UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

August 7, 2014

 

REXFORD INDUSTRIAL REALTY, INC.

(Exact name of registrant as specified in its charter)

 

 

Registrant’s telephone number, including area code: (310) 966-1680

N/A

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2.):

 

 

 

 

 

 

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ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On August 7, 2014, Rexford Industrial Realty, Inc. (“Rexford Industrial”) issued a press release announcing its earnings for the quarter ended June 30, 2014 and distributed certain supplemental financial information. On August 7, 2014, Rexford Industrial also posted the supplemental information on its website located at www.rexfordindustrial.com. Copies of the press release and supplemental information are furnished herewith as Exhibits 99.1 and 99.2, respectively.

The information included in this Current Report on Form 8-K under this Item 2.02 (including Exhibits 99.1 and 99.2 hereto) are being “furnished” and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of the Exchange Act, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

ITEM 7.01 REGULATION FD DISCLOSURE  

As discussed in Item 2.02 above, Rexford Industrial issued a press release announcing its earnings for the quarter ended June 30, 2014 and distributed certain supplemental information. On August 7, 2014, Rexford Industrial also posted the supplemental information on its website located at www.rexfordindustrial.com.

The information included in this Current Report on Form 8-K under this Item 7.01 (including Exhibit 99.1 and 99.2 hereto) is being “furnished” and shall not be deemed to be “filed” for the purposes of the Exchange Act, or otherwise subject to the liabilities of the Exchange Act, nor shall it be incorporated by reference into a filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. The information included in this Current Report on Form 8-K under this Item 7.01 (including Exhibit 99.1 and 99.2 hereto) will not be deemed an admission as to the materiality of any information required to be disclosed solely to satisfy the requirements of Regulation FD.

 

ITEM 8.01 OTHER EVENTS

 

On August 7, 2014, Rexford Industrial announced that its Board of Directors has declared a dividend of $0.12 per share for the third quarter 2014 (the “Dividend”).  Rexford Industrial expects to pay the Dividend in cash on October 15, 2014 to stockholders of record on September 30, 2014.

 

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d)Exhibits.

 

 

 

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

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EXHIBIT INDEX

 

 

 

Exhibit 99.1

 

 

REXFORD INDUSTRIAL announces Second QUARTER 2014 financial RESULTS

 

– Reports Recurring FFO of $0.24 Per Diluted Share –

– Same Property Portfolio Occupancy Increases to 89.8% –

– Acquires More Than $224 Million Year-to-Date –

 

Los Angeles, California – August 7, 2014 – 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 of 2014.

 

 

Second Quarter 2014 Financial and Operational Highlights:

 

 

“We are extremely pleased with the strength of our operating metrics and accretive portfolio growth that we achieved during the second quarter,” stated Michael Frankel and Howard Schwimmer, Rexford Industrial’s Co-Chief Executive Officers.  “During the quarter, we executed over 570,000 square feet of new and renewal leases and recorded a 140 basis point year-over-year jump in our Same Property Portfolio occupancy to nearly 90%. On the investment front, our acquisition activity accelerated as we closed on $192.0 million of attractively positioned properties since April 2014.  Since our IPO in July 2013, we have acquired 2.9 million square feet of industrial property in our target infill Southern California markets, resulting in a 52.94% expansion of our portfolio.”

 

 

 

 

 

 

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Financial Results:

 

Financial results for periods ending on or prior to June 30, 2013 reflect the results of Rexford Industrial’s predecessor entities.

 

The Company reported net income of $0.1 million ($0.1 million before non-controlling interests), or $0.00 per diluted share of common stock, for the three months ended June 30, 2014.  In comparison, Rexford Industrial’s predecessor entities reported a loss of $2.3 million (a loss of $0.5 million before non-controlling interests) for the three months ended June 30, 2013.

 

For the six months ended June 30, 2014, the Company reported net income of $1.4 million ($1.5 million before non-controlling interests), or $0.05 per diluted share of common stock.  In comparison, Rexford Industrial’s predecessor entities reported a loss of $2.0 million (income of $1.6 million before non-controlling interests) for the six months ended June 30, 2013.

 

The Company reported Recurring FFO of $6.1 million, or $0.24 per diluted share of common stock, for the three months ended June 30, 2014.  Adjusting for non-recurring acquisition expenses of $0.7 million incurred during the second quarter, FFO was $5.5 million, or $0.22 per diluted share of common stock.  

 

For the six months ended June 30, 2014, the Company reported Recurring FFO of $11.4 million, or $0.45 per diluted share of common stock.  Adjusting for non-recurring acquisition expenses of $1.0 million incurred during the first six months of 2014, FFO was $10.5 million, or $0.41 per diluted share of common stock.  

 

 

Operating Results:

 

For the three months ended June 30, 2014, the Company’s Same Property Portfolio NOI increased 8.3% compared to the second quarter of 2013, driven by a 4.8% increase in Same Property Portfolio revenue, and a 4.1% decrease in Same Property Portfolio expenses.  Same Property Portfolio Cash NOI increased 3.3% compared to the second quarter 2013.

 

In the second quarter, the Company signed 116 new and renewal leases in its consolidated portfolio, totaling 572,617 square feet.  Average rental rates on comparable new and renewal leases were up 17.1% on a GAAP basis, and up 5.2% on a cash basis. The Company signed 44 new leases for 208,819 square feet, with GAAP rents up 12.9%, compared to the prior in place leases. The Company signed 72 renewal leases for 363,798 square feet, with GAAP rents up 18.9% compared to the prior in place leases. For the 44 new leases, cash rents were up 2.9%, and for the 72 renewal leases, cash rents were up 6.1%, 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 June 30, 2014. See below for information regarding the supplemental information package.

 

 

 

 

 

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Transaction Activity:

 

Since April 2014, including transactions closed after June 30, 2014, the Company has acquired 17 industrial properties totaling approximately 1.77 million square feet, for an aggregate cost of $192.0 million, as detailed below.  

 

In April 2014, the Company acquired Saturn Way, a 170,865 square foot Class “A” industrial building, for $21.1 million, or $123 per square foot.  The property is located in Seal Beach, within the Orange County West submarket, and is currently100% occupied.

 

In May 2014, the Company acquired 2980 San Fernando, a 130,800 square foot industrial property located on San Fernando Boulevard, Burbank for $15.4 million, or $118 per square foot. The property consists of two industrial buildings that are currently 100% occupied by a single tenant, located within the San Fernando Valley submarket.

 

In May 2014, the Company acquired Crescent Bay, a 46,178 square foot industrial building situated on 2.47 acres, for $6.5 million, or $140 per square foot. The Crescent Bay industrial building is located in Lake Forest, within the South Orange County submarket, and is 100% leased through 2016.

 

In June 2014, the Company acquired Birch Street, a 98,105 square foot industrial building along with additional land which together total 7.9 acres located in Santa Ana, for $11.0 million, or $112 per square foot. At the end of the current short-term lease, the Company intends to execute a value-add plan to renovate, modernize and reposition the property as a single-tenant or two-tenant industrial project.

 

In June 2014, the Company acquired Dupont Business Center, a two-building industrial complex totaling 110,890 square feet on 5.7 acres for $10.2 million, or $91 per square foot. The 100% occupied buildings are located in the Ontario / Inland Empire West submarket, and contain big box features for smaller dock high spaces.

 

In June 2014, the Company acquired a nine-property industrial portfolio, containing an aggregate of 817,166 square feet for $88.5 million, or $108 per square foot, across its target markets within Los Angeles County, Orange County and San Diego County. The properties include:

 

 

 

 

 

 

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Subsequent Events:

 

Subsequent to the end of the second quarter, in July 2014, the Company acquired three additional properties. The Company acquired Avenue 32, a 100,500 square foot industrial building for $11.0 million, or $109 per square foot. The property is located in the City of Los Angeles, adjacent to Burbank and Glendale within the East San Fernando Valley, which is a part of the Greater San Fernando Valley submarket. The Company also acquired Chatsworth Industrial Park, a 153,212 square foot industrial complex for $16.8 million, or $110 per square foot, located in the West San Fernando Valley. And finally the Company acquired Avenue Kearny, a 138,980 square foot industrial building for $11.5 million, or $83 per square foot, located in the North San Fernando Valley.  

 

On August 4, 2014, the Board of Directors declared a dividend of $0.12 per share for the third quarter of 2014, payable in cash on October 15, 2014 to stockholders and unitholders of record on September 30, 2014.

 

Earnings Release, Investor Conference Webcast and Conference Call:

The Company will host a webcast and conference call on Thursday, August 7, 2014 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 August 21, 2014, by dialing 877-870-5176 (domestic) or 858-384-5517 (international) and entering the pass code 13586542.

 

 

 

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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 88 properties with approximately 9.5 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 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, 2013. 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

 

 

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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 before noncontrolling interest 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 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.

 

 

 

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Same Property Portfolio: Determined independently for each period presented. Comparable properties must have been owned for the entire current and prior periods presented. The Company’s computation of same property performance may not be comparable to other REITs.

 

Contact:

Investor Relations:

Stephen Swett or Rodny Nacier

424 256 2153 ext 401

investorrelations@rexfordindustrial.com

 

 

 

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REXFORD INDUSTRIAL REALTY, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

 

 

 

 

 

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REXFORD INDUSTRIAL REALTY, INC. AND

REXFORD INDUSTRIAL REALTY, INC. PREDECESSOR

CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (Unaudited)

 

 

 

 

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REXFORD INDUSTRIAL REALTY, INC. AND

REXFORD INDUSTRIAL REALTY, INC. PREDECESSOR

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

 

 

 

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Exhibit 99.2

 

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

 

 

 

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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 Portfolio Data: Portfolio Overview........................................................................................................................................................................................................................ 18 Occupancy and Leasing Trends..................................................................................................................................................................................................... 19 Leasing Statistics........................................................................................................................................................................................................................... 20 Top Tenants and Lease Segmentation.......................................................................................................................................................................................... 21 Capital Expenditure Summary...................................................................................................................................................................................................... 22 Properties Under Repositioning.................................................................................................................................................................................................... 23 Acquisitions and Dispositions Summary....................................................................................................................................................................................... 24 Definitions / Discussion of Non-GAAP Financial Measures........................................................................................................................................................... 25 26 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 2013 Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (“SEC”) on March 20, 2014. 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.

 

 

 

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Investor Company Summary  Howard Schwimmer Michael S. Frankel Adeel Khan Patrick Schlehuber Bruce Herbkersman Shannon Lewis Senior Management Team Co-Chief Executive Officer, Director Co-Chief Executive Officer, Director Chief Financial Officer Director of Acquisitions Director of Construction & Development Director of Leasing & Asset Management Richard Ziman Howard Schwimmer Michael S. Frankel Robert L. Antin Steven C. Good Joel S. Marcus Peter Schwab Board of Directors Chairman Co-Chief Executive Officer, Director Co-Chief Executive Officer, Director Director Director Director Director Company Contact Information   11620 Wilshire Blvd Suite 1000 Los Angeles, CA 90025 310-966-1680 www.RexfordIndustrial.com  Investor Relations Information ICR Brad Cohen and Stephen Swett www.icrinc.com 212-849-3882    Equity Research Coverage   Bank of America Merrill Lynch James Feldman J.P. Morgan Michael W. Mueller, CFA FBR Capital Markets & Co. Nikhil Bhalla Wells Fargo Securities Brendan Maiorana, CFA   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.

 

 

 

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Financial and Portfolio Highlights and Common Stock Data (1)   (in thousands except per share figures and portfolio statistics)   Three Months Ended Three Months Ended Three Months Ended Period From July 24, 2013   June 30, 2014 March 31, 2014 December 31, 2013 to Sep. 30, 2013 (2)    Financial Results: Total rental revenues $ 14,718 $ 13,415 $ 12,448 $ 8,789 Straight line rent 395 184 515 290 Fair value lease expense 73 81 76 122 Net income (loss) attributable to common stockholders 73 1,277 (881) 256 Net income (loss) per common share -basic and diluted $ 0.00 $ 0.05 $ (0.04) $ 0.01 Company share of FFO 5,532 4,941 4,308 3,001 FFO per common share -basic and diluted 0.22 0.19 0.17 0.12 EBITDA 7,769 8,959 5,951 4,178 Adjusted EBITDA 10,325 7,514 6,918 4,724  Dividend declared per common share $ 0.12 $ 0.12 $ 0.12 $ 0.09  Portfolio Statistics: Portfolio SF -consolidated 7,908,456 6,533,452 6,321,894 5,489,496 Ending occupancy -consolidated portfolio 90.5% 90.2% 89.7% 88.0% Pro-forma occupancy including uncommenced leases 91.1% 91.1% 91.7% 89.8% Leasing spreads -cash 5.2% 3.6% 3.5% -1.1% Leasing spreads -GAAP 17.1% 11.5% 12.9% 6.7%  Same Property Performance: (3) Total rental revenue growth 4.8% 3.4% 9.7% 17.0% Total property expense growth -4.1% 15.0% 16.7% 12.0% NOI growth 8.3% -1.1% 7.1% 19.0% Cash NOI growth 3.3% 1.0% 14.5% 15.0% Ending occupancy 89.8% 89.1% 89.3% 87.3% Occupancy growth (ppt) 1.4% 1.4% 3.0% 5.6%  Capitalization: Common stock price at quarter end $ 14.24 $ 14.18 $ 13.20 $ 13.51 Common shares issued and outstanding 25,420,381 25,419,418 25,419,418 24,757,841 Total shares and units issued and outstanding at period end (4) 28,429,640 28,428,677 28,428,677 28,454,927 Weighted average shares outstanding -basic and diluted 25,419,757 25,419,418 25,191,570 24,574,432 Total equity market capitalization $ 404,838 $ 403,119 $ 375,259 $ 384,426 Total consolidated debt 369,679 212,997 192,559 122,795 Total debt (pro-rata) (5) 375,904 219,222 198,784 129,020 Total combined market capitalization 780,742 622,341 574,043 513,446  Ratios: Total debt (pro-rata) to total combined market capitalization 48.1% 35.2% 34.6% 25.1% Total debt (pro-rata) to adjusted EBITDA (quarterly results annualized) 9.1x 7.2x 7.2x 5.2x Net debt (pro-rata) to adjusted EBITDA (quarterly results annualized) 8.9x 7.0x 6.9x 5.0x  (1)  For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 25 of this report.   (2)  The financials reflect operations since the completion of our initial public offering on July 24, 2013.   (3)  Comparison of the three months ended June 30, 2014 to the three months ended June 30, 2013.   (4)  Includes 3,009,259 OP units and excludes 203,264, 131,786 and 140,468 unvested shares of restricted stock as of June 30, 2014, March 31, 2014 and December 31, 2013, respectively. Includes 3,697,086 OP units and excludes 920,734 unvested shares of restricted stock as of September 30, 2013.   (5)  Includes our 15% share of debt in our Mission Oaks joint venture.  

 

 

 

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Consolidated and Combined Balance Sheet  6/30/14  (unaudited and in thousands) Rexford Industrial Realty, Inc. Predecessor 3/31/14 12/31/13(1) 9/30/13 (1) 6/30/13(1) Rexford Industrial Realty, Inc.     Investments in real estate, net  $  653,794  $  512,573  $  483,572  $  432,024  $  378,911   Cash and cash equivalents  9,272  6,344  8,997  4,399  24,951   Restricted cash  379  352  325  298  2,026   Notes receivable  13,136  13,135  13,139  13,153  7,876   Rents and other receivables, net  1,467  1,254  929  869  685   Deferred rent receivable  4,213  3,817  3,642  3,428  3,862   Deferred leasing costs, net  2,650  2,303  2,164  1,979  2,112   Deferred loan costs, net  3,197  1,476  1,597  1,609  1,483   Acquired lease intangible assets, net(2)  22,652  13,174  13,622  11,108  6,896   Indefinite-lived intangible  5,271  5,271  5,271  - -  Other assets  2,583  4,588  2,322  2,317  4,550   Acquisition related deposits  1,450  1,550  1,510  1,435  210   Investment in unconsolidated real estate entities  5,758  5,778  5,687  8,982  11,486     Total Assets $ 725,822 $ 571,615 $ 554,675 $ 489,062 $ 452,391   Notes payable  $  369,873  $  212,918  $  192,491  $  122,857  $  343,663   Accounts payable, accrued expenses and other liabilities  6,281  6,345  6,024  4,586  2,328   Dividends payable  3,075  3,066  5,368  - -  Acquired lease intangible liabilities, net(3)  1,977  1,553  1,160  535  65   Tenant security deposits  7,451  6,960  6,155  4,840  4,521   Prepaid rents  964  778  1,448  447  542   Liabilities associated with real estate held for sale  - - 260  195  7,877     Equity Rexford Industrial Realty Inc. common stock $ 255 $ 255 $ 255 $ 257 $ -Rexford Industrial Realty Inc. additional paid-in capital 312,451 312,131 311,936 308,937 Accumulated other comprehensive income (410) 269 ---  Predecessor equity ----11,968    Total Rexford Industrial Realty, Inc./Predecessor Equity 301,512 304,873 306,198 309,450 (15,624) Total Equity 336,201 339,995 341,769 355,602 93,395   (1)  For comparability, certain prior period amounts have been reclassified to conform to current period presentation of properties held for sale.   (2)  Includes net above-market tenant lease intangibles of $3,443, $1,488 and $1,597 as of June 30, 2014, March 31, 2014 and December 31, 2013, respectively.   (3)  Includes net below-market tenant lease intangibles of $1,716, $1,284 and $883 as of June 30, 2014, March 31, 2014 and December 31, 2013, respectively.    Second Quarter 2014

 

 

 

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Consolidated and Combined Statement of Operations  Quarterly Results (unaudited and in thousands, except share count and per share figures)  Rexford Industrial Rexford Industrial Realty, Inc.(1) Realty, Inc. Predecessor  Three Months Ended Three Months Ended Three Months Ended Period from July 24, Period from July 1,   Rental revenues  $  12,773  $  11,628  $  10,809  $  7,640  $  2,384   Tenant reimbursements  1,681  1,511  1,333  828  254   Management, leasing, and development services  249  234  253  281  13     Total rental revenues 14,718 13,415 12,448 8,789 2,671   Total Revenues 14,996 13,691 12,638 8,980 2,734 Operating Expenses  Property expenses $ 3,892 $ 4,134 $ 3,869 $ 2,527 $ 689 General and administrative 2,780 2,605 2,827 2,500 1,885 Depreciation and amortization 6,003 6,130 5,661 3,025 888   Other (Income) Expense Acquisition expenses $ 652 $ 333 $ 421 $ 119 $ 7 Interest expense 1,537 1,251 1,046 717 1,233   Total Expenses 14,864 14,453 13,824 8,888 4,702   Loss on extinguishment of debt ----(3,919)   Discontinued Operations   Income from discontinued operations   before gains on sale of real estate  $  - $  21  $  171  $  120  $  27   Loss on extinguishment of debt  - - - - (17)     Net Income (Loss) $ 81 $ 1,429 $ (1,006) $ 295 $ (5,868) Net Income (Loss) Attributable to Common Stockholders/Predecessor $ 73 $ 1,277 $ (881) $ 256 $ (2,309)     Earnings per Common Share - Basic and Diluted   (1) The financials reflect operations since the completion of our initial public offering on July 24, 2013.   Second Quarter 2014  Page 6

 

 

 

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Consolidated and Combined Statement of Operations  Quarterly Results (in thousands)  Rexford Industrial Rexford Industrial   Rexford Industrial Realty, Inc. Rexford Industrial Realty, Inc.   Realty, Inc. Predecessor Realty, Inc. Predecessor   Six Months Ended June 30, Three Months Ended June 30,   2014 2013 2014 2013   (unaudited) (unaudited) (unaudited) (unaudited)   Rental Revenues   Rental revenues 12,773$ 9,062$ 24,401$ 16,822$   Tenant reimbursements 1,681 1,112 3,192 1,959     Total rental revenues 14,718 10,393 28,133 19,379   Total Revenues  14,996  10,717  28,687  20,014   Operating Expenses   Property expenses  3,892  2,835  8,026  5,234   General and administrative  2,780  1,396  5,385  2,535     Other (Income) Expense  Acquisition expenses 652 624 985 717    Total Other Expense 2,189 5,010 3,773 8,829  Equity in loss income from unconsolidated real estate entities (51) (712) (6) (925) Gain from early repayment of note receivable ---1,365   Discontinued Operations   Income (loss) from discontinued operations   before gains on sale of real estate  - (257)  21  (838)   Loss on extinguishment of debt  - (41)  - (250)      Net Income (Loss) 81 (468) 1,510 1,586 Net Income (Loss) Attributable to Common Stockholders/Predecessor $ 73 $ (2,286) $ 1,350 $ (1,958)

 

 

 

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Non-GAAP FFO (1) (in thousands) (unaudited results)  Rexford Industrial Realty, Inc. (2)  Rexford Industrial Realty, Inc. Predecessor   June 30, 2014  March 31, 2014 Three Months Ended  December 31, 2013  July 24, 2013 to Sep. 30, 2013  July 1, 2013 to July 23, 2013    Funds From Operations (FFO)   Net income (loss) attributable to common stockholders/predecessor  $  73  1,277  $  (881)  $  256  $  (5,868)   Add:   Depreciation and amortization, including amounts in discontinued operations  6,003  6,137  5,716  3,062  901   Depreciation and amortization from unconsolidated joint ventures  103  85  153  96  107   Loss from early extinguishment of debt  - - - - 3,935   Net income (loss) attributable to noncontrolling interests  8  152  (125)  39  -  Deduct:   Gains on sale of real estate  - 2,125  - - -    Company share of FFO (3) $ 5,532 $ 4,941 $ 4,308 $ 3,001   FFO per share -basic and diluted $ 0.22 $ 0.19 $ 0.17 $ 0.12   Add:  Non-recurring legal fees(4) --225 235   FFO available to common shareholders and unitholders before non-recurring legal fees $ 6,839 $ 5,859 $ 5,509 $ 3,807 Company share of FFO before non-recurring legal fees and acquisition expenses (3) $ 6,115 $ 5,239 $ 4,880 $ 3,373   Weighted-average shares outstanding -basic and diluted Weighted-average diluted shares and units  25,419,757 28,429,016  25,419,418 28,428,677  25,191,570 28,436,531  24,574,432 28,271,518   (1) For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 25 of this report. (2) The financials reflect operations since the completion of our initial public offering on July 24, 2013. (3) Based on weighted average interest in our operating partnership of 10.6% for the three months ended June 30, 2014.    (4) Non-recurring legal fees relate to Accommodation and Litigation. For more information, see Item 3. Legal Proceedings in our 2013 Annual Report on Form 10-K and Item 1. Legal Proceedings in our subsequent filings on Form 10-Q.   Second Quarter 2014  Page 8

 

 

 

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Non-GAAP AFFO (1)  (in thousands)   (unaudited results)   Rexford Industrial   Rexford Industrial Realty, Inc. (2)  Realty, Inc. Predecessor   Three Months Ended   July 24, 2013 to  July 1, 2013 to   June 30, 2014  March 31, 2014 December 31, 2013  Sep. 30, 2013  July 23, 2013   Adjusted Funds From Operations (AFFO)   FFO available to common shareholders and unitholders  6,187 $  5,526 4,863$  3,453$  (925)$   Add:   Amortization of deferred financing costs  144  129 124  93  127   Fair value lease expense  73  81 76  122  44   Acquisition costs  655  333 421  119  7   Non-cash stock compensation  279  172 (59)  326  900   Deduct:   Straight line rent adjustment  395  184 515  290  41   Capitalized payments (3)  222  249 246  67  23   Note Receivable discount amortization  65  64 50  25  8   Note Payable premium amortization  35  11 11  9  3   Recurring capital expenditures (4)  447  280 335  139  -  2nd generation tenant improvements and leasing commissions (5)  795  275 390  166  (1)     (1)  For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 25 of this report.   (2)  The financials reflect operations since the completion of our initial public offering on July 24, 2013.   (3)  Includes capitalized leasing and construction development compensation.   (4)  Excludes nonrecurring capital expenditures of $1,708,000, $557,000, $748,000, $414,000, and $1,000 for the three months ended June 30, 2014, March 31, 2014, December 31, 2013, July 24, 2013 to September 30, 2013, and the period from July 1, 2013 to July 23, 2013, respectively.   (5)  Excludes 1st generation tenant improvements and leasing commissions of $31,000, $50,000, $370,000, $86,000, and $27,000 for the three months ended June 30, 2014, March 31, 2014, December 31, 2013, the period from July 24, 2013 to September 30, 2013, and the period from July 1, 2013 to July 23, 2013, respectively.     Second Quarter 2014

 

 

 

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Statement of Operations Reconciliations (1)  (in thousands) (unaudited results)   Net Operating Income (NOI) Rental revenues  June 30, 2014 12,773 $  Rexford Industrial Realty, Inc. Three Months Ended March 31, 2014 December 31, 2013 11,628$ 10,809$  Period from 7,640$ July 24, 2013 to Sep. 30, 2013  Rexford Industrial Realty, Inc. Predecessor Period from 2,384$ July 1, 2013 to July 23, 2013      Property expenses 3,892 4,134 3,869 2,527 689 NOI $ 10,577 $ 9,047 $ 8,326 $ 5,981 $ 1,969    Straight line rent adjustment (395) (184) (515) (290) (41)  Net Income (Loss) $ 81 $ 1,429 $ (1,006) $ 295 $ (5,868) Add:  General and administrative 2,780 2,605 2,827 2,500 1,885 Depreciation and amortization 6,003 6,130 5,661 3,025 888 Acquisition expenses 652 333 421 119 7 Interest expense 1,537 1,251 1,046 717 1,233   Subtract:  Management, leasing, and development services 249 234 253 281 13 Interest income 278 276 190 191 63 Equity in (loss) income from unconsolidated real estate entities (51) 45 9 83 9 Loss on extinguishment of debt ----(3,919)  Income from discontinued operations -2,146 171 120 10  Fair value lease revenue 73 81 76 122 44   Cash NOI $ 10,255 $ 8,944 $ 7,887 $ 5,813 $ 1,972   (1) For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 25 of this report.  Second Quarter 2014

 

 

 

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Statement of Operations Reconciliations (1) (in thousands)  (unaudited results)  Rexford Industrial Realty, Inc.  Period from July Three Months Ended 24, 2013 to September 30, June 30, 2014 March 31, 2014 December 31, 2013 2013  Net income (loss) $ 81 $ 1,429 $ (1,006) $ 295 Interest expense 1,537 1,251 1,046 717 Proportionate share of interest expense from unconsolidated joint ventures 45 57 42 32 Depreciation and amortization 6,003 6,130 5,661 3,025 Depreciation and amortization included in discontinued operations -7 55 37 Proportionate share of real estate related depreciation and   Stock-based compensation amortization 279 172 (59) 326 Gain on sale of real estate -(2,125) -Non-recurring legal fees(2) --225 235 Acquisition expenses 652 333 421 119 Pro forma effect of acquisitions(3) 1,625 203 606 23   Adjusted EBITDA $ 10,325 $ 7,514 $ 6,918 $ 4,724  (1)  For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 25 of this report.   (2)  Non-recurring legal fees relate to Accommodation and Litigation. For more information, see Item 3. Legal Proceedings in our 2013 Annual Report on Form 10-K and Item 1. Legal Proceedings in oursubsequent filings on Form 10-Q.   (3)  Represents the estimated impact of Q2'14 acquisitions as if they had been acquired on April 1, 2014, Q1'14 acquisitions as if they had been acquired on January 1, 2014, Q4'13 acquisitions calculating as if they had been acquired on October 1, 2013, and Q3'13 acquisitions as if they had been acquired on July 24, 2013. 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.   (4)  Represents the estimated impact of Kaiser, which was sold on January 29, 2014, and Madera, which was sold on March 13, 2014, as if they had been disposed of as of the beginning of each period presented.

 

 

 

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Same Property Portfolio Performance (1) (in thousands) Statement of Operations and NOI Reconciliation (unaudited results)    Rental revenues 8,344 7,906 438 5.5% $ 16,376 $ 15,645 $ 731 4.7% Tenant reimbursements 930 909 21 2.3% 1,865 1,756 109 6.2%   Operating Expenses  Property expenses $ 2,405 $ 2,509 $ (104) (4.1%) $ 5,190 $ 4,918 $ 272 5.5%  Depreciation and amortization 3,411 3,042 369 12.1% 7,094 5,802 1,292 22.3%   Other (Income) Expense    Total Other Expense 58 4,167 (4,109) (98.6%) 115 7,941 (7,826) (98.6%) Net Income (Loss) $ 3,686 $ (537) $ 4,223 786.4% $ 6,439 $ (527) $ 6,966 1321.8%    Net Income (Loss)  3,686  $  (537)  6,439  $  (527)   Add:   Interest expense (3)  58  4,167  115  7,941   Depreciation and amortization  3,411  3,042  7,094  5,802   Deduct:     NOI Amort. above/below market leases  6,876$ 6,348$ 528$ 32 34  8.3%  13,093$ 12,644$ 449$ 64 78  3.6%   (1) For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 25 of this report. (2) Reflects the results of operations for Rexford Industrial Realty, Inc. Predecessor for the three and six months ended June 30, 2013, respectively. (3) Interest expense for the three and six months ended June 30, 2014 only reflects interest for the loan secured by our property located at 107700 Jersey Blvd. Interest on our post-IPO $60mm term loan, which is secured by multiple properties, is being reported under the operating partnership and accordingly the interest is not being pushed down to the property.   Second Quarter 2014 Supplemental Financial Reporting Package  Page 12

 

 

 

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Same Property Portfolio Performance (1) (in thousands) NOI Reconciliation, Portfolio Detail, and Occupancy (unaudited results)     Straight-line rents (221) 92 (313) (340.2%) (245) (71) (174) 245.1%      Three Month Same Property Portfolio Rollforward Six Month Same Property Portfolio Rollforward   Period ended March 31, 2014 and 2013 50 4,402,399 89.1% 87.7% 50 4,402,399 89.1% 87.7%   Period ended June 30, 2014 and 2013 50 4,402,399 89.8% 88.4% 50 4,402,399 89.8% 88.4%    Los Angeles County  92.5%  91.1%  1.4%   Orange County  99.3%  88.5%  10.8%   San Bernardino County  86.4%  81.7%  4.7%   Ventura County  87.6%  97.3%  -9.7%      Total/Weighted Average 89.8% 88.4% 1.4%  (1)  For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 25 of this report.   (2)  Reflects the results of operations for Rexford Industrial Realty, Inc. Predecessor for the three and six months ended June 30, 2013, respectively.     Second Quarter 2014

 

 

 

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Joint Venture Financial Summary (in thousands)  Balance Sheet (unaudited results)  Mission Oaks (1)  June 30, 2014  March 31, 2014  December 31, 2013  September 30, 2013   Assets:   Investments in real estate, net  56,439$  55,085$  54,074$  53,316$   Cash and cash equivalents  427  853  811  781   Rents and other receivables, net  182  133  152  286   Deferred rent receivable  212  161  107  62   Deferred leasing costs and acquisition  -  related intangible assets, net  4,569  4,912  5,254  5,913   Deferred loan costs, net  106  132  159  185   Acquired above-market leases, net  646  735  823  912   Other assets  64  81  42  73     Liabilities:   Notes payable  $  41,500  $  41,500  $  41,500  $  41,500   Accounts payable, accrued expenses and other liabilities  727  913  689  755   Tenant security deposits  277  277  277  267     Total Liabilities 42,628 42,833 42,475 42,522   Equity:   Equity  19,462  18,867  18,762  18,762   Accumulated deficit and distributions  555  392  185  244     Rexford Industrial Realty, Inc./Predecessor Ownership %: 15% 15% 15% 15%  (1) These financials represent amounts attributable to the entities and do not represent our proportionate share.

 

 

 

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Joint Venture Financial Summary (1) (in thousands) Statement of Operations (unaudited results)   Mission Oaks (2)  Three Months Ended   June 30, 2014  March 31, 2014  December 31, 2013  September 30, 2013   Income Statement   Rental revenues  $  1,291  $  1,286 1,419$  1,427$   Tenant reimbursements  630  526  330  330      Total operating expense 745 629 736 912  General and administrative 28 29 32 1 Depreciation and amortization 686 564 1,021 637    Total expense 1,758 1,605 2,067 1,830  EBITDA  Net income (loss) $ 163 $ 207 $ (58) $ 382 Interest expense 299 383 278 280  Depreciation and amortization 686 564 1,021 637  Rexford Industrial Realty, Inc./Predecessor Ownership %: 15% 15% 15% 15%   Net income (loss)  $  163  $  207  $  (58)  $  382   Rexford Industrial Realty, Inc./Predecessor Ownership %:  15%  15%  15%  15%   Company share  24  31  (9)  57     (1)  For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 25 of this report.   (2)  These financials represent amounts attributable to the entities and do not represent our proportionate share.    Second Quarter 2014

 

 

 

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Capitalization Summary  (unaudited results)    Total consolidated debt $ 369,679,177 $ 212,997,286 $ 192,558,968 $ 122,794,765   Less: Cash and cash equivalents $ (9,272,000) $ (6,344,000) $ (8,997,000) $ (4,399,000) Net Debt (pro-rata) $ 366,632,177 $ 212,878,286 $ 189,786,968 $ 124,620,765   Total debt (pro-rata) to total combined market capitalization  48.1%  35.2%  34.6%  25.1%   Total debt (pro-rata) to adjusted EBITDA (quarterly results annualized)  9.1x  7.2x  7.2x  5.2x   Net debt (pro-rata) to adjusted EBITDA (quarterly results annualized)  8.9x  7.0x  6.9x  5.0x   (1) Excludes 203,264, 131,786, 140,468 and 920,734 unvested shares of restricted stock at June 30, 2014, March 31, 2014, December 31, 2013 and September 30, 2013, respectively.     Second Quarter 2014

 

 

 

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Debt Summary (in thousands) (unaudited results)   As of June 30, 2014   Initial  Maturity Date w/  Stated  Effective   Debt Description  Maturity Date  Extensions  Interest Rate  Interest Rate  Balance   Secured Debt:   Glendale Commerce Center (1)  5/1/2016  5/1/2018  LIBOR + 2.00%  2.150%  $  42,750   10700 Jersey Blvd.  1/1/2015  N/A  5.45%  5.450%  5,077   Term Loan  8/1/2019  8/1/2020  LIBOR + 1.90%  2.050%  60,000   Gilbert/La Palma  3/1/2031  N/A  5.125%  5.125%  3,234   2980 San Fernando  7/1/2015  N/A  5.088%  5.088%  10,243   Term Loan  7/24/2017  7/24/2019  LIBOR + 1.55%  1.701%  48,500   Unsecured Debt:     Total Consolidated: 2.025% $ 369,679   Mission Oaks (3) 6/28/2015 6/28/2017 LIBOR + 2.50% 2.688% $ 6,225  (1)  Located at 3350 Tyburn St., 3332 -3424 N. San Fernando Rd.   (2)  Includes the effect of the unused commitment fee which is calculated as 0.30% or 0.20% of the daily unused commitment if the balance is under $100,000,000 or over $100,000,000, respectively.   (3)  3001, 3175 & 3233 Mission Oaks Blvd. structured as 3 separate cross-collateralized loans with similar terms.      Avg. Term Stated Effective Interest   Variable(1) 4.1 LIBOR + 1.65% 1.86% $ 351,125 95% Unsecured credit facility 4.5 1.77% $ 199,875 54%   (1) On February 4, 2014 we executed two forward interest rate swaps to effectively fix the interest rate on our $60mm term loan in the future as follows: (i) $30 million at 3.726% annually from 1/15/15 to 2/15/19, and (ii) $30 million at 3.91% annually from 7/15/15 to 2/15/19.   Year Secured Unsecured Debt Total % Total Interest Rate 2014 $ -$ -$ -0% 2015 15,320 -15,320 4% 5.21% 2016 42,750 -42,750 12% 2.15% 2017 48,500 -48,500 13% 1.70% 2018 -99,875 99,875 27% 1.90% 2019 60,000 100,000 160,000 43% 1.80% Thereafter 3,234 -3,234 1% 5.13%

 

 

 

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Portfolio Overview  at 6/30/14 (unaudited results)   Ann. Base Rent Total  Market # Properties % Owned Pro-rata Sq. Ft. Occ. % (in thousands)(1) per SF   Greater San Fernado Valley 18 100.0% 1,736,627 94.7% $ 16,406 $9.98 San Gabriel Valley 10 100.0% 1,213,095 97.0% 8,803 $7.48 Central LA 1 100.0% 190,663 100.0% 1,288 $6.76 Mid-Counties 4 100.0% 522,430 91.7% 3,512 $7.33   North Orange County 5 100.0% 579,446 94.8% 4,946 $9.01 West Orange County 1 100.0% 170,865 100.0% 1,308 $7.65   Inland Empire West 7 100.0% 721,063 88.6% 5,238 $8.20    Camarillo / Oxnard 3 100.0% 410,533 87.6% 2,808 $7.81  North County 6 100.0% 584,254 75.9% 3,788 $8.54 Central 7 100.0% 476,724 92.4% 4,234 $9.61   San Diego County 14 100.0% 1,139,593 83.6% 8,616 $9.05  Other - Glenview, Illinois 1 100.0% 37,992 79.5% 302 $10.00    Camarillo / Oxnard 3 15.0% 178,261 73.8% $ 806 $6.13    GRAND TOTAL / WEIGHTED AVERAGE 85 88.9% 8,086,717 90.1% $ 60,610 $8.32  (1) Calculated for each property as monthly contracted base rent per the terms of the lease(s) at such property, as of June 30, 2014, 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.  Second Quarter 2014

 

 

 

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Occupancy and Leasing Trends  (unaudited results, data represents consolidated portfolio only on a pro rata basis)   Jun. 30, 2014  Mar. 31, 2014  Dec. 31, 2013  Sep. 30, 2013  Jun. 30, 2013   Occupancy:   Los Angeles County (1)  92.5%  91.6%  89.9%  88.1%  90.9%   Orange County  91.9%  95.0%  91.7%  92.6%  88.1%   San Bernardino County  88.9%  88.8%  87.5%  85.7%  82.3%   Ventura County  87.6%  91.5%  97.7%  97.3%  97.3%     Consolidated Portfolio SF 7,908,456 6,533,452 6,321,894 5,489,496 5,290,266   Three Months Ended  Jun. 30, 2014 Mar. 31, 2014 Dec. 31, 2013 Sep. 30, 2013(4) Jun. 30, 2013  Leasing Activity (SF): (3)   Expiring leases 582,344 618,303 309,769 328,098 339,347    Jun. 30, 2014  Mar. 31, 2014  Dec. 31, 2013  Sep. 30, 2013  Jun. 30, 2013   Cash Rent Change GAAP Rent Change  5.2% 17.1%  3.6% 11.5%  3.5% 12.9%  (1.1%) 6.7%  (2.8%) 8.2%   (1) Excluding the December 17, 2013 acquisition of the office building located at 2900 N. Madera Road, the occupancy at December 31, 2013 is 91.5%. (2) Excluding the December 17, 2013 acquisition of the office building located at 2900 N. Madera Road, the occupancy at December 31, 2013 is 90.6%. (3) Excludes month-to-month tenants. (4) Includes Rexford Industrial Realty, Inc. Predecessor and Rexford Industrial Realty, Inc. results.   Second Quarter 2014 Supplemental Financial Reporting Package  Page 19  

 

 

 

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Leasing Statistics  (unaudited results, data represents consolidated portfolio only on a pro rata basis)    New 44 208,819 3.6 2.9% 12.9%   Total/Weighted Average 116 572,617 2.8 5.2% 17.1%   Uncomm. Lease Ann. Base  Total Pro Forma Ann. Base   Rent  Rent  Pro Forma   Pro Forma Ann. Base   Market  Leased SF  (in thousands)  (in thousands)  Occupancy % Rent per SF   Los Angeles County  20,904  297$  33,187$  93.0%  $8.48   Orange County  - - 9,486  91.9%  $7.90   San Bernardino County  - - 5,702  88.9%  $7.95   Ventura County  - - 2,808  87.6%  $7.81   San Diego County  32,586  293  8,909  86.4%  $9.04     Total/Weighted Average 53,490 $ 590 $ 60,394 91.1% $8.38   Ann. Base Rent  Ann. Base Rent   Year of Lease Expiration  # of Leases Expiring  Total Rentable SF  (in thousands)  % of Ann. Base Rent  per SF   Available  - 754,964  - - -  MTM Tenants  124  196,305  $  2,024  3.5%  $10.31   2014  189  895,155  6,865  11.5%  $7.67   2015  292  1,344,947  11,417  19.1%  $8.49   2016  216  1,789,175  14,526  24.3%  $8.12   2017  102  1,137,194  8,837  14.8%  $7.77   2018  40  712,934  5,912  9.9%  $8.29   2019  20  488,023  3,982  6.7%  $8.16   2020  5  154,526  2,632  4.4%  $17.03   2021  7  86,388  1,161  1.9%  $13.44     (1) Over 99% of lease renewals during the quarter achieved flat or positive cash rent growth.   Second Quarter 2014

 

 

 

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Top Tenants and Lease Segmentation  (unaudited results, data represents consolidated portfolio only on a pro rata basis)   % of Total Ann. Ann. Base Rent   Dendreon Corporation  OC -West  170,865  2.2%  $7.65  12/31/2019   State of California  Inland Empire West  58,781  1.8%  $18.13  3/31/2020   Warehouse Specialists  LA -San Gabriel Valley  245,961  1.8%  $4.32  11/30/2017   Biosense  LA -San Gabriel Valley  76,000  1.7%  $12.99  10/31/2020   Excelis (Formerly ITT Industries, Inc.)  LA -San Gabriel Valley  67,838  1.4%  $12.63  9/30/2023   Kingsbridge International  LA -San Fern. Valley  136,065  1.3%  $5.88  1/31/2024   Tree Island Wire  LA -San Gabriel Valley  108,703  1.2%  $6.49  11/30/2016   Towne Inc.  OC -Airport  122,060  1.2%  $5.73  7/31/2016      Ann. Base Rent % of Total Ann. Ann. Base Rent Square Feet Number of Leases Leased SF (in thousands) Base Rent per SF   5,000 -9,999 104 718,422 7,273 12.2% $10.12 10,000 -24,999 110 1,776,998 15,062 25.2% $8.48   Total / Wtd. Avg. 1,001 7,153,492 $ 59,804 100.0% $8.36  

 

 

 

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Capital Expenditure Summary  (unaudited results, data represents consolidated portfolio only on a pro rata basis)    New Leases 1st Generation New Leases 2nd Generation Renewals  $ $ $  -302,000 37,000  237,755 176,995  - $ $ $  -1.27 0.21   Leasing Commissions & Lease Costs: New Leases 1st Generation New Leases 2nd Generation Renewals  $ $ $  31,000 374,000 82,000  16,444 293,363 116,788  $ $ $  1.89 1.27 0.70   Total Recurring Capex: Recurring Capex Recurring Capex % NOI Recurring Capex % Operating Revenue  $  447,000 4.2% 3.1%  2,457,669  $  0.18   Nonrecurring Capex  $  1,708,000  1,713,319  $  1.00     Tenant Improvements: New Leases 1st Generation New Leases 2nd Generation Renewals  Amount SF(1) 9,000$ 7,032 345,000$ 306,585 81,000$ 367,110  $ $ $  PSF  1.28 1.13 0.22   Leasing Commissions & Lease Costs: New Leases 1st Generation New Leases 2nd Generation Renewals  72,000$ 123,648 504,000$ 456,250 141,000$ 165,803  $ $ $  0.58 1.10 0.85   Total Recurring Capex: Recurring Capex(1) Recurring Capex % NOI Recurring Capex % Operating Revenue  727,000$ 2,320,605 3.7% 2.6%  $  0.31   Nonrecurring Capex(1)  2,265,000$ 1,856,875  $  1.22    (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 total recurring capex and nonrecurring capex, reflects the aggregate square footage of the properties in which we incurred such  capital expenditures.  Second Quarter 2014

 

 

 

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Properties Under Repositioning  (unaudited results, all figures pro rata except SF)   As of June 30, 2014  Total SF   presented on Purchase Projected  a wholly Acquisition Occupancy % at Price Inv.-to-date Total Inv.  Property Ownership % owned basis Date June 30, 2014 ($ in MM) ($ in MM) ($ in MM) Work In Progress: 3233 Mission Oaks Blvd. 15.0% 452,111 Jun-12 32% $2.3 $3.4 $3.5 Glendale* 100.0% 38,665 Apr-08 65% $6.0 $7.9 N/A 1661 240th St. 100.0% 100,851 May-13 0% $5.0 $6.2 $7.6   Grand Total / Wtd. Avg. 663,627 31% $18.3 $22.5 $16.6  * Located at 700 Allen Ave., 1840 Dana St., & 1830 Flower St.   Second Quarter 2014

 

 

 

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Acquisitions and Dispositions Summary  (unaudited results, data presented on a wholly owned basis)   Price Occ. % at Occ. % at   Aug-13 Tarzana 18310-18330 Oxnard St. LA -San Fern. Valley 75,288 $8.4 81% 96% Nov-13 Yorba Linda Business Park 22343-22349 La Palma Ave. OC -North 115,760 $12.7 79% 77% Nov-13 The Park 1100-1170 Gilbert St., 2353-2373 La Palma Ave. OC -North 120,313 $10.6 85% 98% Dec-13 Bonita Thompson 280 Bonita Ave., 2743 Thompson Creek Rd. LA -San Gabriel 365,859 $27.2 100% 100% Dec-13 Madera (1) 2900-2950 N. Madera Road LA -San Fern. Valley 199,370 $15.8 68% 100% Dec-13 Vanowen 10635 W. Vanowen St. LA -San Fern. Valley 31,037 $3.4 100% 100% Jan-14 Rosecrans 7110 Rosecrans Avenue LA -South Bay 72,000 $5.0 50% 50% Jan-14 14723-14825 Oxnard 14723-14825 Oxnard Street LA -San Fern. Valley 78,000 $8.9 98% 98% Feb-14 Ontario Airport Ana Street Inland Empire West 113,612 $8.6 95% 92% Feb-14 228th Street 1500-1510 West 228th Street LA -South Bay 88,330 $6.6 100% 95% Mar-14 24105 Frampton 24105 & 24201 Frampton Avenue LA -South Bay 47,903 $3.9 100% 100% Apr-14 Saturn Way 1700 Saturn Way OC -West 170,865 $21.1 100% 100% May-14 San Fernando 2980 & 2990 N. San Fernando Blvd. OC -South 130,800 $15.4 100% 100% May-14 Crescent Bay 20531 Crescent Bay Drive LA -San Fern. Valley 46,178 $6.5 100% 100% Jun-14 Birch 2610 & 2701 S. Birch Street OC -Airport 98,105 $11.0 100% 100% Jun-14 Dupont 4051 Santa Ana St. & 701 Dupont Ave. Inland Empire West 111,890 $10.2 100% 100% Jun-14 9755 Distribution Ave 9755 Distribution Ave San Diego -Central 47,666 $5.4 100% 100% Jun-14 9855 Distribution Ave 9855 Distribution Ave San Diego -Central 60,819 $8.5 100% 100% Jun-14 9340 Cabot Drive 9340 Cabot Drive San Diego -Central 86,564 $11.0 84% 84% Jun-14 9404 Cabot Drive 9404 Cabot Drive San Diego -Central 46,846 $6.4 100% 100% Jun-14 9455 Cabot Drive 9455 Cabot Drive San Diego -Central 96,840 $12.1 84% 84% Jun-14 14955-14971 E Salt Lake Ave 14955-14971 E Salt Lake Ave LA -San Gabriel Valley 126,036 $10.9 100% 100% Jun-14 5235 Hunter Ave 5235 Hunter Ave OC -North 119,692 $11.3 100% 100% Jun-14 3880 W Valley Blvd 3880 W Valley Blvd LA -San Gabriel Valley 108,703 $9.6 100% 100% Jun-14 1601 & 1621 Alton Pkwy 1601 & 1621 Alton Pkwy OC -Airport 124,000 $13.3 40% 40%  (1) Madera acquisition includes a 136,065 square foot industrial building and a 63,035 square foot office building, which was subsequently sold in Q1-2014.   Sale Price   Apr-13  Williams  1950 East Williams Drive  Ventura County  161,682  $8.5  Marketed sale   May-13  Glenoaks  9027 Glenoaks Blvd.  LA -San Fern. Valley  14,700  $1.7  User sale   May-13  Interstate  2441, 2507, 2515 W. Erie Dr., & 2929 S. Fair Lane  Arizona  83,385  $5.0  Non-strategic location   Jun-13  Knollwood  1255 Knollwood Circle  OC -North  25,162  $2.8  User sale   Jan-14  Kaiser  1335 Park Center Drive  San Diego -North  124,997  $10.1  User sale   Mar-14  Madera -Office  2900 N. Madera Road  LA -San Fern. Valley  63,305  $4.4  Non core business   Second Quarter 2014  Page 24   Supplemental Financial Reporting Package  

 

 

 

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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) regular principal payments required to service our debt, 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.  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 compensaiton expense, loss on extinguishment of debt, 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.   Second Quarter 2014  Page 25

 

 

 

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Supplemental Financial Reporting Package   Definitions / Discussion of Non-GAAP Financial Measures  Properties Under Repositioning: Typically defined as properties where space is held vacant in order to implement capital improvements that improve the market rentability of that space. Considered completed once investment is fully or nearly fully deployed.  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.  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: Determined independently for each period presented. Comparable properties must have been owned for the entire current and prior periods presented. The company's computation of same property performance may not be comparable to other real estate companies.  Uncommenced Leases: Reflects signed leases that have not yet commenced as of the reporting date.   Second Quarter 2014