Rexford Industrial Realty Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Blaine Heck - Wells Fargo Securities - Analyst : Great. Thanks. So as you mentioned, market rents accelerated downward during the quarter, down 2.8% from 1.5% in Q4 and I guess maybe putting aside the potential impact of tariffs on leasing demand for a moment, do you have any better sense of how much further you'd expect rents to decline just based on how much excess vacancy is on the market and how aggressive some of your competitors have been on pricing? And then I guess if you were to factor in the tariffs, how much of an accelerant to moderation do you think a drawn out trade disagreement could potentially present in your markets?

Question: Samir Khanal - Bank of America - Analyst : Yes. Good morning, everybody. I guess, Mike, I know you talked about the lease up. I think you talked about nine months instead of eight months. But maybe -- maybe help us understand a little bit more about the low end of guidance here. I think given the uncertainty, everybody is trying to figure out maybe how much room or cushion there is for sort of rents to fall. (inaudible) think about kind of what PLD did they sort of stress test their guidance. So walk us through that, please. Thanks.

Question: John Kim - BMO Capital Markets - Analyst : Thank you, and good morning. I was wondering if you could provide some more insight on the cash mark-to-market -- or sorry, the cash leasing spreads this quarter, which went negative. And just looking at the leases that you signed this quarter, the average rent was [1650] and comparing that versus your in-place ABR, it looks like it would suggest a negative mark-to-market. But I'm wondering if you could just provide some more color on that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 17, 2025 / 5:00PM, REXR.N - Q1 2025 Rexford Industrial Realty Inc Earnings Call

Question: Michael Mueller - J.P. Morgan Securities - Analyst : Yes. Hi. I guess -- can you talk about the pace of redevelopment repositioning starts for the next 12 months or so based on what you're seeing and expecting today and maybe how it compares to the past year or two?

Question: Omotayo Okusanya - Deutsche Bank - Analyst : Yes, good afternoon, guys. Could you talk a little bit about the lease terminations in 1Q, like the nature of those tenants? And how are you just kind of thinking about the watch list today is one of potential tenants.

Question: Craig Mailman - Citigroup Investment Research - Analyst : Hey, everyone. This question may be a bit ironic or hypocritical over you want to look at it, given that I've kind of asked you guys about selling assets over the last couple of years and now you are doing it and being successful. But I'm just kind of curious about the timing of it, given you're sitting on $600 million. Is there some -- were these more reverse inquiries that users want to buy these buildings? Or what's driving the uptick in disposition activity when acquisitions look a little bit less likely in the near term?

Question: Greg McGinniss - Scotiabank - Analyst : Hey, good morning. Just looking at the average rent escalator signed in Q1 is down to 3.6% as compared to 4% last year. Are you starting to see tenants push back on the 4% escalators you've been able to achieve over the last couple of years? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 17, 2025 / 5:00PM, REXR.N - Q1 2025 Rexford Industrial Realty Inc Earnings Call

Question: Anthony Hau - Truist Securities. - Analyst : Hi, guys. Thanks for taking my question. Howard, I think you have highlighted that in those locations tend to be more resilient in downturns. Can you help us like better quantify that, whether through occupancy, rent growth or leasing velocity compared to [non-indul] assets?

Question: Brendan Lynch - Barclays - Analyst : Great. Thanks for taking my question. I wanted to just dig in a little bit on your philosophy on the pace of redevelopment and repositioning. If we're entering a period of market weakness, is that -- would you be leaning into more redevelopment now because there's a lower opportunity cost of taking assets offline?

Question: Michael Griffin - Evercore ISI - Analyst : Great. Thanks. Wondering if you could give just a little more commentary on occupancy expectations. If I look at your kind of same-store quarter-end occupancy versus the total portfolio, it's a delta of about 600 basis points versus 400 basis points on average the four quarters before. So it seems like you're going to get towards that midpoint of the same-store average occupancy guidance, but should we see that spread narrow? Should we see it widen as we get throughout the year? Like if there's any numbers you can kind of put around that, that would be helpful. Thank you.

Question: Vikram Malhotra - Mizuho Securities USA - Analyst : Morning. Thanks for the question. I guess you've alluded to sort of long-term value creation through development, but also to the private market kind of being 5 or sub-5. So I'm just wondering like as you sell assets, like how much could you sell? And then what about using proceeds for buybacks given kind of where the stock is relative to what you just said the private market is trading at?

Question: Blaine Heck - Wells Fargo Securities - Analyst : Great. Thanks for taking the follow up. Mike, it's helpful to hear you all went through a stress test on operating results and still feel good about the low end of FFO guidance, but I'm wondering if you can talk about some of the specific assumptions in that stress test as it relates to occupancy, rents and bad debts. And I guess, how you think that scenario would likely impact same-store numbers as well?

Question: Omotayo Okusanya - Deutsche Bank - Analyst : Hi, yes, that's just squeezing me in. Could you guys talk a little bit about 3PL exposure within the portfolio, just kind of given your markets generally are big is in [3PL] market?