REXFORD INDUSTRIAL REALTY, INC. (REXR) 2026 Q1 Earnings Call Transcript

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Vikram: the leasing dollar ramp up. I'm wondering if you can, you know, give us a square footage target you have to, you know, to keep the portfolio occupancy for the core portfolio and then how much you need to lease square footage wise for the development portfolio to meet your goals. And then just maybe a bigger picture question for the whole team. You know, clearly you're selling attractively, buying back stock, but I'm wondering if there's a thought to take a deep dive into the portfolio, you know, maybe identify markets or sub markets you don't want to be in long term and take advantage right now by doing a bigger sale, a billion dollar sale, or just, you know, a whole portfolio, mini portfolio sale where you position this portfolio for the long run. Thanks.

Michael P. Frank: Sure. Good morning, Vikram. In terms of square footage that we expect to commence as it relates to our guides between eight and a half million, uh this year which includes about a million square foot a million square feet from repositioning and development

Howard L. Schwimmer: In regards to your question on additional dispositions, we do continually assess the portfolio. We're looking to assess the portfolio for additional opportunity to build a more resilient and higher growth platform and portfolio going forward. We're assessing risk. We're assessing capital needs. We are assessing product that aligns with our ability to drive true value creation and differentiated growth. Really importantly, though, and as is contemplated in our current disposition guidance for the year, we are focused on recycling capital on an accretive basis that enables us to drive FFO and NAV per share growth.

Operator: Thanks, Vikram. Our next question comes from Richard Anderson from Cantor Fitzgerald. Rich, please go ahead.

Richard Anderson: Thanks. Good morning. So I just wanted to ask a broad question myself. around some of the, you know, sort of tangential demand factors around advanced manufacturing and data centers and even in your case, aerospace and defense being, you know, a potential lightning rod of demand as well in Southern California and how that sort of manifests itself in your smaller format consumption-oriented platform. I'm just curious if You know, is there a dotted line, a straight line, a dark line to your business from these sort of outside demand factors, or do you feel it directly in your leasing process? Thanks.

John: Yeah. Hi, Rich. This is John. So just to start off the bat, data centers is not really a core component of our business. There's a lot of power demands that come with that. And so that one is not something that makes up material opportunity for our portfolio. Well, when it comes to advanced manufacturing, the answer is yes. It is a very bold, connected line. And we see that demand being applied to spaces both large and small. The property I mentioned in the prepared remarks, Storm Parkway, it's pretty close to our average unit size, represents the typical unit in the Rexwood portfolio. And we lease that to an advanced manufacturer. It's important to note that there's all different facets and layers to this sector. Some of them are the biggest household names that everybody recognized that are producing things that everyone's familiar with. And then there's all of the suppliers and vendors and service providers that kind of come with that industry. And we see a lot of demand, especially in the South Bay markets, specifically the coastal portions of that market, where there's demand across all those ranges. We've executed deals with the household names and we've been very happy with the level of demand that ranges from some of our smallest units in that market, going down to 5,000 square feet that are a little bit more incubator type, up to things like Storm and beyond. Even Western, which we stabilized last year, which is a Class A development we delivered in Torrance, fits into that category. So it's a very relevant and active sector. As I mentioned also, we do see this demand in other pockets of San Fernando Valley, San Diego, and now a little bit in Long Beach and a little bit into Orange County. So we're very focused. We spend a lot of time focused on the demand that comes from that sector in the market and have had some success to date. So we're pretty pleased by it.

Operator: Thanks, Rich. Our next question comes from Nick Dillman from Baird. Nick, please go ahead.

Nick Dillman: Hey, good morning out there. I was hoping to unpack the decline in lease term signings during the quarter, if there's anything to specifically call out there. I would think if tenants were sort of seeing an inflection point or a bottom-out phase, that they would be seeking a little bit more term and lock in favorable terms. But this is a strategy that Rexford's pursuing to sort of weather the near term and kick out for a cycle in, say, 2029 and beyond. I guess just Is there anything worth highlighting within the lease term or are we just reading through one print and there's some hodgepodge numbers that are in there?

John: Yeah. Hi, Nick. So it really depends. There are tenants in the market who are trying to capitalize on current market rate levels and lock it up for longer periods of time. And in some cases, that might be the best decision to meet that requirement and do that deal. In others, we may proactively try to shorten terms strategically so that we can get to a reset moment if we believe that that's going to come in the next few years. I think TireCo is a good example of that. We chose to limit that term on the extension to three years. It really just depends on competitive supply and how much leverage there is on each side of the table for each one of those situations. In terms of also the overall statistics for the activity that we converted in the first quarter, it also comes down to size. And so the mix of units that falls into our volume can have an impact. Generally speaking, the smaller units in our portfolio on average tend to have shorter terms anyway. So that is impacting the number as well.

Operator: Thanks, Nick. Our next question comes from Brendan Lynch from Barclays. Brendan, please go ahead.

Brendan Lynch: Great. Good morning. Thanks for taking the question. Maybe just talk about the long-term plan for the entire co-asset. I'd imagine getting the lease renewal makes it easier to dispose of if you so choose, and it doesn't really fit in with the rest of your portfolio. So just how we should think about that going forward.

John: Hi, Brendan. You know, our focus was on addressing the lease role for next year as we thought about structuring that renewal. So it's not really a read-through to any longer-term strategic plan for that asset.

Operator: Thanks, Brendan. Our final question comes from Young Koo from Wells Fargo. Young, please go ahead.

Young Koo: Yes, thank you. Good morning out there. I just want to go back to rents a little bit. It looks like the performer targeted rents in your redevelopment portfolio seems to be a little bit higher than current market rents. So I'm just wondering, is that part of a mixed issue or is there some type of rent growth aspect into that performer yield?

Michael P. Frank: No, that has to do with the mixed issue.

Operator: Thanks, Young. That concludes the Q&A portion of our earnings call. I'd now like to turn the call over to Laura Clark for closing remarks.

Laura Clark: Thank you all for joining us today. We look forward to spending time with you throughout the quarter, and I hope everyone has a wonderful weekend. Thank you, and ladies and gentlemen, this concludes today's conference call. You may now disconnect.