Key facts
- Rexford Industrial Realty plans to sell up to $2 billion of its portfolio this year.
- The company increased its disposition guidance from $400M-$500M to $1.5B-$2B.
- Properties identified for sale comprise 8 million square feet and are deemed to not align with the company's long-term strategy.
- Proceeds from the sales will be used to pay down $1 billion of debt maturing in 2027.
- Rexford reported a $506.9 million net loss in Q2, attributed to a noncash impairment from these planned sales.
Rexford Industrial Realty plans to sell up to $2 billion of its industrial property portfolio this year, a substantial increase from its previous guidance, to pay down maturing debt. The company has identified approximately 8 million square feet of assets that do not align with its long-term strategy due to factors such as limited value creation opportunities and elevated competitive supply.
CEO Laura Clark stated on an earnings call that the decision to divest these properties, many acquired at market peaks, is part of a strategic review. These assets are characterized by shorter remaining lease durations and substantially above-market in-place rents. Rexford has already sold 12 properties totaling 886,000 square feet and $265.3 million year-to-date, with seven of those sales occurring in the second quarter.
The planned dispositions have impacted Rexford's second-quarter earnings, resulting in a $506.9 million net loss attributed to a noncash impairment. The company intends to use about $1 billion of the proceeds to reduce debt maturing in 2027. Despite these sales, Rexford maintains conviction in the long-term outlook for infill Southern California industrial real estate, where it focuses its operations and reported 95.7% occupancy in the second quarter.