Rexford Industrial Realty is significantly reducing its portfolio in Southern California. The Los Angeles-based industrial REIT has announced that it has agreed to sell a portfolio of properties to an affiliate of EQT Real Estate for approximately $1.2 billion. The transaction is expected to close by the end of the third quarter.
This sale is part of Rexford's plan to dispose of $1.5 billion to $2 billion worth of non-strategic properties to improve the portfolio and balance sheet. Rexford did not provide details on the specific properties included in the portfolio but announced it would provide further details upon the transaction's closing. The assets were described as having limited long-term growth potential, greater competitive offerings, shorter remaining lease terms, or above-market rents.
Strategic Portfolio Optimisation
The portfolio sold to EQT is expected to generate a cash net operating income yield of 5.5 per cent in 2027, driven by anticipated tenant turnover and adjustment to now above-market rents. Laura Clark, CEO of Rexford, commented in a statement: “By strategically reallocating capital from selected non-strategic assets, we are focusing our portfolio on those properties that we believe offer the strongest long-term cash flow growth and the greatest potential for value creation.”
Rexford intends to use the proceeds to repay debt maturing in 2027, potentially repurchase shares under its $1 billion buyback programme, and finance its repositioning and development pipeline. Including the EQT transaction, Rexford has already completed or contracted approximately $1.5 billion in dispositions this year and is in negotiations for additional properties for sale.
Current Holdings and Outlook
As of 30 June, Rexford owned 409 properties with approximately 49.9 million square feet of rentable area, all concentrated in urban areas of Southern California. The disposition strategy underscores the company's focus on maximising the value of its core holdings and strengthening its financial position in a dynamic market environment.
