Rexford Industrial Realty: Embedded Growth In A Supply-Constrained Market

Summary

• Rexford Industrial Realty has posted a negative -31% total return thus in 2022 as investors have dumped REITs as interest rates have risen.
• Rexford's in-place rents are well below current market rents. With ~15% of leases expiring annually, Rexford will see significant same-store NOI growth even in a recession.
• While increased supply is a concern in most markets, Rexford's Southern California footprint faces very limited supply growth over the next few years.
• Rexford trades at an implied cap rate just over 4% on current numbers. However, if rents were marked to market, the implied cap rate would be north of 6%.
• While not dirt cheap, I believe Rexford can deliver 12-15% annualized returns to shareholders for the next several years.

halbergman

While Rexford Industrial Realty (NYSE:REXR) shares have been hit hard (-31% total return in 2022), prospects for the company remain bright as vacancy is below 1% in core markets while the outlook for supply growth remains limited. This bodes well for future same-store

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in REXR over the next 72 hours. 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.