Document


 
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):
October 31, 2017 
 
REXFORD INDUSTRIAL REALTY, INC.
(Exact name of registrant as specified in its charter) 
 
 
Maryland
 
001-36008
 
46-2024407
(State or other jurisdiction of
incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
 

11620 Wilshire Boulevard, Suite 1000, Los Angeles, California
 
90025
(Address of principal executive offices)
 
(Zip Code)
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.):
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 







ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On October 31, 2017, Rexford Industrial Realty, Inc. (“Rexford Industrial”) issued a press release announcing its earnings for the quarter ended September 30, 2017 and distributed certain supplemental financial information. On October 31, 2017, Rexford Industrial also posted the supplemental financial information on its website located at www.rexfordindustrial.com.  Copies of the press release and supplemental financial 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 September 30, 2017 and distributed certain supplemental information.  On October 31, 2017, Rexford Industrial also posted the supplemental financial 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 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d)    Exhibits.
 
Exhibit
Number
  
Description
99.1
 
 
 
 
99.2
 






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.
 
 
Rexford Industrial Realty, Inc.
October 31, 2017
 
/s/ Michael S. Frankel
 
Michael S. Frankel
Co-Chief Executive Officer
(Principal Executive Officer)
 
 
 
Rexford Industrial Realty, Inc.
October 31, 2017
 
/s/ Howard Schwimmer
 
Howard Schwimmer
Co-Chief Executive Officer
(Principal Executive Officer)






EXHIBIT INDEX

Exhibit
Number
  
Description
99.1
  
 
 
 
99.2
  



Exhibit
Exhibit 99.1

 https://cdn.kscope.io/650870115a2f3529dcf710f3df6eb369-rexrlogoa23.jpg

REXFORD INDUSTRIAL ANNOUNCES THIRD QUARTER 2017 FINANCIAL RESULTS

- Net Income of $0.01 per Diluted Share for Third Quarter 2017 -
- Third Quarter 2017 Core FFO of $0.25 per Diluted Share -
- Same Property Portfolio NOI Up 9.8% Compared to Third Quarter 2016 -
- Consolidated Portfolio NOI Up 33.5% Compared to Third Quarter 2016 -
- Stabilized Same Property Portfolio Occupancy at 96.9% -
- 26.3% GAAP and 16.7% Cash Releasing Spreads -

Los Angeles, California - October 31, 2017 - 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 third quarter of 2017.

Third Quarter 2017 Financial and Operational Highlights:
Net income attributable to common stockholders of $0.01 per diluted share for the quarter ended September 30, 2017, compared to $0.03 per diluted share last year.
Core FFO of $0.25 per diluted share for the quarter ended September 30, 2017, compared to $0.22 per diluted share last year, which represents an increase of 13.6% year-over-year.
Total third quarter rental revenues of $43.2 million, which represents an increase of 31.2% year-over-year. Property Net Operating Income (NOI) of $32.0 million, which represents an increase of 33.5% year-over-year.
Same Property Portfolio NOI increased 9.8% in the third quarter of 2017 compared to the third quarter of 2016, driven by a 7.7% increase in Same Property Portfolio total rental revenue and a 2.2% increase in Same Property Portfolio operating expenses. Same Property Portfolio Cash NOI increased 11.3% compared to the third quarter of 2016.
Signed new and renewal leases totaling 1,293,057 rentable square feet. Rental rates on new and renewal leases were 26.3% higher than prior rents on a GAAP basis and 16.7% higher on a cash basis.
Stabilized Same Property Portfolio occupancy was 96.9%, which represents an increase of 40 basis points year-over-year. Same Property Portfolio occupancy, inclusive of assets in value-add repositioning, was 95.2%, which represents an increase of 220 basis points year-over-year.
At September 30, 2017, the consolidated portfolio including repositioning assets was 94.1% leased and 92.9% occupied, which represents an increase in occupancy of 320 basis points year-over-year. At September 30, 2017, the consolidated portfolio, excluding repositioning assets aggregating approximately 0.8 million rentable square feet, was 98.0% leased and 97.2% occupied.
During the third quarter of 2017, the Company acquired seven industrial properties for a total purchase price of $293.2 million.


“We are very proud of our third quarter results, which included a 9.8% increase in Same Property NOI and 1.3 million square feet of new and renewal leases signed, which exceeded our previous quarterly record. Further, these leases were signed at impressive GAAP and cash releasing spreads of 26.3% and 16.7%, respectively, which demonstrates the depth of demand for our high-quality properties within the thriving infill Southern California industrial market,” stated Michael Frankel and Howard Schwimmer, Co-Chief Executive Officers of the Company. “During the quarter, we acquired $293.2 million of core and value-add industrial properties in our severely supply constrained infill submarkets, and we




recently delivered and leased up 317,000 square feet of repositioned space at attractive returns. As we look ahead, we believe we are well positioned to continue to leverage our strong balance sheet, our talented team and tremendous market opportunity as we work to maximize portfolio and shareholder value in the largest and most supply-constrained industrial market in the country.”
 

Financial Results:

The Company reported net income attributable to common stockholders of $0.6 million, or $0.01 per diluted share, for the three months ended September 30, 2017, as compared to net income attributable to common stockholders of $2.3 million, or $0.03 per diluted share, for the three months ended September 30, 2016.

The Company reported net income attributable to common stockholders of $22.6 million, or $0.33 per diluted share, for the nine months ended September 30, 2017, as compared to net income attributable to common stockholders of $15.9 million, or $0.26 per diluted share, for the nine months ended September 30, 2016. Net income for the nine months ended September 30, 2017, included $19.2 million of gains on sale of real estate, as compared to $11.6 million for the nine months ended September 30, 2016.

The Company reported Company share of Core FFO of $18.0 million, or $0.25 per diluted share of common stock, for the three months ended September 30, 2017, as compared to Company share of Core FFO of $14.2 million, or $0.22 per diluted share of common stock, for the three months ended September 30, 2016. Adjusting for net non-core expenses and reimbursements ($16 thousand reported during the third quarter of 2017 and $0.4 million reported during the third quarter of 2016), Company share of FFO was $18.0 million, or $0.25 per diluted share of common stock, as compared to Company share of FFO of $13.9 million, or $0.21 per diluted share of common stock, for the three months ended September 30, 2016.

The Company reported Company share of Core FFO of $49.0 million, or $0.71 per diluted share of common stock, for the nine months ended September 30, 2017, as compared to Company share of Core FFO of $40.1 million, or $0.65 per diluted share of common stock, for the nine months ended September 30, 2016. Adjusting for net non-core expenses and reimbursements ($0.4 million reported during the first nine months of 2017 and $0.8 million during the first nine months of 2016), Company share of FFO was $48.6 million, or $0.70 per diluted share of common stock, as compared to Company share of FFO of $39.3 million, or $0.63 per diluted share of common stock, for the nine months ended September 30, 2016.

For the three months ended September 30, 2017, the Company’s Same Property Portfolio GAAP NOI increased 9.8% compared to the third quarter of 2016, driven by a 7.7% increase in Same Property Portfolio total rental revenue and a 2.2% increase in Same Property Portfolio expenses. Same Property Portfolio Cash NOI increased 11.3% compared to the third quarter of 2016.

Operating Results:

In the third quarter of 2017, the Company signed 127 new and renewal leases totaling 1,293,057 rentable square feet. Average rental rates on comparable new and renewal leases were up 26.3% on a GAAP basis and up 16.7% on a cash basis. The Company signed 61 new leases for 678,882 rentable square feet, with GAAP rents up 33.6% compared to the prior in-place leases. The Company signed 66 renewal leases for 614,175 rentable square feet, with GAAP rents up 21.2% compared to the prior in-place leases. For the 61 new leases, cash rents were up 21.4%, and for the 66 renewal leases, cash rents were up 13.4%, 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 September 30, 2017. See below for information regarding the supplemental information package. 

Transaction Activity:

In the third quarter 2017, the Company completed seven acquisitions, for an aggregate purchase price of $293.2 million, as detailed below.





In July 2017, the Company acquired 3002-3072 Inland Empire Boulevard, a 100% leased four building ten-tenant industrial property containing 218,407 square feet on 10.82 acres, located in the Inland Empire West submarket, for $26.9 million, or approximately $123 per square foot.

In July 2017, the Company acquired 17000 Kingsview Avenue, a 100% leased two-tenant industrial building containing 100,121 square feet on 3.93 acres, located in the South Bay submarket, for approximately $14.0 million, or approximately $140 per square foot.

In July 2017, the Company acquired Rancho Pacifica Park, a 99% leased six building industrial complex containing approximately 1.17 million square feet on 56.01 acres, located in the South Bay submarket, for $210.5 million, or approximately $180 per square foot.

In July 2017, the Company acquired 11190 White Birch Drive, a 100% leased single-tenant industrial property containing 201,035 square feet on 9.27 acres, located in the Inland Empire West submarket, for approximately $19.8 million, or approximately $99 per square foot.

In July 2017, the Company acquired 4832-4850 Azusa Canyon Road, a 100% leased two-tenant industrial property containing 87,421 square feet on 3.5 acres, located in the San Gabriel Valley submarket, for approximately $14.6 million, or approximately $166 per square foot.

In September 2017, the Company acquired 1825 South Soto Street, a 100% leased industrial property containing 25,040 square feet on 1.03 acres, located in the Central Los Angeles submarket, for approximately $3.5 million, or approximately $139 per square foot.

In September 2017, the Company acquired 19402 South Susana Road, a 100% leased single-tenant industrial property containing 74,000 square feet of paved land with a 15,433 square foot building, located in the South Bay submarket, for approximately $3.9 million, or approximately $255 per square foot.


Balance Sheet:
  
In July 2017, the Company issued through a private placement $125.0 million of 10-year senior guaranteed notes carrying a fixed annual interest rate of 3.93%. The net proceeds from the issuance of the notes were used to finance the acquisition of Rancho Pacifica Park.

As of September 30, 2017, the Company had $667.0 million of outstanding debt, with an average interest rate of 3.346% and an average term-to-maturity of 5.9 years. As of September 30, 2017, approximately $392 million, or 59%, of the Company’s outstanding debt was fixed-rate with an average interest rate of 3.83% and an average term-to-maturity of 6.6 years. The remaining $275 million, or 41%, of the Company’s outstanding debt was floating-rate, with an average interest rate of LIBOR + 1.43% and an average term-to-maturity of 4.9 years. During 2016, the Company executed two interest rate swaps to hedge $225 million of its remaining floating-rate debt beginning in 2018 when the swaps become effective. If these two interest rate swaps were effective as of September 30, 2017, the Company’s debt would be 93% fixed and 7% variable.

In September 2017, the Company launched a new ATM program with a total capacity of $300 million, having exhausted the previous $125 million and $150 million ATM programs earlier this year. The Company issued an aggregate of 6,805,820 shares of common stock during the quarter ended September 30, 2017. The shares were issued at a weighted average price of $29.09 per share, providing gross proceeds of approximately $198.0 million and net proceeds of approximately $195.0 million. As of September 30, 2017, the new program had approximately $256.6 million of remaining capacity.





Guidance

The Company is updating its full year 2017 guidance for Company share of Core FFO to a range of $0.94 to $0.96 per diluted share of common stock. This Core FFO guidance refers only to the Company’s in-place portfolio as of October 31, 2017, and does not include any assumptions for acquisitions, dispositions or balance sheet activities that may or may not occur later during the year. Full year guidance assumes the following: year-end Same Property Portfolio occupancy within a range of 95% to 96%, year-end Stabilized Same Property Portfolio occupancy within a range of 97% to 98%, Same Property Portfolio NOI growth for the year of 7.5% to 8.5% and general and administrative expenses of $21.3 million to $21.7 million.

The Company does not provide a reconciliation for its guidance range of Core FFO per diluted share to net income attributable to common stockholders per diluted share, the most directly comparable forward-looking GAAP financial measure, because it is impractical to provide a meaningful or accurate estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and/or amount of various items that would impact net income attributable to common stockholders per diluted share, including, for example, acquisition costs, gains on sales of depreciable real estate and other items that have not yet occurred and are out of the Company’s control. For the same reasons, the Company is unable to address the probable significance of the unavailable information and believes that providing a reconciliation for its guidance range of Core FFO per diluted share would imply a degree of precision as to its forward-looking net income attributable to common stockholders per diluted share that would be confusing or misleading to investors.

Dividends:

On October 30, 2017, the Board of Directors declared a dividend of $0.145 per share for the fourth quarter of 2017, payable in cash on January 15, 2018, to common stockholders and common unit holders of record as of December 29, 2017.

On October 30, 2017, the Board of Directors also declared a cash dividend of $0.36719 per share payable to its Series A Cumulative Redeemable Preferred stockholders, payable in cash on December 29, 2017, to stockholders of record as of December 15, 2017.

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, November 1, 2017, at 1:00 p.m. Eastern Time to review third quarter results and discuss recent events. The live webcast will be available on the Company’s investor relations website at 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 December 1, 2017, by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the pass code 13672041.

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 146 properties with approximately 18.0 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, 2016, and subsequent filings with the Securities and Exchange Commission. 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 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, impairment losses, 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. FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance. A reconciliation of net income, the nearest GAAP equivalent, to FFO is set forth below.

Core Funds from Operations (Core FFO): We calculate Core FFO by adjusting FFO to exclude the impact of certain items that we do not consider reflective of our core revenue or expense streams. These adjustments consist of acquisition expenses and legal fee reimbursements related to prior litigation. For more information on prior litigation, see Item 3. Legal Proceedings in our 2014 Annual Report on Form 10-K. Management believes that Core FFO is a useful supplemental measure as it provides a more meaningful and consistent comparison of operating performance and allows investors to more easily compare the Company’s operating results. Because certain of these adjustments have a real economic impact on our financial condition and results from operations, the utility of Core FFO as a measure of our performance is limited. Other REITs may not calculate Core FFO in a consistent manner. Accordingly, our Core FFO may not be comparable to other REITs’ Core FFO. Core FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance. A reconciliation of FFO to Core FFO is set forth below.

Net Operating Income (NOI): NOI is a non-GAAP measure, which includes the revenue and expense directly attributable to our real estate properties. NOI is calculated as total revenue from real estate operations including i) rental income, 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 net income to NOI 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 adjustments. 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 net income to Cash NOI 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, 2016, and still owned by us as of September 30, 2017. Therefore, we excluded from our Same Properties Portfolio any properties that were acquired or sold during the period from January 1, 2016 through September 30, 2017. 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 space at properties that were in various stages of repositioning (defined below) or lease-up in connection with or following a completed repositioning. As of September 30, 2017, the difference between our Same Property Portfolio and our Stabilized Same Property Portfolio is space aggregating 190,158 rentable square feet at three of our properties that were in various stages of repositioning or lease-up.

Properties and Space Under Repositioning: Typically defined as properties or units where a significant amount of space is held vacant in order to implement capital improvements that improve the functionality (not including basic refurbishments, i.e., paint and carpet), cash flow and value of that space. We define a significant amount of space in a building as the lower of (i) 20,000 square feet of space or (ii) 50% of a building’s square footage. Typically, we would include properties or space where the repositioning and lease-up time frame is estimated to be greater than six months. A repositioning is considered complete once the investment is fully or nearly fully deployed and the property is marketable for leasing. We consider a property to be stabilized once it reaches 95% occupancy.

Contact:
Investor Relations:

Stephen Swett
424 256 2153 ext 401
investorrelations@rexfordindustrial.com




Rexford Industrial Realty, Inc.
Consolidated Balance Sheets
(In thousands except share data)

 
 
September 30, 2017
 
December 31, 2016
 
(unaudited)
 
 
ASSETS
 
 
 
Land
$
925,360

 
$
683,919

Buildings and improvements
1,051,037

 
811,614

Tenant improvements
47,663

 
38,644

Furniture, fixtures, and equipment
167

 
174

Construction in progress
33,158

 
17,778

Total real estate held for investment
2,057,385

 
1,552,129

Accumulated depreciation
(165,385
)
 
(135,140
)
Investments in real estate, net
1,892,000

 
1,416,989

Cash and cash equivalents
12,918

 
15,525

Notes receivable

 
5,934

Rents and other receivables, net
3,040

 
2,749

Deferred rent receivable, net
14,929

 
11,873

Deferred leasing costs, net
10,756

 
8,672

Deferred loan costs, net
2,084

 
847

Acquired lease intangible assets, net
49,147

 
36,365

Acquired indefinite-lived intangible
5,156

 
5,170

Interest rate swap asset
4,752

 
5,594

Other assets
7,144

 
5,290

Acquisition related deposits
1,075

 

Total Assets
$
2,003,001

 
$
1,515,008

LIABILITIES & EQUITY
 
 
 
Liabilities
 
 
 
Notes payable
$
664,209

 
$
500,184

Interest rate swap liability
785

 
2,045

Accounts payable, accrued expenses and other liabilities
22,190

 
13,585

Dividends payable
11,580

 
9,282

Acquired lease intangible liabilities, net
18,147

 
9,130

Tenant security deposits
19,149

 
15,187

Prepaid rents
5,738

 
3,455

Total Liabilities
741,798

 
552,868

Equity
 
 
 
Rexford Industrial Realty, Inc. stockholders’ equity
 
 
 
Preferred stock, $0.01 par value, 10,000,000 shares authorized; 5.875% series A cumulative redeemable preferred stock, liquidation preference $25.00 per share, 3,600,000 shares outstanding as of September 30, 2017 and December 31, 2016, respectively ($90,000 liquidation preference)
86,651

 
86,651

Common Stock, $0.01 par value 490,000,000 shares authorized and 77,595,240 and 66,454,375 shares outstanding as of September 30, 2017 and December 31, 2016, respectively
773

 
662

Additional paid in capital
1,213,123

 
907,834

Cumulative distributions in excess of earnings
(67,578
)
 
(59,277
)
Accumulated other comprehensive income
3,870

 
3,445

Total stockholders’ equity
1,236,839

 
939,315

Noncontrolling interests
24,364

 
22,825

Total Equity
1,261,203

 
962,140

Total Liabilities and Equity
$
2,003,001

 
$
1,515,008





Rexford Industrial Realty, Inc.
Consolidated Statements of Operations
(Unaudited and in thousands, except per share data)


 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
RENTAL REVENUES
 
 
 
 
 
 
 
Rental income
$
36,748

 
$
28,285

 
$
97,494

 
$
77,903

Tenant reimbursements
6,279

 
4,467

 
16,606

 
12,144

Other income
203

 
192

 
550

 
764

TOTAL RENTAL REVENUES
43,230

 
32,944

 
114,650

 
90,811

Management, leasing and development services
109

 
131

 
380

 
376

Interest income

 
228

 
445

 
228

TOTAL REVENUES
43,339

 
33,303

 
115,475

 
91,415

OPERATING EXPENSES
 
 
 
 
 
 
 
Property expenses
11,229

 
8,978

 
29,987

 
24,480

General and administrative
5,843

 
5,067

 
16,052

 
13,190

Depreciation and amortization
17,971

 
13,341

 
46,085

 
37,165

TOTAL OPERATING EXPENSES
35,043

 
27,386

 
92,124

 
74,835

OTHER EXPENSES
 
 
 
 
 
 
 
Acquisition expenses
16

 
380

 
421

 
1,490

Interest expense
6,271

 
3,804

 
14,571

 
10,774

TOTAL OTHER EXPENSES
6,287

 
4,184

 
14,992

 
12,264

TOTAL EXPENSES
41,330

 
31,570

 
107,116

 
87,099

Equity in income from unconsolidated real estate entities

 
1,328

 
11

 
1,451

Loss on extinguishment of debt

 

 
(22
)
 

Gains on sale of real estate

 

 
19,237

 
11,563

NET INCOME
2,009

 
3,061

 
27,585

 
17,330

Less: net income attributable to noncontrolling interest
(21
)
 
(63
)
 
(684
)
 
(533
)
NET INCOME ATTRIBUTABLE TO REXFORD INDUSTRIAL REALTY, INC.
1,988

 
2,998

 
26,901

 
16,797

Less: preferred stock dividends
(1,322
)
 
(661
)
 
(3,966
)
 
(661
)
Less: earnings attributable to participating securities
(80
)
 
(70
)
 
(327
)
 
(223
)
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS
$
586

 
$
2,267

 
$
22,608

 
$
15,913

Net income attributable to common stockholders per share  basic
$
0.01

 
$
0.03

 
$
0.33

 
$
0.26

Net income attributable to common stockholders per share  diluted
$
0.01

 
$
0.03

 
$
0.33

 
$
0.26







Rexford Industrial Realty, Inc.
Same Property Portfolio Occupancy and NOI and Cash NOI
(Unaudited, dollars in thousands)
 
 
Same Property Portfolio Occupancy:
 
 
 
 
 
 
 
September 30, 2017
 
September 30, 2016
 
Change (basis points)
 
Same Property
Portfolio
 
Stabilized
Same
Property
Portfolio
(1)
 
Same Property
Portfolio
 
Stabilized
Same
Property
Portfolio
(2)
 
Same Property
Portfolio
 
Stabilized
Same
Property
Portfolio
Occupancy:
 
 
 
 
 
 
 
 
 
 
 
Los Angeles County
95.4%
 
98.3%
 
92.7%
 
97.5%
 
270 bps
 
80 bps
Orange County
95.1%
 
96.2%
 
86.7%
 
95.2%
 
840 bps
 
100 bps
San Bernardino County
98.3%
 
98.3%
 
95.2%
 
95.2%
 
310 bps
 
310 bps
San Diego County
94.5%
 
94.5%
 
96.9%
 
96.9%
 
(240) bps
 
(240) bps
Ventura County
92.3%
 
92.3%
 
94.3%
 
94.3%
 
(200) bps
 
(200) bps
Total/Weighted Average
95.2%
 
96.9%
 
93.0%
 
96.5%
 
220 bps
 
40 bps

(1)
Reflects the occupancy of our Same Property Portfolio as of September 30, 2017, adjusted for space aggregating 190,158 rentable square feet at three properties that were in various stages of repositioning or lease-up as of September 30, 2017.
(2)
Reflects the occupancy of our Same Property Portfolio as of September 30, 2016, adjusted for space aggregating 412,888 rentable square feet at six properties that were in various stages of repositioning or lease-up as of September 30, 2016.

Same Property Portfolio NOI and Cash NOI
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
$ Change
 
% Change
 
2017
 
2016
 
$ Change
 
% Change
Rental income
$
25,155

 
$
23,359

 
$
1,796

 
7.7%
 
$
73,682

 
$
68,541

 
$
5,141

 
7.5%
Tenant reimbursements
3,834

 
3,508

 
326

 
9.3%
 
11,536

 
10,394

 
1,142

 
11.0%
Other income
134

 
171

 
(37
)
 
(21.6)%
 
436

 
592

 
(156
)
 
(26.4)%
Total rental revenues
29,123

 
27,038

 
2,085

 
7.7%
 
85,654

 
79,527

 
6,127

 
7.7%
Property expenses
7,655

 
7,493

 
162

 
2.2%
 
22,791

 
21,449

 
1,342

 
6.3%
Same Property Portfolio NOI
$
21,468

 
$
19,545

 
$
1,923

 
9.8%
 
$
62,863

 
$
58,078

 
$
4,785

 
8.2%
Straight-line rents
(730
)
 
(887
)
 
157

 
(17.7)%
 
(2,150
)
 
(2,177
)
 
27

 
(1.2)%
Amortization above/below market leases
73

 
41

 
32

 
78.0%
 
246

 
124

 
122

 
98.4%
Same Property Portfolio Cash NOI
$
20,811

 
$
18,699

 
$
2,112

 
11.3%
 
$
60,959

 
$
56,025

 
$
4,934

 
8.8%






Rexford Industrial Realty, Inc.
Reconciliation of Net Income to NOI, Same Property Portfolio NOI and Same Property Portfolio Cash NOI
(Unaudited and in thousands)


 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Net income
$
2,009

 
$
3,061

 
$
27,585

 
$
17,330

Add:
 
 
 
 
 
 
 
General and administrative
5,843

 
5,067

 
16,052

 
13,190

Depreciation and amortization
17,971

 
13,341

 
46,085

 
37,165

Acquisition expenses
16

 
380

 
421

 
1,490

Interest expense
6,271

 
3,804

 
14,571

 
10,774

Loss on extinguishment of debt

 

 
22

 

Deduct:
 
 
 
 
 
 
 
Management, leasing and development services
109

 
131

 
380

 
376

Interest income

 
228

 
445

 
228

Equity in income from unconsolidated real estate entities

 
1,328

 
11

 
1,451

Gains on sale of real estate

 

 
19,237

 
11,563

Net operating income (NOI)
$
32,001

 
$
23,966

 
$
84,663

 
$
66,331

Non-Same Property Portfolio operating revenues
(14,107
)
 
(5,906
)
 
(28,996
)
 
(11,284
)
Non-Same Property Portfolio property expenses
3,574

 
1,485

 
7,196

 
3,031

Same Property Portfolio NOI
$
21,468

 
$
19,545

 
$
62,863

 
$
58,078

Straight-line rents
(730
)
 
(887
)
 
(2,150
)
 
(2,177
)
Amort. above/below market leases
73

 
41

 
246

 
124

Same Property Portfolio Cash NOI
$
20,811

 
$
18,699

 
$
60,959

 
$
56,025






Rexford Industrial Realty, Inc.
Reconciliation of Net Income to Funds From Operations and Core Funds From Operations
(Unaudited and in thousands, except per share data)

 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Net income
$
2,009

 
$
3,061

 
$
27,585

 
$
17,330

Add:
 
 
 
 
 

 
 

Depreciation and amortization
17,971

 
13,341

 
46,085

 
37,165

Depreciation and amortization from unconsolidated joint ventures(1)

 

 

 
10

Deduct:
 
 
 
 
 
 
 
Gains on sale of real estate

 

 
19,237

 
11,563

Gain on acquisition of unconsolidated joint venture property

 
1,332

 
11

 
1,332

Funds From Operations (FFO)
$
19,980

 
$
15,070

 
$
54,422

 
$
41,610

Less: preferred stock dividends
(1,322
)
 
(661
)
 
(3,966
)
 
(661
)
Less: FFO attributable to noncontrolling interest(2)
(491
)
 
(424
)
 
(1,408
)
 
(1,294
)
Less: FFO attributable to participating securities(3)
(133
)
 
(111
)
 
(408
)
 
(349
)
Company share of FFO
$
18,034

 
$
13,874

 
$
48,640

 
$
39,306

 
 
 
 
 
 
 
 
FFO per common share - basic
$
0.25

 
$
0.21

 
$
0.71

 
$
0.64

FFO per common share - diluted
$
0.25

 
$
0.21

 
$
0.70

 
$
0.63

 
 
 
 
 
 
 
 
FFO
$
19,980

 
$
15,070

 
$
54,422

 
$
41,610

Adjust:
 
 
 
 
 
 
 
Legal fee reimbursements

 

 

 
(643
)
Acquisition expenses
16

 
380

 
421

 
1,490

Core FFO
$
19,996

 
$
15,450

 
$
54,843

 
$
42,457

Less: preferred stock dividends
(1,322
)
 
(661
)
 
(3,966
)
 
(661
)
Less: Core FFO attributable to noncontrolling interest(2)
(492
)
 
(435
)
 
(1,420
)
 
(1,318
)
Less: Core FFO attributable to participating securities(3)
(133
)
 
(114
)
 
(411
)
 
(356
)
Company share of Core FFO
$
18,049

 
$
14,240

 
$
49,046

 
$
40,122

 
 
 
 
 
 
 
 
Core FFO per common share - basic
$
0.25

 
$
0.22

 
$
0.71

 
$
0.65

Core FFO per common share - diluted
$
0.25

 
$
0.22

 
$
0.71

 
$
0.65

 
 
 
 
 
 
 
 
Weighted-average shares of common stock outstanding – basic
72,621

 
65,707

 
68,984

 
61,695

Weighted-average shares of common stock outstanding – diluted
73,068

 
65,994

 
69,365

 
61,920

 
(1)
Amount represents our 15% ownership interest in a joint venture that owned the property located at 3233 Mission Oaks Boulevard for periods prior to July 6, 2016, when we acquired the remaining 85% ownership interest.
(2)
Noncontrolling interest represent holders of outstanding common units of the Company’s operating partnership that are owned by unit holders other than the Company.
(3)
Participating securities include unvested shares of restricted stock, unvested LTIP units and unvested performance units.


Exhibit
Exhibit 99.2

https://cdn.kscope.io/650870115a2f3529dcf710f3df6eb369-suppcoverq3a12.jpg



Table of Contents.
 
 
 
 
 
Section
Page
 
 
Corporate Data:
 
Investor Company Summary
3
Financial and Portfolio Highlights and Common Stock Data
4
Consolidated Financial Results:
 
Consolidated Balance Sheets
5
Consolidated Statements of Operations
6-7
Non-GAAP FFO, Core FFO and AFFO Reconciliations
8-9
Statement of Operations Reconciliations
10
Same Property Portfolio Performance
11
Capitalization Summary
12
Debt Summary
13
Portfolio Data:
 
Portfolio Overview
14
Occupancy and Leasing Trends
15
Leasing Statistics
16-17
Top Tenants and Lease Segmentation
18
Capital Expenditure Summary
19
Properties and Space Under Repositioning
20-21
Current Year Acquisitions and Dispositions Summary
22
Guidance
23
Net Asset Value Components
24
Notes and Definitions
25-28
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 2016 Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (“SEC”) on February 23, 2017. 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.

 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 2

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Investor Company Summary.
 
 
 
 
 
Executive Management Team
Howard Schwimmer
 
Co-Chief Executive Officer, Director
Michael S. Frankel
 
Co-Chief Executive Officer, Director
Adeel Khan
 
Chief Financial Officer
David Lanzer
 
General Counsel and Corporate Secretary
Board of Directors
Richard Ziman
 
Chairman
Howard Schwimmer
 
Co-Chief Executive Officer, Director
Michael S. Frankel
 
Co-Chief Executive Officer, Director
Robert L. Antin
 
Director
Steven C. Good
 
Director
Peter Schwab
 
Director
Tyler H. Rose
 
Director
Investor Relations Information
 
ICR
 
Stephen Swett
www.icrinc.com
212-849-3882
 
 
Equity Research Coverage
 
 
Bank of America Merrill Lynch
 
James Feldman
 
(646) 855-5808
Capital One
 
Chris Lucas
 
(571) 633-8151
Citigroup Investment Research
 
Emmanuel Korchman
 
(212) 816-1382
D.A Davidson
 
Barry Oxford
 
(212) 240-9871
J.P. Morgan
 
Michael W. Mueller, CFA
 
(212) 622-6689
Jefferies LLC
 
Jonathan Petersen
 
(212) 284-1705
National Securities Corporation
 
John R. Benda
 
(212) 417-8127
Stifel Nicolaus & Co.
 
John W. Guinee
 
(443) 224-1307
Wells Fargo Securities
 
Blaine Heck
 
(443) 263-6529
FBR & Co.
 
Craig Kucera
 
(540) 277-3366
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.

 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 3

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

 
Three Months Ended
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
December 31, 2016
 
September 30, 2016
Financial Results:
 
 
 
 
 
 
 
 
 
Total rental revenues
$
43,230

 
$
36,419

 
$
35,001

 
$
34,449

 
$
32,944

Net income
$
2,009

 
$
19,855

 
$
5,721

 
$
8,546

 
$
3,061

Net Operating Income (NOI)
$
32,001

 
$
26,883

 
$
25,779

 
$
25,310

 
$
23,966

Company share of Core FFO
$
18,049

 
$
15,893

 
$
15,104

 
$
15,048

 
$
14,240

Core FFO per common share - diluted
$
0.25

 
$
0.23

 
$
0.23

 
$
0.23

 
$
0.22

Company share of FFO
$
18,034

 
$
15,873

 
$
14,733

 
$
15,071

 
$
13,874

FFO per common share - diluted
$
0.25

 
$
0.23

 
$
0.22

 
$
0.23

 
$
0.21

Adjusted EBITDA
$
28,265

 
$
25,360

 
$
22,292

 
$
22,388

 
$
20,622

Dividend declared per common share
$
0.145

 
$
0.145

 
$
0.145

 
$
0.135

 
$
0.135

Portfolio Statistics:
 
 
 
 
 
 
 
 
 
Portfolio SF - consolidated
18,044,612

 
16,221,646

 
15,069,122

 
15,020,336

 
14,588,101

Ending occupancy - consolidated portfolio
92.9
%
 
91.4
%
 
88.9
%
 
91.7
%
 
89.7
%
Stabilized occupancy - consolidated portfolio
97.2
%
 
96.5
%
 
96.4
%
 
96.8
%
 
95.8
%
Leasing spreads - GAAP
26.3
%
 
20.4
%
 
23.3
%
 
16.1
%
 
15.6
%
Leasing spreads - cash
16.7
%
 
10.6
%
 
13.7
%
 
5.9
%
 
7.0
%
Same Property Performance:
 
 
 
 
 
 
 
 
 
Same Property Portfolio SF
11,211,193

 
11,211,193

 
11,211,193

 
11,211,193

 
11,211,193

Same Property Portfolio ending occupancy
95.2
%
 
93.5
%
 
93.1
%
 
94.9
%
 
93.0
%
Stabilized Same Property Portfolio ending occupancy
96.9
%
 
96.0
%
 
96.0
%
 
96.9
%
 
96.5
%
NOI growth(2)
9.8
%
 
6.6
%
 
8.3
%
 
n/a

 
n/a

Cash NOI growth(2)
11.3
%
 
5.1
%
 
10.1
%
 
n/a

 
n/a

Capitalization:
 
 
 
 
 
 
 
 
 
Common stock price at quarter end
$
28.62

 
$
27.44

 
$
22.52

 
$
23.19

 
$
22.89

Common shares issued and outstanding
77,337,373

 
70,810,523

 
66,375,624

 
66,166,548

 
65,725,504

Total shares and units issued and outstanding at period end (3)
79,284,781

 
72,785,007

 
68,365,436

 
68,175,212

 
67,704,346

Weighted average shares outstanding - diluted
73,068,081

 
68,331,234

 
66,626,239

 
66,079,935

 
67,985,177

5.875% Series A Cumulative Redeemable Preferred Stock
90,000

 
90,000

 
90,000

 
90,000

 
90,000

Total equity market capitalization
$
2,359,130

 
$
2,087,221

 
$
1,629,590

 
$
1,670,983

 
$
1,639,752

Total consolidated debt
$
666,979

 
$
564,242

 
$
512,504

 
$
502,476

 
$
502,776

Total combined market capitalization (net debt plus equity)
$
3,013,191

 
$
2,638,345

 
$
2,130,418

 
$
2,157,934

 
$
2,087,265

Ratios:
 
 
 
 
 
 
 
 
 
Net debt to total combined market capitalization
21.7
%
 
20.9
%
 
23.5
%
 
22.6
%
 
21.4
%
Net debt to Adjusted EBITDA (quarterly results annualized)
5.8x

 
5.4x

 
5.6x

 
5.4x

 
5.4x

(1)
For definition/discussion of non-GAAP financial measures and reconciliations to their nearest GAAP equivalents, see the definitions section and reconciliation section beginning on page 25 and page 8 of this report, respectively.
(2)
Represents the year over year percentage change in NOI and Cash NOI for the Same Property Portfolio. For comparability, NOI growth and Cash NOI growth for Q1’17 has been restated to remove the results of 2535 Midway Drive, which was sold during Q2’17. See page 22 for a list of dispositions completed during 2017.
(3)
Includes the following number of OP Units held by noncontrolling interests: 1,905,740 (Sep 30, 2017), 1,932,816 (Jun 30, 2017), 1,948,144 (Mar 31, 2017), 1,966,996 (Dec 31, 2016) and 1,978,842 (Sep 30, 2016). Excludes the following number of shares of unvested restricted stock: 257,867 (Sep 30, 2017), 312,379 (Jun 30, 2017), 333,128 (Mar 31, 2017), 287,827 (Dec 31, 2016) and 322,837 (Sep 30, 2016). Current period excludes 241,691 unvested LTIP units and 514,998 unvested performance units granted during Q4-15 and Q4-16.

 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 4

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Consolidated Balance Sheets.
 
 
 
 
(unaudited and in thousands)
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
December 31, 2016
 
September 30, 2016
Assets
 
 
 
 
 
 
 
 
 
Land
$
925,360

 
$
763,622

 
$
692,731

 
$
683,919

 
$
659,641

Buildings and improvements
1,051,037

 
923,760

 
816,912

 
811,614

 
778,066

Tenant improvements
47,663

 
43,717

 
39,595

 
38,644

 
36,687

Furniture, fixtures, and equipment
167

 
167

 
167

 
174

 
175

Construction in progress
33,158

 
25,792

 
21,792

 
17,778

 
23,300

  Total real estate held for investment
2,057,385

 
1,757,058

 
1,571,197

 
1,552,129

 
1,497,869

Accumulated depreciation
(165,385
)
 
(153,163
)
 
(143,199
)
 
(135,140
)
 
(126,601
)
Investments in real estate, net
1,892,000

 
1,603,895

 
1,427,998

 
1,416,989

 
1,371,268

Cash and cash equivalents
12,918

 
13,118

 
11,676

 
15,525

 
55,263

Restricted cash

 

 
6,537

 

 

Notes receivable

 

 
6,090

 
5,934

 
5,817

Rents and other receivables, net
3,040

 
2,644

 
2,921

 
2,749

 
2,633

Deferred rent receivable
14,929

 
13,628

 
12,793

 
11,873

 
10,913

Deferred leasing costs, net
10,756

 
9,448

 
9,279

 
8,672

 
8,064

Deferred loan costs, net
2,084

 
2,239

 
2,352

 
847

 
996

Acquired lease intangible assets, net(1)
49,147

 
41,087

 
33,050

 
36,365

 
38,093

Indefinite-lived intangible
5,156

 
5,156

 
5,156

 
5,170

 
5,215

Interest rate swap asset
4,752

 
4,399

 
5,657

 
5,594

 

Other assets
7,144

 
7,388

 
5,944

 
5,290

 
5,522

Acquisition related deposits
1,075

 
2,250

 
500

 

 
400

Total Assets
$
2,003,001

 
$
1,705,252

 
$
1,529,953

 
$
1,515,008

 
$
1,504,184

Liabilities
 
 
 
 
 
 

 
 
Notes payable
$
664,209

 
$
561,530

 
$
509,693

 
$
500,184

 
$
500,428

Interest rate swap liability
785

 
1,094

 
1,356

 
2,045

 
5,938

Accounts payable and accrued expenses
22,190

 
14,298

 
18,005

 
13,585

 
18,433

Dividends and distributions payable
11,580

 
10,642

 
10,008

 
9,282

 
9,214

Acquired lease intangible liabilities, net(2)
18,147

 
10,785

 
8,653

 
9,130

 
5,722

Tenant security deposits
19,149

 
16,721

 
15,311

 
15,187

 
14,946

Prepaid rents
5,738

 
5,204

 
4,785

 
3,455

 
3,945

Total Liabilities
741,798

 
620,274

 
567,811

 
552,868

 
558,626

Equity
 
 
 
 
 
 

 
 
Preferred stock, net ($90,000 liquidation preference)
86,651

 
86,651

 
86,651

 
86,651

 
86,664

Common stock
773

 
708

 
664

 
662

 
658

Additional paid in capital
1,213,123

 
1,027,282

 
912,047

 
907,834

 
898,354

Cumulative distributions in excess of earnings
(67,578
)
 
(56,992
)
 
(64,682
)
 
(59,277
)
 
(56,651
)
Accumulated other comprehensive income (loss)
3,870

 
3,216

 
4,176

 
3,445

 
(5,764
)
Total stockholders’ equity
1,236,839

 
1,060,865

 
938,856

 
939,315

 
923,261

Noncontrolling interests
24,364

 
24,113

 
23,286

 
22,825

 
22,297

Total Equity
1,261,203

 
1,084,978

 
962,142

 
962,140

 
945,558

Total Liabilities and Equity
$
2,003,001

 
$
1,705,252

 
$
1,529,953

 
$
1,515,008

 
$
1,504,184

(1)
Includes net above-market tenant lease intangibles of $5,512 (September 30, 2017), $5,640 (June 30, 2017), $5,420 (March 31, 2017), $5,779 (December 31, 2016) and $6,204 (September 30, 2016).
(2)
Includes net below-market tenant lease intangibles of $17,990 (September 30, 2017), $10,102 (June 30, 2017), $8,479 (March 31, 2017), $8,949 (December 31, 2016) and $5,533 (September 30, 2016).

 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 5

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

 
Three Months Ended
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
December 31, 2016
 
September 30, 2016
Revenues
 
 
 
 
 
 
 
 
 
Rental income
$
36,748

 
$
31,132

 
$
29,614


$
29,691

 
$
28,285

Tenant reimbursements
6,279

 
5,172

 
5,155


4,579

 
4,467

Other income
203

 
115

 
232


179

 
192

Total Rental Revenues
43,230

 
36,419

 
35,001


34,449

 
32,944

Management, leasing, and development services
109

 
145

 
126


97

 
131

Interest income

 
218

 
227


231

 
228

Total Revenues
43,339

 
36,782

 
35,354


34,777

 
33,303

Operating Expenses
 
 
 
 


 
 
 
Property expenses
11,229

 
9,536

 
9,222


9,139

 
8,978

General and administrative
5,843

 
5,123

 
5,086


4,225

 
5,067

Depreciation and amortization
17,971

 
14,515

 
13,599


14,242

 
13,341

Total Operating Expenses
35,043

 
29,174

 
27,907


27,606

 
27,386

Other Expenses
 
 
 
 


 
 
 
Acquisition expenses
16

 
20

 
385


365

 
380

Interest expense
6,271

 
4,302

 
3,998


4,074

 
3,804

Total Other Expenses
6,287

 
4,322

 
4,383


4,439

 
4,184

Total Expenses
41,330

 
33,496

 
32,290


32,045

 
31,570

Equity in income from unconsolidated real estate entities

 

 
11



 
1,328

Loss on extinguishment of debt

 

 
(22
)


 

Gains on sale of real estate

 
16,569

 
2,668


5,814

 

Net Income
2,009

 
19,855

 
5,721


8,546

 
3,061

Less: net income attributable to noncontrolling interest
(21
)
 
(531
)
 
(132
)

(217
)
 
(63
)
Net income attributable to Rexford Industrial Realty, Inc.
1,988

 
19,324

 
5,589


8,329

 
2,998

Less: preferred stock dividends
(1,322
)
 
(1,322
)
 
(1,322
)

(1,322
)
 
(661
)
Less: earnings allocated to participating securities
(80
)
 
(156
)
 
(91
)

(79
)
 
(70
)
Net income attributable to common stockholders
$
586

 
$
17,846

 
$
4,176


$
6,928

 
$
2,267

 
 
 
 
 



 

Earnings per Common Share
 
 
 
 



 

Net income attributable to common stockholders per share - basic
$
0.01

 
$
0.26

 
$
0.06


$
0.11

 
$
0.03

Net income attributable to common stockholders per share - diluted
$
0.01

 
$
0.26

 
$
0.06


$
0.10

 
$
0.03

 
 
 
 
 


 
 
 
Weighted average shares outstanding - basic
72,621,219
 
67,920,773
 
66,341,138
 
65,785,226
 
65,707,476
Weighted average shares outstanding - diluted
73,068,081
 
68,331,234
 
66,626,239
 
66,079,935
 
67,985,177

 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 6

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Consolidated Statements of Operations.
 
 
Quarterly Results
 
(unaudited and in thousands)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Rental Revenues
 
 
 
 
 
 
 
Rental income
$
36,748

 
$
28,285

 
$
97,494

 
$
77,903

Tenant reimbursements
6,279

 
4,467

 
16,606

 
12,144

Other income
203

 
192

 
550

 
764

Total Rental Revenues
43,230

 
32,944

 
114,650

 
90,811

Management, leasing, and development services
109

 
131

 
380

 
376

Interest income

 
228

 
445

 
228

Total Revenues
43,339

 
33,303

 
115,475

 
91,415

Operating Expenses
 
 
 
 
 
 
 
Property expenses
11,229

 
8,978

 
29,987

 
24,480

General and administrative
5,843

 
5,067

 
16,052

 
13,190

Depreciation and amortization
17,971

 
13,341

 
46,085

 
37,165

Total Operating Expenses
35,043

 
27,386

 
92,124

 
74,835

Other Expenses
 
 
 
 
 
 
 
Acquisition expenses
16

 
380

 
421

 
1,490

Interest expense
6,271

 
3,804

 
14,571

 
10,774

Total Other Expenses
6,287

 
4,184

 
14,992

 
12,264

Total Expenses
41,330

 
31,570

 
107,116

 
87,099

Equity in income from unconsolidated real estate entities

 
1,328

 
11

 
1,451

Loss on extinguishment of debt

 

 
(22
)
 

Gains on sale of real estate

 

 
19,237

 
11,563

Net Income
2,009

 
3,061

 
27,585

 
17,330

 Less: net income attributable to noncontrolling interest
(21
)
 
(63
)
 
(684
)
 
(533
)
Net income attributable to Rexford Industrial Realty, Inc.
1,988

 
2,998

 
26,901

 
16,797

 Less: preferred stock dividends
(1,322
)
 
(661
)
 
(3,966
)
 
(661
)
 Less: earnings allocated to participating securities
(80
)
 
(70
)
 
(327
)
 
(223
)
Net income attributable to common stockholders
$
586

 
$
2,267

 
$
22,608

 
$
15,913


 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 7

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Non-GAAP FFO and Core FFO Reconciliations. (1)
 
 
 
(unaudited and in thousands, except share and per share data)
 
Three Months Ended
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
December 31, 2016
 
September 30, 2016
Net Income
$
2,009

 
$
19,855

 
$
5,721

 
$
8,546

 
$
3,061

Add:
 
 
 
 
 
 
 
 
 
Depreciation and amortization
17,971

 
14,515

 
13,599

 
14,242

 
13,341

Deduct:
 
 
 
 
 
 
 
 
 
Gains on sale of real estate

 
16,569

 
2,668

 
5,814

 

Gain on acquisition of unconsolidated joint venture property

 

 
11

 

 
1,332

Funds From Operations (FFO)
19,980

 
17,801

 
16,641

 
16,974

 
15,070

Less: preferred stock dividends
(1,322
)
 
(1,322
)
 
(1,322
)
 
(1,322
)
 
(661
)
Less: FFO attributable to noncontrolling interests(2)
(491
)
 
(468
)
 
(449
)
 
(457
)
 
(424
)
Less: FFO attributable to participating securities(3)
(133
)
 
(138
)
 
(137
)
 
(124
)
 
(111
)
Company share of FFO
$
18,034

 
$
15,873

 
$
14,733

 
$
15,071

 
$
13,874

 
 
 
 
 
 
 
 
 
 
FFO per common share‐basic
$
0.25

 
$
0.23

 
$
0.22

 
$
0.23

 
$
0.21

FFO per common share‐diluted
$
0.25

 
$
0.23

 
$
0.22

 
$
0.23

 
$
0.21

 
 
 
 
 
 
 
 
 
 
FFO
$
19,980

 
$
17,801

 
$
16,641

 
$
16,974

 
$
15,070

Adjust:
 
 
 
 
 
 
 
 
 
Legal fee reimbursements(4)

 

 

 
(389
)
 

Acquisition expenses
16

 
20

 
385

 
365

 
380

Core FFO
19,996

 
17,821

 
17,026

 
16,950

 
15,450

Less: preferred stock dividends
(1,322
)
 
(1,322
)
 
(1,322
)
 
(1,322
)
 
(661
)
Less: Core FFO attributable to noncontrolling interests(2)
(492
)
 
(468
)
 
(460
)
 
(456
)
 
(435
)
Less: Core FFO attributable to participating securities(3)
(133
)
 
(138
)
 
(140
)
 
(124
)
 
(114
)
Company share of Core FFO
$
18,049

 
$
15,893

 
$
15,104

 
$
15,048

 
$
14,240

 
 
 
 
 
 
 
 
 
 
Core FFO per common share‐basic
$
0.25

 
$
0.23

 
$
0.23

 
$
0.23

 
$
0.22

Core FFO per common share‐diluted
$
0.25

 
$
0.23

 
$
0.23

 
$
0.23

 
$
0.22

 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding-basic
72,621,219

 
67,920,773

 
66,341,138

 
65,785,226

 
65,707,476

Weighted-average shares outstanding-diluted(5)
73,068,081

 
68,331,234

 
66,626,239

 
66,079,935

 
65,994,173

(1)
For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 25 of this report.
(2)
Noncontrolling interests represent holders of outstanding common units of the Company’s operating partnership that are owned by unit holders other than us.
(3)
Participating securities include unvested shares of restricted stock, unvested LTIP units and unvested performance units.
(4)
Legal fee reimbursements relate to prior litigation of the Company. For more information, see Item 3. Legal Proceedings in our 2014 Annual Report on Form 10-K.
(5)
Weighted-average shares outstanding-diluted includes adjustments for unvested performance units and operating partnership units if their effect is dilutive for the reported period.

 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 8

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Non-GAAP AFFO Reconciliation. (1)
 
 
 
 
(unaudited and in thousands, except share and per share data)

 
Three Months Ended
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
December 31, 2016
 
September 30, 2016
Funds From Operations(2)
$
19,980

 
$
17,801

 
$
16,641

 
$
16,974

 
$
15,070

Add:
 
 
 
 
 
 
 
 
 
Amortization of deferred financing costs
290

 
288

 
275

 
266

 
263

Net fair value lease revenue (expense)
(885
)
 
(201
)
 
(117
)
 
(95
)
 
(39
)
Non-cash stock compensation
1,330

 
1,394

 
1,346

 
956

 
992

Straight line corporate office rent expense adjustment
(19
)
 
(36
)
 
(36
)
 
(50
)
 
(12
)
Loss on extinguishment of debt

 

 
22

 

 

Deduct:
 
 
 
 
 
 
 
 
 
Preferred stock dividends
1,322

 
1,322

 
1,322

 
1,322

 
661

Straight line rental revenue adjustment(3)
1,307

 
996

 
956

 
1,095

 
1,395

Capitalized payments(4)
1,219

 
1,021

 
976

 
726

 
833

Note payable premium amortization
37

 
36

 
58

 
60

 
60

Recurring capital expenditures(5)
452

 
857

 
390

 
667

 
691

2nd generation tenant improvements and leasing commissions(6)(7)
1,618

 
900

 
1,241

 
1,311

 
1,988

Unconsolidated joint venture AFFO adjustments

 

 

 

 
2

Adjusted Funds From Operations (AFFO)
$
14,741

 
$
14,114

 
$
13,188

 
$
12,870

 
$
10,644


(1)
For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 25 of this report.
(2)
A reconciliation of net income to Funds From Operations is set forth on page 8 of this report.
(3)
The straight line rental revenue adjustment includes concessions of $1,019, $851, $612, $873 and $1,072 for the three months ended September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016, and September 30, 2016, respectively.
(4)
Includes capitalized interest, and leasing and construction development compensation.
(5)
Excludes nonrecurring capital expenditures of $9,259, $9,007, $5,700, $4,494 and $7,030 for the three months ended September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016, and September 30, 2016, respectively.
(6)
Excludes 1st generation tenant improvements/space preparation and leasing commissions of $860, $370, $569, $636 and $1,407 for the three months ended September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016, and September 30, 2016, respectively.
(7)
Prior period amounts have been adjusted to reflect the reclass of $304 (Q1-2017) and $721 (Q2-2017) of costs from 2nd generation tenant improvements and leasing commissions to nonrecurring capital expenditures.

 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 9

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Statement of Operations Reconciliations - NOI, Cash NOI, EBITDA and Adjusted EBITDA. (1)
 
 
(unaudited and in thousands)
NOI and Cash NOI
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
December 31, 2016
 
September 30, 2016
 
Rental income
$
36,748

 
$
31,132

 
$
29,614

 
$
29,691

 
$
28,285

 
Tenant reimbursements
6,279

 
5,172

 
5,155

 
4,579

 
4,467

 
Other income
203

 
115

 
232

 
179

 
192

 
Total Rental Revenues
43,230

 
36,419

 
35,001

 
34,449

 
32,944

 
Property Expenses
11,229

 
9,536

 
9,222

 
9,139

 
8,978

 
Net Operating Income (NOI)
$
32,001

 
$
26,883

 
$
25,779

 
$
25,310

 
$
23,966

 
Net fair value lease revenue (expense)
(885
)
 
(201
)
 
(117
)
 
(95
)
 
(39
)
 
Straight line rental revenue adjustment
(1,307
)
 
(996
)
 
(956
)
 
(1,095
)
 
(1,395
)
 
Cash NOI
$
29,809

 
$
25,686

 
$
24,706

 
$
24,120

 
$
22,532

 
EBITDA and Adjusted EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Three Months Ended
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
December 31, 2016
 
September 30, 2016
Net income
$
2,009

 
$
19,855

 
$
5,721

 
$
8,546

 
$
3,061

Interest expense
6,271

 
4,302

 
3,998

 
4,074

 
3,804

Depreciation and amortization
17,971

 
14,515

 
13,599

 
14,242

 
13,341

EBITDA
$
26,251

 
$
38,672

 
$
23,318

 
$
26,862

 
$
20,206

Stock-based compensation amortization
1,330

 
1,394

 
1,346

 
956

 
992

Gains on sale of real estate

 
(16,569
)
 
(2,668
)
 
(5,814
)
 

Gain on sale of real estate from unconsolidated joint ventures

 

 
(11
)
 

 
(1,332
)
Loss on extinguishment of debt

 

 
22

 

 

Legal fee reimbursements(2)

 

 

 
(389
)
 

Acquisition expenses
16

 
20

 
385

 
365

 
380

Pro forma effect of acquisitions(3)
668

 
2,000

 
(15
)
 
521

 
376

Pro forma effect of dispositions(4)

 
(157
)
 
(85
)
 
(113
)
 

Adjusted EBITDA
$
28,265

 
$
25,360

 
$
22,292

 
$
22,388

 
$
20,622

(1) 
For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 25 of this report.
(2) 
Legal fee reimbursements relate to prior litigation of the Company. For more information, see Item 3. Legal Proceedings in our 2014 Annual Report on Form 10-K.
(3) 
Represents the estimated impact on Q3’17 EBITDA of Q3’17 acquisitions as if they had been acquired July 1, 2017, the impact on Q2’17 EBITDA of Q2’17 acquisitions as if they had been acquired April 1, 2017, the impact on Q1’17 EBITDA of Q1’17 acquisitions as if they had been acquired January 1, 2017, the impact on Q4’16 EBITDA of Q4’16 acquisitions as if they had been acquired October 1, 2016 and the impact on Q3’16 EBITDA of Q3’16 acquisitions as if they had been acquired July 1, 2016. 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 impact on Q2’17 EBITDA of Q2’17 dispositions as if they had been sold as of April 1, 2017, the impact on Q1’17 EBITDA of Q1’17 dispositions as if they had been sold as of January 1, 2017, and the impact on Q4’16 EBITDA of Q4’16 dispositions as if they had been sold as of October 1, 2016. See page 22 for a detail of current year disposition properties.

 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 10

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Same Property Portfolio Performance. (1)
 
 
 
 
(unaudited and dollars in thousands)
Same Property Portfolio NOI and Cash NOI:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
 
 
 
 
Nine Months Ended September 30,
 
 
 
 
 
 
2017
 
2016
 
$ Change
 
% Change
 
2017
 
2016
 
$ Change
 
% Change
 
Rental income
$
25,155

 
$
23,359

 
$
1,796

 
7.7%
 
$
73,682

 
$
68,541

 
$
5,141

 
7.5%
 
Tenant reimbursements
3,834

 
3,508

 
326

 
9.3%
 
11,536

 
10,394

 
1,142

 
11.0%
 
Other income
134

 
171

 
(37
)
 
(21.6)%
 
436

 
592

 
(156
)
 
(26.4)%
 
Total rental revenues
29,123

 
27,038

 
2,085

 
7.7%
 
85,654

 
79,527

 
6,127

 
7.7%
 
Property expenses
7,655

 
7,493

 
162

 
2.2%
 
22,791

 
21,449

 
1,342

 
6.3%
 
Same property portfolio NOI
$
21,468

 
$
19,545

 
$
1,923

 
9.8%
(2) 
$
62,863

 
$
58,078

 
$
4,785

 
8.2%
(2) 
Straight-line rents
(730
)
 
(887
)
 
157
 
(17.7)%
 
(2,150
)
 
(2,177
)
 
27

 
(1.2)%
 
Amort. above/below market leases
73

 
41

 
32
 
78.0%
 
246

 
124

 
122

 
98.4%
 
Same property portfolio Cash NOI
$
20,811

 
$
18,699

 
$
2,112

 
11.3%
 
$
60,959

 
$
56,025

 
$
4,934

 
8.8%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Property Portfolio Summary:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Property Portfolio
 
 
Number of properties
 
 
 
 
114
 
 
Square Feet
 
 
 
 
11,211,193
 
 
Same Property Portfolio Occupancy:
 
 
 

 
 
 
 
 
 
 
 
 
September 30, 2017
 
September 30, 2016
 
Change (basis points)
 
Same Property
Portfolio
 
Stabilized Same Property Portfolio(3)
 
Same Property
Portfolio
 
Stabilized Same Property Portfolio(4)
 
Same Property
Portfolio
 
Stabilized Same Property Portfolio
Occupancy:
 
 
 
 
 
 
 
 
 
 
 
Los Angeles County
95.4%
 
98.3%
 
92.7%
 
97.5%
 
270 bps
 
80 bps
Orange County
95.1%
 
96.2%
 
86.7%
 
95.2%
 
840 bps
 
100 bps
San Bernardino County
98.3%
 
98.3%
 
95.2%
 
95.2%
 
310 bps
 
310 bps
San Diego County
94.5%
 
94.5%
 
96.9%
 
96.9%
 
(240) bps
 
(240) bps
Ventura County
92.3%
 
92.3%
 
94.3%
 
94.3%
 
(200) bps
 
(200) bps
Total/Weighted Average
95.2%
 
96.9%
 
93.0%
 
96.5%
 
220 bps
 
40 bps
(1)
For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 25 of this report.
(2)
Excluding the three and nine months operating results of properties under repositioning in 2016 and 2017, Same Property Portfolio NOI increased by approximately 6.1% and 5.2% during the three and nine months ended September 30, 2017, compared to the three and nine months ended September 30, 2016, respectively.
(3)
Reflects the occupancy of our Same Property Portfolio as of September 30, 2017, adjusted for space aggregating 190,158 rentable square feet at three of our properties that were classified as repositioning or lease-up as of September 30, 2017. For additional details, refer to pages 20-21 of this report.
(4)
Reflects the occupancy of our Same Property Portfolio as of September 30, 2016, adjusted for space aggregating 412,888 rentable square feet at six of our properties that were classified as repositioning or lease-up as of September 30, 2016.

 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 11

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Capitalization Summary.
 
 
 
 
(unaudited and in thousands, except share and per share data)
 
 
 
Capitalization as of September 30, 2017
 
 
https://cdn.kscope.io/650870115a2f3529dcf710f3df6eb369-rexrex992_chart-50918a04.jpg
Description
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
December 31, 2016
 
September 30, 2016
Common shares outstanding(1)
 
77,337,373

 
70,810,523

 
66,375,624

 
66,166,548

 
65,725,504

Operating partnership units outstanding(2)
 
1,947,408

 
1,974,484

 
1,989,812

 
2,008,664

 
1,978,842

Total shares and units outstanding at period end
 
79,284,781

 
72,785,007

 
68,365,436

 
68,175,212

 
67,704,346

Share price at end of quarter
 
$
28.62

 
$
27.44

 
$
22.52

 
$
23.19

 
$
22.89

Common Stock and Operating Partnership Units - Capitalization
 
$
2,269,130

 
$
1,997,221

 
$
1,539,590

 
$
1,580,983

 
$
1,549,752

5.875% Series A Cumulative Redeemable Preferred Stock(3)
 
90,000

 
90,000

 
90,000

 
90,000

 
90,000

Total Equity Market Capitalization
 
$
2,359,130

 
$
2,087,221

 
$
1,629,590

 
$
1,670,983

 
$
1,639,752

 
 
 
 
 
 
 
 
 
 
 
Total Debt
 
$
666,979

 
$
564,242

 
$
512,504

 
$
502,476

 
$
502,776

Less: Cash and cash equivalents
 
(12,918
)
 
(13,118
)
 
(11,676
)
 
(15,525
)
 
(55,263
)
Net Debt
 
$
654,061

 
$
551,124

 
$
500,828

 
$
486,951

 
$
447,513

Total Combined Market Capitalization (Net Debt plus Equity)
 
$
3,013,191

 
$
2,638,345

 
$
2,130,418

 
$
2,157,934

 
$
2,087,265

 
 
 
 
 
 
 
 
 
 
 
Net debt to total combined market capitalization
 
21.7
%
 
20.9
%
 
23.5
%
 
22.6
%
 
21.4
%
Net debt to Adjusted EBITDA (quarterly results annualized)(4)
 
5.8x

 
5.4x

 
5.6x

 
5.4x

 
5.4x

 
 
 
 
 
 
 
 
 
 
 
(1)
Excludes the following number of shares of unvested restricted stock: 257,867 (Sep 30, 2017), 312,379 (Jun 30, 2017), 333,128 (Mar 31, 2017), 287,827 (Dec 31, 2016) and 322,837 (Sep 30, 2016).
(2)
Represents outstanding common units of the Company’s operating partnership, Rexford Industrial Realty, LP, that are owned by unit holders other than Rexford Industrial Realty, Inc. Represents the noncontrolling interest in our operating partnership. Includes 41,668 vested LTIP Units and excludes 241,691 unvested LTIP Units and 514,998 unvested performance units.
(3)
Value based on 3,600,000 outstanding shares of preferred stock at a liquidation preference of $25.00 per share.
(4)
For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 25 of this report.

 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 12

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Debt Summary.
 
 
 
 
(unaudited and dollars in thousands)
 
 
 
Debt Detail:
 
 
As of September 30, 2017
 
 
Debt Description
 
Maturity Date
 
Stated Interest Rate
 
Effective
Interest Rate
(1)
 
Principal Balance
 
Maturity Date of Effective Swaps
Secured Debt:
 
 
 
 
 
 
 
 
 
 
$60M Term Loan
 
    8/1/2019(2)
 
LIBOR + 1.90%
 
3.817%
 
$59,087
 
2/15/2019
Gilbert/La Palma
 
3/1/2031
 
5.125%
 
5.125%
 
2,803
 
--
12907 Imperial Highway
 
4/1/2018
 
5.95%
 
5.950%
 
5,089
 
--
Unsecured Debt:
 
 
 
 
 
 
 
 
 
 
$100M Term Loan Facility
 
2/14/2022
 
LIBOR +1.20%(4)
 
3.098%
 
100,000
 
12/14/2018
$350M Revolving Credit Facility(5)
 
    2/12/2021(3)
 
LIBOR +1.10%(4)
 
2.332%
 
50,000
 
--
$225M Term Loan Facility(6)
 
1/14/2023
 
LIBOR +1.50%(4)
 
2.732%
 
225,000
 
--
$100M Senior Notes
 
8/6/2025
 
4.29%
 
4.290%
 
100,000
 
--
$125M Senior Notes
 
7/13/2027
 
3.93%
 
3.930%
 
125,000
 
--
Total Consolidated:
 
 
 
 
 
3.346%
 
$666,979
 
 
(1)
Includes the effect of interest rate swaps effective as of September 30, 2017, and excludes the effect of discounts/premiums, deferred loan costs and the facility fee.
(2)
One additional one-year extension is available, provided that certain conditions are satisfied.
(3)
Two additional six-month extensions are available, provided that certain conditions are satisfied.
(4)
The applicable LIBOR margin will range from 1.10% to 1.50% for the revolving credit facility, 1.20% to 1.70% for the $100M term loan facility and 1.50% to 2.25% for the $225M term loan facility depending on the ratio of our outstanding consolidated indebtedness to the value of our consolidated gross asset value, which is measured on a quarterly basis. As a result, the effective interest rate will fluctuate from period to period.
(5)
The credit facility is subject to a facility fee which is calculated as a percentage of the total commitment amount, regardless of usage. The facility fee ranges from 0.15% to 0.30% depending on the ratio of our outstanding consolidated indebtedness to the value of our consolidated gross asset value, which is measured on a quarterly basis.
(6)
We have two interest rate swaps that will effectively fix this $225M term loan as follows: (i) $125M at 1.349% + an applicable LIBOR margin from 2/14/18 to 1/14/22 and (ii) $100M at 1.406% + an applicable LIBOR margin from 8/14/18 to 1/14/22.
Debt Composition:
 
 
 
 
 
 
 
 
 
 
Category
 
Avg. Term Remaining (yrs)(1)
 
Stated
Interest Rate
 
Effective Interest Rate
 
Balance
 
% of Total
Fixed(2)
 
6.6
 
3.83%
 
3.83%
 
$391,979
 
59%
Variable(2)
 
4.9
 
LIBOR + 1.43%
 
2.66%
 
$275,000
 
41%
Secured
 
2.2
 
 
 
4.03%
 
$66,979
 
10%
Unsecured
 
6.3
 
 
 
3.27%
 
$600,000
 
90%
(1)
The weighted average remaining term to maturity of our consolidated debt is 5.9 years.
(2)
If all of our interest rate swaps were effective as of September 30, 2017, our consolidated debt would be 93% fixed and 7% variable. See footnote (6) above.
Debt Maturity Schedule:
 
 
 
 
 
 
 
 
 
 
Year
 
Secured(1)
 
Unsecured
 
Total
 
% Total
 
Effective Interest Rate
2017
 
$

 
$

 
$

 
%
 
%
2018
 
5,089

 

 
5,089

 
1
%
 
5.950
%
2019
 
59,087

 

 
59,087

 
9
%
 
3.817
%
2020
 

 

 

 
%
 
%
2021
 

 
50,000

 
50,000

 
7
%
 
2.332
%
Thereafter
 
2,803

 
550,000

 
552,803

 
83
%
 
3.363
%
Total
 
$
66,979

 
$
600,000

 
$
666,979

 
100
%
 
3.346
%
(1)
Excludes the effect of scheduled monthly principal payments on amortizing loans.

 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 13

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Portfolio Overview.
 
 
at 9/30/17
 
(unaudited results)
 
 
 
Consolidated Portfolio:
 
 
 
 
 
 
Rentable Square Feet
 
Occupancy %
 
Annualized Base Rent
Market
 
# Properties
 
Same Properties Portfolio
 
Non-Same Properties Portfolio
 
Total Portfolio
 
Same Properties Portfolio
 
Non-Same Properties Portfolio
 
Total Portfolio
 
Total Portfolio Excluding Repositioning(1)
 
Total
(in 000’s)(2)
 
per SF
Central LA
 
5
 
387,310

 
25,040

 
412,350

 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
$
4,380

 
$10.62
Greater San Fernando Valley
 
26
 
2,600,837

 
309,036

 
2,909,873

 
92.1
%
 
64.0
%
 
89.1
%
 
97.9
%
 
25,643

 
$9.89
Mid-Counties
 
10
 
672,090

 
198,062

 
870,152

 
97.9
%
 
100.0
%
 
98.4
%
 
98.4
%
 
7,976

 
$9.32
San Gabriel Valley
 
16
 
1,329,061

 
639,631

 
1,968,692

 
99.4
%
 
77.0
%
 
92.1
%
 
99.6
%
 
14,271

 
$7.87
South Bay
 
17
 
961,214

 
1,562,578

 
2,523,792

 
95.3
%
 
94.4
%
 
94.7
%
 
98.7
%
 
19,966

 
$8.35
Los Angeles County
 
74
 
5,950,512

 
2,734,347

 
8,684,859

 
95.4
%
 
87.3
%
 
92.9
%
 
98.7
%
 
72,236

 
$8.96
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North Orange County
 
6
 
528,256

 
345,756

 
874,012

 
94.9
%
 
89.8
%
 
92.9
%
 
92.9
%
 
6,954

 
$8.57
OC Airport
 
7
 
512,407

 
116,575

 
628,982

 
92.1
%
 
100.0
%
 
93.5
%
 
96.0
%
 
5,925

 
$10.07
South Orange County
 
3
 
46,178

 
283,280

 
329,458

 
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%
 
2,976

 
$9.03
West Orange County
 
4
 
285,777

 
243,274

 
529,051

 
100.0
%
 
55.6
%
 
79.6
%
 
100.0
%
 
3,359

 
$7.98
Orange County
 
20
 
1,372,618

 
988,885

 
2,361,503

 
95.1
%
 
85.5
%
 
91.1
%
 
96.1
%
 
19,214

 
$8.93
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inland Empire East
 
2
 
85,282

 

 
85,282

 
93.3
%
 
%
 
93.3
%
 
93.3
%
 
558

 
$7.01
Inland Empire West
 
16
 
1,108,197

 
2,200,618

 
3,308,815

 
98.7
%
 
99.3
%
 
99.1
%
 
99.1
%
 
22,890

 
$6.98
San Bernardino County
 
18
 
1,193,479

 
2,200,618

 
3,394,097

 
98.3
%
 
99.3
%
 
99.0
%
 
99.0
%
 
23,448

 
$6.98
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ventura
 
13
 
1,144,575

 
599,910

 
1,744,485

 
92.3
%
 
71.4
%
 
85.1
%
 
93.4
%
 
12,644

 
$8.52
Ventura County
 
13
 
1,144,575

 
599,910

 
1,744,485

 
92.3
%
 
71.4
%
 
85.1
%
 
93.4
%
 
12,644

 
$8.52
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Central San Diego
 
13
 
889,050

 
254,919

 
1,143,969

 
95.1
%
 
94.4
%
 
95.0
%
 
95.0
%
 
12,567

 
$11.57
North County San Diego
 
7
 
584,258

 
54,740

 
638,998

 
93.5
%
 
%
 
85.5
%
 
85.5
%
 
5,603

 
$10.25
South County San Diego
 
1
 
76,701

 

 
76,701

 
95.1
%
 
%
 
95.1
%
 
95.1
%
 
686

 
$9.41
San Diego County
 
21
 
1,550,009

 
309,659

 
1,859,668

 
94.5
%
 
77.7
%
 
91.7
%
 
91.7
%
 
18,856

 
$11.05
CONSOLIDATED TOTAL / WTD AVG
 
146
 
11,211,193

 
6,833,419

 
18,044,612

 
95.2
%
 
89.1
%
 
92.9
%
 
97.2
%
 
$
146,398

 
$8.73

(1)
Excludes space aggregating 790,138 square feet at eight of our properties that were in various stages of repositioning or lease-up as of September 30, 2017. See pages 20-21 for additional details on these properties.
(2)
Calculated for each property as monthly contracted base rent per the terms of the lease(s) at such property, as of September 30, 2017, multiplied by 12 and then aggregated by market. Excludes billboard and antenna revenue and rent abatements.

 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 14

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Occupancy and Leasing Trends.
 
 
 
 
(unaudited results, data represents consolidated portfolio only)
 
 
 
Occupancy by County:
 
 
 
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
 
Dec 31, 2016
 
Sep 30, 2016
Occupancy:(1)
 
 
 
 
 
 
 
 
 
 
Los Angeles County
 
92.9%
 
90.5%
 
89.8%
 
92.1%
 
91.2%
Orange County
 
91.1%
 
92.0%
 
92.7%
 
96.1%
 
92.3%
San Bernardino County
 
99.0%
 
95.2%
 
92.0%
 
96.4%
 
96.1%
Ventura County
 
85.1%
 
83.1%
 
88.1%
 
92.3%
 
86.2%
San Diego County
 
91.7%
 
95.7%
 
79.8%
 
81.0%
 
79.5%
Total/Weighted Average
 
92.9%
 
91.4%
 
88.9%
 
91.7%
 
89.7%
 
 
 
 
 
 
 
 
 
 
 
Consolidated Portfolio SF
 
18,044,612
 
16,221,646
 
15,069,122
 
15,020,336
 
14,588,101
Leasing Activity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
 
Dec 31, 2016
 
Sep 30, 2016
Leasing Activity (SF):(2)
 
 
 
 
 
 
 
 
 
 
New leases(3)
 
678,882
 
310,950
 
423,766
 
401,081
 
519,212
Renewal leases(3)
 
614,175
 
469,766
 
439,602
 
363,601
 
318,179
Gross leasing
 
1,293,057
 
780,716
 
863,368
 
764,682
 
837,391
 
 
 
 
 
 
 
 
 
 
 
Expiring leases
 
942,721
 
663,128
 
914,098
 
477,966
 
619,461
Expiring leases - placed into repositioning
 
28,830
 
107,965
 
334,689
 
 
Net absorption
 
321,506
 
9,623
 
(385,419)
 
286,716
 
217,930
Retention rate(4)
 
66%
 
71%
 
57%
 
76%
 
51%
Weighted Average New / Renewal Leasing Spreads:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
 
Dec 31, 2016
 
Sep 30, 2016
GAAP Rent Change
 
26.3%
 
20.4%
 
23.3%
 
16.1%
 
15.6%
Cash Rent Change
 
16.7%
 
10.6%
 
13.7%
 
5.9%
 
7.0%
(1)
See page 14 for the occupancy by county of our total consolidated portfolio excluding repositioning space.
(2)
Excludes month-to-month tenants.
(3)
Renewal leasing activity for Q3’17 and Q1’17 excludes relocations/expansions within Rexford’s portfolio totaling 9,493 and 77,738 rentable square feet, respectively, which are included as part of new leasing activity.
(4)
Retention rate is calculated as renewal lease square footage plus relocation/expansion square footage noted in (3) above, divided by expiring lease square footage (excluding expiring lease square footage placed into repositioning).

 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 15

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Leasing Statistics.
 
 
 
 
(unaudited results, data represents consolidated portfolio only)
 
 
 
Leasing Activity:
 
 
 
 
# Leases Signed
 
SF of Leasing
 
Weighted Average Lease Term (Years)
Third Quarter 2017:
 
 
 
 
 
 
New
 
61
 
678,882
 
4.4
Renewal
 
66
 
614,175
 
3.6
Total/Weighted Average
 
127
 
1,293,057
 
4.0

Change in Annual Rental Rates for Current Quarter Leases:
 
 
 
 
 
 
GAAP Rent
 
Cash Rent
Third Quarter 2017:
 
Current Lease
 
Prior Lease
 
Rent Change - GAAP
 
Weighted Average Abatement (Months)
 
Starting Cash Rent - Current Lease
 
Expiring Cash Rent - Prior Lease
 
Rent Change - Cash
New(1)
 
$10.81
 
$8.09
 
33.6%
 
0.8
 
$10.55
 
$8.69
 
21.4%
Renewal(2)
 
$8.60
 
$7.09
 
21.2%
 
1.8
 
$8.58
 
$7.57
 
13.4%
Total/Weighted Average
 
$9.44
 
$7.47
 
26.3%
 
1.4
 
$9.33
 
$7.99
 
16.7%

Uncommenced Leases by County:
 
 
 
 
 
 
 
 
 
 
Market
 
Leased SF
 
Uncommenced Leases
Annualized Base Rent
(in thousands)
 
Total Pro Forma
Annualized Base Rent
(in thousands)
 
Leased Percentage
 
Pro Forma
Annualized Base
Rent per SF
Los Angeles County
 
38,708
 
$416
 
$72,653
 
93.3%
 
$8.97
Orange County
 
34,826
 
410
 
19,624
 
92.5%
 
$8.98
San Bernardino County
 
2,770
 
33
 
23,481
 
99.0%
 
$6.99
San Diego County
 
95,737
 
1,067
 
19,922
 
96.9%
 
$11.06
Ventura County
 
43,927
 
343
 
12,987
 
87.6%
 
$8.50
Total/Weighted Average
 
215,968
 
$2,269
 
$148,667
 
94.1%
 
$8.76
(1)
GAAP and cash rent statistics for new leases exclude 21 leases aggregating 314,601 rentable square feet for which there was no comparable lease data. Of these 21 excluded leases, four leases aggregating 172,675 rentable square feet relate to repositioning projects. Comparable leases generally exclude: (i) space that has never been occupied under our ownership, (ii) repositioned/redeveloped space, (iii) space that has been vacant for over one year, (iv) space with different lease structures (for example a change from a gross lease to a modified gross lease or an increase or decrease in the leased square footage) or (v) lease terms shorter than six months.
(2)
GAAP and cash rent statistics for renewal leases excludes one lease with 21,975 rentable square feet for which there was no comparable lease data, due to either (i) space with different lease structures or (ii) lease terms shorter than six months.

 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 16

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Leasing Statistics (Continued).
 
 
 
 
(unaudited results, data represents consolidated portfolio only)
 
 
 
Lease Expiration Schedule for Leases in Place as of September 30, 2017:
 
 
https://cdn.kscope.io/650870115a2f3529dcf710f3df6eb369-rexrex992_chart-50966a04.jpg
Year of Lease Expiration
 
# of Leases Expiring
 
Total Rentable SF
 
Annualized Base Rent
(in thousands)
 
Annualized Base
Rent per SF
Available
 
 
504,853
 
$

 
$—
Current Repositioning(1)
 
 
559,308
 

 
$—
MTM Tenants
 
100
 
223,304
 
2,225

 
$9.96
2017
 
99
 
780,868
 
7,713

 
$9.88
2018
 
352
 
2,519,326
 
22,522

 
$8.94
2019
 
301
 
2,565,082
 
23,170

 
$9.03
2020
 
252
 
3,471,261
 
28,599

 
$8.24
2021
 
123
 
3,233,164
 
26,758

 
$8.28
2022
 
85
 
1,626,380
 
13,286

 
$8.17
2023
 
20
 
595,581
 
6,159

 
$10.34
2024
 
13
 
731,124
 
6,892

 
$9.43
2025
 
4
 
148,215
 
1,712

 
$11.55
2026
 
6
 
273,904
 
3,150

 
$11.50
Thereafter
 
11
 
812,242
 
6,481

 
$7.98
Total Portfolio
 
1,366
 
18,044,612
 
$
148,667

 
$8.76
(1)
Represents space at six of our properties that were classified as current repositioning as of September 30, 2017. Excludes completed repositioning properties, properties in lease-up and pre-leased space at current repositioning properties. See pages 20-21 for additional details on these properties.

 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 17

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Top Tenants and Lease Segmentation.
 
 
 
 
(unaudited results, data represents consolidated portfolio only)
 
 
 
Top 10 Tenants:
 
 
Tenant
 
Submarket
 
Leased SF
 
% of Total Annualized
Base Rent
 
Annualized Base
Rent per SF
 
Lease Expiration
32 Cold, LLC
 
Central LA
 
149,157
 
1.4%
 
$14.44
 
3/31/2026(1)
Command Logistics Services, Inc.
 
South Bay
 
340,672
 
1.4%
 
$6.00
 
9/30/2020(2)
Triscenic Production Services, Inc.
 
Greater San Fernando Valley
 
255,303
 
1.3%
 
$7.51
 
3/31/2022(3)
Cosmetic Laboratories of America, LLC
 
Greater San Fernando Valley
 
319,348
 
1.3%
 
$5.95
 
6/30/2020
Universal Technical Institute of Southern California, LLC
 
South Bay
 
142,593
 
1.3%
 
$13.29
 
8/31/2030
Dendreon Corporation
 
West Orange County
 
170,865
 
1.0%
 
$8.87
 
12/31/2019
Undisclosed luxury high-end car company
 
Greater San Fernando Valley
 
167,425
 
1.0%
 
$8.44
 
8/31/2022(4)
Triumph Processing, Inc.
 
South Bay
 
164,662
 
0.9%
 
$8.47
 
5/31/2030
Elliott Auto Supply Co., Inc.
 
North Orange County
 
228,379
 
0.9%
 
$5.98
 
12/31/2021(5)
Heritage Bag Company
 
Inland Empire West
 
284,676
 
0.8%
 
$4.34
 
11/27/2030
Top 10 Total / Weighted Average
 
 
 
2,223,080
 
11.3%
 
$7.57
 
 
(1)
Includes (i) 78,280 rentable square feet expiring September 30, 2025, and (ii) 70,877 rentable square feet expiring March 31, 2026.
(2)
Includes (i) 111,769 rentable square feet expiring June 30, 2018, and (ii) 228,903 rentable square feet expiring September 30, 2020.
(3)
Includes (i) 38,766 rentable square feet expiring November 30, 2019, (ii) 147,318 rentable square feet expiring September 30, 2021, and (iii) 69,219 rentable square feet expiring March 31, 2022.
(4)
Includes (i) 16,868 rentable square feet expiring 4/30/2018, (ii) 21,697 rentable square feet expiring 11/30/2019, (iii) 20,310 rentable square feet expiring 5/31/2020, and (iv) 108,550 rentable square feet expiring 8/31/2022.
(5)
Includes (i) 28,217 rentable square feet expiring October 31, 2021, and (ii) 200,162 rentable square feet expiring December 31, 2021.

Lease Segmentation by Size:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Square Feet
 
Number of Leases
 
Leased Rentable SF
 
Rentable SF
 
Leased %
 
Leased % Excluding Repositioning
 
Annualized Base Rent
(in thousands)
 
% of Total Annualized
Base Rent
 
Annualized Base Rent
per SF
<4,999
 
811
 
1,709,117
 
1,824,120
 
93.7%
 
93.8%
 
$
19,985

 
13.4%
 
$11.69
5,000 - 9,999
 
188
 
1,310,159
 
1,431,834
 
91.5%
 
97.0%
 
13,817

 
9.3%
 
$10.55
10,000 - 24,999
 
223
 
3,572,302
 
3,988,579
 
89.6%
 
96.1%
 
33,560

 
22.6%
 
$9.39
25,000 - 49,999
 
70
 
2,492,505
 
2,533,581
 
98.4%
 
98.4%
 
22,532

 
15.2%
 
$9.04
>50,000
 
74
 
7,896,368
 
8,266,498
 
95.5%
 
100.0%
 
58,773

 
39.5%
 
$7.44
Total / Weighted Average
 
1,366
 
16,980,451
 
18,044,612
 
94.1%
 
98.0%
 
$
148,667

 
100.0%
 
$8.76


 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 18

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Capital Expenditure Summary.
 
 
(unaudited results, in thousands, except square feet and per square foot data)
 
 
 
Nine months ended September 30, 2017
 
 
 
 
 
 
 
 
 
Year to Date
 
Q3-2017
 
Q2-2017
 
Q1-2017
 
Total
 
SF(1)
 
PSF
Tenant Improvements and Space Preparation(2):
 
 
 
 
 
 
 
 
 
 
 
New Leases‐1st Generation
$
306

 
$
267

 
$
445

 
$
1,018

 
448,243

 
$
2.27

New Leases‐2nd Generation
$
299

 
$
109

 
$
225

 
$
633

 
500,514

 
$
1.26

Renewals
$
109

 
$
214

 
$
19

 
$
342

 
316,312

 
$
1.08

 
 
 
 
 
 
 
 
 
 
 
 
Leasing Commissions & Lease Costs:
 
 
 
 
 
 
 
 
 
 
 
New Leases‐1st Generation
$
554

 
$
103

 
$
116

 
$
773

 
278,885

 
$
2.77

New Leases‐2nd Generation
$
980

 
$
448

 
$
835

 
$
2,263

 
1,043,627

 
$
2.17

Renewals
$
230

 
$
129

 
$
162

 
$
521

 
520,533

 
$
1.00

 
 
 
 
 
 
 
 
 
 
 
 
Total Recurring Capex:
 
 
 
 
 
 
 
 
 
 
 
Recurring Capex
$
452

 
$
857

 
$
390

 
$
1,699

 
16,104,713

 
$
0.11

Recurring Capex % of NOI
1.4
%
 
3.2
%
 
1.5
%
 
2.0
%
 
 
 
 
Recurring Capex % of Operating Revenue
1.0
%
 
2.4
%
 
1.1
%
 
1.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonrecurring Capex(2)
$
9,259

 
$
9,007

 
$
5,700

 
$
23,966

 
11,709,772

 
$
2.05


(1)
For tenant improvements and leasing commissions, reflects the aggregate square footage of the leases in which we incurred such costs, excluding new/renewal leases in which there were no tenant improvements and/or leasing commissions. For recurring capex, reflects the weighted average square footage of our consolidated portfolio for the period. For nonrecurring capex, reflects the aggregate square footage of the properties in which we incurred such capital expenditures.
(2)
Prior period amounts have been adjusted to reflect the reclass of $312 (Q1-2017) and $726 (Q2-2017) of costs from tenant improvements and space preparation to nonrecurring capex.


 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 19

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Properties and Space Under Repositioning. (1)
 
As of September 30, 2017
 
(unaudited results, in thousands, except square feet)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Estimated Construction Period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property (Submarket)
 
Total Property Rentable
Square Feet
 
Space Under Repositioning/ Lease-Up
 
Est. Development Rentable Square
Feet(2)
 
Total Property Leased %
9/30/17
 
Same Property Portfolio
 
Start
 
Target Completion
 
Est. Period until
Stabilized
(months)(3)
 
Purchase
Price
 
Projected Repositioning Costs
 
Projected Total
Investment
(4)
 
Cumulative
Investment
to Date(5)
 
Actual Quarterly
Cash
NOI
3Q-2017
(6)
 
Est. Annual
Stabilized
Cash
NOI(7)
CURRENT REPOSITIONING:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14750 Nelson Repositioning
 
147,360
 
147,360
 
 
0%
 
 
 
3Q-2016
 
1Q-2018
 
14 - 17
 
$
12,718

 
$
7,049

 
$
19,767

 
$
13,661

 
$
(25
)
 
$
1,306

14750 Nelson Development
 
 
 
63,460
 
0%
 
 
 
3Q-2016
 
2Q-2018
 
17 - 20
 
$
2,282

 
$
5,133

 
$
7,415

 
$
2,493

 
$

 
$
468

14750 Nelson (San Gabriel Valley)
 
147,360
 
147,360
 
63,460
 
0%
 
N
 
3Q-2016
 
2Q-2018
 
14 - 20
 
$
15,000

 
$
12,182

 
$
27,182

 
$
16,154

 
$
(25
)
 
$
1,774

301-445 Figueroa Street (South Bay)(8)
 
133,625
 
77,975
 
 
42%
 
N
 
4Q-2016
 
3Q-2018
 
15 - 18
 
$
13,000

 
$
3,872

 
$
16,872

 
$
14,783

 
$
66

 
$
1,128

12131 Western Avenue (West OC)
 
207,953
 
107,953
 
 
100%
(9) 
N
 
1Q-2017
 
4Q-2017
 
  3 (9)
 
$
27,000

 
$
3,548

 
$
30,548

 
$
30,052

 
$
101

 
$
1,809

28903 Avenue Paine - Repositioning
 
111,346
 
111,346
 
 
0%
 
 
 
1Q-2017
 
1Q-2018
 
8 - 11
 
$
11,545

 
$
2,631

 
$
14,176

 
$
12,224

 
$
(25
)
 
$
849

28903 Avenue Paine - Development
 
 
 
112,654
 
0%
 
 
 
1Q-2017
 
4Q-2018
 
18 - 21
 
$
5,515

 
$
9,275

 
$
14,790

 
$
5,543

 
$

 
$
966

28903 Avenue Paine (SF Valley)
 
111,346
 
111,346
 
112,654
 
0%
 
N
 
1Q-2017
 
4Q-2018
 
8 - 21
 
$
17,060

 
$
11,906

 
$
28,966

 
$
17,767

 
$
(25
)
 
$
1,815

TOTAL/WEIGHTED AVERAGE
 
600,284
 
444,634
 
176,114
 
44%
 
 
 
 
 
 
 
 
 
$
72,060

 
$
31,508

 
$
103,568

 
$
78,756

 
$
117

(10) 
$
6,526

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LEASE-UP:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1601 Alton Pkwy. (OC Airport)
 
124,988
 
15,874
 
 
87%
 
Y
 
4Q-2014
 
4Q-2017
 
3 - 7
 
$
13,276

 
$
6,310

 
$
19,586

 
$
19,586

 
$
208

 
$
1,495

9401 De Soto Avenue (SF Valley)
 
150,831
 
150,831
 
 
0%
 
Y
 
2Q-2015
 
1Q-2016
 
n/a (11)
 
$
14,075

 
$
2,917

 
$
16,992

 
$
16,771

 
$
(39
)
 
$
1,165

TOTAL/WEIGHTED AVERAGE
 
275,819
 
166,705
 
 
39%
 
 
 
 
 
 
 
 
 
$
27,351

 
$
9,227

 
$
36,578

 
$
36,357

 
$
169

(10) 
$
2,660

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FUTURE REPOSITIONING:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9615 Norwalk Blvd. (Mid-Counties)
 
38,362
 
 
201,808
 
100%
 
Y
 
2Q-2018
 
2Q-2019
 
TBD
 
$
9,642

 
$
14,803

 
$
24,445

 
$
10,062

 
$
202

 
$
1,556

COMPLETED AND LEASED-UP:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3880 Valley Blvd. (San Gabriel Valley)
 
108,550
 
 
 
100%
 
Y
 
N/A
 
N/A
 
--
 
$
9,631

 
$
3,174

 
$
12,805

 
$
12,350

 
$
61

(10) 
$
883

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
See page 27 for a definition of Properties and Space Under Repositioning.
(2)
Represents the estimated rentable square footage upon completion of current and future development projects.
(3)
Represents the estimated remaining number of months, as of September 30, 2017, for the property to reach stabilization. Includes time to complete construction and lease-up the property. Actual number of months required to reach stabilization may vary materially from our estimates.
(4)
Projected total investment includes the purchase price of the property and an estimate of total expected nonrecurring capital expenditures to be incurred on each repositioning and development project to reach completion.
(5)
Cumulative investment-to-date includes the purchase price of the property and subsequent costs incurred for nonrecurring capital expenditures.
(6)
Represents the actual cash NOI for each property for the three months ended September 30, 2017. For a definition/discussion of non-GAAP financial measures, see the definitions section beginning on page 25 of this report.
(7)
Represents management’s estimate of each property’s cash NOI (including development projects) upon stabilization. Actual results may vary materially from our estimates. The Company does not provide a reconciliation to net income on a consolidated basis, because it is unable to provide a meaningful or accurate estimation of reconciling items due to the inherent difficulty of forecasting the timing and/or amount of various items that would impact net income.
(8)
The property located at 301-445 Figueroa has 14 units, all of which will be repositioned in various phases. We expect that repositioning of the first seven units (77,975 RSF) will be completed during 4Q-2017 and the remaining seven units (55,650 RSF) will be completed between 4Q-2017 and 3Q-2018. The projected total investment and estimated annual stabilized Cash NOI presented above reflect the repositioning of all 14 units.
(9)
As of September 30, 2017, this property is 48.1% leased. The pro-forma leased percentage of 100% reflects the execution of a lease subsequent to September 30, 2017, for the entire property to a single tenant which has an expected commencement date of December 31, 2017.
(10)
Actual NOI for the three months ended September 30, 2017, reflects the capitalization of $225 thousand of real estate property taxes and insurance for current repositioning, $5 thousand for lease-up properties and $28 thousand for completed properties, respectively. We will continue to capitalize taxes and insurance during the period in which construction is taking place to get each repositioning property ready for its intended use.
(11)
We are currently under contract to sell the property located at 9401 De Soto. During October 2017 the buyer waived all contingencies and we expect the sale to be completed in early November 2017.

 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 20

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Properties and Space Under Repositioning (Continued). (1)
As of September 30, 2017
 
(unaudited results, in thousands, except square feet)

Repositioning Space
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Estimated Construction Period
 
 
 
 
 
 
 
 
 
 
 
 
 
Property (Submarket)
 
Property Rentable Square Feet
 
Space Under Repositioning/Lease-Up
 
Same Property Portfolio
 
Start
 
Target Completion
 
Est. Period until
Stabilized
(months)
(2)
 
Projected Total
Investment
(3)
 
Repositioning
Costs Incurred to
Date
 
Total Property Leased %
9/30/17
 
Actual Quarterly Cash
NOI
3Q-2017
(4)
 
Estimated Annual
Stabilized
Cash NOI
(5)
 
CURRENT REPOSITIONING:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
228th Street (South Bay)(6)
 
88,971
 
23,453
 
Y
 
1Q-2016
 
4Q-2017
 
2 (6)
 
$
2,038

 
$
1,740

 
96%
 
$
(3
)
 
$
231

 
3233 Mission Oaks Blvd. (Ventura)(7):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unit 3233-H
 
461,210
 
43,927
 
N
 
1Q-2017
 
4Q-2017
 
5 (8)
 
$
1,135

 
$
654

 
72%
 
$
(6
)
 
$
288

 
Unit 3233
 
461,210
 
111,419
 
N
 
2Q-2017
 
3Q-2018
 
15 - 21
 
$
5,414

 
$
523

 
72%
 
$
(15
)
 
$
852

 
TOTAL
 

 
178,799
 
 
 
 
 
 
 
 
 
$
8,587

 
$
2,917

 
 
 
$
(24
)
(9) 
$
1,371

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Completed and Leased Repositionings: Properties and Space
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property (Submarket)
 
 
 
Rentable Square Feet
 
 
 
 
 
Stabilized Period
 
 
 
 
Stabilized Yield
 
7110 Rosecrans Ave. (South Bay)
 
 
 
73,439
 
 
 
 
 
2Q-2015
 
 
 
 
7.9%
 
7900 Nelson Rd. (SF Valley)
 
 
 
202,905
 
 
 
 
 
4Q-2015
 
 
 
 
6.6%
 
605 8th Street (SF Valley)
 
 
 
55,715
 
 
 
 
 
4Q-2015
 
 
 
 
6.8%
 
24105 Frampton Ave. (South Bay)
 
 
 
49,841
 
 
 
 
 
3Q-2016
 
 
 
 
7.0%
 
12247 Lakeland Rd. (Mid-Counties)
 
 
 
24,875
 
 
 
 
 
3Q-2016
 
 
 
 
6.4%
 
2610 & 2701 S. Birch St. (OC Airport)
 
 
 
98,230
 
 
 
 
 
4Q-2016
 
 
 
 
7.1%
 
15140 & 15148 Bledsoe St. (SF Valley)
 
 
 
72,000
 
 
 
 
 
4Q-2016
 
 
 
 
N/A(10)
 
679-691 S. Anderson St. (Central LA)
 
 
 
47,490
 
 
 
 
 
2Q-2017
 
 
 
 
6.3%
 
18118 - 18120 S. Broadway St. (South Bay)
 
 
 
18,033
 
 
 
 
 
2Q-2017
 
 
 
 
N/A(10)
 
3880 Valley Blvd. (San Gabriel Valley)
 
 
 
108,550
 
 
 
 
 
3Q-2017
 
 
 
 
 
6.9%
 
TOTAL/WEIGHTED AVERAGE
 

 
751,078
 
 
 
 
 
 
 
 
 
 
 
 
 
6.8%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
See page 27 for a definition of Properties and Space Under Repositioning.
(2)
Represents the estimated remaining number of months, as of September 30, 2017, for the space to reach stabilization. Includes time to complete construction and lease-up the space. Actual number of months required to reach stabilization may vary materially from our estimates.
(3)
Projected total investment represents the estimated nonrecurring capital expenditures to be incurred on each repositioning project to reach completion.
(4)
Represents the actual cash NOI of repositioning space for the three months ended September 30, 2017. For a definition and discussion of non-GAAP financial measures, see the definitions section beginning on page 25 of this report.
(5)
Based on current management estimates. Actual results may vary materially from our estimates. The Company does not provide a reconciliation to net income on a consolidated basis, because it is unable to provide a meaningful or accurate estimation of reconciling items due to the inherent difficulty of forecasting the timing and/or amount of various items that would impact net income.
(6)
The property located at 228th Street includes eight buildings, of which three buildings aggregating 23,453 RSF are under repositioning as of September 30, 2017. The amounts presented on this page represent the actual and projected construction costs and the actual and estimated stabilized cash NOI of only these three buildings. As of September 30, 2017, repositioning space aggregating 20,198 RSF has been pre-leased with a lease commencement date of November 1, 2017.
(7)
As of September 30, 2017, we are repositioning two spaces aggregating 155,346 RSF at 3233 Mission Oaks. The amounts presented on this page represent the actual and projected construction costs and the actual and estimated stabilized cash NOI of only these two spaces.
(8)
As of September 30, 2017, Unit H has been pre-leased with a lease commencement date of February 1, 2018.
(9)
Actual NOI for the three months ended September 30, 2017, reflects the capitalization of $33 thousand of real estate property taxes and insurance for repositioning space. We will continue to capitalize real estate property taxes and insurance during the period in which construction is taking place to get each repositioning space ready for its intended use.
(10)
We are unable to provide a meaningful stabilized yield for these completed projects as these were partial repositionings of larger properties.

 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 21

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Current Year Acquisitions and Dispositions Summary.
 
As of September 30, 2017
 
(unaudited results, data represents consolidated portfolio only)
2017 Acquisitions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition Date
 
Property Address
 
County
 
Submarket
 
Rentable Square Feet
 
Acquisition Price
($ in MM)
 
Occ. % at Acquisition
 
Occ.% at
September 30, 2017
2/17/2017
 
28903 Avenue Paine
 
Los Angeles
 
Greater San Fernando Valley
 
111,346
 
$17.06
 
—%
 
—%
4/28/2017
 
2390 Ward Avenue
 
Ventura
 
Ventura
 
138,700
 
$16.50
 
100%
 
100%
5/24/2017
 
Safari Business Center
 
San Bernardino
 
Inland Empire West
 
1,138,090
 
$141.20
 
97%
 
99%
6/14/2017
 
4175 Conant Street
 
Los Angeles
 
South Bay
 
142,593
 
$30.60
 
100%
 
100%
6/15/2017
 
5421 Argosy Avenue
 
Orange County
 
Orange County West
 
35,321
 
$5.30
 
100%
 
100%
6/30/2017
 
14820-14830 Carmenita Road
 
Los Angeles
 
Mid-Counties
 
198,062
 
$30.65
 
100%
 
100%
7/3/2017
 
3002-3072 Inland Empire Boulevard
 
San Bernardino
 
Inland Empire West
 
218,407
 
$26.90
 
100%
 
100%
7/11/2017
 
17000 Kingsview Avenue
 
Los Angeles
 
South Bay
 
100,121
 
$13.99
 
100%
 
100%
7/18/2017
 
Rancho Pacifica Park
 
Los Angeles
 
South Bay
 
1,170,806
 
$210.50
 
99%
 
99%
7/20/2017
 
11190 White Birch Drive
 
San Bernardino
 
Inland Empire West
 
201,035
 
$19.81
 
100%
 
100%
7/28/2017
 
4832-4850 Azusa Canyon Road
 
Los Angeles
 
San Gabriel Valley
 
87,421
 
$14.55
 
100%
 
100%
9/8/2017
 
1825 Soto Street
 
Los Angeles
 
Central Los Angeles
 
25,040
 
$3.48
 
100%
 
100%
9/13/2017
 
19402 Susana Road
 
Los Angeles
 
South Bay
 
15,433
 
$3.94
 
100%
 
100%
 
 
 
 
 
 
 
 
3,582,375
 
$534.48
 
 
 
 

2017 Dispositions
 
 
 
 
 
 
 
 
 
 
 
 
 
Disposition Date
 
Property Address
 
County
 
Submarket
 
Rentable Square Feet
 
Sale Price
($ in MM)
 
Reason for Selling
3/31/2017
 
9375 Archibald Avenue
 
San Bernardino
 
Inland Empire West
 
62,677
 
$6.88
 
Investor Sale
5/17/2017
 
2535 Midway Drive
 
San Diego
 
Central San Diego
 
373,744
 
$40.05
 
Opportunistic Sale
6/28/2017
 
2811 Harbor Boulevard
 
Orange County
 
Airport
 
126,796
 
$18.70
 
Tenant Exercise of Purchase Option
 
 
 
 
 
 
 
 
563,217
 
$65.63
 
 
 
 


 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 22

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Guidance.
 
 
 
 

2017 OUTLOOK

METRIC
2017 GUIDANCE / ASSUMPTIONS
Core FFO (1)
$0.94 to $0.96 per share (2)
Same Property Portfolio NOI Growth
7.5% to 8.5%
Year-End 2017 Same Property Portfolio Occupancy (3)
95.0% to 96.0% (4)
Year-End 2017 Stabilized Same Property Portfolio Occupancy (3)
97.0% to 98.0% (4)
General and Administrative Expenses
$21.3 million to $21.7 million (5)


(1)
Our Core FFO guidance refers to the Company's in-place portfolio as of October 31, 2017, and does not include any assumptions for acquisitions, dispositions or balance sheet activities that may or may not occur later during the year.
(2)
The Company does not provide a reconciliation for its guidance range of Core FFO per diluted share to net income attributable to common stockholders per diluted share, the most directly comparable forward-looking GAAP financial measure, because it is impractical to provide a meaningful or accurate estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and/or amount of various items that would impact net income available to common stockholders per diluted share, including, for example, acquisition costs, gains on sales of depreciable real estate and other items that have not yet occurred and are out of the Company’s control. For the same reasons, the Company is unable to address the probable significance of the unavailable information and believes that providing a reconciliation for its guidance range of Core FFO per diluted share would imply a degree of precision as to its forward-looking net income available to common stockholders per diluted share that would be confusing or misleading to investors.
(3)
Our 2017 Same Property Portfolio is a subset of our consolidated portfolio and consists of 114 properties aggregating 11,211,193 rentable square feet that were wholly-owned by us as of January 1, 2016, and still owned by us as of September 30, 2017. Our 2017 Stabilized Same Property Portfolio represents the properties included in our Same Property Portfolio, adjusted to exclude space at three of our properties aggregating 190,158 rentable square feet that will be in various stages of repositioning (current and future) and lease-up in connection with completed repositioning during 2017. See pages 20-21 for additional details on these three properties.
(4)
As of December 31, 2016, the occupancy of our 2017 Same Property Portfolio was 94.9% and the occupancy of our 2017 Stabilized Same Property Portfolio was 96.9%.
(5)
Our general and administrative expense guidance includes estimated non-cash equity compensation expense of $5.1 million.


 
Third Quarter 2017
Supplemental Financial Reporting Package
Page 23

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Net Asset Value Components.
 
 
  At 9/30/2017
(unaudited and in thousands, except share data)
Net Operating Income
 
 
 
 
 
Pro Forma Net Operating Income (NOI)(1)
Three Months Ended September 30, 2017
 
Total operating revenues
$43,230
 
Property operating expenses
(11,229)
 
Pro forma effect of uncommenced leases(2)
396
 
Pro forma effect of acquisitions(3)
668
 
Pro forma NOI effect of properties and space under repositioning(4)
2,724
 
Pro Forma NOI
35,789
 
Fair value lease revenue
(885)
 
Straight line rental revenue adjustment
(1,307)
 
Pro Forma Cash NOI
$33,597
 
 
 
 
Balance Sheet Items
 
 
 
 
 
 
 
 
Other assets and liabilities
September 30, 2017
 
Cash and cash equivalents
$12,918
 
Rents and other receivables, net
3,040
 
Other assets
7,144
 
Acquisition related deposits
1,075
 
Accounts payable, accrued expenses and other liabilities
(22,190)
 
Dividends payable
(11,580)
 
Tenant security deposits
(19,149)
 
Prepaid rents
(5,738)
 
Estimated remaining cost to complete repositioning projects
(45,600)
 
Total other assets and liabilities
$(80,080)
 
 
 
 
Debt and Shares Outstanding
 
 
 
 
 
Total consolidated debt(5)
$666,979
 
Preferred stock - liquidation preference
$90,000
 
 
 
 
Common shares outstanding(6)
77,337,373
 
Operating partnership units outstanding(7)
1,947,408
 
Total common shares and operating partnership units outstanding
79,284,781
 
(1)
For a definition and discussion of non-GAAP financial measures, see the notes and definitions section beginning on page 25 of this report.
(2)
Represents the estimated incremental base rent from uncommenced leases as if they had commenced as of July 1, 2017.
(3)
Represents the estimated incremental NOI from Q3’17 acquisitions as if they had been acquired on July 1, 2017. 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 NOI had we actually owned the acquired entities as of July 1, 2017.
(4)
Represents the estimated incremental NOI from the properties that were classified as current or future repositioning or lease-up during the three months ended September 30, 2017, assuming that all repositioning work had been completed and all of the properties/space were fully stabilized as of July 1, 2017. See pages 20-21 for the properties included. 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 NOI had these properties actually been stabilized as of July 1, 2017.
(5)
Excludes net deferred loan fees and net loan premium aggregating $2.8 million.
(6)
Represents outstanding shares of common stock of the Company, which excludes 257,867 shares of unvested restricted stock.
(7)
Represents outstanding common units of the Company’s operating partnership, Rexford Industrial Realty, L.P., that are owned by unit holders other than Rexford Industrial Realty, Inc. Includes 41,668 vested LTIP Units.

 
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Supplemental Financial Reporting Package
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Notes and Definitions.
 
 
 


Adjusted Funds from Operations (AFFO): We calculate adjusted funds from operations, or AFFO, by adding to or subtracting from FFO, as defined below, the following items: (i) certain non-cash operating revenues and expenses, (ii) capitalized operating expenditures such as leasing and construction payroll, (iii) recurring capital expenditures required to maintain and re-tenant our properties, (iv) capitalized interest costs resulting from the repositioning/redevelopment of certain of our properties, (v) 2nd generation tenant improvements and leasing commissions and (vi) gain (loss) on extinguishment of debt. Management uses AFFO as a supplemental performance measure because it provides a performance measure that, when compared year over year, captures trends in portfolio operating results. We also believe that, as a widely recognized measure of the performance of REITs, AFFO will be used by investors as a basis to assess our performance in comparison to other REITs. However, because AFFO may exclude certain non-recurring capital expenditures and leasing costs, the utility of AFFO as a measure of our performance is limited. Additionally, other Equity REITs may not calculate AFFO using the method we do. As a result, our AFFO may not be comparable to such other Equity REITs’ AFFO. AFFO should be considered only as a supplement to net income (as computed in accordance with GAAP) as a measure of our performance.
Annualized Base Rent: Calculated for each lease as the latest monthly contracted base rent per the terms of such lease multiplied by 12. Excludes billboard and antenna revenue and rent abatements.
Capital Expenditures, Non-recurring: Expenditures made in respect of a property for improvement to the appearance of such property or any other major upgrade or renovation of such property, and further includes capital expenditures for seismic upgrades, and 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.
Core Funds From Operations (Core FFO): We calculate Core FFO by adjusting FFO, as defined below, to exclude the impact of certain items that we do not consider reflective of our core revenue or
 
expense streams. These adjustments consist of acquisition expenses and legal expenses or reimbursements related to prior litigation. For more information on prior litigation, see Item 3. Legal Proceedings in our 2014 Annual Report on Form 10-K. Management believes that Core FFO is a useful supplemental measure as it provides a more meaningful and consistent comparison of operating performance and allows investors to more easily compare the Company's operating results. Because certain of these adjustments have a real economic impact on our financial condition and results from operations, the utility of core FFO as a measure of our performance is limited. Other REITs may not calculate core FFO in a consistent manner. Accordingly, our core FFO may not be comparable to other REITs' core FFO. Core FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.
Debt Covenants ($ in thousands):
 
 
 
Sep 30, 2017
 
Jun 30, 2017
 
Current Period Covenant
 
Amended Credit Facility and $225M Term Loan
 
$100M Senior Notes and $125M Senior Notes
 
Amended Credit Facility and $225M Term Loan
 
$100M Senior Notes
Maximum Leverage Ratio
less than 60%
 
30.2%
 
30.2%
 
29.9%
 
29.9%
Maximum Secured Leverage Ratio
less than 45%
 
3.0%
 
n/a
 
3.5%
 
n/a
Maximum Secured Leverage Ratio
less than 40%
 
n/a
 
3.0%
 
n/a
 
3.5%
Maximum Secured Recourse Debt
less than 15%
 
—%
 
—%
 
—%
 
—%
Minimum Tangible Net Worth
$1,002,909
 
$1,390,432
 
$1,390,432
 
$1,202,683
 
$1,202,683
Minimum Fixed Charge Coverage Ratio
at least 1.50 to 1.00
 
3.9 to 1.00
 
3.9 to 1.00
 
4.1 to 1.00
 
4.1 to 1.00
Unencumbered Leverage Ratio
less than 60%
 
29.5%
 
29.5%
 
28.9%
 
28.9%
Unencumbered Interest Coverage Ratio
at least 1.75 to 1.00
 
6.2 to 1.00
 
6.2 to 1.00
 
7.02 to 1.00
 
7.02 to 1.00
Our actual performance for each covenant is calculated based on the definitions set forth in each loan agreement.
EBITDA and Adjusted EBITDA: EBITDA is calculated as earnings (net income) before interest expense, tax expense and depreciation and amortization, including our proportionate share from our unconsolidated joint venture. We calculate Adjusted EBITDA by adding or subtracting from EBITDA the following items: (i) non-cash stock based compensation expense, (ii) gains on sale of real estate (including our proportionate share from our unconsolidated joint venture), (iii) gain (loss) on extinguishment of debt, (iv) legal fee reimbursements related to prior litigation, (v) acquisition expenses and (vi) the pro-forma effects of acquisitions and dispositions. We believe that EBITDA and Adjusted EBITDA are 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 these measures in ratios to compare our performance to that of our industry peers. In addition, we believe EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of Equity REITs. However, because EBITDA and Adjusted EBITDA are calculated before recurring cash charges including interest expense and income taxes, and are not adjusted for capital expenditures or other recurring cash requirements of our business, their utility as a measure of our liquidity is limited. Accordingly, EBITDA and Adjusted EBITDA should not be considered alternatives to cash flow from operating activities (as computed in accordance with GAAP) as a measure of our liquidity. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income or loss as an indicator of our operating performance. Other Equity REITs may calculate EBITDA and Adjusted

 
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Supplemental Financial Reporting Package
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Notes and Definitions.
 
 
 


EBITDA differently than we do; accordingly, our EBITDA and Adjusted EBITDA may not be comparable to such other Equity REITs’ EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA should be considered only as supplements to net income (as computed in accordance with GAAP) as a measure of our performance.
Fixed Charge Coverage Ratio:
 
For the Three Months Ended
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
 
Dec 31, 2016
 
Sep 30, 2016
EBITDA
$
26,251

 
$
38,672

 
$
23,318

 
$
26,862

 
$
20,206

Cash distributions from unconsolidated joint ventures

 

 

 
(8
)
 
(4
)
Fair value lease expense
(885
)
 
(201
)
 
(117
)
 
(95
)
 
(39
)
Non-cash stock compensation
1,330

 
1,394

 
1,346

 
956

 
992

Straight line corporate office rent expense adjustment
(19
)
 
(36
)
 
(36
)
 
(50
)
 
(12
)
Gains on sale of real estate

 
(16,569
)
 
(2,668
)
 
(5,814
)
 

Loss on extinguishment of debt

 

 
22

 

 

Straight line rental revenue adjustment
(1,307
)
 
(996
)
 
(956
)
 
(1,095
)
 
(1,395
)
Capitalized payments
(832
)
 
(563
)
 
(510
)
 
(388
)
 
(400
)
Recurring capital expenditures
(452
)
 
(857
)
 
(390
)
 
(667
)
 
(691
)
2nd generation tenant improvements and leasing commissions
(1,618
)
 
(900
)
 
(1,241
)
 
(1,311
)
 
(1,988
)
Unconsolidated joint venture AFFO adjustments

 

 

 

 
(2
)
Cash flow for fixed charge coverage calculation
22,468

 
19,944

 
18,768

 
18,390

 
16,667

Cash interest expense calculation detail:
 
 
 
 
 
 
 
 
 
Interest expense
6,271

 
4,302

 
3,998

 
4,074

 
3,804

Capitalized interest
387

 
458

 
466

 
338

 
433

Note payable premium amort.
37

 
36

 
58

 
60

 
60

Amortization of deferred financing costs
(290
)
 
(288
)
 
(275
)
 
(266
)
 
(263
)
Cash interest expense
6,405

 
4,508

 
4,247

 
4,206

 
4,034

Scheduled principal payments
263

 
222

 
301

 
300

 
234

Preferred stock dividends
1,322

 
1,322

 
1,322

 
1,322

 
661

Fixed charges
$
7,990

 
$
6,052

 
$
5,870

 
$
5,828

 
$
4,929

 
 
 
 
 
 
 
 
 
 
Fixed Charge Coverage Ratio
2.8
x
 
3.3
x
 
3.2
x
 
3.2
x
 
3.4
x
 
Funds from Operations (FFO): We calculate FFO 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, impairment losses, 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. FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.
Net Operating Income (NOI): NOI is a non-GAAP measure which includes the revenue and expense directly attributable to our real estate properties. NOI is calculated as total revenue from real estate operations including i) rental income, ii) tenant reimbursements, and iii) other income less property expenses. We use NOI as a supplemental performance measure because, in excluding real estate depreciation and amortization expense, general and administrative expenses, interest expense, gains (or losses) on sale of real estate and other non-operating items, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that NOI will be useful to investors as a basis to compare our operating performance with that of other REITs. However, because NOI excludes depreciation and amortization expense and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties (all of which have real economic effect and could materially impact our results from operations), the utility of NOI as a measure of our performance is limited. Other equity REITs may not calculate NOI in a similar manner and, accordingly, our NOI may not be comparable to such other REITs’ NOI. Accordingly, NOI should be considered only as a supplement to net income as a measure of our performance. NOI should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs. NOI should not be used as a substitute for cash flow from operating activities in accordance with GAAP. We use NOI to help evaluate the performance of the Company as a whole, as well as the performance of our Same Property Portfolio.
Proforma NOI: Proforma NOI is calculated by adding to NOI the following adjustments: (i) the estimated impact on NOI of uncommenced leases as if they had commenced at the beginning of the reportable period, (ii) the estimated impact on NOI of current period acquisitions as if they had been acquired at the beginning of the reportable period, (iii) the actual NOI of properties sold during the current period and (iv) the estimated incremental NOI from properties that were classified as repositioning/lease-up properties as of the end of the reporting period, assuming that all repositioning work had been completed and the properties/space were fully stabilized as of the beginning of the reportable period. These

 
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Supplemental Financial Reporting Package
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Notes and Definitions.
 
 
 


estimates do not purport to be indicative of what operating results would have been had the transactions actually occurred at the beginning of the reportable period and may not be indicative of future operating results.
Properties and Space Under Repositioning: Typically defined as properties or units where a significant amount of space is held vacant in order to implement capital improvements that improve the functionality (not including basic refurbishments, i.e., paint and carpet), cash flow and value of that space. We define a significant amount of space in a building as the lower of (i) 20,000 square feet of space or (ii) 50% of a building’s square footage. Typically, we would include properties or space where the repositioning and lease-up time frame is estimated to be greater than six months. A repositioning is considered complete once the investment is fully or nearly fully deployed and the property is marketable for leasing. We consider a property to be stabilized once it reaches 95% occupancy.
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: (i) space that has never been occupied under our ownership, (ii) repositioned/redeveloped space, (iii) space that has been vacant for over one year, (iv) space with different lease structures (for example a change from a gross lease to a modified gross lease or an increase or decrease in the leased square footage) or (v) lease terms shorter than six months.
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: (i) space that has never been occupied under our ownership, (ii) repositioned/redeveloped space, (iii) space that has been vacant for over one year, (iv) space with different lease structures (for example a change from a gross lease to a modified gross lease or an increase or decrease in the leased square footage) or (v) lease terms shorter than six months.
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, 2016, and still owned by us as of September 30, 2017. 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 space at properties that were in various stages of repositioning or lease-up in connection with a completed repositioning.
Uncommenced Leases: Reflects signed leases that have not yet commenced as of the reporting date.





 




















































 
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Supplemental Financial Reporting Package
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Notes and Definitions.
 
 
 


Reconciliation of Net Income to NOI and Cash NOI (in thousands):

 
Three Months Ended
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
 
Dec 31, 2016
 
Sep 30, 2016
Net Income
$
2,009

 
$
19,855

 
$
5,721

 
$
8,546

 
$
3,061

Add:
 
 
 
 
 
 
 
 
 
General and administrative
5,843

 
5,123

 
5,086

 
4,225

 
5,067

Depreciation and amortization
17,971

 
14,515

 
13,599

 
14,242

 
13,341

Acquisition expenses
16

 
20

 
385

 
365

 
380

Interest expense
6,271

 
4,302

 
3,998

 
4,074

 
3,804

Loss on extinguishment of debt

 

 
22

 

 

Subtract:
 
 
 
 
 
 
 
 
 
Management, leasing, and development services
109

 
145

 
126

 
97

 
131

Interest income

 
218

 
227

 
231

 
228

Equity in income from unconsolidated real estate entities

 

 
11

 

 
1,328

Gains on sale of real estate

 
16,569

 
2,668

 
5,814

 

NOI
$
32,001

 
$
26,883

 
$
25,779

 
$
25,310

 
$
23,966

Straight line rental revenue adjustment
(1,307
)
 
(996
)
 
(956
)
 
(1,095
)
 
(1,395
)
Net fair value lease revenue (expense)
(885
)
 
(201
)
 
(117
)
 
(95
)
 
(39
)
Cash NOI
$
29,809

 
$
25,686

 
$
24,706

 
$
24,120

 
$
22,532

















 
Reconciliation of Net Income to Same Property Portfolio NOI and Same Property Portfolio Cash NOI (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Net income
$
2,009

 
$
3,061

 
$
27,585

 
$
17,330

Add:
 
 
 
 
 
 
 
General and administrative
5,843

 
5,067

 
16,052

 
13,190

Depreciation and amortization
17,971

 
13,341

 
46,085

 
37,165

Acquisition expenses
16

 
380

 
421

 
1,490

Interest expense
6,271

 
3,804

 
14,571

 
10,774

Loss on extinguishment of debt

 

 
22

 

Deduct:
 
 
 
 
 
 
 
Management, leasing and development services
109

 
131

 
380

 
376

Interest income

 
228

 
445

 
228

Equity in income from unconsolidated real estate entities

 
1,328

 
11

 
1,451

Gains on sale of real estate

 

 
19,237

 
11,563

NOI
$
32,001

 
$
23,966

 
$
84,663

 
$
66,331

Non-Same Property Portfolio operating revenues
(14,107
)
 
(5,906
)
 
(28,996
)
 
(11,284
)
Non-Same Property Portfolio property expenses
3,574

 
1,485

 
7,196

 
3,031

Same Property Portfolio NOI
$
21,468

 
$
19,545

 
$
62,863

 
$
58,078

Straight line rental revenue adjustment
(730
)
 
(887
)
 
(2,150
)
 
(2,177
)
Amort. above/below market leases
73

 
41

 
246

 
124

Same Property Portfolio Cash NOI
$
20,811

 
$
18,699

 
$
60,959

 
$
56,025



 
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Supplemental Financial Reporting Package
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