Form: 8-K

Current report filing

February 18, 2016

Documents

Exhibit 99.2

 
 
 
 
 
Rexford Industrial Realty, Inc.
NYSE: REXR
11620 Wilshire Blvd
Suite 1000
Los Angeles, CA 90025
310-966-1680
www.RexfordIndustrial.com
 
 
 
 
 


Table of Contents
 
 
 
 
 
Section
Page
 
 
Corporate Data:
 
Investor Company Summary
3
Financial and Portfolio Highlights and Common Stock Data
4
Consolidated and Combined Financial Results:
 
Consolidated and Combined Balance Sheet
5
Consolidated and Combined Statement of Operations
6-7
Non‐GAAP FFO and AFFO Reconciliations
8-9
Statement of Operations Reconciliations
10-11
Same Property Portfolio Performance
12-13
Joint Venture Financial Summary
14-15
Capitalization Summary
16
Debt Summary
17
Debt Covenants
18
Portfolio Data:
 
Portfolio Overview
19
Occupancy and Leasing Trends
20
Leasing Statistics
21
Top Tenants and Lease Segmentation
22
Capital Expenditure Summary
23
Properties Under Repositioning
24
Acquisitions and Dispositions Summary
25
Net Asset Value Components
26
Fixed Charge Coverage Ratio
27
Definitions / Discussion of Non‐GAAP Financial Measures
28-29
Disclosures:
Forward Looking Statements: This supplemental package contains “forward‐looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We caution investors that any forward‐looking statements presented herein are based on management’s beliefs and assumptions and information currently available to management. Such statements are subject to risks, uncertainties and assumptions and may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. These risks and uncertainties include, without limitation: general risks affecting the real estate industry (including, without limitation, the market value of our properties, the inability to enter into or renew leases at favorable rates, dependence on tenants’ financial condition, and competition from other developers, owners and operators of real estate); risks associated with the disruption of credit markets or a global economic slowdown; risks associated with the potential loss of key personnel (most importantly, members of senior management); risks associated with our failure to maintain our status as a Real Estate Investment Trust under the Internal Revenue Code of 1986, as amended; possible adverse changes in tax and environmental laws; litigation, including costs associated with prosecuting or defending pending or threatened claims and any adverse outcomes, and potential liability for uninsured losses and environmental contamination.
For a further discussion of these and other factors that could cause our future results to differ materially from any forward‐looking statements, see Item 1A. Risk Factors in our 2014 Annual Report on Form 10‐K, as amended, which was filed with the Securities and Exchange Commission (“SEC”) on March 9, 2015. We disclaim any obligation to publicly update or revise any forward‐looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes.

Fourth Quarter 2015
Page 2
Supplemental Financial Reporting Package
 

Investor Company Summary
 
 
 
 
 
Senior Management Team
Howard Schwimmer
 
Co‐Chief Executive Officer, Director
Michael S. Frankel
 
Co‐Chief Executive Officer, Director
Adeel Khan
 
Chief Financial Officer
Patrick Schlehuber
 
Director of Acquisitions
Bruce Herbkersman
 
Director of Construction & Development
Shannon Lewis
 
Director of Leasing & Asset Management
Ashley Arthur
 
Director of Property Operations
Board of Directors
Richard Ziman
 
Chairman
Howard Schwimmer
 
Co‐Chief Executive Officer, Director
Michael S. Frankel
 
Co‐Chief Executive Officer, Director
Robert L. Antin
 
Director
Steven C. Good
 
Director
Peter Schwab
 
Director
Tyler H. Rose
 
Director
Company Contact Information
11620 Wilshire Blvd
Suite 1000
Los Angeles, CA 90025
 310‐966‐1680
 www.RexfordIndustrial.com
Investor Relations Information
ICR
Stephen Swett
www.icrinc.com
212-849-3882
Equity Research Coverage
Bank of America Merrill Lynch
 
Juan Sanabria
Citigroup Investment Research
 
Emmanuel Korchman
D.A Davidson
 
Barry Oxford
J.P. Morgan
 
Michael W. Mueller, CFA
Jeffries LLC
 
Jonathan Peterson
Wells Fargo Securities
 
Brendan Maiorana, CFA
Wunderlich Securities
 
Craig Kucera

Disclaimer: This list may not be complete and is subject to change as firms add or delete coverage of our company. Please note that any opinions, estimates, forecasts or predictions regarding our historical or predicted performance made by these analysts are theirs alone and do not represent opinions, estimates, forecasts or predictions of Rexford Industrial Realty, Inc. or its management. We are providing this listing as a service to our stockholders and do not by listing these firms imply our endorsement of, or concurrence with, such information, conclusions or recommendations. Interested persons may obtain copies of analysts' reports on their own; we do not distribute these reports.

Fourth Quarter 2015
Page 3
Supplemental Financial Reporting Package
 

Financial and Portfolio Highlights and Common Stock Data (1)
 
 
(in thousands except share and per share data and portfolio statistics)

 
Three Months Ended
 
 
December 31, 2015
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
 
Financial Results:
 
 
 
 
 
 
 
 
 
 
Total rental revenues
$
26,059

 
$
23,335

 
$
22,281

 
$
20,931

 
$
19,370

 
Net income
$
1,056

 
$
617

 
$
196

 
$
81

 
$
145

 
Net income per common share-basic and diluted
$
0.02

 
$
0.01

 
$
0.00

 
$
0.00

 
$
0.00

 
Company share of Recurring FFO
$
11,870

 
$
11,201

 
$
11,089

 
$
10,085

 
$
8,932

 
Recurring FFO per common share-basic and diluted
$
0.21

 
$
0.20

 
$
0.20

 
$
0.20

 
$
0.21

 
Company share of FFO
$
11,365

 
$
10,780

 
$
10,220

 
$
9,513

 
$
8,145

 
FFO per common share-basic and diluted
$
0.21

 
$
0.20

 
$
0.19

 
$
0.19

 
$
0.19

 
EBITDA
$
14,606

 
$
13,508

 
$
12,364

 
$
11,819

 
$
10,334

 
Adjusted EBITDA
$
16,385

 
$
14,607

 
$
14,066

 
$
12,927

 
$
12,585

 
Dividend declared per common share
$
0.135

 
$
0.135

 
$
0.12

 
$
0.12

 
$
0.12

 
Portfolio Statistics:
 
 
 
 
 
 
 
 
 
 
Portfolio SF-consolidated
11,955,455

 
11,078,912

 
10,649,768

 
10,253,580

 
9,829,020

 
Ending occupancy-consolidated portfolio
89.2
 %
 
88.8
 %
 
88.4
%
 
89.5
 %
 
90.7
%
 
Pro‐forma occupancy including uncommenced leases
89.3
 %
 
90.5
 %
 
90.0
%
 
90.8
 %
 
90.7
%
 
Leasing spreads-cash
6.4
 %
 
5.4
 %
 
7.0
%
 
4.5
 %
 
1.9
%
(2) 
Leasing spreads-GAAP
12.9
 %
 
16.3
 %
 
15.4
%
 
11.6
 %
 
11.8
%
(2) 
Same Property Performance:
 
 
 
 
 
 
 
 
 
 
Total rental revenue growth
2.8
 %
 
5.0
 %
 
5.5
%
 
4.2
 %
 
8.8
%
 
Total property expense growth
-5.4
 %
 
-3.2
 %
 
3.8
%
 
-3.4
 %
 
4.1
%
 
NOI growth
4.8
 %
 
8.4
 %
 
6.2
%
 
7.4
 %
 
10.7
%
 
Cash NOI growth
7.5
 %
 
7.1
 %
 
8.0
%
 
7.3
 %
 
9.7
%
 
Same Property Portfolio ending occupancy
94.4
 %
 
93.7
 %
 
92.6
%
 
92.4
 %
 
92.1
%
 
Stabilized Same Property Portfolio ending occupancy
95.6
 %
 
94.8
 %
 
94.0
%
 
94.9
 %
 
93.7
%
 
Same Property Portfolio occupancy growth (ppt)
1.6
 %
 
2.4
 %
 
2.3
%
 
2.1
 %
 
2.3
%
 
Capitalization:
 
 
 
 
 
 
 
 
 
 
Common stock price at quarter end
$
16.36

 
$
13.79

 
$
14.58

 
$
15.81

 
$
15.71

 
Common shares issued and outstanding
55,265,243

 
55,198,780

 
55,051,832

 
54,909,083

 
43,382,425

 
Total shares and units issued and outstanding at period end (3)
57,291,885

 
57,265,484

 
57,229,405

 
57,205,769

 
45,705,769

 
Weighted average shares outstanding ‐ basic and diluted
55,244,664

 
55,145,963

 
54,963,093

 
50,683,528

 
43,234,602

 
Total equity market capitalization
$
937,295

 
$
789,691

 
$
834,405

 
$
904,423

 
$
718,038

 
Total consolidated debt
$
418,698

 
$
335,904

 
$
296,715

 
$
269,879

 
$
357,076

 
Total combined market capitalization (debt and equity)
$
1,350,792

 
$
1,120,512

 
$
1,121,132

 
$
1,126,761

 
$
1,066,508

 
Ratios:
 
 
 
 
 
 
 
 
 
 
Net debt (pro‐rata) to total combined market capitalization
30.6
 %
 
29.5
 %
 
25.6
%
 
19.7
 %
 
32.7
%
 
Net debt (pro‐rata) to adjusted EBITDA (quarterly results annualized)
6.3x

 
5.7x

 
5.1x

 
4.3x

 
6.9x

 
(1)For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 28 of this report.
(2)Excluding the effect of one new 15,040 sqft lease transaction in our San Diego market, the weighted average cash and GAAP growth for total leases (new & renewal) executed during Q4-14 was 3.3% and 13.3%, respectively.
(3) 
Includes the following number of OP Units held by noncontrolling interests: 2,026,642 (Dec 31, 2015), 2,066,704 (Sep 30, 2015), 2,177,573 (Jun 30, 2015), 2,296,686 (Mar 31, 2015) and 2,323,344 (Dec 31, 2014). Excludes the following number of shares of unvested restricted stock: 333,441 (Dec 31, 2015), 389,123 (Sep 30, 2015), 407,463 (Jun 30, 2015), 420,280 (Mar 31, 2015) and 320,017 (Dec 31, 2014). Excludes 166,669 unvested LTIP Units and 315,998 unvested performance units which were granted in Q4-15.

Fourth Quarter 2015
Page 4
Supplemental Financial Reporting Package
 

Consolidated Balance Sheets
 
 
 
 
(unaudited and in thousands)
 
Rexford Industrial Realty, Inc.
 
12/31/15
 
9/30/15
 
6/30/2015
 
3/31/2015
 
12/31/2014
Assets
 
 
 
 
 
 
 
 
 
Land
$
492,704

 
$
445,454

 
$
420,349

 
$
392,594

 
$
368,033

Buildings and improvements
650,075

 
620,341

 
586,178

 
557,382

 
530,191

Tenant improvements
28,977

 
26,539

 
25,008

 
22,417

 
21,404

Furniture, fixtures, and equipment
188

 
188

 
188

 
188

 
188

Construction in progress
16,822

 
14,265

 
13,181

 
13,306

 
10,646

  Total real estate held for investment
1,188,766

 
1,106,787

 
1,044,904

 
985,887

 
930,462

Accumulated depreciation
(103,623
)
 
(96,403
)
 
(89,539
)
 
(83,140
)
 
(76,884
)
Investments in real estate, net
1,085,143

 
1,010,384

 
955,365

 
902,747

 
853,578

Cash and cash equivalents
5,201

 
5,083

 
9,988

 
47,541

 
8,606

Notes receivable
—

 
—

 
13,137

 
13,135

 
13,137

Rents and other receivables, net
3,040

 
2,221

 
2,210

 
1,892

 
1,812

Deferred rent receivable
7,827

 
7,009

 
6,067

 
5,520

 
5,165

Deferred leasing costs, net
5,331

 
5,044

 
4,526

 
3,744

 
3,608

Deferred loan costs, net
1,445

 
1,595

 
1,745

 
1,895

 
2,045

Acquired lease intangible assets, net(1)
30,383

 
27,838

 
28,580

 
26,504

 
28,136

Indefinite‐lived intangible
5,271

 
5,271

 
5,271

 
5,271

 
5,271

Other assets
5,523

 
5,491

 
5,221

 
5,534

 
4,699

Acquisition related deposits
—

 
1,250

 
1,400

 
250

 
2,110

Investment in unconsolidated real estate entities
4,087

 
4,056

 
4,018

 
4,013

 
4,018

Total Assets
$
1,153,251

 
$
1,075,242

 
$
1,037,528

 
$
1,018,046

 
$
932,185

Liabilities
 
 
 
 
 
 
 
 
 
Notes payable
$
418,154

 
$
335,058

 
$
296,333

 
$
269,541

 
$
356,362

Interest rate swap liability
3,144

 
4,716

 
2,960

 
3,279

 
1,402

Accounts payable and accrued expenses
12,631

 
13,886

 
9,257

 
11,566

 
10,053

Dividends payable
7,806

 
7,504

 
6,655

 
6,639

 
5,244

Acquired lease intangible liabilities, net(2)
3,387

 
2,700

 
2,579

 
2,903

 
3,016

Tenant security deposits
11,539

 
10,523

 
9,711

 
9,112

 
8,768

Prepaid rents
2,846

 
1,935

 
2,517

 
1,144

 
1,463

Total Liabilities
459,507

 
376,322

 
330,012

 
304,184

 
386,308

Equity
 
 
 
 
 
 
 
 
 
Common stock
553

 
552

 
550

 
549

 
434

Additional paid in capital
722,722

 
722,102

 
720,583

 
719,199

 
542,318

Cumulative distributions in excess of earnings
(48,103
)
 
(41,613
)
 
(34,702
)
 
(28,235
)
 
(21,673
)
Accumulated other comprehensive loss
(3,033
)
 
(4,546
)
 
(2,847
)
 
(3,147
)
 
(1,331
)
Total stockholders' equity
672,139

 
676,495

 
683,584

 
688,366

 
519,748

Noncontrolling interests
21,605

 
22,425

 
23,932

 
25,496

 
26,129

Total Equity
693,744

 
698,920

 
707,516

 
713,862

 
545,877

Total Liabilities and Equity
$
1,153,251

 
$
1,075,242

 
$
1,037,528

 
$
1,018,046

 
$
932,185

(1) 
Includes net above-market tenant lease intangibles of $6,225 (Dec. 31, 2015), $5,621 (Sept. 30, 2015), $5,725 (June 30, 2015), $3,312 (March 31, 2015) and $3,644 (Dec. 31 2014).
(2) 
Includes net below-market tenant lease intangibles of $3,174 (Dec. 31, 2015), $2,479 (Sept. 30, 2015), $2,350 (June 30, 2015), $2,666 (March 31, 2015) and $2,771 (Dec. 31 2014).

Fourth Quarter 2015
Page 5
Supplemental Financial Reporting Package
 

Consolidated Statements of Operations
 
 
Quarterly Results
 
(unaudited and in thousands, except share and per share data)

 
Three Months Ended
 
December 31, 2015
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
Revenues
 
 
 
 
 
 
 
 
 
Rental income
$
22,665

 
$
20,617

 
$
19,275

 
$
18,557

 
$
16,719

Tenant reimbursements
3,074

 
2,377

 
2,844

 
2,184

 
2,417

Other income
320

 
341

 
162

 
190

 
234

Total rental revenues
26,059

 
23,335

 
22,281

 
20,931

 
19,370

Management, leasing, and development services
105

 
186

 
161

 
132

 
206

Interest income
—

 
153

 
280

 
277

 
282

Total Revenues
26,164

 
23,674

 
22,722

 
21,340

 
19,858

Operating Expenses
 
 
 
 
 
 
 
 
 
Property expenses
7,118

 
6,237

 
5,874

 
5,771

 
5,477

General and administrative
3,952

 
3,778

 
3,740

 
3,546

 
3,486

Depreciation and amortization
10,821

 
10,642

 
10,490

 
9,884

 
8,443

Total Operating Expenses
21,891

 
20,657

 
20,104

 
19,201

 
17,406

Other Expense
 
 
 
 
 
 
 
 
 
Acquisition expenses
528

 
528

 
847

 
233

 
627

Interest expense
2,724

 
2,245

 
1,658

 
1,826

 
1,655

Total Other Expense
3,252

 
2,773

 
2,505

 
2,059

 
2,282

Total Expenses
25,143

 
23,430

 
22,609

 
21,260

 
19,688

Equity in income (loss) from unconsolidated real estate entities
35

 
45

 
12

 
1

 
(25
)
Gain from early repayment of note receivable
—

 
581

 
—

 
—

 
—

(Loss) gain on extinguishment of debt
—

 
(253
)
 
71

 
—

 
—

Net Income
1,056

 
617

 
196

 
81

 
145

 Less: net income attributable to noncontrolling interest
(40
)
 
(24
)
 
(8
)
 
(4
)
 
—

Net income attributable to Rexford Industrial Realty, Inc.
1,016

 
593

 
188

 
77

 
145

 Less: earnings allocated to participating securities
(71
)
 
(53
)
 
(49
)
 
(50
)
 
(38
)
Net income attributable to common stockholders
$
945

 
$
540

 
$
139

 
$
27

 
$
107

 
 
 
 
 
 
 
 
 
 
Earnings per Common Share ‐ Basic and Diluted
 
 
 
 
 
 
 
 
 
Net income attributable to common stockholders
$
0.02

 
$
0.01

 
$
0.00

 
$
0.00

 
$
0.00

Weighted average shares outstanding ‐ basic and diluted
55,244,664
 
55,145,963
 
54,963,093
 
50,683,528
 
43,234,602
 


Fourth Quarter 2015
Page 6
Supplemental Financial Reporting Package
 

Consolidated Statements of Operations
 
 
Quarterly Results
 
(unaudited and in thousands)
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2015
 
2014
 
2015
 
2014
Rental Revenues
 
 
 
 
 
 
 
Rental income
$
22,665

 
$
16,719

 
$
81,114

 
$
56,636

Tenant reimbursements
3,074

 
2,417

 
10,479

 
7,661

Other income
320

 
234

 
1,013

 
307

Total Rental Revenues
26,059

 
19,370

 
92,606

 
64,604

Management, leasing, and development services
105

 
206

 
584

 
860

Interest income
—

 
282

 
710

 
1,117

Total Revenues
26,164

 
19,858

 
93,900

 
66,581

Operating Expenses
 
 
 
 
 
 
 
Property expenses
7,118

 
5,477

 
25,000

 
18,382

General and administrative
3,952

 
3,486

 
15,016

 
12,144

Depreciation and amortization
10,821

 
8,443

 
41,837

 
28,608

Total Operating Expenses
21,891

 
17,406

 
81,853

 
59,134

Other Expense
 
 
 
 
 
 
 
Acquisition expenses
528

 
627

 
2,136

 
2,038

Interest expense
2,724

 
1,655

 
8,453

 
6,400

Total Other Expense
3,252

 
2,282

 
10,589

 
8,438

Total Expenses
25,143

 
19,688

 
92,442

 
67,572

Equity in income (loss) from unconsolidated real estate entities
35

 
(25
)
 
93

 
(29
)
Gain from early repayment of note receivable
—

 
—

 
581

 
—

Loss on extinguishment of debt
—

 
—

 
(182
)
 
—

Loss on sale of real estate
—

 
—

 
—

 
(150
)
Net Income (Loss) from Continuing Operations
1,056

 
145

 
1,950

 
(1,170
)
Discontinued Operations
 
 
 
 
 
 
 
Income from discontinued operations before gain on sale of real estate
—

 
—

 
—

 
21

Gain on sale of real estate
—

 
—

 
—

 
2,125

Income from Discontinued Operations
—

 
—

 
—

 
2,146

Net Income
1,056

 
145

 
1,950

 
976

 Less: net income attributable to noncontrolling interest
(40
)
 
—

 
(76
)
 
(80
)
Net income attributable to Rexford Industrial Realty, Inc.
1,016

 
145

 
1,874

 
896

 Less: earnings allocated to participating securities
(71
)
 
(38
)
 
(223
)
 
(102
)
Net income attributable to common stockholders
$
945

 
$
107

 
$
1,651

 
$
794

 
 
 
 
 
 
 
 

Fourth Quarter 2015
Page 7
Supplemental Financial Reporting Package
 

Non-GAAP FFO (1)
 
 
 
 
(unaudited and in thousands, except share and per share data)
 
Rexford Industrial Realty, Inc.
 
Three Months Ended
 
December 31, 2015
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
Funds From Operations (FFO)
 
 
 
 
 
 
 
 
 
Net Income
$
1,056

 
$
617

 
$
196

 
$
81

 
$
145

Add:
 
 
 
 
 
 
 
 
 
Depreciation and amortization, including amounts in discontinued operations
10,821

 
10,642

 
10,490

 
9,884

 
8,443

Depreciation and amortization from unconsolidated joint ventures
5

 
4

 
20

 
28

 
66

Deduct:
 
 
 
 
 
 
 
 
 
Gain on sale of real estate from unconsolidated joint ventures
—

 
—

 
—

 
—

 
3

FFO (2)
11,882

 
11,263

 
10,706

 
9,993

 
8,651

Company share of FFO (3)(4)
$
11,365

 
$
10,780

 
$
10,220

 
$
9,513

 
$
8,145

 
 
 
 
 
 
 
 
 
 
FFO per share‐basic and diluted
$
0.21

 
$
0.20

 
$
0.19

 
$
0.19

 
$
0.19

 
 
 
 
 
 
 
 
 
 
FFO
11,882

 
11,263

 
10,706

 
9,993

 
8,651

Add:
 
 
 
 
 
 
 
 
 
Non‐recurring legal fees (reimbursements)(5)
—

 
(88
)
 
64

 
369

 
205

Acquisition expenses
528

 
528

 
847

 
233

 
627

Recurring FFO (2)
$
12,410

 
$
11,703

 
$
11,617

 
$
10,595

 
$
9,483

Company share of Recurring FFO (3)
$
11,870

 
$
11,201

 
$
11,089

 
$
10,085

 
$
8,932

 
 
 
 
 
 
 
 
 
 
Recurring FFO per share‐basic and diluted
$
0.21

 
$
0.20

 
$
0.20

 
$
0.20

 
$
0.21

 
 
 
 
 
 
 
 
 
 
Weighted‐average shares outstanding‐basic and diluted
55,244,664

 
55,145,963

 
54,963,093

 
50,683,528

 
43,234,602

Weighted-average diluted shares and units
57,289,069

 
57,257,186

 
57,220,536

 
52,989,102

 
45,705,769

 
 
 
 
 
 
 
 
 
 
(1) 
For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 28 of this report.
(2) 
FFO and Recurring FFO for the three months ended September 30, 2015, includes the following: (i) $581 gain from the early repayment of the Calle Perfecto note receivable and (ii) $253 loss on extinguishment of debt. FFO and Recurring FFO for the three months ended June 30, 2015, includes a $71 gain on extinguishment of debt.
(3) 
Company share of FFO and Recurring FFO is based on the weighted average interest in our operating partnership of 96.4%, 96.3%, 96.1%, 95.6% and 94.6% for the three months ended December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015 and December 31, 2014, respectively.
(4) 
Company share of FFO excludes FFO allocated to participating securities of $99, $76, $76, $71 and $38 for the three months ended December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015 and December 31, 2014, respectively. Participating securities include unvested shares of restricted stock, unvested LTIP units and unvested performance units.
(5) 
Non-recurring legal fees (reimbursements) relate to litigation. For more information, see Item 3. Legal Proceedings in our 2014 Annual Report on Form 10-K, as amended, and Item 1. Legal Proceedings in our subsequent quarterly reports on Form 10-Q.

Fourth Quarter 2015
Page 8
Supplemental Financial Reporting Package
 

Non-GAAP AFFO (1)
 
 
 
 
(unaudited and in thousands)
AFFO
 
 
 
Rexford Industrial Realty, Inc.
 
Three Months Ended
 
December 31, 2015
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015(2)
 
December 31, 2014(2)
Adjusted Funds From Operations (AFFO)
 
 
 
 
 
 
 
 
 
Funds From Operations
$
11,882

 
$
11,263

 
$
10,706

 
$
9,993

 
$
8,651

Add:
 
 
 
 
 
 
 
 
 
Amortization of deferred financing costs
194

 
200

 
209

 
209

 
206

Fair value lease expense
48

 
69

 
46

 
39

 
115

Non‐cash stock compensation
494

 
443

 
467

 
348

 
250

Straight line corporate office rent expense adjustment
(1
)
 
21

 
37

 
24

 
—

Loss (gain) on extinguishment of debt
—

 
253

 
(71
)
 
—

 
—

Deduct:
 
 
 
 
 
 
 
 
 
Straight line rental revenue adjustment(3)
1,409

 
1,039

 
612

 
365

 
595

Capitalized payments (4)
651

 
548

 
497

 
344

 
302

Note receivable discount amortization
—

 
38

 
71

 
69

 
68

Note payable premium amortization
33

 
33

 
33

 
92

 
82

Gain from early repayment of note receivable
—

 
581

 
—

 
—

 
—

Recurring capital expenditures(5)
1,346

 
921

 
871

 
392

 
908

2nd generation tenant improvements and leasing commissions(6)
762

 
701

 
893

 
706

 
918

Unconsolidated joint venture AFFO adjustments
4

 
5

 
(4
)
 
(9
)
 
3

AFFO
$
8,412

 
$
8,383

 
$
8,421

 
$
8,654

 
$
6,346


(1) 
For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 28 of this report.
(2) 
For comparability, prior period amounts have been reclassified to conform to current period presentation.
(3) 
For the three months ended December 31, 2015, the straight line rental revenue adjustment includes $727 of concessions and $554 of free rent under a license agreement at one of our properties. The straight line rental revenue adjustment includes concessions of $870, $485, $358, and $494 for the three months ended September 30, 2015, June 30, 2015, March 31, 2015 and December 31, 2014, respectively.
(4) 
Includes capitalized interest, and leasing and construction development compensation.
(5) 
Excludes nonrecurring capital expenditures of $4,018, $4,222, $3,312, $2,920, and $4,118 for the three months ended December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015 and December 31, 2014, respectively.
(6) 
Excludes 1st generation tenant improvements and leasing commissions of $418, $624, $996, $236 and $640 for the three months ended December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015 and December 31, 2014, respectively.

Fourth Quarter 2015
Page 9
Supplemental Financial Reporting Package
 

Statement of Operations Reconciliations (1)
 
 
 
 
(unaudited and in thousands)
 
Rexford Industrial Realty, Inc.
 
Three Months Ended
 
December 31, 2015
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
Rental income
$
22,665

 
$
20,617

 
$
19,275

 
$
18,557

 
$
16,719

Tenant reimbursements
3,074

 
2,377

 
2,844

 
2,184

 
2,417

Other income
320

 
341

 
162

 
190

 
234

Total rental revenues
26,059

 
23,335

 
22,281

 
20,931

 
19,370

 
 
 
 
 
 
 
 
 
 
Property expenses
7,118

 
6,237

 
5,874

 
5,771

 
5,477

NOI
$
18,941


$
17,098


$
16,407


$
15,160


$
13,893

Fair value lease revenue
48

 
69

 
46

 
39

 
115

Straight line rental revenue adjustment
(1,409
)
 
(1,039
)
 
(612
)
 
(365
)
 
(595
)
Cash NOI
$
17,580

 
$
16,128

 
$
15,841

 
$
14,834

 
$
13,413

 
 
 
 
 
 
 
 
 
 
Net Income
$
1,056

 
$
617

 
$
196

 
$
81

 
$
145

Add:
 
 
 
 
 
 
 
 
 
General and administrative
3,952

 
3,778

 
3,740

 
3,546

 
3,486

Depreciation and amortization
10,821

 
10,642

 
10,490

 
9,884

 
8,443

Acquisition expenses
528

 
528

 
847

 
233

 
627

Interest expense
2,724

 
2,245

 
1,658

 
1,826

 
1,655

Loss (gain) on extinguishment of debt
—

 
253

 
(71
)
 
—

 
—

Subtract:
 
 
 
 
 
 
 
 
 
Management, leasing, and development services
105

 
186

 
161

 
132

 
206

Interest income
—

 
153

 
280

 
277

 
282

Equity in income (loss) from unconsolidated real estate entities
35

 
45

 
12

 
1

 
(25
)
Gain from early repayment of note receivable
—

 
581

 
—

 
—

 
—

NOI
$
18,941


$
17,098


$
16,407


$
15,160


$
13,893

Fair value lease revenue
48

 
69

 
46

 
39

 
115

Straight line rental revenue adjustment
(1,409
)
 
(1,039
)
 
(612
)
 
(365
)
 
(595
)
Cash NOI
$
17,580

 
$
16,128

 
$
15,841

 
$
14,834

 
$
13,413

(1) 
For a definition and discussion of non‐GAAP financial measures, see the definitions section beginning on page 28 of this report.

Fourth Quarter 2015
Page 10
Supplemental Financial Reporting Package
 

Statement of Operations Reconciliations (1)
 
 
 
 
(unaudited and in thousands)
 
Rexford Industrial Realty, Inc.
 
Three Months Ended
 
December 31, 2015
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
Net income
1,056

 
617

 
196

 
81

 
145

Interest expense
2,724

 
2,245

 
1,658

 
1,826

 
1,655

Proportionate share of interest expense from
 
 
 
 
 
 
 
 
 
unconsolidated joint ventures
—

 
—

 
—

 
—

 
25

Depreciation and amortization
10,821

 
10,642

 
10,490

 
9,884

 
8,443

Proportionate share of real estate related depreciation and
 
 
 
 
 
 
 
 
 
amortization from unconsolidated joint ventures
5

 
4

 
20

 
28

 
66

EBITDA
$
14,606

 
$
13,508

 
$
12,364

 
$
11,819

 
$
10,334

Stock‐based compensation amortization
494

 
443

 
467

 
348

 
250

Loss (gain) on extinguishment of debt
—

 
253

 
(71
)
 
—

 
—

Gain from early repayment of note receivable
—

 
(581
)
 
—

 
—

 
—

Non‐recurring legal fees (reimbursements)(2)
—

 
(88
)
 
64

 
369

 
205

Acquisition expenses
528

 
528

 
847

 
233

 
627

Pro forma effect of acquisitions(3)
757

 
544

 
395

 
158

 
1,169

Adjusted EBITDA
$
16,385

 
$
14,607

 
$
14,066

 
$
12,927

 
$
12,585

(1) 
For a definition and discussion of non‐GAAP financial measures, see the definitions section beginning on page 28 of this report.
(2) 
Non‐recurring legal fees (reimbursements) relate to Litigation. For more information, see Item 3. Legal Proceedings in our 2014 Annual Report on Form 10‐K, as amended, and Item 1. Legal Proceedings in our subsequent quarterly reports on Form 10‐Q.
(3) 
Represents the estimated impact of Q4'15 acquisition as if they had been acquired October 1, 2015, Q3'15 acquisitions as if they had been acquired July 1, 2015, Q2'15 acquisitions as if they had been acquired April 1, 2015, Q1'15 acquisitions as if they had been acquired January 1, 2015 and Q4'14 acquisitions as if they had been acquired October 1, 2014. We have made a number of assumptions in such estimates and there can be no assurance that we would have generated the projected levels of EBITDA had we owned the acquired entities as of the beginning of each period.

Fourth Quarter 2015
Page 11
Supplemental Financial Reporting Package
 

Same Property Portfolio Performance (1)
 
 
Statement of Operations and NOI Reconciliation
 
(unaudited and in thousands)
Same Property Portfolio Statement of Operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2015
 
2014
 
$ Change
 
% Change
 
2015
 
2014
 
$ Change
 
% Change
Rental Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental income
$
12,533

 
$
12,080

 
$
453

 
3.8%
 
$
48,545

 
$
46,423

 
$
2,122

 
4.6%
Tenant reimbursements
1,593

 
1,671

 
(78
)
 
(4.7)%
 
5,976

 
6,106

 
(130
)
 
(2.1)%
Other income
228

 
213

 
15

 
7.0%
 
600

 
282

 
318

 
112.8%
Total Rental Revenues
14,354


13,964


390

 
2.8%
 
55,121


52,811


2,310

 
4.4%
Interest income
—

 
—

 
—

 
0.0%
 
—

 
1

 
(1
)
 
(100.0)%
Total Revenues
14,354


13,964


390

 
2.8%
 
55,121


52,812


2,309

 
4.4%
Operating Expenses
 
 
 
 

 
 
 
 
 
 
 

 
 
Property expenses
3,876

 
3,964

 
(88
)
 
(2.2)%
 
14,950

 
15,162

 
(212
)
 
(1.4)%
Depreciation and amortization
4,469

 
4,855

 
(386
)
 
(8.0)%
 
18,343

 
21,103

 
(2,760
)
 
(13.1)%
Total Operating Expenses
8,345


8,819


(474
)
 
(5.4)%
 
33,293


36,265


(2,972
)
 
(8.2)%
Other Expense
 
 
 
 

 
 
 
 
 
 
 

 
 
Interest expense
—

 
185

 
(185
)
 
(100.0)%
 
549

 
1,062

 
(513
)
 
(48.3)%
Total Other Expense
—


185


(185
)
 
(100.0)%
 
549


1,062


(513
)
 
(48.3)%
Total Expenses
8,345


9,004


(659
)
 
(7.3)%
 
33,842


37,327


(3,485
)
 
(9.3)%
Net Income
$
6,009


$
4,960


$
1,049

 
21.1%
 
$
21,279


$
15,485


$
5,794

 
37.4%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Property Portfolio NOI Reconciliation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Year Ended December 31,
NOI
2015
 
2014
 
$ Change
 
% Change
 
2015
 
2014
 
$ Change
 
% Change
Net Income
$
6,009

 
$
4,960

 
 
 
 
 
$
21,279

 
$
15,485

 
 
 
 
Add:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
—

 
185

 
 
 
 
 
549

 
1,062

 
 
 
 
Depreciation and amortization
4,469

 
4,855

 
 
 
 
 
18,343

 
21,103

 
 
 
 
Deduct:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
—

 
—

 
 
 
 
 
—

 
1

 
 
 
 
NOI
$
10,478


$
10,000

 
$
478

 
4.8%
 
$
40,171


$
37,649

 
$
2,522

 
6.7%
Straight-line rents
(149
)
 
(438
)
 
 
 
 
 
(569
)
 
(1,015
)
 
 
 
 
Amort. above/below market leases
36

 
80

 
 
 
 
 
191

 
370

 
 
 
 
Cash NOI
$
10,365

 
$
9,642

 
$
723

 
7.5%
 
$
39,793


$
37,004

 
$
2,789

 
7.5%

(1) 
For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 28 of this report.



Fourth Quarter 2015
Page 12
Supplemental Financial Reporting Package
 

Same Property Portfolio Performance (1)
 
 
NOI Reconciliation, Portfolio Summary and Occupancy
 
(unaudited and dollars in thousands)
Same Property Portfolio NOI Reconciliation Continued:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2015
 
2014
 
$ Change
 
% Change
 
2015
 
2014
 
$ Change
 
% Change
Rental income
$
12,533

 
$
12,080

 
$
453

 
3.8%
 
$
48,545

 
$
46,423

 
$
2,122

 
4.6%
Tenant reimbursements
1,593

 
1,671

 
(78
)
 
(4.7)%
 
5,976

 
6,106

 
(130
)
 
(2.1)%
Other income
228

 
213

 
15

 
7.0%
 
600

 
282

 
318

 
112.8%
Total rental revenues
14,354


13,964

 
390

 
2.8%
 
55,121


52,811


2,310

 
4.4%
Property expenses
3,876

 
3,964

 
(88
)
 
(2.2)%
 
14,950

 
15,162

 
(212
)
 
(1.4)%
NOI
$
10,478


$
10,000

 
$
478

 
4.8%
 
$
40,171


$
37,649


$
2,522

 
6.7%
Straight-line rents
(149
)
 
(438
)
 
289
 
(66.0)%
 
(569
)
 
(1,015
)
 
446

 
(43.9)%
Amort. above/below market leases
36

 
80

 
(44)
 
(55.0)%
 
191

 
370

 
(179
)
 
(48.4)%
Cash NOI
$
10,365


9,642

 
$
723

 
7.5%
 
$
39,793


37,004


$
2,789

 
7.5%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Property Portfolio Summary:
 
Same Property Portfolio
 
Stabilized Same
Property Portfolio(2)
 
Number of properties
62
 
62
 
Square Feet
6,083,359
 
6,011,359
 
Same Property Portfolio Occupancy:
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2015
 
December 31, 2014
 
Change (ppt)
 
Same Property
Portfolio
 
Stabilized Same Property Portfolio(2)
 
Same Property
Portfolio
 
Stabilized Same Property Portfolio(2)
 
Same Property
Portfolio
 
Stabilized Same Property Portfolio(2)
Occupancy:
 
 
 
 
 
 
 
 
 
 
 
Los Angeles County
94.8%
 
96.9%
 
96.0%
 
95.9%
 
(1.2)%
 
1.0%
Orange County
96.1%
 
96.1%
 
96.2%
 
96.2%
 
(0.1)%
 
(0.1)%
San Bernardino County
96.2%
 
96.2%
 
87.6%
 
87.6%
 
8.6%
 
8.6%
Ventura County
95.5%
 
95.5%
 
90.5%
 
90.5%
 
5.0%
 
5.0%
San Diego County
89.1%
 
89.1%
 
81.7%
 
81.7%
 
7.4%
 
7.4%
Total/Weighted Average
94.4%
 
95.6%
 
92.8%
 
92.7%
 
1.6%
 
2.9%

(1) 
For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 28 of this report.
(2) 
Reflects the square footage and occupancy of our Same Property Portfolio adjusted for space aggregating 72,000 rentable square feet that was classified as repositioning as of December 31, 2015. For additional details, refer to page 24 of this report.

Fourth Quarter 2015
Page 13
Supplemental Financial Reporting Package
 

Joint Venture Financial Summary
 
 
Balance Sheet
 
(unaudited and in thousands)
 
Mission Oaks (1)
 
December 31, 2015
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
Assets:
 
 
 
 
 
 
 
 
 
Investments in real estate, net
$
21,558

 
$
21,153

 
$
20,690

 
$
20,635

 
$
20,268

Cash and cash equivalents
2,474

 
2,631

 
2,891

 
2,573

 
2,331

Rents and other receivables, net
34

 
5

 
183

 
220

 
231

Deferred rent receivable
61

 
39

 
2

 
—

 
—

Deferred leasing costs and acquisition related intangible assets, net
140

 
152

 
74

 
164

 
290

Acquired above-market leases, net
—

 
—

 
—

 
44

 
110

Other assets
13

 
16

 
22

 
28

 
19

Total Assets
$
24,280

 
$
23,996

 
$
23,862

 
$
23,664

 
$
23,249

 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable, accrued expenses and other liabilities
$
646

 
$
686

 
$
836

 
$
930

 
$
678

Deferred rent payable
—

 
—

 
—

 
4

 
11

Tenant security deposits
436

 
429

 
429

 
292

 
292

Prepaid rents
168

 
130

 
177

 
129

 
—

Total Liabilities
1,250

 
1,245

 
1,442

 
1,355

 
981

 
 
 
 
 
 
 
 
 
 
Equity:
 
 
 
 
 
 
 
 
 
Equity
8,202

 
8,202

 
8,202

 
8,202

 
8,202

Accumulated deficit and distributions
14,828

 
14,549

 
14,218

 
14,107

 
14,066

Total Equity
23,030

 
22,751

 
22,420

 
22,309

 
22,268

 
 
 
 
 
 
 
 
 
 
Total Liabilities and Equity
$
24,280

 
$
23,996

 
$
23,862

 
$
23,664

 
$
23,249

 
 
 
 
 
 
 
 
 
 
Rexford Industrial Realty, Inc. Ownership %:
15%
 
15%
 
15%
 
15%
 
15%

(1) 
These financial statements represent amounts attributable to the entities and do not represent our 15% proportionate share.

Fourth Quarter 2015
Page 14
Supplemental Financial Reporting Package
 

Joint Venture Financial Summary(1)
 
 
Statement of Operations
 
(unaudited and in thousands)
 
 
 
Statement of Operations:
 
 
 
Mission Oaks (2)
 
Three Months Ended
 
December 31, 2015
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
Income Statement
 
 
 
 
 
 
 
 
 
Rental revenues
$
526

 
$
502

 
$
373

 
$
348

 
$
807

Tenant reimbursements
106

 
191

 
312

 
315

 
355

Other operating revenues
(2
)
 
2

 
—

 
—

 
—

Total revenue
630

 
695

 
685

 
663

 
1,162

 
 
 
 
 
 
 
 
 
 
Total operating expense
288

 
334

 
423

 
425

 
555

NOI
342

 
361

 
262

 
238

 
607

 
 
 
 
 
 
 
 
 
 
General and administrative
36

 
3

 
13

 
12

 
11

Depreciation and amortization
27

 
27

 
138

 
185

 
442

Interest expense
—

 
—

 
—

 
—

 
165

Loss on Extinguishment of Debt
—

 
—

 
—

 
—

 
70

Gain on sale of assets/investments
—

 
—

 
—

 
—

 
(13,389
)
Total expense (income)
351

 
364

 
574

 
622

 
(12,146
)
Net Income
$
279

 
$
331

 
$
111

 
$
41

 
$
13,308

 
 
 
 
 
 
 
 
 
 
EBITDA
 
 
 
 
 
 
 
 
 
Net income
$
279

 
$
331

 
$
111

 
$
41

 
$
13,308

Interest expense
—

 
—

 
—

 
—

 
165

Depreciation and amortization
27

 
27

 
138

 
185

 
442

EBITDA
$
306

 
$
358

 
$
249

 
$
226

 
$
13,915

 
 
 
 
 
 
 
 
 
 
Rexford Industrial Realty, Inc. Ownership %:
15%
 
15%
 
15%
 
15%
 
15%
 
 
 
 
 
 
 
 
 
 
Reconciliation - Equity Income in Joint Venture:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
279

 
$
331

 
$
111

 
$
41

 
$
13,308

 
 
 
 
 
 
 
 
 
 
Rexford Industrial Realty, Inc. Ownership %:
15
%
 
15
%
 
15
%
 
15
%
 
15
%
Company share
42

 
50

 
17

 
6

 
1,996

Intercompany eliminations/basis adjustments
(7
)
 
(5
)
 
(5
)
 
(5
)
 
(2,021
)
Equity in net income (loss) from unconsolidated real estate entities
$
35

 
$
45

 
$
12

 
$
1

 
$
(25
)
(1) 
For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 28 of this report.
(2) 
These financial statements represent amounts attributable to the entities and do not represent our 15% proportionate share.

Fourth Quarter 2015
Page 15
Supplemental Financial Reporting Package
 

Capitalization Summary
 
 
 
 
(unaudited and in thousands, except share and per share data)
 
 
 
Capitalization as of December 31, 2015
 
 

Description
 
December 31, 2015
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
Common shares (1)
 
55,265,243

 
55,198,780

 
55,051,832

 
54,909,083

 
43,382,425

Operating partnership units(2)
 
2,026,642

 
2,066,704

 
2,177,573

 
2,296,686

 
2,323,344

Total shares and units at period end
 
57,291,885

 
57,265,484

 
57,229,405

 
57,205,769

 
45,705,769

Share price at end of quarter
 
$
16.36

 
$
13.79

 
$
14.58

 
$
15.81

 
$
15.71

Total Equity Market Capitalization
 
$
937,295

 
$
789,691

 
$
834,405

 
$
904,423

 
$
718,038

 
 
 
 
 
 
 
 
 
 
 
Total Debt
 
$
418,698

 
$
335,904

 
$
296,715

 
$
269,879

 
$
357,076

Less: Cash and cash equivalents
 
(5,201
)
 
(5,083
)
 
(9,988
)
 
(47,541
)
 
(8,606
)
Net Debt
 
$
413,497

 
$
330,821

 
$
286,727

 
$
222,338

 
$
348,470

 
 
 
 
 
 
 
 
 
 
 
Total Combined Market Capitalization (Debt and Equity)
 
$
1,350,792

 
$
1,120,512

 
$
1,121,132

 
$
1,126,761

 
$
1,066,508

 
 
 
 
 
 
 
 
 
 
 
Net debt to total combined market capitalization
 
30.6
%
 
29.5
%
 
25.6
%
 
19.7
%
 
32.7
%
Net debt to adjusted EBITDA (quarterly results annualized)(3)
 
6.3x

 
5.7x

 
5.1x

 
4.3x

 
6.9x

 
 
 
 
 
 
 
 
 
 
 

(1) Excludes the following number of shares of unvested restricted stock: 333,441 (December 31, 2015), 389,123 (September 30, 2015), 407,463 (June 30, 2015), 420,280 (March 31, 2015) and 320,017 (December 31, 2014).
(2) Represents outstanding common units of the Company' s operating partnership, Rexford Industrial Realty, LP, that are owned by unit holders other than Rexford Industrial Realty, Inc. Represents the noncontrolling interest in our operating partnership. Excludes 166,669 unvested LTIP Units and 315,998 unvested performance units which were granted during Q4-15.
(3) For a definition and discussion of non‐GAAP financial measures, see the definitions section beginning on page 28 of this report.







Fourth Quarter 2015
Page 16
Supplemental Financial Reporting Package
 

Debt Summary
 
 
 
 
(unaudited and dollars in thousands)
 
 
 
Debt Detail:
 
 
As of December 31, 2015
 
 
Debt Description
 
Maturity Date
 
Stated Interest Rate
 
Effective
Interest Rate(1)
 
Principal Balance
 
Maturity Date of Effective Swaps
Secured Debt:
 
 
 
 
 
 
 
 
 
 
$60M Term Loan
 
    8/1/2019(2)
 
LIBOR + 1.90%
 
3.818%
 
60,000

 
2/15/2019
Gilbert/La Palma
 
3/1/2031
 
5.125%
 
5.125%
 
3,044

 
--
12907 Imperial Highway
 
4/1/2018
 
5.950%
 
5.950%
 
5,299

 
--
1065 Walnut St
 
2/1/2019(6)
 
4.550%
 
4.550%
 
9,855

 
--
Unsecured Debt:
 
 
 
 
 
 
 
 
 
 
$100M Term Loan Facility
 
6/11/2019
 
LIBOR +1.25%(3)
 
3.040%
 
50,000

 
12/14/2018
$100M Term Loan Facility(4)
 
6/11/2019
 
LIBOR +1.25%(3)
 
1.680%
 
50,000

 
--
$200M Revolving Credit Facility(5)
 
    6/11/2018(2)
 
LIBOR +1.30%(3)
 
1.730%
 
140,500

 
--
$100M Senior Notes
 
8/6/2025
 
4.290%
 
4.290%
 
100,000

 
--
Total Consolidated:
 
 
 
 
 
2.935%
 
418,698

 
 
(1) Includes the effect of interest rate swaps effective as of December 31, 2015, and excludes the effect of discounts/premiums, deferred loan costs and the unused commitment fee.
(2) One additional one‐year extension is available, provided that certain conditions are satisfied.
(3) The applicable LIBOR margin will range from 1.30% to 1.90% for the revolving credit facility and 1.25% to 1.85% for the term loan facility, depending on the ratio of our outstanding consolidated indebtedness to the value of our consolidated gross asset value, which is measured on a quarterly basis. As a result, the effective interest rate will fluctuate from period to period.
(4) We have executed a forward interest swap that will effectively fix $50M of this $100M term loan at 2.005% plus the applicable term loan facility LIBOR margin from 2/16/16 to 12/14/18.
(5) The credit facility is subject to an unused commitment fee which is calculated as 0.30% or 0.20% of the daily unused commitment if the balance is under $100M or over $100M, respectively.
(6) One additional five‐year extension is available, provided that certain conditions are satisfied.
Debt Composition:
 
 
 
 
 
 
 
 
 
 
Category
 
Avg. Term Remaining (yrs)(1)
 
Stated
Interest Rate
 
Effective Interest Rate
 
Balance
 
% of Total
Fixed(2)
 
6.3
 
3.95%
 
3.95%
 
$228,198
 
55%
Variable(2)
 
2.7
 
LIBOR + 1.29%
 
1.72%
 
$190,500
 
45%
Secured
 
3.9
 
 
 
4.11%
 
$78,198
 
19%
Unsecured
 
4.8
 
 
 
2.67%
 
$340,500
 
81%
(1) The weighted average remaining term to maturity of our consolidated debt is 4.7 years.
(2) If all of our interest rate swaps were effective as of December 31, 2015, our consolidated debt would be 66% fixed and 34% variable. See footnote (4) above.
Debt Maturity Schedule:
 
 
 
 
 
 
 
 
 
 
Year
 
Secured
 
Unsecured Debt
 
Total
 
% Total
 
Interest Rate
2016-2017
 
—

 
—

 
—

 
—
%
 
—
%
2018
 
5,299

 
140,500

 
145,799

 
35
%
 
1.883
%
2019
 
69,855

 
100,000

 
169,855

 
41
%
 
3.002
%
Thereafter
 
3,044

 
100,000

 
103,044

 
25
%
 
4.315
%
Total
 
$
78,198

 
$
340,500

 
$
418,698

 
100
%
 
2.935
%

Fourth Quarter 2015
Page 17
Supplemental Financial Reporting Package
 

Debt Covenants
 
 
 
 
(unaudited results)
 
 
 
Unsecured Revolving Credit Facility and Term Loan Facility Covenants(1)
 
 
 
Covenant
 
December 31, 2015
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
Maximum Leverage Ratio
less than 60%
 
36.3%
 
30.2%
 
28.1%
 
26.6%
 
Maximum Secured Leverage Ratio
less than 45%
 
5.9%
 
6.2%
 
15.1%
 
16.7%
 
Maximum Secured Recourse Debt(2)
less than 15%
 
0.0%
 
—%
 
—%
 
—%
 
Maximum Recourse Debt(2)
less than 15%
 
--
 
--
 
1.0%
 
1.1%
 
Minimum Tangible Net Worth
$582,432,000
 
$753,641,000
 
$755,982,000
 
$756,231,000
 
$762,145,000
 
Minimum Fixed Charge Coverage Ratio
at least 1.50 to 1.00
 
4.72 to 1.00
 
5.26 to 1.00
 
8.47 to 1.00
 
7.60 to 1.00
 
Unencumbered Leverage Ratio
less than 60%
 
33.6%
 
27.1%
 
17.1%
 
13.1%
 
Unencumbered Interest Coverage Ratio
at least 1.75 to 1.00
 
3.31 to 1.00
 
3.87 to 1.00
 
5.96 to 1.00
 
7.55 to 1.00
 
 
 
 
 
 
 
 
 
 
 
 
(1) 
Our actual performance for each covenant is calculated based on the definitions set forth in the loan agreement.
(2) 
On July 15, 2015, we amended our credit agreement. The amendment provides for, among other things, the replacement of the maximum recourse debt covenant with a maximum secured recourse debt covenant.


Fourth Quarter 2015
Page 18
Supplemental Financial Reporting Package
 

Portfolio Overview
 
 
at 12/31/15
 
(unaudited results)
 
 
 
Consolidated Portfolio:
 
 
 
 
 
 
Rentable Square Feet
 
Occupancy
 
Annualized Base Rent
Market
 
# Properties
 
Same Properties Portfolio
 
Non-Same Properties Portfolio
 
Total Portfolio
 
Same Properties Portfolio
 
Non-Same Properties Portfolio
 
Total Portfolio
 
Total Portfolio Excluding Repositioning(1)
 
Total
(in thousands)(2)
 
per SF
Greater San Fernando Valley
 
23
 
1,283,251

 
1,329,723

 
2,612,974

 
87.3
%
 
84.7
%
 
86.0
%
 
94.0
%
 
21,274

 
$9.47
San Gabriel Valley
 
12
 
978,356

 
350,858

 
1,329,214

 
99.8
%
 
100.0
%
 
99.8
%
 
99.8
%
 
10,644

 
$8.02
Central LA
 
4
 
190,663

 
196,647

 
387,310

 
100.0
%
 
87.9
%
 
93.9
%
 
100.0
%
 
3,631

 
$9.99
Mid-Counties
 
10
 
522,430

 
302,740

 
825,170

 
100.0
%
 
79.1
%
 
92.3
%
 
100.0
%
 
5,615

 
$7.37
South Bay
 
13
 
331,076

 
658,281

 
989,357

 
98.2
%
 
89.5
%
 
92.5
%
 
97.4
%
 
8,093

 
$8.85
Los Angeles County
 
62
 
3,305,776

 
2,838,249

 
6,144,025

 
94.8
%
 
87.3
%
 
91.4
%
 
97.0
%
 
49,257

 
$8.77
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North Orange County
 
6
 
459,754

 
184,262

 
644,016

 
96.5
%
 
100.0
%
 
97.5
%
 
97.5
%
 
5,769

 
$9.19
West Orange County
 
2
 
—

 
285,777

 
285,777

 
0.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
2,263

 
$7.92
South Orange County
 
1
 
—

 
46,178

 
46,178

 
0.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
371

 
$8.04
OC Airport
 
6
 
289,040

 
222,230

 
511,270

 
95.6
%
 
22.2
%
 
63.7
%
 
96.2
%
 
2,899

 
$8.90
Orange County
 
15
 
748,794

 
738,447

 
1,487,241

 
96.1
%
 
76.6
%
 
86.4
%
 
97.8
%
 
11,302

 
$8.79
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inland Empire West
 
11
 
495,431

 
675,452

 
1,170,883

 
95.5
%
 
97.6
%
 
96.7
%
 
96.7
%
 
8,204

 
$7.24
Inland Empire East
 
2
 
85,282

 
—

 
85,282

 
100.0
%
 
0.0
%
 
100.0
%
 
100.0
%
 
551

 
$6.46
San Bernardino County
 
13
 
580,713

 
675,452

 
1,256,165

 
96.2
%
 
97.6
%
 
97.0
%
 
97.0
%
 
8,755

 
$7.19
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ventura
 
11
 
649,128

 
495,143

 
1,144,271

 
95.5
%
 
95.1
%
 
95.3
%
 
95.3
%
 
9,011

 
$8.26
Ventura County
 
11
 
649,128

 
495,143

 
1,144,271

 
95.5
%
 
95.1
%
 
95.3
%
 
95.3
%
 
9,011

 
$8.26
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North County San Diego
 
6
 
584,258

 
—

 
584,258

 
91.1
%
 
0.0
%
 
91.1
%
 
91.1
%
 
4,980

 
$9.36
Central San Diego
 
11
 
137,989

 
1,124,805

 
1,262,794

 
95.5
%
 
66.3
%
 
69.5
%
 
98.7
%
 
9,973

 
$11.37
South County San Diego
 
1
 
76,701

 
—

 
76,701

 
62.6
%
 
0.0
%
 
62.6
%
 
62.6
%
 
432

 
$9.00
San Diego County
 
18
 
798,948

 
1,124,805

 
1,923,753

 
89.1
%
 
66.3
%
 
75.8
%
 
94.0
%
 
15,386

 
$10.56
CONSOLIDATED TOTAL / WTD AVG
 
119
 
6,083,359

 
5,872,096

 
11,955,455

 
94.4
%
 
83.8
%
 
89.2
%
 
96.5
%
 
93,710

 
$8.79
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unconsolidated Joint Ventures:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ventura
 
1
 
—

 
68,370

 
68,370

 
0.0
%
 
55.0
%
 
55.0
%
 
55.0
%
 
311

 
$8.26
UNCONSOLIDATED TOTAL / WTD AVG
 
1
 
—

 
68,370

 
68,370

 
0.0
%
 
55.0
%
 
55.0
%
 
55.0
%
 
311

 
$8.26
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GRAND TOTAL / WTD AVG
 
120
 
6,083,359

 
5,940,466

 
12,023,825

 
94.4
%
 
83.5
%
 
89.0
%
 
96.3
%
 
94,020

 
$8.78

(1) 
Excludes space at nine of our properties that were in various stages of repositioning (including current and future repositioning) or lease-up as of December 31, 2015. See page 24 for additional details on these properties.
(2) 
Calculated for each property as monthly contracted base rent per the terms of the lease(s) at such property, as of December 31, 2015, 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.

Fourth Quarter 2015
Page 19
Supplemental Financial Reporting Package
 

Occupancy and Leasing Trends
 
 
 
 
(unaudited results, data represents consolidated portfolio only)
 
 
 
Occupancy by County:
 
 
 
 
Dec 31, 2015(1)
 
Sep 30, 2015
 
June 30, 2015
 
Mar 31, 2015
 
Dec 31, 2014
Occupancy:
 
 
 
 
 
 
 
 
 
 
Los Angeles County
 
91.4%
 
86.1%
 
87.7%
 
87.1%
 
91.0%
Orange County
 
86.4%
 
85.1%
 
84.4%
 
92.6%
 
92.1%
San Bernardino County
 
97.0%
 
97.2%
 
96.7%
 
96.3%
 
92.1%
Ventura County
 
95.3%
 
94.7%
 
90.8%
 
91.8%
 
91.4%
San Diego County
 
75.8%
 
91.7%
 
87.5%
 
89.0%
 
86.3%
Total/Weighted Average
 
89.2%
 
88.8%
 
88.4%
 
89.5%
 
90.7%
 
 
 
 
 
 
 
 
 
 
 
Consolidated Portfolio SF
 
11,955,455
 
11,078,912
 
10,649,768
 
10,253,580
 
9,829,020
Leasing Activity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Dec 31, 2015
 
Sep 30, 2015
 
June 30, 2015
 
Mar 31, 2015
 
Dec 31, 2014
Leasing Activity (SF): (2)
 
 
 
 
 
 
 
 
 
 
New leases
 
343,876
 
216,499
 
283,695
 
458,301
 
201,269
Renewal
 
237,935
 
323,085
 
442,019
 
319,849
 
229,226
Gross leasing
 
581,811
 
539,584
 
725,714
 
778,150
 
430,495
 
 
 
 
 
 
 
 
 
 
 
Expiring leases
 
378,694
 
455,677
 
857,483
 
625,534
 
388,816
Net absorption
 
203,117
 
83,907
 
(131,769)(3)
 
152,616
 
41,679
Retention rate
 
63%
 
71%
 
52%(3)
 
51%
 
59%
Weighted Average New/Renewal Leasing Spreads:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Dec 31, 2015
 
Sep 30, 2015
 
June 30, 2015
 
Mar 31, 2015
 
Dec 31, 2014
Cash Rent Change
 
6.4%
 
5.4%
 
7.0%
 
4.5%
 
1.9%(4)
GAAP Rent Change
 
12.9%
 
16.3%
 
15.4%
 
11.6%
 
11.8%(4)
(1) 
See page 19 for the occupancy by county of our total consolidated portfolio excluding repositioning space.
(2) 
Excludes month-to-month tenants.
(3) 
Excluding the effect of two move-outs aggregating 146,133 square feet at two of our repositioning properties, Birch and Frampton, our net absorption was 14,364 square feet and our retention rate was 62%, respectively.
(4) 
Excluding the effect of one 15,040 sqft lease transaction in our San Diego market, the weighted average cash and GAAP growth for total executed leases was 3.3% and 13.3%, respectively.

Fourth Quarter 2015
Page 20
Supplemental Financial Reporting Package
 

Leasing Statistics
 
 
 
 
(unaudited results, data represents consolidated portfolio only)
 
 
 
Leasing Activity:
 
 

 
 
# Leases Signed
 
SF of Leasing
 
Wtd. Avg. Lease Term
 
Rent Change - Cash
 
Rent Change - GAAP
Fourth Quarter 2015:
 
 
 
 
 
 
 
 
 
 
New
 
61
 
343,876
 
4.8
 
9.5
%
 
17.6
%
Renewal (1)
 
58
 
237,935
 
3.0
 
4.3
%
 
9.8
%
Total/Weighted Average
 
119
 
581,811
 
4.1
 
6.4
%
 
12.9
%
 
 
 
 
 
 
 
 
 
 
 
Uncommenced Leases by County:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Market
 
Leased SF
 
Uncommenced Leases
Annual Base Rent
(in thousands)
 
Total Pro Forma
Annualized Base Rent
(in thousands)
 
Pro Forma
Occupancy
 
Pro Forma
Annualized Base
Rent per SF
Los Angeles County
 
5,806

 
83

 
49,340

 
91.5
%
 

$8.78

Orange County
 
—

 
—

 
11,302

 
86.4
%
 

$8.79

San Bernardino County
 
1,680

 
13

 
8,768

 
97.1
%
 

$7.19

Ventura County
 
3,318

 
34

 
9,045

 
95.6
%
 

$8.27

San Diego County
 
1,818

 
22

 
15,408

 
75.9
%
 

$10.56

Total/Weighted Average
 
12,622

 
$
152

 
$
93,862

 
89.3
%
 

$8.79

 
 
 
 
 
 
 
 
 
 
 
Lease Expiration Schedule:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year of Lease Expiration
 
# of Leases Expiring
 
Total Rentable SF
 
Annualized Base Rent
(in thousands)
 
% of Annualized
Base Rent
 
Annualized Base
Rent per SF
Available
 
—
 
1,290,124
 
—

 
—%
 
$—
MTM Tenants
 
117
 
247,789
 
2,716

 
2.9%
 
$10.96
2015(2)
 
11
 
152,349
 
1,128

 
1.2%
 
$7.40
2016
 
417
 
2,955,395
 
24,361

 
26.0%
 
$8.24
2017
 
362
 
2,188,195
 
19,138

 
20.4%
 
$8.75
2018
 
227
 
1,435,427
 
13,296

 
14.2%
 
$9.26
2019
 
59
 
915,368
 
7,570

 
8.1%
 
$8.27
2020
 
50
 
1,067,540
 
9,764

 
10.4%
 
$9.15
2021
 
21
 
487,033
 
5,231

 
5.6%
 
$10.74
2022
 
7
 
156,065
 
895

 
1.0%
 
$5.74
2023
 
4
 
106,278
 
1,284

 
1.4%
 
$12.08
2024
 
4
 
472,125
 
3,602

 
3.8%
 
$7.63
Thereafter
 
6
 
481,767
 
4,725

 
5.0%
 
$9.81
Total Portfolio
 
1,285
 
11,955,455
 
$
93,710

 
100.0%
 
$8.79
(1) 
100% of lease renewals during the quarter achieved positive cash rent growth.
(2) 
Of the 11 leases expiring on December 31, 2015, six (6) leases aggregating 46,389 rentable square feet and $352,580 annualized base rent vacated, four (4) leases aggregating 28,967 rentable square feet and $216,653 annualized base rent subsequently renewed and one (1) lease with 76,993 rentable square feet and $558,704 annualized base rent relocated to another space.

Fourth Quarter 2015
Page 21
Supplemental Financial Reporting Package
 

Top Tenants and Lease Segmentation
 
 
 
 
(unaudited results, data represents consolidated portfolio only)
 
 
 
Top 10 Tenants:
 
 
Tenant
 
Submarket
 
Leased SF
 
% of Total Ann.
Base Rent
 
Ann. Base Rent
per SF
 
Lease Expiration
32 Cold, LLC
 
Central LA
 
149,157
 
2.2%
 
$13.80
 
1/31/2026(1)
Cosmetic Laboratories of America, LLC
 
Greater San Fernando Valley
 
319,348
 
1.9%
 
$5.64
 
6/30/2020
PureTek Corporation, a California corporation
 
Greater San Fernando Valley
 
189,550
 
1.6%
 
$7.94
 
1/31/2026(2)
Valeant Pharmaceuticals International, Inc.
 
West Orange County
 
170,865
 
1.5%
 
$8.24
 
12/31/2019
Triumph Processing, Inc.
 
South Bay
 
164,662
 
1.4%
 
$7.86
 
5/31/2030
Senior Operations, Inc.
 
Greater San Fernando Valley
 
130,800
 
1.2%
 
$8.88
 
11/30/2024
Biosense Webster, Inc.
 
San Gabriel Valley
 
89,920
 
1.2%
 
$12.82
 
10/31/2020(3)
KT's Kitchen
 
South Bay
 
87,420
 
1.2%
 
$12.79
 
4/30/2021
Warehouse Specialists, Inc.
 
San Gabriel Valley
 
245,961
 
1.2%
 
$4.50
 
11/30/2017
Department of Corrections
 
Inland Empire West
 
58,781
 
1.1%
 
$18.25
 
3/31/2020
Top 10 Total / Wtd. Avg.
 
 
 
1,606,464
 
14.5%
 
$8.51
 
 
(1) 
Includes (i) 78,280 rentable square feet expiring September 30, 2025 and (ii) 70,877 rentable square feet expiring January 31, 2026.
(2) As of December 31, 2015, PureTek occupied (i) 76,993 rentable square feet expiring December 31, 2015 with annualized base rent of approximately $7.26 PSF and (ii) 112,557 rentable square feet expiring January 31, 2026 with annualized base rent of approximately $8.44 PSF.
(3) Includes (i) 1,120 rentable square feet expiring September 30, 2016, (ii) 12,800 rentable square feet expiring September 30, 2017 and (iii) 76,000 rentable square feet expiring October 31, 2020.

Lease Segmentation by Size:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Square Feet
 
Number of Leases
 
Leased SF
 
Ann. Base Rent
(in thousands)
 
% of Total Ann.
Base Rent
 
Ann. Base Rent
per SF
<4,999
 
907
 
1,895,912
 
$
20,212

 
21.6%
 
$10.66
5,000‐9,999
 
157
 
1,089,921
 
10,823

 
11.5%
 
$9.93
10,000‐24,999
 
142
 
2,216,792
 
20,488

 
21.9%
 
$9.24
25,000‐49,999
 
35
 
1,229,941
 
10,495

 
11.2%
 
$8.53
>50,000
 
44
 
4,232,765
 
31,692

 
33.8%
 
$7.49
Total / Wtd. Avg.
 
1,285
 
10,665,331
 
$
93,710

 
100.0%
 
$8.79


Fourth Quarter 2015
Page 22
Supplemental Financial Reporting Package
 

Capital Expenditure Summary
 
 
(unaudited results, in thousands, except square feet and per square foot data)
(data represents consolidated portfolio only)
 
 
 
Quarter Ended December 31, 2015
 
 
 
Amount
 
SF(1)
 
PSF
Tenant Improvements:
 
 
 
 
 
New Leases‐1st Generation
$
227

 
154,646

 
$
1.47

New Leases‐2nd Generation
$
258

 
156,828

 
$
1.65

Renewals
$
45

 
20,048

 
$
2.24

 
 
 
 
 
 
Leasing Commissions & Lease Costs:
 
 
 
 
 
New Leases‐1st Generation
$
191

 
106,966

 
$
1.79

New Leases‐2nd Generation
$
336

 
223,355

 
$
1.50

Renewals
$
123

 
165,557

 
$
0.74

 
 
 
 
 
 
Total Recurring Capex:
 
 
 
 
 
Recurring Capex
$
1,346

 
11,502,212

 
$
0.12

Recurring Capex % NOI
7.1
%
 
 
 
 
Recurring Capex % Operating Revenue
5.2
%
 
 
 
 
 
 
 
 
 
 
Nonrecurring Capex
$
4,018

 
3,842,881

 
$
1.05

 
 
 
 
 
 
Year Ended December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
Amount
 
SF(1)
 
PSF
Tenant Improvements:
 
 
 
 
 
New Leases ‐1st Generation
$
736

 
516,605

 
$
1.42

New Leases‐2nd Generation
$
1,509

 
893,499

 
$
1.69

Renewals
$
190

 
209,910

 
$
0.91

 
 
 
 
 
 
Leasing Commissions & Lease Costs:
 
 
 
 
 
New Leases‐1st Generation
$
1,538

 
868,335

 
$
1.77

New Leases‐2nd Generation
$
1,108

 
890,044

 
$
1.24

Renewals
$
255

 
579,677

 
$
0.44

 
 
 
 
 
 
Total Recurring Capex:
 
 
 
 
 
Recurring Capex
$
3,530

 
10,710,780

 
$
0.33

Recurring Capex % NOI
5.2
%
 
 
 
 
Recurring Capex % Operating Revenue
3.8
%
 
 
 
 
 
 
 
 
 
 
Nonrecurring Capex
$
14,472

 
6,118,145

 
$
2.37

(1) 
For tenant improvements and leasing commissions, reflects the aggregate square footage of the leases in which we incurred such costs, excluding new/renewal leases in which there were no tenant improvements and/or leasing commissions. For recurring capex, reflects the weighted average square footage of our consolidated portfolio for the period. For nonrecurring capex, reflects the aggregate square footage of the properties in which we incurred such capital expenditures.

Fourth Quarter 2015
Page 23
Supplemental Financial Reporting Package
 

Properties and Space Under Repositioning
 
 
As of December 31, 2015
 
(unaudited results, in thousands, except square feet)
Repositioning Properties
 
 
 
 
 
 
Est. Construction Period
 
Costs Incurred
 
 
 
 
 
 
 
 
 
 
Property (Submarket)
 
Rentable
Square Feet
 
Acquisition
Date
 
Start
 
Completion
 
Purchase
Price
 
Repositioning
 
Cumulative
Investment
to date(1)
 
Projected Total
Investment(2)
 
Occ %
12/31/15
 
Actual Cash
NOI
4Q‐2015(3)
 
Est. Annual
Stabilized
Cash NOI
 
Est.Period to
Stabilization
(months)(4)
CURRENT REPOSITIONING/LEASE-UP:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2610 & 2701 S. Birch St. (OC Airport)(5)
 
98,230
 
Jun 2014
 
2Q-2015
 
4Q-2015
 
$
11,000

 
$
2,596

 
$
13,596

 
$
13,606

 
0%
 
$
(19
)
 
$
868

 
 2 - 8
1601 Alton Pkwy. (OC Airport)
 
124,000
 
Jun 2014
 
4Q-2014
 
4Q-2016
 
$
13,276

 
$
1,016

 
$
14,292

 
$
18,663

 
40%
 
$
103

 
$
1,359

 
24 - 30
9401 De Soto Ave. (SF Valley)
 
150,263
 
Mar 2015
 
2Q-2015
 
1Q-2016
 
$
14,075

 
$
1,387

 
$
15,462

 
$
16,906

 
0%
 
$
(24
)
 
$
1,007

 
 2 - 8
24105 Frampton Ave. (South Bay)
 
49,841
 
Mar 2014
 
2Q-2015
 
1Q-2016
 
$
3,930

 
$
472

 
$
4,402

 
$
5,323

 
0%
 
$
(43
)
 
$
362

 
 1 - 7
9615 Norwalk Blvd. (Mid-Counties)(6)
 
38,362
 
Apr 2015
 
3Q-2015
 
2Q-2017
 
$
9,642

 
$
77

 
$
9,719

 
$
23,682

 
0%
 
$
40

 
$
1,556

 
 16 - 22
12247 Lakeland Rd. (Mid-Counties)
 
24,875
 
Dec 2015
 
1Q-2016
 
3Q-2016
 
$
4,257

 
$
0

 
$
4,257

 
$
5,025

 
0%
 
$
3

 
$
297

 
10 - 16
2535 Midway Drive Phase I (Central SD)
 
228,824
 
Oct 2015
 
4Q-2015
 
1Q-2017
 
$
19,295

 
$
13

 
$
19,308

 
$
37,762

 
0%
 
$
(64
)
 
$
2,696

 
23 - 29
2535 Midway Drive Phase II (Central SD)
 
144,920
 
Oct 2015
 
4Q-2017
 
1Q-2018
 
$
0

 
$
0

 
$
0

 
$
10,198

 
0%
 
$
0

 
$
1,493

 
24 - 36
TOTAL/WEIGHTED AVERAGE
 
859,315
 
 
 
 
 
 
 
$
75,475

 
$
5,561

 
$
81,036

 
$
131,165

 
6%
 
$
(4
)
(7) 
$
9,638

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FUTURE REPOSITIONING:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
679-691 S. Anderson St. (Central LA)
 
47,490
 
Nov 2014
 
1Q-2016
 
2Q-2016
 
$
6,490

 
$
22

 
$
6,512

 
$
7,770

 
50%
 
$
53

 
$
585

 
 --
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COMPLETED REPOSITIONING:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7110 Rosecrans Ave. (South Bay)
 
73,439
 
Jan 2014
 
3Q-2014
 
1Q-2015
 
$
5,000

 
$
746

 
$
5,746

 
$
5,746

 
100%
 
$
113

 
$
451

 
 Stabilized
7900 Nelson Rd. (SF Valley)(8)
 
202,905
 
Nov 2014
 
1Q-2015
 
1Q-2016
 
$
24,287

 
$
1,059

 
$
25,346

 
$
25,887

 
100%
 
$
166

 
$
1,697

 
Stabilized
605 8th Street (SF Valley)(8)
 
55,715
 
Aug 2014
 
4Q-2014
 
1Q-2016
 
$
5,075

 
$
1,448

 
$
6,523

 
$
6,775

 
100%
 
$
(10
)
 
$
439

 
Stabilized
TOTAL/WEIGHTED AVERAGE
 
332,059
 
 
 
 
 
 
 
$
34,362

 
$
3,253

 
$
37,615

 
$
38,408

 
100%
 
$
269

(6)(7) 
$
2,587

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repositioning Space
 
 
 
 
 
 
 
 
 
 
Est. Construction Period
 
 
 
 
 
 
 
 
 
 
 
 
Property (Submarket)
 
 
 
 
 
Rentable Square Feet
 
Space Under Repositioning
 
Start
 
Completion
 
Occ %
12/31/15
 
 
 
 
 
Actual Cash
NOI
4Q‐2015(3)
 
Est. Annual
Stabilized
Cash NOI
 
Est.Period to
Stabilization
(months)(4)
15140 & 15148 Bledsoe St. (SF Valley)
 
133,356
 
72,000
 
1Q-2015
 
    1Q-2016
 
46%
 
 
 
 
 
$104
(7) 
$882
 
6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Cumulative investment‐to‐date includes the purchase price of the property and subsequent costs incurred for nonrecurring capital expenditures.
(2)
Projected total investment includes the purchase price of the property and an estimate of total expected nonrecurring capital expenditures to be incurred on each repositioning project to reach completion.
(3)
Represents the actual net operating income for each property for the three months ended December 31, 2015. For a definition and discussion of non‐GAAP financial measures, see the definitions section beginning on page 28 of this report.
(4)
Represents the estimated remaining number of months, as of December 31, 2015, for the property to reach stabilization. Includes time to complete construction and to lease-up property.
(5)
Repositioning at 2610 & 2701 S. Birch was completed during 4Q-2015 and as of December 31, 2015 is in lease-up.
(6)
9615 Norwalk has 10.26 acres of partially paved storage yard/industrial land that is currently under a short-term lease. The current projected total investment reflects the cost of designing and constructing a new building after the short-term lease ends, and assumes we do not re-lease the land on a longer term basis. If we decide to re-lease the land on a longer term basis, the projected total investment would decrease to $10,729, which reflects the cost of making improvements to the storage yard/land, including upgrading the paving and adding lighting.
(7)
Actual NOI for the three months ended December 31, 2015, reflects the capitalization of $109 of real estate property taxes for current repositioning/lease-up, $35 for repositioning completed during the current quarter and $18 for repositioning space, respectively. We will continue to capitalize real estate property taxes during the period in which construction is taking place to get each repositioning property ready for its intended use.
(8)
As of December 31, 2015, we have substantially completed the repositioning of 7900 Nelson Road and 605 8th Street and have fully leased both buildings. The remaining construction work, which primarily consists of completing exterior improvements, is estimated to be completed in Q1-2016.

Fourth Quarter 2015
Page 24
Supplemental Financial Reporting Package
 

Current Year Acquisitions Summary
 
 
 
 
(unaudited results, data represents consolidated portfolio only)
2015 Acquisitions
Acquisition Date
 
Property Address
 
County
 
Submarket
 
Rentable Square Feet
 
Price
($ in MM)
 
Occ. % at Acquisition
 
Occ.% at
December 31, 2015
1/21/2015
 
12907 Imperial Highway
 
Los Angeles
 
Mid-Counties
 
101,080
 
$12.2
 
100%
 
100%
1/21/2015
 
8902-8940 Activity Road
 
San Diego
 
Central San Diego
 
112,501
 
$18.5
 
93%
 
98%
3/9/2015
 
1210 North Red Gum Street
 
Orange
 
North Orange County
 
64,570
 
$7.7
 
100%
 
100%
3/18/2015
 
9401 De Soto Avenue(1)
 
Los Angeles
 
Greater San Fernando Valley
150,263(2)
 
$14.1
 
—%
 
—%
4/30/2015
 
9615 Norwalk Boulevard(1)
 
Los Angeles
 
Mid-Counties
 
38,362
 
$9.6
 
100%
 
—%
5/1/2015
 
16221 Arthur Street
 
Los Angeles
 
Mid-Counties
 
61,372
 
$5.8
 
100%
 
100%
5/12/2015
 
2588 & 2605 Industry Way
 
Los Angeles
 
South Bay
 
164,662
 
$22.0
 
100%
 
100%
5/15/2015
 
425 Hacienda Boulevard
 
Los Angeles
 
San Gabriel Valley
 
51,823
 
$7.0
 
100%
 
100%
6/29/2015
 
6700 S Alameda Street
 
Los Angeles
 
Central LA
 
78,280
 
$14.5
 
100%
 
100%
7/10/2015
 
12720-12860 Danielson Court
 
San Diego
 
Central San Diego
 
112,062
 
$16.9
 
100%
 
100%
7/29/2015
 
10950 Norwalk Boulevard & 12241 Lakeland Road
 
Los Angeles
 
Mid-Counties
 
18,995
 
$5.0
 
100%
 
100%
8/11/2015
 
610-760 W Hueneme Road & 5651-5721 Perkins Road
 
Ventura
 
Ventura
 
86,904
 
$9.6
 
87%
 
96%
9/1/2015
 
10701-10719 Norwalk Boulevard
 
Los Angeles
 
Mid-Counties
 
58,056
 
$7.2
 
100%
 
100%
9/18/2015
 
6020 Sheila Street
 
Los Angeles
 
Central LA
 
70,877
 
$12.2
 
—%
 
100%
9/30/2015
 
9805 6th Street
 
San Bernardino
 
Inland Empire West
 
81,377
 
$6.9
 
100%
 
100%
10/14/2015
 
16321-16327 Arrow Highway
 
Los Angeles
 
San Gabriel Valley
 
64,296
 
$8.1
 
100%
 
100%
10/22/2015
 
2535 Midway Drive(1)
 
San Diego
 
Central San Diego
 
373,744
 
$19.3
 
—%
 
—%
12/8/2015
 
601-605 Milliken Avenue
 
San Bernardino
 
Inland Empire West
 
128,322
 
$13.0
 
96%
 
95%
12/11/2015
 
1065 E. Walnut Street
 
Los Angeles
 
South Bay
 
172,420
 
$16.7
 
100%
 
100%
12/16/2015
 
12247 Lakeland Road(1)
 
Los Angeles
 
Mid-Counties
 
24,875
 
$4.3
 
—%
 
—%
12/30/2015
 
17311 Nichols Lane
 
Orange
 
West Orange County
 
114,912
 
$17.1
 
100%
 
100%
(1) As of December 31, 2015, this property was undergoing repositioning. See page 24 for additional details.
(2) Represents the expected square footage of the building after completion of the planned repositioning. At acquisition, the property was measured at 153,984 square feet.

Fourth Quarter 2015
Page 25
Supplemental Financial Reporting Package
 

Net Asset Value Components
 
 
  At 12/31/2015
 
(unaudited and in thousands, except share data)
Net Operating Income
 
 
 
For the Three Months Ended
 
ProForma Net Operating Income (NOI)(1)
December 31, 2015
 
Total operating revenues
$
26,059

 
Property operating expenses
(7,118
)
 
Pro forma effect of acquisitions(2)
757

 
Pro forma NOI effect of properties and space under repositioning(3)
3,002

 
ProForma NOI
22,700

 
Fair value lease revenue
48

 
Straight line rental revenue adjustment
(1,409
)
 
ProForma Cash NOI
$
21,339

 
 
 
 
Balance Sheet Items
 
 
 
 
 
Other assets and liabilities
December 31, 2015
 
Cash and cash equivalents
$
5,201

 
Rents and other receivables, net
3,040

 
Other assets
5,523

 
Accounts payable, accrued expenses and other liabilities
(12,631
)
 
Dividends payable
(7,806
)
 
Tenant security deposits
(11,539
)
 
Prepaid rents
(2,846
)
 
Total other assets and liabilities
(21,058
)
 
 
 
 
Debt and Shares Outstanding
 
 
 
 
 
Total consolidated debt(4)
$
418,698

 
 
 
 
Common shares outstanding(5)
55,265,243

 
Operating partnership units outstanding(6)
2,026,642

 
 
57,291,885

 
(1)For a definition and discussion of non‐GAAP financial measures, see the definitions section beginning on page 28 of this report.
(2)Represents the estimated impact of Q4'15 acquisitions as if they had been acquired October 1, 2015.
(3)Represents the estimated impact of properties and space under repositioning during Q4-15, as if the projects had been completed and the property was stabilized as of October 1, 2015. See page 24 for properties included.
(4)Excludes net deferred loan fees and net loan premium aggregating $544.
(5)Represents outstanding shares of common stock of the Company, which excludes 333,441 shares of unvested restricted stock.
(6)Represents outstanding common units of the Company's operating partnership, Rexford Industrial Realty, L.P., that are owned by unit holders other than Rexford Industrial Realty, Inc.

Fourth Quarter 2015
Page 26
Supplemental Financial Reporting Package
 


Fixed Charge Coverage Ratio
 
 
 at 12/31/15
 
(unaudited and in thousands)
 
 
 
 
For the Three Months Ended
 
December 31, 2015
 
September 30, 2015
 
June 30, 2015
 
March 31, 2015
 
December 31, 2014
EBITDA
14,606

 
13,508

 
12,364

 
11,819

 
10,334

Recurring cash distributions from unconsolidated joint ventures
46

 
54

 
37

 
34

 
89

Fair value lease expense
48

 
69

 
46

 
39

 
115

Non‐cash stock compensation
494

 
443

 
467

 
348

 
250

Straight line corporate office rent expense adjustment
(1
)
 
21

 
37

 
24

 
—

Loss (gain) on extinguishment of debt
(33
)
 
253

 
(71
)
 
—

 
—

Straight line rental revenue adjustment
(1,409
)
 
(1,039
)
 
(612
)
 
(365
)
 
(595
)
Capitalized payments
(345
)
 
(296
)
 
(311
)
 
(334
)
 
(302
)
Note receivable discount amortization
—

 
(38
)
 
(71
)
 
(69
)
 
(68
)
Gain from early repayment of note receivable
—

 
(581
)
 
—

 
—

 
—

Recurring capital expenditures
(1,346
)
 
(921
)
 
(871
)
 
(392
)
 
(908
)
2nd generation tenant improvements and leasing commissions
(762
)
 
(701
)
 
(893
)
 
(706
)
 
(918
)
Unconsolidated joint venture AFFO adjustments
(4
)
 
(5
)
 
4

 
9

 
(3
)
Cash flow for fixed charge coverage calculation
11,294

 
10,767

 
10,126

 
10,407

 
7,994

Cash interest expense calculation detail:
 
 
 
 
 
 
 
 
 
Interest expense
2,724

 
2,245

 
1,658

 
1,826

 
1,655

Capitalized interest
306

 
252

 
186

 
10

 
42

Note payable premium amortization
33

 
33

 
33

 
92

 
82

Amortization of deferred financing costs
(194
)
 
(200
)
 
(209
)
 
(209
)
 
(206
)
Cash interest expense
2,869

 
2,330

 
1,668

 
1,719

 
1,573

 
 
 
 
 
 
 
 
 
 
Fixed Charge Coverage Ratio
3.9
x
 
4.6
x
 
6.1
x
 
6.1
x
 
5.1
x

Fourth Quarter 2015
Page 27
Supplemental Financial Reporting Package
 

Definitions / Discussion of Non‐GAAP Financial Measures
 
 
 

Adjusted Funds from Operations (AFFO): We calculate adjusted funds from operations, or AFFO, by adding to or subtracting from FFO (i) non‐cash operating revenues and expenses, (ii) capitalized operating expenditures such as leasing payroll, (iii) recurring capital expenditures required to maintain and re‐tenant our properties, (iv) capitalized interest costs resulting from the repositioning/redevelopment of certain of our properties, and (v) 2nd generation tenant improvements and leasing commissions. Management uses AFFO as a supplemental performance measure because it provides a performance measure that, when compared year over year, captures trends in portfolio operating results. We also believe that, as a widely recognized measure of the performance of REITs, AFFO will be used by investors as a basis to assess our performance in comparison to other REITs. However, because AFFO may exclude certain non‐recurring capital expenditures and leasing costs, the utility of AFFO as a measure of our performance is limited. Additionally, other Equity REITs may not calculate AFFO using the method we do. As a result, our AFFO may not be comparable to such other Equity REITs’ AFFO. AFFO should be considered only as a supplement to net income (as computed in accordance with GAAP) as a measure of our performance.

Annualized Base Rent: Calculated for each lease as the latest monthly contracted base rent per the terms of such lease multiplied by 12. Excludes billboard and antenna revenue and rent abatements.

Capital Expenditures, Non‐recurring: Expenditures made in respect of a property for improvement to the appearance of such property or any other major upgrade or renovation of such property, and further includes capital expenditures for seismic upgrades, or capital expenditures for deferred maintenance existing at the time such property was acquired.

Capital Expenditures, Recurring: Expenditures made in respect of a property for maintenance of such property and replacement of items due to ordinary wear and tear including, but not limited to, expenditures made for maintenance or replacement of parking lot, roofing materials, mechanical systems, HVAC systems and other structural systems. Recurring capital expenditures shall not include any of the following: (a) improvements to the appearance of such property or any other major upgrade or renovation of such property not necessary for proper maintenance or marketability of such property; (b) capital expenditures for seismic upgrades; or (c) capital expenditures for deferred maintenance for such property existing at the time such property was acquired.

Capital Expenditures, First Generation: Capital expenditures for newly acquired space, newly developed or redeveloped space, or change in use.

Cash NOI: Cash basis NOI is a non‐GAAP measure, which we calculate by adding or subtracting from NOI i) fair value lease revenue and ii) straight‐line rent adjustment. We use Cash NOI, together with NOI, as a supplemental performance measure. Cash NOI should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs. Cash NOI should not be used as a substitute for cash flow from operating activities computed in accordance with GAAP. We use Cash NOI to help evaluate the performance of the Company as a whole, as well as the performance of our Same Property Portfolio.

EBITDA and Adjusted EBITDA: We believe that EBITDA is helpful to investors as a supplemental measure of our operating performance as a real estate company because it is a direct measure of the actual operating results of our industrial properties. We also use this measure in ratios to compare our performance to that of our industry peers. In addition, we believe EBITDA is frequently used by securities analysts, investors and other interested parties in the evaluation of Equity REITs. However, because EBITDA is calculated before recurring cash charges including interest expense and income taxes, and is not adjusted for capital expenditures or other recurring cash requirements of our business, its utility as a measure of our liquidity is limited. Accordingly, EBITDA should not be considered an alternative to cash flow from operating activities (as computed in accordance with GAAP) as a measure of our liquidity. EBITDA should not be considered as an alternative to net income or loss as an indicator of our operating performance. Other Equity REITs may calculate EBITDA differently than we do; accordingly, our EBITDA may not be comparable to such other Equity REITs’ EBITDA. Adjusted EBITDA includes add backs of non‐cash stock based compensation expense, gain on extinguishment of debt, loss on sale of real estate, non‐recurring legal fees and the pro‐forma effects of acquisitions and assets classified as held for sale.

Investment to Date and Total: Reflects the total purchase price for a property plus additional or planned tangible investment subsequent to acquisition.

Funds from Operations (FFO): We calculate FFO before non‐controlling interest in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. Management uses FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization, gains and losses from property dispositions, other than temporary impairments of unconsolidated real estate entities, and impairment on our investment in real estate, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of performance used by other REITs, FFO may be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. Other equity REITs may not calculate or interpret FFO in accordance with the NAREIT definition as we do, and, accordingly, our FFO may not be comparable to such other REITs’ FFO. FFO should not be used as a measure of our liquidity, and is not indicative of funds available for our cash needs, including our ability to pay dividends.


Fourth Quarter 2015
Page 28
Supplemental Financial Reporting Package
 

Definitions / Discussion of Non‐GAAP Financial Measures
 
 
 

NOI: Includes the revenue and expense directly attributable to our real estate properties calculated in accordance with GAAP. Calculated as total revenue from real estate operations including i) rental revenues ii) tenant reimbursements, and iii) other income less property expenses and other property expenses (before interest expense, depreciation and amortization). We use NOI as a supplemental performance measure because, in excluding real estate depreciation and amortization expense and gains (or losses) from property dispositions, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that NOI will be useful to investors as a basis to compare our operating performance with that of other REITs. However, because NOI excludes depreciation and amortization expense and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties (all of which have real economic effect and could materially impact our results from operations), the utility of NOI as a measure of our performance is limited. Other equity REITs may not calculate NOI in a similar manner and, accordingly, our NOI may not be comparable to such other REITs’ NOI. Accordingly, NOI should be considered only as a supplement to net income as a measure of our performance. NOI should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs. NOI should not be used as a substitute for cash flow from operating activities in accordance with GAAP. We use NOI to help evaluate the performance of the Company as a whole, as well as the performance of our Same Property Portfolio.

Proforma NOI: Proforma NOI is calculated by adding to NOI the estimated impact of current period acquisitions as if they had been acquired at the beginning of the reportable period. These estimates do not purport to be indicative of what operating results would have been had the acquisitions actually occurred at the beginning of the reportable period and may not be indicative of future operating results.

Properties Under Repositioning: Typically defined as properties where a significant amount of space is held vacant in order to implement capital improvements that improve the market rentability and leasing functionality of that space. Considered completed once investment is fully or nearly fully deployed and the property is marketable for leasing.

Recurring Funds From Operations (Recurring FFO): We calculate Recurring FFO by adjusting FFO to exclude the effect of non‐recurring expenses and acquisition expenses.

Rent Change ‐ Cash: Compares the first month cash rent excluding any abatement on new leases to the last month rent for the most recent expiring lease. Data included for comparable leases only. Comparable leases generally exclude properties under repositioning, short‐term leases, and space that has been vacant for over one year.

Rent Change ‐ GAAP: Compares GAAP rent, which straightlines rental rate increases and abatement, on new leases to GAAP rent for the most recent expiring lease. Data included for comparable leases only. Comparable leases generally exclude properties under repositioning, short‐term leases, and space that has been vacant for over one year.

Same Property Portfolio: Our Same Property Portfolio is a subset of our consolidated portfolio and includes properties that were wholly‐owned by us as of January 1, 2014 and still owned by us as of December 31, 2015. The Company’s computation of same property performance may not be comparable to other REITs.

Space Under Repositioning: Defined as space held vacant in order to implement capital improvements to change the leasing functionality of that space. Considered completed once the repositioning has been completed and the unit is marketable for leasing.

Stabilized Same Property Portfolio: Our Stabilized Same Property Portfolio represents the properties included in our Same Property Portfolio, adjusted to exclude spaces that were under repositioning.

Uncommenced Leases: Reflects signed leases that have not yet commenced as of the reporting date.


Fourth Quarter 2015
Page 29
Supplemental Financial Reporting Package