Rexford Industrial Realty keeps rolling sevens: the REIT rolled out another batch of seven off-market deals this week to acquire infill industrial properties in Southern California, this one totaling $339M.
Like the package of purchases Rexford announced at the end of July—which also involved seven industrial acquisitions, with the July deals totaling $661M—this week's SoCal haul was funded using a combination of cash on hand and the REIT's line of credit.
Rexford's acquisition binge of SoCal industrial assets this year is now approaching $2B, and it shows no signs of ending anytime soon. In a release detailing its latest acquisitions, Rexford said it more than $200M in SoCal industrial deals in its pipeline, either under contract or with accepted offers.
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The largest deal announced this week by Rexford is the $100M acquisition of 148K SF low coverage, port adjacent logistics facility located on 8.5 acres at 920 E. Pacific Coast Highway in Wilmington, in the LA-South Bay submarket. The sale-leaseback deal includes a long-term lease for a single tenant.
Three of the acquisitions announced this week involve properties the REIT intends to redevelop. Rexford purchased for $34.6M of a 3.7-acre site at 2880 E. Ana St. in Rancho Dominguez, where the company intends to develop an industrial outdoor storage yard; it paid $20M for a site at 3901 Via Oro in Long Beach where Rexford plans to build a new 74K Class A industrial building.
Rexford also acquired for $26.1M a two-building property encompassing 57K SF, also in Rancho Dominguez, which the REIT plans to redevelop into a low coverage logistics facility after a short-term leaseback with the seller expires.
In Carson, Rexford acquired a 52K SF, single-tenant Class A industrial building for $26.1M; in the LA-Central submarket, the REIT purchased two fully occupied Class A buildings encompassing 183K SF for $91.5M. Rexford said the two buildings in LA-Central are leased at rents that are 35% below current market rates.
The seventh deal in Rexford's latest acquisition tranche is a three-building package encompassing 114K SF in the City of Industry. The company said each building is fully occupied by a single tenant leasing the facilities at rents estimated to be 50% below current market rates.
The REIT doesn't believe it's gambling as it keeps rolling sevens in SoCal. Rexford scours the landscape for assets that it considers a sure thing: infill industrial properties currently occupied by tenants paying below-market rents in SoCal, the tightest industrial market in the US, where vacancies have dipped below 1% since the beginning of the year.
Rexford's strategy is built around using rent intel—which the REIT says it acquires through its "proprietary access"—to target its SoCal acquisitions, then pouncing in off-market, cash-fueled deals. The company positions itself to make quick acquisitions by maintaining a low-leverage balance sheet.
According to Co-CEOs Howard Schwimmer and Michael Frankel, Rexford's strategy is producing sizeable yields for its shareholders.
"Our deep market penetration enables a highly selective approach to capital allocation, demonstrated by our $2 billion of investments year-to-date and pipeline of over $200 million of additional investments, which are projected to generate stabilized return on investment well in excess of market yields," Schwimmer and Frankel said, in a statement.
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