Rexford Industrial Announces Fourth Quarter 2013 Financial Results

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LOS ANGELES--(BUSINESS WIRE)-- Rexford Industrial Realty, Inc. (the “Company” or “Rexford Industrial”) (NYSE:REXR), a real estate investment trust (“REIT”) that specializes in acquiring, owning and operating industrial properties located in Southern California infill markets, today announced financial results for the fourth quarter and full year 2013.

Fourth Quarter and Full Year 2013 Financial and Operational Highlights:

  • Reported Funds From Operations (FFO) of $0.17 per share for the 3 months ended December 31, 2013.
  • As previously reported, same property portfolio occupancy increased 3.0 percentage points to 89.3% compared to the fourth quarter of 2012.
  • Achieved same store NOI growth of 7% in the fourth quarter 2013 compared to the prior year period, driven by a 10% increase in same store revenue, more than offsetting a 17% increase in same store expenses. Same store cash NOI increased 15% compared to the fourth quarter 2012.
  • As previously reported, signed new and renewal leases totaling approximately 386,000 square feet, resulting in approximately 77,000 square feet of positive net absorption and increased GAAP leasing spreads of 12.9% and cash leasing spreads of 3.5% during the fourth quarter of 2013.
  • In the fourth quarter, acquired six properties totaling approximately 832,000 square feet for an aggregate cost of $69.7 million. Subsequent to year end, acquired four properties totaling approximately 352,000 square feet for an aggregate cost of $29.1 million.

“Our fourth quarter 2013 financial results reflect the strong operating and leasing metrics which we pre-released in February. The execution of our operating and leasing strategies combined with the steady improvement in our core Southern California infill industrial markets drive these positive results,” stated Michael Frankel and Howard Schwimmer, Rexford Industrial’s Co-Chief Executive Officers. “In addition, with our initial public offering completed last July, we were well-positioned to accelerate our investment pace, acquiring six properties in the fourth quarter for $69.7 million. This activity has continued into early 2014, with another 4 acquisitions closed, for a total cost of $29.1 million. In the eight months since our initial public offering, we have acquired 1.3 million square feet of industrial property, representing a 24.6% increase in our owned portfolio and we continue to review and pursue a substantial pipeline of potential investment opportunities from a variety of sources.”

Financial Results:

The Company reported a net loss of $0.88 million (or a net loss of $1.0 million before noncontrolling interests), or negative $0.04 per diluted share, for the three months ended December 31, 2013. In comparison, Rexford Industrial’s predecessor entities reported a net loss of $1.53 million (or a net loss of $1.68 million before noncontrolling interests) for the three months ended December 31, 2012

For the twelve months ending December 31, 2013, the Company reported a net loss of $4.9 million (or a net loss of $5.0 million before noncontrolling interests), compared to a net loss of $4.9 million (or a net loss of $9.0 million before noncontrolling interests) for the twelve months ended December 31, 2012. The net loss in 2013 included approximately $4.0 million of loss on extinguishment of debt associated with pay down of mortgage debt at the consummation of the IPO, $5.0 million of gains related to the disposition of five of the Company’s properties, and $1.4 million of gains associated with early repayment of a note receivable. Financial results for periods ending on or prior to July 24, 2013 reflect the results of Rexford Industrial’s predecessor entities.

The Company reported funds from operations (FFO) of $4.3 million, or $0.17 per diluted share, for the three months ended December 31, 2013. The Company’s share of Funds from Operations (FFO) for the period from July 24, 2013 through December 31, 2013 was $7.3 million, or $0.29 per diluted share.

Operating Results:

For the three months ended December 31, 2013, the Company’s same property portfolio produced a 7.1% increase in NOI compared to the fourth quarter of 2012, driven by a 9.7% increase in same property portfolio revenue, more than offsetting a 16.7% increase in same property portfolio expenses. Cash NOI on the Company’s same property portfolio was up 14.5% compared to the fourth quarter of 2012.

For the full year 2013, NOI on the Company’s same property portfolio increased 12.6%, driven by a 10.6% increase in same property portfolio revenue offsetting a 5.8% increase in same property portfolio expenses, compared to 2012. Cash NOI on the Company’s same property portfolio was up 15.8% in 2013, compared to 2012.

In the fourth quarter, the Company signed 91 new and renewal leases in its consolidated portfolio, totaling approximately 386,000 square feet. Average rental rates on comparable new and renewal leases were up 12.9% on a GAAP basis, and up 3.5% on a cash basis. The Company signed 38 new leases for approximately 142,000 square feet, with GAAP rents up 15.2%, compared to the prior in place leases. The Company signed 53 renewal leases for approximately 244,000 square feet, with GAAP rents up 12.4% compared to the prior in place leases. For the 38 new leases, cash rents were up 4.5%, and for the 53 renewal leases, cash rents were up 3.3%, compared to the ending cash rents for the prior leases.

The Company has included in a supplemental information package the results and operating statistics that reflect the activities of the Company for the three months ended December 31, 2013. See below for information regarding the supplemental information package.

Transaction Activity:

In November, the Company acquired Yorba Linda Business Park, a four-building Orange County, multi-tenant industrial park totaling 115,760 square feet, in Yorba Linda, California. The property was acquired for $12.7 million, or $109.71 per square foot, and was 79% occupied at the time of purchase.

In November, the Company acquired The Park, an Orange County industrial business park located in Anaheim, California, for $10.6 million, or $88.10 per square foot. The Park is located adjacent to the Interstate 5 Freeway in Anaheim, California, and consists of six multi-tenant buildings totaling 120,313 square feet. The buildings are situated on 6.9 acres of land, and were 85% occupied at the time of acquisition.

In December, the Company acquired Bonita Thompson, an industrial property in Pomona, California, for $27.2 million, or $74.34 per square foot. Located in the San Gabriel Valley sub-market, Bonita Thompson is in close proximity to three major highways, and consists of two 24’ clear single-tenant, rail-served distribution buildings, with 52 dock-high loading positions, totaling 365,859 square feet. The divisible buildings are situated on 16.3 acres of land, and are currently 100% occupied.

In December, the Company acquired a 199,370 square foot industrial and office property located in Simi Valley, California, for $15.8 million, or $79 per square foot. The project consists of a 30' clear, ESFR single-tenant industrial building with 136,065 square feet and a two-story 63,305 square foot Class A office building, situated on 16.3 acres of land. The industrial building is 100% leased to Kingsbridge International, Inc. for ten years. The office building, which is situated on a separate parcel, is currently vacant and is currently in escrow for sale.

In December, the Company acquired Vanowen, a 31,037 square foot industrial building located in the San Fernando Valley, for $3.4 million, or $109.55 per square foot, adjacent to the Burbank (Bob Hope) Airport. The property is 100% leased to four tenants.

Subsequent to year-end and through February 24, the Company acquired four additional properties totaling approximately 352,000 square feet for an aggregate cost of $29.1 million, detailed below.

In January, the Company acquired Rosecrans, a 72,000 square foot industrial building located in Paramount, California, for $5.0 million, or $69.44 per square foot. The seller is consolidating into half of the building under a five year lease-back, enabling the Company to execute its value-add improvement and leasing plan for the remainder of the property.

In January, the Company acquired Oxnard Street, located in Van Nuys, California, for $8.9 million, or $114 per square foot. The property consists of a six-building multi-tenant business park totaling 78,000 square feet. The buildings are situated on 3.25 acres of land and are currently 98% occupied. The Company plans to upgrade the property through overall aesthetic improvements and operational enhancements to facilitate accelerated rent growth.

In February, the Company acquired Ontario Airport Business Park, an industrial property located in Ontario, California, for $8.6 million, or $75.69 per square foot. The project consists of a five-building multi-tenant business park totaling 113,612 square feet and is currently 95.4% occupied.

In February, the Company acquired an 88,330 square foot, six-building industrial complex located at 1500-1510 W. 228th Street, Los Angeles, California, for $6.6 million, or $74.72 per square foot. The complex is located within the South Bay submarket, and is currently 98.0% occupied.

Also, in January, the Company sold Kaiser, a 124,997 square foot industrial property in San Diego, California, for $10.1 million. Proceeds from the sale of Kaiser were reinvested into Ontario Airport Business Park and 1500-1510 W. 228th Street acquisitions in a tax-deferred 1031 exchange.

Subsequent Events:

In March, the Company announced that Peter Schwab was elected as an independent director to the Company’s Board of Directors.

On March 12, 2014, the Board of Directors declared a dividend of $0.12 per share for the first quarter 2014, payable in cash on April 15, 2014 to stockholders and unitholders of record on March 31, 2014.

Earnings Release, Investor Conference Webcast and Conference Call:

The company will release its fourth quarter and full year 2013 results after the market closes on Thursday, March 13, 2014. The Company will host a webcast and conference call that same day at 5:00 p.m. Eastern time to review fourth quarter results and discuss recent events. The live webcast will be available on the Company’s investor relations website at www.ir.rexfordindustrial.com. To participate in the call, please dial 877-407-0789 (domestic) or 201-689-8562 (international). A replay of the conference call will be available through March 27, 2014, by dialing 877-870-5176 (domestic) or 858-384-5517 (international) and entering the pass code 13576279.

About Rexford Industrial:

Rexford Industrial is a real estate investment trust that specializes in acquiring, owning and operating industrial properties in Southern California infill markets. The Company owns interests in 70 properties with approximately 7.7 million rentable square feet and manages an additional 20 properties with approximately 1.2 million rentable square feet.

For additional information, visit www.rexfordindustrial.com.

Forward Looking Statements:

This press release may contain forward-looking statements within the meaning of the federal securities laws, which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," or "potential" or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. While forward-looking statements reflect the Company's good faith beliefs, assumptions and expectations, they are not guarantees of future performance. For a further discussion of these and other factors that could cause the Company's future results to differ materially from any forward-looking statements, see the section entitled "Cautionary Note Regarding Forward-Looking Statements" in the Company's prospectus for its July 2013 IPO and other risks described in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission (in particular under the caption “Risk Factors” in our periodic filings). The Company disclaims 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.

     

REXFORD INDUSTRIAL REALTY, INC. AND

REXFORD INDUSTRIAL REALTY, INC. PREDECESSOR

CONSOLIDATED AND COMBINED BALANCE SHEETS

 
Rexford Industrial

Realty, Inc.

Rexford Industrial

Realty, Inc.

Predecessor

December 31, 2013

(Unaudited)

December 31, 2012
ASSETS
Land $ 219,301,000 $ 151,057,000
Buildings and improvements 314,064,000 205,473,000
Tenant improvements 13,267,000 12,260,000
Furniture, fixtures, and equipment   188,000   188,000
Total real estate held for investment 546,820,000 368,978,000
Accumulated depreciation   (58,978,000 )   (55,370,000 )
Investments in real estate, net 487,842,000 313,608,000
Cash and cash equivalents 8,997,000 43,499,000
Restricted cash 325,000 1,882,000
Notes receivable 13,139,000 11,911,000
Rents and other receivables, net 929,000 559,000
Deferred rent receivable 3,642,000 3,727,000
Deferred leasing costs and in-place lease intangibles, net 14,189,000 5,003,000
Deferred loan costs, net 1,597,000 1,382,000
Acquired above-market leases, net 1,597,000 179,000
Acquired indefinite-lived intangible 5,271,000 -
Other assets 2,334,000 1,868,000
Acquisition related deposits 1,510,000 260,000
Investment in unconsolidated real estate entities 5,687,000 12,697,000
Assets associated with real estate held for sale   7,616,000   23,921,000
Total Assets $ 554,675,000 $ 420,496,000
LIABILITIES & EQUITY
Liabilities
Notes payable $ 192,491,000 $ 295,419,000
Accounts payable, accrued expenses and other liabilities 6,024,000 2,575,000
Due to members - 1,221,000
Interest rate contracts - 49,000
Dividends payable 5,368,000 -
Acquired lease intangible liabilities, net 1,160,000 39,000
Tenant security deposits 6,155,000 3,738,000
Prepaid rents 1,448,000 335,000
Liabilities associated with real estate held for sale   260,000   20,872,000
Total Liabilities 212,906,000 324,248,000
Equity

Rexford Industrial Realty, Inc. stockholders' equity and Predecessor equity

Common Stock, $0.01 par value 490,000,000 authorized and 25,559,886 outstanding at December 31, 2013

255,000 --
Additional paid in capital 311,936,000 --
Accumulated deficit   (5,993,000 ) --
Total stockholders' equity   306,198,000 --
Predecessor equity - (12,691,000 )
Noncontrolling interests   35,571,000   108,939,000
Total Equity   341,769,000   96,248,000
Total Liabilities and Equity $ 554,675,000 $ 420,496,000
 
     

REXFORD INDUSTRIAL REALTY, INC. AND

REXFORD INDUSTRIAL REALTY, INC. PREDECESSOR

CONSOLIDATED AND COMBINED STATEMENTS OF OPERATION (Unaudited)

 
Rexford Industrial Realty, Inc. Rexford Industrial Realty, Inc. Predecessor
Period from

July 24, 2013 to

December 31, 2013

Period from

January 1, 2013 to

July 23, 2013

  Year Ended

December 31, 2012

  Year Ended

December 31, 2011

RENTAL REVENUES
Rental revenues $ 18,449,000 $ 19,206,000 $ 27,842,000 $ 23,311,000
Tenant reimbursements 2,161,000 2,212,000 2,952,000 2,387,000
Management, leasing and development services 534,000 444,000 518,000 316,000
Other income   93,000   187,000   105,000   147,000
TOTAL RENTAL REVENUES 21,237,000 22,049,000 31,417,000 26,161,000
Interest income   381,000   698,000   1,577,000   1,577,000
TOTAL REVENUES   21,618,000   22,747,000   32,994,000   27,738,000
OPERATING EXPENSES
Property expenses 5,237,000 5,039,000 7,950,000 6,643,000
General and administrative 5,327,000 4,420,000 5,146,000 3,729,000
Depreciation and amortization 8,686,000 7,022,000 11,921,000 9,667,000
Other property expenses   1,167,000   885,000   1,300,000   1,015,000
TOTAL OPERATING EXPENSES 20,417,000 17,366,000 26,317,000 21,054,000
OTHER (INCOME) EXPENSE
Acquisition expenses 540,000 724,000 599,000 1,022,000
Interest expense 1,763,000 9,395,000 16,875,000 17,466,000
Gain on mark-to-market of interest rate swaps   -   (49,000 )   (2,361,000 )   (4,185,000 )
TOTAL OTHER EXPENSE 2,303,000 10,070,000 15,113,000 14,303,000
TOTAL EXPENSES   22,720,000   27,436,000   41,430,000   35,357,000
Equity in income (loss) from unconsolidated real estate entities 92,000 (915,000 ) 122,000 185,000
Gain from early repayment of note receivable - 1,365,000 - -
Loss on extinguishment of debt   -   (3,955,000 )   -   -
NET LOSS FROM CONTINUING OPERATIONS   (1,010,000 )   (8,194,000 )   (8,314,000 )   (7,434,000 )
DISCONTINUED OPERATIONS
Income (loss) from discontinued operations before gain (loss) on sale of real estate and extinguishment of debt 299,000 (809,000 ) (698,000 ) (1,406,000)
Loss on extinguishment of debt - (267,000 ) - -
Gain on sale of real estate   -   4,989,000   55,000   2,503,000
INCOME (LOSS) FROM DISCONTINUED OPERATIONS   299,000   3,913,000   (643,000 )   1,097,000
NET LOSS   (711,000 )   (4,281,000 )   (8,957,000 )   (6,337,000 )
Net loss attributable to noncontrolling interests   86,000   15,000   4,066,000   2,585,000
NET LOSS ATTRIBUTABLE TO REXFORD INDUSTRIAL REALTY, INC. $ (625,000 ) $ (4,266,000 ) $ (4,891,000 ) $ (3,752,000 )
Net loss available to common stockholders per share - basic and diluted $ (0.03 )
 
               

REXFORD INDUSTRIAL REALTY, INC. AND

REXFORD INDUSTRIAL REALTY, INC. PREDECESSOR

Same Property Portfolio Statement of Operations and NOI Reconciliation (unaudited)

 
Same Property Portfolio Statement of Operations:
 
Three Months Ending Year Ending
December 31 December 31
 

2013(1)

 

    2012   Change  

2013(1)

 

  2012   Change
Rental Revenues
Rental revenues $ 7,901 $ 7,263 9 % $ 29,896 $ 27,268 10 %
Tenant reimbursements 881 771 14 % 3,275 2,843 15 %
Other operating revenues   33     3   1000 %   231     79   192 %
Total rental revenues 8,815 8,037 10 % 33,402 30,190 11 %
Interest income   190     252   25 %   1,016     1,004   1 %
Total Revenues 9,005 8,289 9 % 34,418 31,194 10 %
 
Operating Expenses
Property expenses $ 2,532 $ 2,170 17 % $ 9,283 $ 8,777 6 %
Depreciation and amortization   3,695     2,967   25 %   11,313     12,129   (7 %)
Total Operating Expenses 6,227 5,137 21 % 20,596 20,906 (2 %)
 
Other (Income) Expense
Interest expense   60     4,299   (99 %)   9,075     17,339   (48 %)
Total Other Expense   60     4,299   (99 %)   9,075     17,339   (48 %)
Total Expenses 6,287 9,436 (33 %) 29,671 38,245 (22 %)
 
Loss on extinguishment of debt   -     -       (3,382 )   -    
Net Income (Loss) $ 2,718   $ (1,147 ) 337 % $ 1,365   $ (7,051 ) 119 %
 
Same Property Portfolio NOI Reconciliation:
 
Three Months Ending Year Ending
December 31 December 31
NOI  

2013(1)

 

    2012   Change  

2013(1)

 

  2012   Change
Net Income (Loss) $ 2,718 $ (1,147 ) $ 1,365 $ (7,051 )
Add:
Interest expense 60 4,299 9,075 17,339
Depreciation and amortization 3,695 2,967 11,313 12,129
Deduct:
Loss on extinguishment of debt - - (3,382 ) -
Interest income   190   252       1,016     1,004    
NOI $ 6,283   $ 5,867   7 % $ 24,119   $ 21,413   13 %
 
Straight-line rents (209 ) (579 ) (158 ) (802 )
Amort. above/below market leases   24   36       77     142    
Cash NOI $ 6,098   $ 5,324   15 % $ 24,038   $ 20,753   16 %
 

(1) Includes Predecessor and Rexford Industrial Realty, Inc. results.

 
               

REXFORD INDUSTRIAL REALTY, INC. AND

REXFORD INDUSTRIAL REALTY, INC. PREDECESSOR

NOI Reconciliation, Portfolio Detail, and Occupancy (unaudited)

 
Same Property Portfolio NOI Reconciliation Continued:
   
Three Months Ending Year Ending
December 31 December 31
 

2013 (1)

 

      2012   Change  

2013 (1)

 

  2012   Change
Rental revenues $ 7,901 $ 7,263 9 % $ 29,896 $ 27,268 10 %
Tenant reimbursements 881 771 14 % 3,275 2,843 15 %
Other operating revenues   33     3   1000 %   231     79   192 %
Total rental revenue 8,815 8,037 10 % 33,402 30,190 11 %
 
Property expenses 2,085 1,853 13 % 7,884 7,664 3 %
Other property expenses   447     317   41 %   1,399     1,113   26 %
Total property expense 2,532 2,170 17 % 9,283 8,777 6 %
           
NOI $ 6,283   $ 5,867   7 % $ 24,119   $ 21,413   13 %
 
Straight-line rents (209 ) (579 ) (64 %) (158 ) (802 ) (80 %)
Amort. above/below market leases   24     36   (34 %)   77     142   (46 %)
Cash NOI $ 6,098   $ 5,324   15 % $ 24,038   $ 20,573   16 %
 
       
Quarterly Same Property Portfolio Detail Annual Same Property Portfolio Detail
# of    

Square

    Wtd Avg. # of    

Square

   

Wtd Avg.

Properties

Feet

Occupancy Properties

Feet

Occupancy

    2013     2012     2013     2012
Period ended Sept. 30, 2013 and 2012 49 4,320,532   87.3 %   81.6 % 47 4,174,679   87.1 %   81.2 %
Additions (deductions)   (1 )   (124,944 ) 100.0 % 5.1 %   (1 )   (124,944 ) 100.0 % 5.1 %
Period ended Dec. 31, 2013 and 2012 48 4,195,588 89.3 % 86.3 % 46 4,049,735 89.1 % 86.1 %
 
 
Same Property Portfolio Occupancy:
           
Occupancy: December 31, 2013 December 31, 2012 Change (ppt )
Los Angeles County 89.3 % 89.5 % -0.2 %
Orange County 95.7 % 87.6 % 8.1 %
San Bernardino County 88.4 % 84.5 % 3.9 %
Ventura County 100.0 % 100.0 % 0.0 %
San Diego County 81.6 % 72.2 % 9.4 %
Other 80.6 % 74.9 % 5.7 %
Total/Weighted Average 89.3 % 86.3 % 3.0 %
 

(1) Includes Predecessor and Rexford Industrial Realty, Inc. results

Rexford Industrial
Investor Relations:
Stephen Swett or Rodny Nacier
424-256-2153 ext 401
investorrelations@rexfordindustrial.com

Source: Rexford Industrial Realty, Inc.

Released March 13, 2014