Rexford Industrial reports 76% jump in profit

LA industrial specialist reports $140.7M in revenue, up from $100M a year ago

Rexford Industrial Realty's Michael Frankel and Howard Schwimmer (Rexford, iStock)
Rexford Industrial Realty's Michael Frankel and Howard Schwimmer (Rexford, iStock)

Rexford Industrial Realty is seeing the benefits of soaring industrial prices and rising rents in Southern California.

The Los Angeles-based investor and developer saw a 76 percent jump in net income in the first quarter compared to the same period last year, according to an earnings report. Rexford reported $43.9 million in net income in the first quarter, up from $24.9 million the year prior.

Rexford said it reeled in $140.8 million in revenue for the first three months of 2022 — a 41 percent increase from the first quarter last year — and $82.9 million in funds from operations, or $0.48 per share.

The increase in revenue and profits came on “extraordinary tenant demand,” Rexford’s co-CEO, Michael Frankel, said on an earnings call Wednesday.

As vacancy rates near zero in some Southern California industrial markets, Rexford is seeing occupancy rates across its own portfolio near 100 percent. The firm ended the quarter with 35 new leases, 54 lease renewals and a portfolio vacancy rate of 0.7 percent.

And Frankel doesn’t see demand dwindling anytime soon.

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“[Businesses] are really forced to establish a greater presence of smaller warehouses throughout infill Southern California,” he said, responding to a question about whether businesses were going to be forced out of the California market due to rising rental rates and inflationary pressure.

“What are they doing with these increasing rental rates, they are absorbing them — they just don’t have a lot of options.”

Rexford’s pace of acquisition is slowing down amid the ongoing high demand and tight inventory of Class A space across Los Angeles, the Inland Empire and Orange County.

In the first quarter of this year, Rexford purchased 14 buildings for a total of $458 million. That’s down from $551 million on 19 properties in the prior quarter.

Over the next two years, the firm said it was focusing on value-add and redevelopment projects, to bring more industrial space to market. Rexford has spent the last year buying up older industrial properties for renovation or office properties for demolition and eventual conversion into Class A industrial.