developed and maintain a deep, broad network of relationships among key market participants, including property brokers, lenders, owners and tenants. We employ an extensive broker marketing, incentives and loyalty program. We also utilize data-driven and event-driven analytics and primary research to identify and pursue

 

events and circumstances, including financial distress, related to owners, lenders, and tenants that tend to generate early access to emerging investment opportunities. We believe that our relationship network, creative sourcing approach and research-driven originations methods contribute to a superior level of attractive investment opportunities.

Experienced Management Team: Members of our senior management team contribute over 64 years of prior public company experience, and collectively have been involved with over $25 billion of real estate acquisitions over multiple cycles. Members of our senior management team have been working together for nearly a decade and together bring 130 years of experience focused on creating value by investing in infill Southern California industrial property.

Ability to Execute Opportunistic Transactions: The combination of our proprietary origination methods and the experience and relationships of our management team grant us access to and allow us to capitalize on unique transaction opportunities.

Vertically Integrated Platform: We are a full-service real estate operating company, with in-house capabilities in all aspects of our business. Our platform includes experienced in-house teams focused on acquisitions, analytics and underwriting, asset management and repositioning, property management, leasing, and construction management, as well as finance, accounting, legal and human relations departments.

Growth-Oriented Capital Structure: We believe that a public company capital structure will enable us to capitalize effectively on the substantial volume of opportunities generated by our origination platform. Upon completion of this offering, our pro forma debt to total market capitalization will be approximately     %. We expect to enter into a new approximately $             million term loan, which will be used at the closing of this offering to repay a portion of our outstanding mortgage debt. In addition, we have negotiated a proposed revolving credit facility with a borrowing capacity of $200 million that we expect to have in place at the completion of this offering. This facility is expected to have an accordion feature that may provide for up to an additional $200 million borrowing capacity as our company grows. We expect to use the proposed revolving credit facility to fund future acquisition and revenue-enhancing capital expenditures, as well as for general corporate purposes.

Value-Add Repositioning and Redevelopment Expertise: Our in-house redevelopment and construction management team collectively has over 75 years of industrial property redevelopment experience. Our in-house team employs an entrepreneurial approach to redevelopment and repositioning activities that are designed to increase the functionality and cash flow of our properties. These activities include converting large underutilized spaces into a series of smaller and more functional spaces, adding additional square footage and modernizing properties by, among other things, modernizing fire, life-safety and building operating systems, resolving functional obsolescence, adding or enhancing loading areas and truck access and making certain other accretive improvements.

Our Business and Growth Strategies

Our primary objective is to generate attractive risk-adjusted returns for our stockholders through dividends and capital appreciation. We believe that pursuing the following strategies will enable us to achieve this objective:

External Growth through Acquisitions

We intend to grow our initial portfolio through disciplined acquisitions in prime Southern California infill markets. We believe that our relationship-, data- and event-driven research allows us to identify and exploit asset mispricing and market inefficiencies. Through these proprietary origination methods, we are actively

 

monitoring, as of June 4, 2013, approximately 31.6 million square feet of properties in our markets that we believe represent attractive potential investment opportunities, including properties containing approximately 2.9 million square feet on which we have submitted non-binding offers that remain outstanding. In addition, we currently have two properties totalling 123,676 square feet under contract to purchase with the purchase expected to close before July 31, 2013. The closings are subject to satisfactory completion of our due diligence and customary closing conditions. As such, we cannot assure you that we will complete these acquisitions on the current terms or at all. Our predecessor’s most recent investment fund has acquired in excess of 3.1 million square feet in our target markets, sourced primarily through a combination of off-market and lightly marketed transactions, sale lease-backs and related transactions, short sales and discounted note purchases from financial institutions.

We believe there are a large number of over-leveraged industrial properties within our target markets facing loan maturities over the next several years. We seek to source transactions from owners facing pressing liquidity needs or financial distress, including maturities of loans that lack economical refinancing options. We also seek to transact with lenders, which, following the recent financial crisis, face a heightened need to divest or resolve underperforming loans in order to meet capital and regulatory requirements.

Internal Growth through Intensive, Value-Added Asset Management

We employ an intensive asset management strategy that is designed to increase cash flow and occupancy from our properties. Our strategy includes repositioning industrial property by renovating, modernizing or increasing functionality to increase cash flow and value. For example, we sometimes convert formerly single-tenant properties to multi-tenant occupancy to capitalize upon the higher per square foot rents generated by smaller spaces in our target markets. We believe that by undertaking such conversions or other functional enhancements, we can position our properties to attract a larger universe of potential tenants, increase occupancy, tenant quality and rental rates. We also believe that multi-tenant properties help to limit our exposure to tenant default risk and diversify our sources of cash flow.

 

Our proactive approach to leasing and asset management is driven by our in-house team of portfolio and property managers, which maintains direct, day-to-day relationships and dialogue with our tenants. In addition, we motivate listing brokers through leasing incentives combined with highly entrepreneurial leasing plans that we develop for each of our properties. We believe our proactive approach to leasing and asset management enhances recurring cash flow and reduces periods of vacancy. Our properties have successfully outperformed the overall infill Southern California market in leasing up vacant space. As illustrated in the chart below, over the course of the last five years, we have demonstrated an ability to consistently increase occupancy, even during the depth of the recent “Great Recession” when our target markets experienced a net reduction in occupancy.

Source: DAUM market materials, citing CoStar Property Database as of March 2013.

We believe that our initial portfolio contains the potential for imbedded growth through the lease-up of currently available space. As of March 31, 2013, our initial portfolio was 89.4% leased. We believe three factors will contribute to increased cash flow from leasing in the near term:

 

•

a number of our properties are in their final lease-up stage after being repositioned through our value-add activities,

 

•

we expect the firming up of supply and demand in certain markets, such as San Diego, that has generally lagged the infill markets of Los Angeles County and Orange County through the 2010 to 2012 recovery, and are now experiencing net positive absorption, and

 

•

expected market rental rate increases in the multi-tenant industrial market, as smaller and medium sized business tenants begin to gain access to increased liquidity and available credit as the economy recovers.

Financing Strategy

We intend to maintain a flexible and growth-oriented capital structure. Upon completion of this offering, we will have an initial debt-to-market capitalization of approximately     %. To facilitate our acquisition

 

strategy, we have negotiated a proposed revolving credit facility with a borrowing capacity of $200 million that we expect to have in place at the completion of this offering. This facility is expected to have an accordion feature that may provide for up to an additional $200 million borrowing capacity as our company grows. The proposed revolving credit facility will be used for property acquisitions, working capital requirements and other general corporate purposes. We also expect to enter into a new approximately $             million term loan, which will be used at the closing of this offering to repay a portion of our outstanding mortgage debt. For more information regarding our proposed revolving credit facility and our new term loan, see “Business—Description of Certain Debt.”

We expect to fund property acquisitions through borrowings under our proposed revolving credit facility and traditional mortgage financing, as well as from any remaining cash available from the proceeds of this offering and the concurrent private placement after repayment of certain indebtedness as described under “Use of Proceeds.” We may place longer term mortgage debt on certain properties. We also anticipate using common units to acquire properties from existing owners interested in tax-deferred transactions.

Our Properties

Upon completion of our formation transactions, our initial portfolio will consist of 61 properties with approximately 6.7 million rentable square feet, including two properties that we currently have under contract to purchase, and we will manage an additional 20 properties with approximately 1.2 million rentable square feet. We will own 100% of 58 of these properties and own 15% of the remaining three properties. Our initial portfolio has a stable and diversified tenant base. As of March 31, 2013, the properties comprising our initial portfolio were 89.4% leased to 693 tenants, with no single tenant accounting for more than 2.3% and no single industry accounting for more than 11.6% of our total annualized rent. Our ten largest tenants account for 13.7% of our total annualized rent as of March 31, 2013. We intend to continue to maintain a diversified mix of tenants to limit our exposure to any single tenant or industry. We will also own one non-recourse mortgage loan with an estimated outstanding balance of approximately $14.3 million as of March 31, 2013, secured by a first mortgage on an industrial property located in San Juan Capistrano, California, which is scheduled to mature on May 1, 2017.

The following tables portray the property type, geographic and industry diversity, respectively, of the properties and tenants comprising our initial portfolio as of March 31, 2013:

 

Property Type		Number of Properties				Occupancy(1)				Rentable Square Feet				Ownership Interest in Rentable Square Feet(2)				Percentage of Total Rentable Square Feet				Annualized Base Rent(3)				Percentage of Total Annualized Base Rent(4)				Annualized Base Rent per Square Foot(5)
Warehouse / Light Manufacturing(6)			34				87.0	%			2,764,624				2,764,624				48.8	%		$	19,585,430				46.4	%		$	8.14
Warehouse / Distribution			14				88.6	%			3,035,471				2,025,325				35.7	%		$	13,684,037				32.4	%		$	7.63
Light Manufacturing / Flex			6				74.5	%			466,319				466,319				8.2	%		$	4,910,808				11.6	%		$	14.14
Light Industrial / Office			7				72.1	%			411,549				411,549				7.3	%		$	4,024,596				9.5	%		$	13.56
Total / Weighted Average(7)			61				85.5	%			6,677,963				5,667,817				100.0	%		$	42,204,871				100.0	%		$	8.71

 

(1)	Calculated as the average occupancy at such properties as of March 31, 2013, weighted by ownership interest in the properties’ rentable square feet. These properties were 89.4% leased as of March 31, 2013, weighted by ownership interest in the properties’ rentable square feet.

(2)	Calculated for each property as rentable square feet for such property multiplied by our ownership interest for such property, and then aggregated by property type.

(3)

Calculated for each property as the monthly contracted base rent per the terms of the lease(s) at such property, as of March 31, 2013, multiplied by 12 and then multiplied by our ownership interest for such property, and then aggregated by property type. Excludes billboard and antenna revenue and rent abatements. Total rent abatements with respect to our initial portfolio for leases in effect as of March 31, 2013 for the 12 months ending March 31, 2014 are $980,117, of which our proportionate share, based on our ownership interest in the applicable properties, is $980,117. Annualized base rent includes rent from triple net leases, modified gross leases and gross leases. See “Business and Properties-Leases.”

 

(4)	Calculated for each property type as annualized base rent for such property type divided by annualized base rent for the total portfolio as of March 31, 2013.

(5)

Calculated for each property type as annualized base rent for such property type divided by our ownership interest in leased square feet for such property type as of March 31, 2013. Total annualized base rent per square foot, net of our proportionate share of rent abatements, for our properties is $8.51.

(6)	Excluding our pending acquisitions of the Oxnard and Orion properties, which we have under contract to purchase, occupancy was 87.3%, annualized base rent was $18,472,886 and total annualized base rent per square foot was $8.01.

(7)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $41,092,327 and total annualized base rent per square foot was $8.66.

Market		Number of Properties				Occupancy(1)				Rentable Square Feet				Ownership Interest in Rentable Square Feet(2)				Percentage of Total Rentable Square Feet				Annualized Base Rent(3)				Percentage of Total Annualized Base Rent(4)				Annualized Base Rent per Square Foot(5)
Los Angeles County
Greater San Fernando Valley			14				91.2	%			1,360,719				1,360,719				24.0	%		$	12,226,116				29.0	%		$	9.85
San Gabriel Valley			6				97.6	%			612,482				612,482				10.8	%		$	5,674,423				13.4	%		$	9.49
Central			1				100.0	%			190,663				190,663				3.4	%		$	1,257,912				3.0	%		$	6.60
Mid-Counties			4				82.2	%			522,490				522,490				9.2	%		$	3,015,480				7.1	%		$	7.02
South Bay			6				77.7	%			335,258				335,258				5.9	%		$	1,959,024				4.6	%		$	7.52
Subtotal / Weighted Average(6)			31				90.0	%			3,021,612				3,021,612				53.3	%			24,132,956				57.2	%		$	8.87
Orange County
North Orange County			2				97.6	%			223,681				223,681				3.9	%		$	1,801,800				4.3	%		$	8.26
Airport			4				91.2	%			289,040				289,040				5.1	%		$	2,083,716				4.9	%		$	7.90
Subtotal / Weighted Average			6				94.0	%			512,721				512,721				9.0	%			3,885,516				9.2	%		$	8.06
San Bernardino County
Inland Empire West			5				80.4	%			495,561				495,561				8.7	%		$	3,753,372				8.9	%		$	9.42
Inland Empire East			2				94.9	%			85,282				85,282				1.5	%		$	447,288				1.1	%		$	5.53
Subtotal / Weighted Average			7				82.5	%			580,843				580,843				10.2	%			4,200,660				10.0	%		$	8.77
Ventura County
Camarillo / Oxnard			6				91.5	%			1,598,940				588,794				10.4	%		$	3,849,365				9.1	%		$	7.14
Subtotal / Weighted Average			6				91.5	%			1,598,940				588,794				10.4	%			3,849,365				9.1	%		$	7.14
San Diego County
North County			7				60.3	%			709,251				709,251				12.5	%		$	3,868,734				9.2	%		$	9.05
Central			2				93.6	%			137,989				137,989				2.4	%		$	1,516,164				3.6	%		$	11.74
South County			1				49.0	%			78,615				78,615				1.4	%		$	364,452				0.9	%		$	9.46
Subtotal / Weighted Average			10				64.3	%			925,855				925,855				16.3	%			5,749,350				13.6	%		$	9.66
Other(7)			1				75.6	%			37,992				37,992				0.7	%		$	387,024				0.9	%		$	13.48
Portfolio—Total / Weighted Average(8)			61				85.5	%			6,677,963				5,667,817				100.0	%		$	42,204,871				100.0	%		$	8.71

 

(1)

Calculated as the average occupancy at such properties as of March 31, 2013, weighted by our ownership interest in the properties’ rentable square feet. As of June 4, 2013, we have entered into 53 new leases and 58 renewal leases, totaling 111 leases or renewals that had not yet commenced as of March 31, 2013 (“the uncommenced leases”). The table below sets forth pro forma data reflecting the uncommenced leases.

 

Market		Leased Square Feet Under Uncommenced Leases(a)				Ownership Interest in Leased Square Feet(b)				Pro Forma Occupancy(c)				Annualized Base Rent Under Uncommenced Leases(d)				Total Pro Forma Annualized Base Rent(e)				Total Pro Forma Annualized Base Rent per Square Foot(f)
Los Angeles County(g)			188,956				188,956				91.6	%		$	1,897,926			$	24,579,655			$	8.88
Orange County			57,408				57,408				93.7	%		$	509,913			$	3,859,976			$	8.04
San Bernardino County			79,047				79,047				87.5	%		$	656,229			$	4,445,504			$	8.74
Ventura County			14,714				14,714				89.0	%		$	123,904			$	3,714,313			$	7.09
San Diego County			223,807				223,807				86.4	%		$	1,574,494			$	7,159,806			$	8.95
Other			3,381				3,381				75.6	%		$	51,312			$	387,024			$	13.48
Total/Weighted Average(h)			567,313				567,313				90.1	%		$	4,813,779			$	44,146,278			$	8.64

 

(a)

The uncommenced leases include: 103,629 square feet being renewed and 85,327 square feet of new leases for Los Angeles County; 37,092 square feet being renewed and 20,316 square feet of new leases for Orange County; 28,289 square feet being renewed and 50,758 square feet of new leases for San Bernardino County; 14,714 square feet being renewed and no new leases for Ventura County; 19,145 square feet being renewed and 204,662 square feet of new leases for San Diego County; and 3,381 square feet being renewed and no new leases for Other.

(b)

Ownership interest in leased square feet is calculated as square feet subject to the uncommenced leases multiplied by our ownership interest in the relevant properties and then aggregated by market.

(c)

Pro forma occupancy is calculated as (i) square footage under lease as of March 31, 2013 weighted by our ownership interest in rentable square feet plus additional square footage leased pursuant to uncommenced leases (net of renewal space) as of June 4, 2013 weighted by our ownership interest minus square footage vacated between March 31, 2013 and June 4, 2013, weighted by our ownership interest in rentable square feet, divided by (ii) total rentable square feet (including new uncommenced leases) weighted by our ownership interest.

(d)

Annualized base rent under uncommenced leases is calculated by multiplying the first full month of contractual rents (before rent abatements) to be received under uncommenced leases, by 12 and then multiplying by our ownership interest in the relevant properties and then aggregating by market. Total rent abatements under leases entered into as of June 4, 2013 but that had not commenced as of March 31, 2013 for the 12 months ending March 31, 2014 are $727,840. This figure includes $688,799 of rent abatements for new leases and $39,041 for renewal leases.

(e)

Total pro forma annualized base rent is calculated by adding annualized base rent as of March 31, 2013 and annualized base rent under uncommenced leases (net of renewals) and subtracting annualized base rent contributed by tenants that had vacated their applicable properties between March 31, 2013 and June 4, 2013. To avoid double counting, total pro forma annualized rent does not include annualized rent on space under lease as of March 31, 2013 that is being renewed pursuant to an uncommenced lease. Excludes billboard and antenna revenue.

(f)

Annualized base rent per square foot under uncommenced leases is calculated as (i) annualized rent base under leases entered into as of June 4, 2013 but that had not commenced as of March 31, 2013, divided by (ii) ownership interest in leased square feet under uncommenced leases.

(g)

Excluding our pending acquisitions of Oxnard and Orion, occupancy was 92.0%, annualized base rent under uncommenced leases was $1,844,142, total pro forma annualized base rent was $23,441,563 and total annualized base rent per square foot was $8.80.

(h)

Excluding our pending acquisitions of Oxnard and Orion, occupancy was 90.3%, annualized base rent under uncommenced leases was $4,759,995, total pro forma annualized base rent was $43,008,186 and total annualized base rent per square foot was $8.59.

(2)	Calculated for each property as rentable square feet for such property multiplied by our ownership interest for such property, and then aggregated by market.

(3)

Calculated for each property as monthly contracted base rent per the terms of the lease(s) at such property, as of March 31, 2013, multiplied by 12 and then multiplied by our ownership interest for such property, and then aggregated by market. Excludes billboard and antenna revenue and rent abatements. Total rent abatements with respect to our initial portfolio for leases in effect as of March 31, 2013 for the 12 months ending March 31, 2014 are $980,117, of which our proportionate share, based on our ownership interest in the applicable properties, is $980,117. Annualized base rent includes rent from triple net leases, modified gross leases and gross leases. See "Business and Properties-Leases."

(4)	Calculated as annualized base rent for such market divided by annualized base rent for the total portfolio as of March 31, 2013.

(5)	Calculated as annualized base rent for such market divided by our ownership interest in leased square feet for such market as of March 31, 2013. Total annualized base rent per square foot, net of our proportionate share of rent abatements, for our properties is $8.51.

(6)	Excluding our pending acquisitions of Oxnard and Orion, occupancy was 90.4%, annualized base rent was $23,020,412, percentage of total annualized base rent was 56.0% and total annualized base rent per square foot was $8.79.

(7)	Includes one property in Glenview, Illinois.

(8)	Excluding our pending acquisitions of Oxnard and Orion, occupancy was 85.6%, annualized base rent was $41,092,327 and total annualized base rent per square foot was $8.66.

 

 

Industry		Number of Leases(1)				Leased Square Feet				Ownership Interest in Leased Square Feet(2)				Percentage of Total Leased Square Feet				Annualized Base Rent(3)				Percentage of Total Annualized Base Rent(4)				Annualized Base Rent per Square Foot(5)
Wholesale/Retail(6)			79				580,350				580,350				12.0	%		$	4,883,172				11.6	%		$	8.41
Business Services(7)			96				339,542				339,542				7.0	%		$	3,931,812				9.3	%		$	11.58
Light Manufacturing(8)			46				478,085				478,085				9.9	%		$	3,549,504				8.4	%		$	7.42
Apparel(9)			27				720,684				465,684				9.6	%		$	3,077,760				7.3	%		$	6.61
Technology & Electronics(10)			48				427,331				304,938				6.3	%		$	3,042,102				7.2	%		$	9.98
Industrial Equipment & Components			46				326,241				326,241				6.7	%		$	2,647,950				6.3	%		$	8.12
Construction(11)			53				329,807				329,807				6.8	%		$	2,556,960				6.1	%		$	7.75
Automotive(12)			56				298,032				298,032				6.2	%		$	2,546,904				6.0	%		$	8.55
Paper & Printing			14				324,607				324,607				6.7	%		$	2,382,036				5.6	%		$	7.34
Warehousing & Storage(13)			48				659,743				300,103				6.2	%		$	2,231,347				5.3	%		$	7.44
Pharmaceuticals			13				172,419				172,419				3.6	%		$	2,116,128				5.0	%		$	12.27
Food & Beverage(14)			42				200,589				200,589				4.1	%		$	1,885,128				4.5	%		$	9.40
Sporting & Recreational Goods			26				163,077				163,077				3.4	%		$	1,381,476				3.3	%		$	8.47
Logistics & Transportation			22				159,385				159,385				3.3	%		$	1,236,624				2.9	%		$	7.76
Healthcare			28				120,609				120,609				2.5	%		$	1,221,444				2.9	%		$	10.13
Government			2				60,881				60,881				1.3	%		$	1,071,936				2.5	%		$	17.61
Financial Services			18				31,345				31,345				0.6	%		$	415,512				1.0	%		$	13.26
Other(15)			29				188,156				188,156				3.9	%		$	2,027,076				4.8	%		$	10.77
Total / Weighted Average(16)			693				5,580,883				4,843,850				100.0	%		$	42,204,871				100.0	%		$	8.71

 

(1)	A single lease may cover space in more than one building.

(2)	Calculated for each lease as leased square feet multiplied by our ownership interest for the applicable property, and then aggregated by industry.

(3)

Calculated for each lease as the monthly contracted base rent per the terms of such lease, as of March 31, 2013, multiplied by 12 and then multiplied by our ownership interest for the applicable property, and then aggregated by industry. Excludes billboard and antenna revenue and rent abatements. Total rent abatements with respect to our initial portfolio for leases in effect as of March 31, 2013 for the 12 months ending March 31, 2014 are $980,117, of which our proportionate share, based on our ownership interest in the applicable properties, is $980,117. Annualized base rent includes rent from triple net leases, modified gross leases and gross leases. See “Business and Properties-Leases.”

(4)	Calculated as annualized base rent for tenants in such industry divided by annualized base rent for the total portfolio as of March 31, 2013.

(5)	Calculated as annualized base rent for tenants in such industry divided by our ownership interest in leased square feet for tenants in such industry as of March 31, 2013. Total annualized base rent per square foot, net of our proportionate share of rent abatements, for our properties is $8.51.

(6)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $4,714,152, percentage of total annualized base rent was 11.5% and total annualized base rent per square foot was $8.36.

(7)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $3,770,700, percentage of total annualized base rent was 9.2% and total annualized base rent per square foot was $11.60.

(8)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $3,523,116, percentage of total annualized base rent was 8.6% and total annualized base rent per square foot was $7.41.

(9)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $3,027,348, percentage of total annualized base rent was 7.4% and total annualized base rent per square foot was $6.56.

(10)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $2,938,062, percentage of total annualized base rent was 7.1% and total annualized base rent per square foot was $9.94.

(11)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $2,523,816, percentage of total annualized base rent was 6.1% and total annualized base rent per square foot was $7.71.

(12)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $2,508,372, percentage of total annualized base rent was 6.1% and total annualized base rent per square foot was $8.51.

(13)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $1,875,535, percentage of total annualized base rent was 4.6% and total annualized base rent per square foot was $7.00.

(14)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $1,742,340, percentage of total annualized base rent was 4.2% and total annualized base rent per square foot was $9.22.

 

(15)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $1,995,780, percentage of total annualized base rent was 4.9% and total annualized base rent per square foot was $10.76.

(16)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $41,092,327 and total annualized base rent per square foot was $8.66.

The following table sets forth information about the 10 largest tenants in our portfolio based on total annualized rent as of March 31, 2013.

 

Tenant		Submarket		Number of Properties				Leased Square Feet				Ownership Interest in Leased Square Feet(1)				Percentage of Total Leased Square Feet				Annualized Base  Rent(2)				Percentage of Total Annualized Base Rent(3)				Annualized Base Rent per Square Foot(4)				Lease Expirations
Biosense		San Gabriel Valley			1				76,000				76,000				1.6	%		$	967,824				2.3	%		$	12.73				10/31/2020
Towne Inc		OC Airport			1				122,060				122,060				2.5	%		$	678,900				1.6	%		$	5.56				7/31/2014
Deckers Outdoor Corporation		Ventura			2				723,106				108,466				2.2	%		$	592,223				1.4	%		$	5.46				11/30/2018
Royal Printex		Central LA			1				78,928				78,928				1.6	%		$	540,384				1.3	%		$	6.85				1/31/2017
Sonic Electronix		Greater San Fernando Valley			1				71,268				71,268				1.5	%		$	534,516				1.3	%		$	7.50				8/31/2014
PureTek		Greater San Fernando Valley			1				76,993				76,993				1.6	%		$	526,632				1.2	%		$	6.84				11/30/2015
Circor Aerospace		Greater San Fernando Valley			1				77,118				77,118				1.6	%		$	524,256				1.2	%		$	6.80				12/31/2014
Perfect Fit Industries		Mid Counties			1				96,758				96,758				2.0	%		$	522,492				1.2	%		$	5.40				7/31/2013
Plastics Research Corporation		Inland Empire West			1				107,861				107,861				2.2	%		$	440,076				1.0	%		$	4.08				2/28/2022
Genie Air		Greater San Fernando Valley			1				81,282				81,282				1.7	%		$	438,924				1.0	%		$	5.40				5/31/2016
Top 10 Tenants					11				1,511,374				896,734				18.5	%		$	5,766,228				13.7	%		$	6.43
All Other Tenants(5)					50				4,069,509				3,947,116				81.5	%		$	36,438,644				86.3	%		$	9.23
Total Initial Portfolio(6)					61				5,580,883				4,843,850				100.0	%		$	42,204,871				100.0	%		$	8.71

 

(1)	Calculated for each tenant as leased square feet multiplied by our ownership interest for the applicable property.

(2)

Calculated for each tenant as the monthly contracted base rent per the terms of such tenant’s lease, as of March 31, 2013, multiplied by 12 and then multiplied by our ownership interest for the applicable property. Excludes billboard and antenna revenue and rent abatements. Total rent abatements with respect to our initial portfolio for leases in effect as of March 31, 2013 for the 12 months ending March 31, 2014 are $980,117, of which our proportionate share, based on our ownership interest in the applicable properties, is $980,117. Annualized base rent includes rent from triple net leases, modified gross leases and gross leases. See “Business and Properties—Leases.”

(3)	Calculated as annualized base rent for such tenant divided by annualized base rent for the total portfolio as of March 31, 2013.

(4)	Calculated as annualized base rent for such tenant divided by our ownership interest in leased square feet for such tenant as of March 31, 2013. Total annualized base rent per square foot, net of our proportionate share of rent abatements, for our properties is $8.51.

(5)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $35,326,100, percentage of total annualized base rent was 86.0% and total annualized base rent per square foot was $9.18.

(6)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $41,092,327 and total annualized base rent per square foot was $8.66.

 

As of March 31, 2013, our weighted average in-place remaining lease term was 2.57 years. The following table sets forth a summary schedule of lease expirations for leases in place as of March 31, 2013, plus available space, for each of the ten full and partial calendar years commencing March 31, 2013 and thereafter in our portfolio. The information set forth in the table assumes that tenants exercise no renewal options and no early termination rights.

 

Year of Lease Expiration		Number of Leases Expiring				Total Rentable Square Feet(1)				Ownership Interest in Rentable Square Feet(2)				Percentage of Total Owned Square Feet				Annualized Base Rent(3)				Percentage of Total Annualized Base Rent(4)				Annualized Base Rent per Square Foot(5)
MTM Tenants(6)(7)			49				113,339				113,339				2.0	%		$	1,039,740				2.5	%		$	9.17
Available(8)			0				1,097,080				823,967				14.5	%		$	0				0.0	%		$	0.00
2013(9)			202				812,859				812,859				14.3	%		$	7,322,400				17.3	%		$	9.01
2014(10)			215				1,355,875				1,355,875				23.9	%		$	11,164,975				26.5	%		$	8.23
2015(11)			140				1,102,780				980,387				17.3	%		$	7,833,558				18.6	%		$	7.99
2016(12)			44				526,443				526,443				9.3	%		$	4,630,512				11.0	%		$	8.80
2017(13)			17				342,615				342,615				6.0	%		$	2,873,538				6.8	%		$	8.39
2018(14)			15				938,080				323,440				5.7	%		$	2,749,691				6.5	%		$	8.50
2019			3				55,787				55,787				1.0	%		$	582,672				1.4	%		$	10.44
2020			4				154,526				154,526				2.7	%		$	2,571,192				6.1	%		$	16.64
2021			1				1,680				1,680				0.0	%		$	29,028				0.1	%		$	17.28
2022			1				107,861				107,861				1.9	%		$	440,076				1.0	%		$	4.08
Thereafter			2				69,038				69,038				1.2	%		$	967,488				2.3	%		$	14.01
Total Initial Portfolio(15)			693				6,677,963				5,667,817				100.0	%		$	42,204,871				100.0	%		$	8.71

 

(1)	Represents the contracted square footage upon expiration.

(2)	Calculated as rentable square feet for such property multiplied by our ownership interest in such property.

(3)

Calculated as monthly contracted base rent per the terms of such lease, as of March 31, 2013, multiplied by 12 and then multiplied by our ownership interest in such property. Excludes billboard and antenna revenue and rent abatements. Total rent abatements with respect to our initial portfolio for leases in effect as of March 31, 2013 for the 12 months ending March 31, 2014 are $980,117, of which our proportionate share, based on our ownership interest in the applicable properties, is $980,117. Annualized base rent includes rent from triple net leases, modified gross leases and gross leases. See "Business and Properties-Leases."

(4)	Calculated as annualized base rent set forth in this table divided by annualized base rent for the total portfolio as of March 31, 2013.

(5)

Calculated as annualized base rent for such leases divided by our ownership interest in leased square feet for such leases at each of the properties so impacted by the lease expirations as of March 31, 2013. Total annualized base rent per square foot, net of our proportionate share of rent abatements, for our properties is $8.51.

(6)	Represents tenants under month-to-month leases.

(7)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $924,552, percentage of total annualized base rent was 2.2% and total annualized base rent per square foot was $8.84.

(8)	Excluding our pending acquisitions of Oxnard and Orion, percentage of total owned square feet was 14.4%.

(9)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $7,161,912, percentage of total annualized base rent was 17.4% and total annualized base rent per square foot was $8.96.

(10)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $10,942,555, percentage of total annualized base rent was 26.6% and total annualized base rent per square foot was $8.18.

(11)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $7,379,442, percentage of total annualized base rent was 18.0% and total annualized base rent per square foot was $7.87.

(12)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $4,593,252, percentage of total annualized base rent was 11.2% and total annualized base rent per square foot was $8.78.

(13)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $2,860,146, percentage of total annualized base rent was 7.0% and total annualized base rent per square foot was $8.38.

(14)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $2,640,011, percentage of total annualized base rent was 6.4% and total annualized base rent per square foot was $8.48.

(15)	Excluding our pending acquisitions of Oxnard and Orion, annualized base rent was $41,092,327 and total annualized base rent per square foot was $8.66.