Executive Summary / Key Takeaways

• Strategic Focus on Infill Southern California: Rexford Industrial Realty (REXR) maintains a highly differentiated strategy, concentrating on supply-constrained, high-barrier infill Southern California industrial markets, which are less susceptible to global trade flows and benefit from robust regional consumption.
• Robust Value Creation Engine: The company's vertically integrated platform and aggressive repositioning and redevelopment initiatives are key drivers of accretive internal growth, projected to contribute significant incremental Net Operating Income (NOI) and enhance asset value.
• Solid Financial Performance and Liquidity: REXR demonstrated strong financial results for the nine months ended September 30, 2025, with double-digit growth in Core FFO and NOI, supported by a low-leverage balance sheet and ample liquidity for strategic capital allocation.
• Market Resilience and Outperformance: Despite broader macroeconomic uncertainties and market rent moderation, REXR's portfolio continues to exhibit relative strength, outperforming the overall market in occupancy and leasing spreads due to the mission-critical nature and superior functionality of its assets.
• Disciplined Capital Allocation: The company actively recycles capital through strategic dispositions at premium valuations, funding higher-yielding value-add projects and opportunistic share repurchases, reinforcing its commitment to shareholder value.

The Southern California Industrial Imperative: REXR's Differentiated Core

Rexford Industrial Realty, Inc. (REXR) stands as a self-administered and self-managed full-service Real Estate Investment Trust, strategically focused on owning and operating industrial properties within the infill Southern California markets. Established in 2013, REXR's foundational strategy has been to capitalize on a unique market characterized by extreme scarcity of functional product, high barriers to new construction, and a persistent supply-demand imbalance. This region, home to the nation's largest population base and the world's 11th largest economy, drives demand primarily through regional consumption, offering a distinct advantage over larger, non-infill industrial markets more exposed to global trade fluctuations.

REXR's overarching strategy is to generate attractive risk-adjusted returns by acquiring, improving, repositioning, redeveloping, leasing, and managing industrial real estate. This vertically integrated approach allows the company to pursue both stabilized, cash-flowing assets and properties with significant value-add potential. The company's historical journey, marked by consistent acquisitions and proactive capital management, has solidified its position as a specialized player in a critical economic hub.

Competitive Landscape and Operational Edge

REXR's competitive positioning is defined by its specialized focus on smaller format spaces, averaging 26,000 square feet, within last-mile, infill Southern California locations. This niche allows REXR to exhibit superior resilience compared to the broader industrial market. For instance, while market rents across Rexford's portfolio declined approximately 3.5% sequentially and 12.8% year-over-year in Q2 2025, the company's assets continue to demonstrate relative strength. In Q4 2024, REXR's comparable product saw declines of 1.5% sequentially and 8% year-over-year, significantly outperforming the broader infill markets (down 12.5% year-over-year) and large box markets (down 25% year-over-year).

The company's vertically integrated operating platform and entrepreneurial team are its core technological differentiators. This "technology" is not a physical product but a sophisticated operational framework that enables data-driven acquisition, repositioning, and asset management strategies. This translates into tangible benefits such as the ability to identify off-market or lightly marketed transactions with significant value-add opportunities. The platform supports the company's "embedded growth opportunity," which was substantial at $195 million of incremental cash NOI, representing 28% growth, as of Q2 2025. This includes $70 million from repositioning and redevelopment projects and $105 million from contractual rent steps.

This operational "technology" provides REXR with a competitive moat, driving higher Funds From Operations (FFO), better margins through efficient operations, and sustained Net Asset Value (NAV) growth. It allows REXR to create value even in volatile market conditions, making its growth less dependent on overall market rent appreciation. The company's limited exposure to 3PLs and its rigorous tenant credit analysis further underscore its disciplined approach, mitigating potential risks associated with less creditworthy tenants. Furthermore, state-level zoning changes like AB 98, while impacting larger logistics projects, are expected to have nominal effects on REXR's portfolio, potentially creating more value for its existing assets due to increased supply constraints.

Financial Performance: A Story of Growth and Resilience

Rexford Industrial's financial performance for the nine months ended September 30, 2025, underscores its operational effectiveness and strategic focus. Net income attributable to common stockholders surged by 32.1% year-over-year to $268.9 million. Core FFO attributable to common stockholders also saw robust growth, increasing by 10.3% year-over-year to $422.4 million. Net Operating Income (NOI) expanded by 7.7% to $568.7 million over the same period.

Rental income, the primary revenue driver, grew by 8% year-over-year to $737.15 million for the nine months ended September 30, 2025. This growth was supported by strong leasing activity, with the company executing 360 new and renewal leases covering 7.4 million rentable square feet. These leases achieved impressive spreads of 23.9% on a GAAP basis and 11.4% on a cash basis. Contractual rent steps in executed leases consistently averaged between 3.7% and 3.9%, providing a predictable source of income growth. The company's total portfolio occupancy stood at 91.8% as of September 30, 2025, with its stabilized consolidated portfolio achieving 97.3% occupancy.

Profitability metrics highlight REXR's efficient operations, with a TTM Gross Profit Margin of 77.51%, Operating Profit Margin of 61.20%, Net Profit Margin of 33.44%, and an EBITDA Margin of 66.98%. These strong margins reflect the company's ability to effectively manage its property expenses and leverage its high-quality asset base.

Liquidity and Capital Allocation Discipline

REXR maintains a strong financial position, crucial for executing its capital-intensive strategy. As of September 30, 2025, cash and cash equivalents totaled $249 million. The company boasts substantial liquidity, with over $1.8 billion available as of Q2 2025, including $1.25 billion under its unsecured revolving credit facility. This robust liquidity is further bolstered by a low-leverage balance sheet, with net debt to EBITDA at 4.0x as of Q2 2025, well within its long-term target range. The company has no significant debt maturities until mid-2026, assuming extension options, and its debt carries investment-grade credit ratings (Baa2 from Moody's, BBB from S&P and Fitch).

Capital allocation remains a core strategic pillar. REXR actively recycles capital through strategic dispositions, selling six properties for $187.6 million gross sales price in the first nine months of 2025. These dispositions, often to owner-users paying premium valuations, generated a weighted average unlevered IRR of 11.9% at low 4% cap rates, providing capital for higher-yielding investments. The company also demonstrated a commitment to shareholder returns through its stock repurchase program, repurchasing $150 million of common stock at a weighted average price of $38.62 per share in the nine months ended September 30, 2025, with $450 million remaining under the new $500 million program.

Strategic Initiatives: The Value Creation Engine

REXR's growth narrative is deeply intertwined with its value-add repositioning and redevelopment initiatives. These projects are designed to enhance property functionality and drive significant cash flow accretion. For the nine months ended September 30, 2025, REXR stabilized 14 repositioning and redevelopment projects, encompassing 1.48 million rentable square feet. These projects achieved an unlevered stabilized yield of 7.4% year-to-date through Q2 2025, with incremental returns on capital invested ranging from 15% to 20%.

The company's pipeline remains robust, with 12 properties currently under repositioning or redevelopment, 16 in the lease-up phase, and an additional 12 projects anticipated for near-term construction. An estimated $130.9 million in capital is earmarked for these projects over the next few years. The ability to capitalize interest and real estate taxes during construction, totaling $26.5 million and $7.4 million respectively for the nine months ended September 30, 2025, further enhances the financial efficiency of these investments. This strategic focus ensures REXR's growth is not solely reliant on market rent appreciation but is driven by its ability to create value through property enhancements.

Outlook and Risks: Navigating the Macro Landscape

Rexford Industrial has reaffirmed its full-year 2025 Core FFO outlook of $2.37 to $2.41 per share, reflecting a pragmatic approach to current market dynamics. This guidance is underpinned by several key assumptions, including an expectation of lower interest expense due to favorable interest rate swaps and higher capitalized interest. However, management anticipates some delays in rent commencements for repositioning and redevelopment projects, with projected lease-up timing increased to nine months. The outlook also factors in planned move-outs within the same-property portfolio in the second half of 2025, leading to a projected deceleration in occupancy, and a bad debt reserve maintained at approximately 70-75 basis points of revenue, higher than historical averages.

The company projects a $15 million net NOI contribution from repositioning and redevelopment for 2025, comprising $30 million in incremental NOI from newly leased projects offset by $15 million coming offline for new starts. General and administrative expenses are expected to remain flat year-over-year, demonstrating strong operating leverage.

While the long-term outlook for Southern California's infill industrial market remains favorable due to persistent supply constraints and strong demand drivers, REXR acknowledges ongoing volatility. Macroeconomic and political uncertainty, changes in trade and tariff policy, an uncertain interest rate environment, and persistent inflation continue to weigh on tenant decision-making and lease-up timeframes. Proposed trade policies could also lead to increased construction costs and delays. However, REXR's infill market focus, diverse tenant base (no single tenant accounts for more than 5% of rental income), and mission-critical nature of its properties provide a significant buffer against these headwinds. Tenants in REXR's portfolio tend to be "sticky" due to the scarcity of space and the essential role these locations play in their business ecosystems.

Conclusion

Rexford Industrial Realty continues to demonstrate a compelling investment thesis, firmly rooted in its specialized focus on the high-barrier, supply-constrained infill Southern California industrial market. The company's vertically integrated platform and relentless pursuit of value-add repositioning and redevelopment projects serve as its core engine for growth, consistently delivering accretive returns and enhancing asset quality. Despite the prevailing macroeconomic uncertainties and market rent moderation, REXR's operational excellence and strategic discipline have enabled it to outperform the broader market, showcasing the resilience of its portfolio and business model.

With a strong balance sheet, ample liquidity, and a clear capital allocation strategy that prioritizes high-yielding internal investments and opportunistic share repurchases, REXR is well-positioned to drive long-term shareholder value. The company's reaffirmed 2025 guidance, while acknowledging near-term market dynamics, reflects a confident outlook grounded in its unique market position and proven ability to create value. Investors looking for exposure to a high-quality, growth-oriented industrial REIT with a distinct competitive advantage in an irreplaceable market should consider REXR's enduring potential.