Rexford Industrial Realty Inc. spent the first month of the New Year making a handful of diverse acquisitions, shelling out $72.7 million on five assets in separate transactions. The collection, located in various Southern California infill markets, includes three industrial facilities totaling approximately 177,000 square feet, in addition to an industrial storage site and a redevelopment site.
Having closed 2020 with a slew of purchases, Rexford’s continuation of its shopping spree into 2021 dovetails with the REIT’s broader strategy. “We see a very substantial opportunity to consolidate well beyond our current 1.5 percent market share within our highly fragmented, exceptionally large infill Southern California industrial market,” Michael Frankel, co-CEO of Rexford Industrial Realty Inc., said during the company’s third quarter 2020 earnings conference call on Oct. 21, 2020.
Through the three newly announced transactions involving built properties, Rexford has enhanced its holdings by an aggregate 177,000 square feet in Southern California. For starters, the REIT increased its footprint in the high-demand Inland Empire with the addition of 5002-5018 Lindsay Court, a 65,000-square-foot, two-tenant building sited on nearly 3 acres in Chino. The property cost $12.7 million and will benefit from a repositioning and re-tenanting under the new ownership.
Rexford also spent $20.2 million on the purchase of the 74,800-square-foot property at 17907-18001 S. Figueroa St., in Gardena, part of the Los Angeles–South Bay submarket. Currently 100 percent leased, the multi-tenant property also features 5.6 acres and offers upside potential via value-add repositioning or ground-up redevelopment.
In the Los Angeles–San Fernando Valley submarket, Rexford purchased 7817 Woodley Ave., a 36,900-square-foot property located on 1.6 acres in Van Nuys. The fully leased, single-tenant industrial building carried a price tag of $10 million, including the assumption of existing debt, and it completes the company’s Van Nuys Airport Industrial Center portfolio purchase of December 2020.
The two remaining acquisitions include 514 E. C St. in Wilmington in the South Bay submarket, and 8888-8892 Balboa Ave. in San Diego. The property at 514 E. C St. is a fenced trucking and container storage facility featuring 2.5 acres of paved yard and a 3,400-square-foot office structure adjacent to the Port of Los Angeles. Rexford purchased the asset for $10 million in a sale-leaseback transaction with the tenant. And Rexford paid $19.8 million for the nearly 6-acre San Diego property at 8888-8892 Balboa Ave., where the REIT plans to develop a 120,900-square-foot Class A industrial building.
Rexford, which had completed 77 percent of its transactions in the first three quarters of 2020 by means of off-market or lightly marketed deals, closed each of the five newly announced purchases via off-market transactions. The company relied on cash on hand and 1031 exchange proceeds to finance the acquisitions.
While many investors have remained on the sidelines in favor of a wait-and-see approach amid the economic fallout from the COVID-19 health crisis, Rexford has remained highly acquisitive; the REIT continued bolstering its portfolio throughout 2020. “If you didn’t know the word COVID, you’d probably be thinking things were just pretty typical in terms of our business,” Howard Schwimmer, co-CEO of Rexford Industrial Realty Inc., said during the conference call. Rexford’s acquisition pipeline remains strong. In late January, the REIT entered into an agreement to purchase an 83-acre industrial property in Los Angeles County via a sale-leaseback transaction valued at $217.1 million.
Despite a certain degree of wariness among investors—industrial sector investment volume in 2020 was three-quarters that of 2019, according to a CommercialEdge report—Rexford does not expect to benefit from any pandemic-related fire sales. “There’s a significant amount of demand in the [industrial] market. Vacancy is still incredibly low. So, when you really look at the entirety of the market, there is not really any distress that’s out there,” Schwimmer added. “There’s a few things going on here and there, but that’s not leading to sellers thinking, because of the pandemic, they need to sell their real estate.”