Press Release Details

– Reports Recurring FFO of $0.20 Per Diluted Share –

– Same Property NOI Up 6.2% Compared to Second Quarter 2014 –

– Stabilized Same Property Portfolio Occupancy At 94%, Up 360 Basis Points Year-Over-Year –

 

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 second quarter 2015.

Second Quarter 2015 Financial and Operational Highlights:

• Reported Recurring Funds From Operations (FFO) of $0.20 per diluted share for the quarter ended June 30, 2015. Adjusting for non-recurring items, FFO was $0.19 per diluted share.
• Total rental revenues of $22.4 million increased 52.5% year-over-year. Property Net Operating Income (NOI) of $16.4 million increased 55.1% year-over-year.
• Signed new and renewal leases totaling 725,714 square feet. Rental rates on new and renewal leases were 15.4% higher than prior rents on a GAAP basis and 7.0% higher on a cash basis.
• Stabilized Same Property Portfolio occupancy was 94.0%, an increase of 360 basis points year-over-year. Total Same Property Portfolio occupancy was 92.6%, an increase of 230 basis points year-over-year.
• At June 30, 2015, the consolidated portfolio, inclusive of value-add acquisitions and redevelopment activity, was 88.4% occupied, a decrease of 210 bps year-over-year.
• Same Property Portfolio NOI increased 6.2% in the second quarter of 2015 compared to the second quarter of 2014, driven by a 5.5% increase in Same Property Portfolio total rental revenue and a 3.8% increase in Same Property Portfolio operating expenses. Same Property Portfolio Cash NOI increased 8.0% compared to the second quarter 2014.
• During the second quarter 2015, the Company acquired five industrial properties for an aggregate cost of $58.9 million. Year to date, including properties acquired after the end of the second quarter 2015, the Company has acquired 10 properties for an aggregate cost of $128.2 million.

“The second quarter of 2015 represented another strong quarter for Rexford, as we leased more than 700,000 square feet for the second quarter in a row at favorable re-leasing spreads, and we pushed our stabilized same property portfolio occupancy to 94%,” stated Michael Frankel and Howard Schwimmer, Rexford Industrial’s Co-Chief Executive Officers. “Additionally, we continued to capitalize on our deep market presence, strong balance sheet, and extensive sourcing methods to add another $76 million dollars of high-quality, in-fill industrial properties to our portfolio since the start of the second quarter. As we move into the second half of 2015, we believe we are well positioned to continue to drive strong performance across our platform.”

Financial Results:

The Company reported net income of $0.2 million (net income of $0.2 million before non-controlling interests), for the three months ended June 30, 2015. This compares to net income of $0.1 million (net income $0.1 million before non-controlling interests) for the three months ending June 30, 2014.

The Company reported net income of $0.3 million (net income of $0.3 million before non-controlling interests) for the six months ended June 30, 2015, compared to net income of $1.4 million (net income of $1.5 million before non-controlling interests) for the six months ended June 30, 2014.

The Company reported Company share of Recurring FFO of $11.1 million, or $0.20 per diluted share of common stock, for the three months ended June 30, 2015. This compares to Company share of Recurring FFO of $6.1 million, or $0.24 per diluted share of common stock, for the three months ending June 30, 2014. Including non-recurring expenses and acquisition expenses of $0.9 million incurred during the second quarter, Company share of FFO was $10.2 million, or $0.19 per diluted share of common stock.

For the six months ended June 30, 2015, Rexford reported Company share of Recurring FFO of $21.2 million, or $0.40 per diluted share of common stock, compared to Company share of Recurring FFO of $11.3 million, or $0.45 per diluted share of common stock, for the six months ended June 30, 2014. Adjusting for non-recurring expenses and acquisition expenses of $1.5 million incurred during the first six months of 2015, Company share of FFO was $19.7 million, or $0.37 per diluted share of common stock.

Operating Results:

For the three months ended June 30, 2015, the Company’s Same Property Portfolio NOI increased 6.2% compared to the second quarter of 2014, driven by a 5.5% increase in Same Property Portfolio total rental revenue, and a 3.8% increase in Same Property Portfolio expenses. Same Property Portfolio Cash NOI increased 8.0% compared to the second quarter 2014.

In the second quarter, the Company signed 142 new and renewal leases in its consolidated portfolio, totaling 725,714 square feet. Average rental rates on comparable new and renewal leases were up 15.4% on a GAAP basis and up 7.0% on a cash basis. The Company signed 57 new leases for 283,695 square feet, with GAAP rents up 14.4% compared to the prior in place leases. The Company signed 85 renewal leases for 442,019 square feet, with GAAP rents up 15.9% compared to the prior in place leases. For the 57 new leases, cash rents were up 7.1%, and for the 85 renewal leases, cash rents were up 6.9%, compared to the ending cash rents for the prior leases.

The Company has included in a supplemental information package the detailed results and operating statistics that reflect the activities of the Company for the three months ended June 30, 2015. See below for information regarding the supplemental information package.

Transaction Activity:

In the second quarter 2015, the Company acquired five industrial properties in off-market transactions for an aggregate cost of $58.9 million, as detailed below.

In April 2015, the Company acquired 9615 Norwalk Boulevard, a 10.26 acre paved land storage facility in Santa Fe Springs within the Mid-Counties (Los Angeles) submarket, for approximately $9.6 million, or approximately $22 per square foot of land.

In May 2015, the Company acquired 16221 Arthur Street, a 61,372 square foot building in Cerritos within the Mid-Counties (Los Angeles) submarket, for approximately $5.8 million, or approximately $94 per square foot.

In May 2015, the Company acquired 2588-2605 Industry Way, a two-building industrial portfolio containing 164,662 square feet in Lynwood within the Los Angeles – South Bay submarket, for $22.0 million, or approximately $134 per square foot.

In May 2015, the Company acquired 425 Hacienda Boulevard, a 51,823 square foot industrial property in City of Industry within the San Gabriel Valley submarket, for $7.0 million, or approximately $135 per square foot.

In June 2015, the Company acquired 6700 Alameda Street, a 78,280 square foot cold storage facility in Huntington Park within the Los Angeles - Central submarket, for $14.5 million, or approximately $185 per square foot.

Balance Sheet:

At June 30, 2015, the Company had $296.7 million of outstanding debt, with an average interest rate of 2.017% and an average term-to-maturity of 3.2 years. As of June 30, 2015, $30 million of the Company’s floating-rate debt has been effectively fixed at 3.726% through the use of an interest rate swap. As a result, approximately $38.5 million, or 13%, of outstanding debt was fixed-rate with an average interest rate of 4.15% and an average term-to-maturity of 4.8 years, and the remaining $258.3 million, or 87%, of outstanding debt was floating-rate, with an average interest rate of LIBOR+1.51% and an average term-to-maturity of 2.9 years.

In addition to the swap noted above, the Company has another three forward interest rate swaps that will effectively fix an additional $130 million of floating rate debt as follows: (i) $30 million at 3.91% from 7/15/15 to 2/15/19, (ii) $50 million at 1.79% plus the applicable term loan facility margin from 8/14/15 to 12/14/18, and (iii) $50 million at 2.005% plus the applicable term loan facility margin from 2/16/16 to 12/14/18. If all of these swaps were effective as of June 30, 2015, the Company’s consolidated debt would be 57% fixed-rate and 43% variable-rate.

Subsequent to the end of the second quarter, the Company entered into an agreement to issue $100 million of 10-year senior guaranteed notes through a private placement. The notes are expected to be issued on August 6, 2015, and carry a fixed annual interest rate of 4.29% The Company intends to use the net proceeds from the issuance of the notes for the repayment of existing secured indebtedness and for general corporate purposes.

Supplemental Information:

Details regarding these results can be found in the Company’s supplemental financial package available on the Company’s investor relations website at www.ir.rexfordindustrial.com.

Earnings Release, Investor Conference Webcast and Conference Call:

The Company will host a webcast and conference call on Wednesday August 5, 2015 at 5:00 p.m. Eastern time to review second 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 September 5, 2015, by dialing 877-870-5176 (domestic) or 858-384-5517 (international) and entering the pass code 13614661.

About Rexford Industrial:

Rexford Industrial is a real estate investment trust focused on owning and operating industrial properties in Southern California infill markets. The Company owns interests in 109 properties with approximately 10.8 million rentable square feet and manages an additional 19 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 reports and other filings by the Company with the U.S. Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. 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.

Definitions / Discussion of Non-GAAP Financial Measures:

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. A reconciliation of FFO to net income, the nearest GAAP equivalent, is set forth below.

Recurring Funds from Operations (Recurring FFO): We calculate Recurring FFO by adjusting FFO to exclude the effect of non-recurring expenses and acquisition expenses. A reconciliation of FFO to Recurring FFO is set forth below.

Net Operating Income (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 (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. A calculation of NOI for our Same Property Portfolio, as well as a reconciliation of NOI for our Same Property Portfolio to net income for our Same Property Portfolio, is set forth below.

Cash NOI: Cash 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. A calculation of Cash NOI for our Same Property Portfolio, as well as a reconciliation of Cash NOI for our Same Property Portfolio to net income for our Same Property Portfolio, is set forth below.

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 June 30, 2015. Therefore, we excluded from our Same Properties Portfolio any properties that were acquired or sold during the period from January 1, 2014 through June 30, 2015. The Company’s computation of same property performance may not be comparable to other REITs.

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. As of June 30, 2015, spaces aggregating 90,074 square feet were under repositioning.