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The Industrial Dividend Growth Story Is Rexford


  • REXR has several advantages, but is completely overlooked by most investors.
  • They deleveraged their balance sheet while driving NAV per share dramatically higher through prudent investment.
  • The Southern California real estate market for industrial real estate continues to demand premium rents, faster rental rate growth, and high occupancy.
  • REXR trades right around NAV (net asset value). That's actually quite cheap for them. REITs that regularly grow NAV tend to trade at premiums.
  • There are some weaker REITs which often trade at huge discounts to NAV. Those weaker REITs tend to deliver much weaker long-term performance.
  • Looking for a portfolio of ideas like this one? Members of The REIT Forum get exclusive access to our model portfolio. Get started today »

Rexford Industrial (NYSE:REXR) has been on our radar for the last year. The main strengths are:

  1. Outstanding property quality in a fragmented market.
  2. An edge in evaluating physical real estate and sourcing deals.
  3. Exceptional balance sheet, prepared for growth.
  4. Strong management team.
  5. Shares frequently trade over NAV, enabling accretive growth.

The downsides are:

  1. Investors need to accept a high price to FFO multiple and low dividend yield.
  2. Investors need to be ready to pay a premium to NAV to open positions.

Index Card For REXR

The quick stats are summed up in the index card below:

Source: The REIT Forum

No One Covers REXR

It felt like we never heard other analysts talking about REXR, so we did a quick search on Seeking Alpha. We see a lack of coverage. We scanned for articles which satisfy two traits:

  1. About the common stock (not the preferred stock)
  2. Has either a bullish or bearish outlook (no neutral)

There were precisely two articles to meet those criteria since June 2015. Why isn’t anyone talking about REXR? They are an outstanding industrial REIT with a common equity market capitalization slightly under $5 billion. That’s big enough to warrant coverage.

To put that in perspective, Plymouth (PLYM) has seven articles since June 2018. PLYM only has a market capitalization for common equity of $215 million. How is it that PLYM can acquire seven articles with bullish or bearish ratings on the common shares in under two years, but REXR only gets two in five years?

Is it because PLYM was a better investment? No, that isn’t it:

Source: Yahoo

The reason is simple. PLYM has a big sucker yield dividend. REXR only has a 2.22% yield, so it doesn’t draw as much attention. Picking REXR isn’t cool. Telling investors they can get a 10.27% yield while getting a

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This article was written by

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Colorado Wealth Management is a REIT specialist who began his decades-long investment career in a family-owned realtor office before launching his own company and embracing his drive for deep-dive REIT analysis. He passed all 3 CFA exams. He focuses on Equity REITs, Mortgage REITs, and preferred shares.

Features of the group include: Exclusive REIT focus analysis, proprietary charts and data models, real-time trade alerts posted multiple times a month, multiple subscriber-only portfolios, and access to the service's team of analysts and support staff for dialogue and questions on the REIT space.

Analyst’s Disclosure: I am/we are long REXR, ELS, NNN, SUI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (14)

twajetgod profile picture
competition is TRNO. very good management with more cash to buy. what about that?
Michael1944 profile picture
I charted TRNO against REXR as I was looking to add morei n this area and I am already heavy with REXR,but REXR came out ahead, but thanks for the heads up,always appreciated.
The yield is awful, especially for a reit.
Colorado Wealth Management Fund profile picture
Good thing our analysis extends well beyond:
"What was the amount of the last dividend declared by the board?"
Michael1944 profile picture
ABR for Yield,REXR for Growth.
Einherjar profile picture
thx for confirmation...bought in last month
Cuip99 profile picture
As a former resident of California I am not enamored with real estate in the LA basin. Yes, a lot of people live there but the political environment is horrible. Taxes are atrocious. Some cities are in perpetual bankruptcy. Good weather and terrible smog. Even the aircraft industry has generally moved out of Southern California. Not my cup of tea.
I'm long PLD in this space and have been for decades. I also covered Socal for several years just after business school and did a couple of industrial deals. I would say that it is the most covered market(s) by institutional investors in the country, so to conclude that REX or anybody else has some market knowledge advantage seems unlikely to me. I do like their balance sheet focus and have no problem with their yield. Still, if I am to add to my PLD position, I would be more likely to add TRNO than REX. JMO
Michael1944 profile picture
Thank You,will check it out?
The CA Comment, i wish my kid would listen to me,He and his Wife,No Kids,want to move there??
Kids should respect their Parents, We completed high school without GOOGLE, Sirri,open Book etc and failure was not a chance to blame some one else for it.
I am a Dinosaur.
You hit it early on in the article. 2% dividend. As Mr Wonderful says on Shark Tank," That's not enough for me to get out of bed for"!!
Colorado Wealth Management Fund profile picture
This is the challenge for many investors. They focus on the amount of the dividend declared without looking at the cash flows behind the dividend. That's why so many small investors suffered a large decline in PLYM while REXR was roaring higher.

The investors see the big dividend PLYM is sending out and don't realize the NAV is declining. They see the small dividend from REXR and don't realize how quickly management is compounding cash flows.
Michael1944 profile picture
He's a Jerk, a Canadian, not my fav,but I own many shares of REXR for the growth,ABR for the Dividend.
I admit to being a whoosie,I have Covered Calls on all of them some have worked out,others haven't.
I own the 5.875% preferred REXR.PA.
wildpitcher profile picture
Thanks for the article. I'll have to have a look. I'm currently long PLD in this space.

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