Rexford Industrial Realty Inc Reports Robust Growth in Core FFO and NOI for Full Year 2023
Net Income: $227.4 million for 2023, a substantial increase from $157.5 million in the previous year.
Core FFO: Company share of Core FFO surged by 32.9% to $444.8 million for the year.
NOI Growth: Consolidated Portfolio NOI grew by 26.4%, with Same Property Portfolio NOI up by 8.2%.
Occupancy Rates: Average Same Property Portfolio occupancy remained high at 97.8%.
Rental Rate Increases: Comparable rental rates on new and renewal leases soared by over 77% on a GAAP basis.
Investment Activity: Completed 18 transactions totaling $1.5 billion, with projected yields indicating strong future returns.
Balance Sheet Strength: Maintained low leverage with a net debt-to-enterprise value ratio of 15.0%.
On February 6, 2024, Rexford Industrial Realty Inc (NYSE:REXR), a real estate investment trust specializing in industrial properties in Southern California, released its 8-K filing, announcing financial and operational results for the fourth quarter and full year 2023. The company reported a net income attributable to common stockholders of $227.4 million, or $1.12 per diluted share, marking a significant increase from the previous year's $157.5 million, or $0.92 per diluted share. This performance underscores the company's effective strategy in the highly competitive Southern California infill markets.
Financial and Operational Highlights
Rexford Industrial's financial achievements are particularly noteworthy in the context of the REIT industry. The company's share of Core Funds from Operations (Core FFO) per diluted share increased by 11.7% to $2.19, reflecting the company's ability to generate substantial operating income from its real estate investments. The Consolidated Portfolio Net Operating Income (NOI) also saw a robust increase of 26.4% compared to the prior year, demonstrating the company's operational efficiency and the profitability of its property portfolio.
The Same Property Portfolio NOI, a key metric that measures the operating performance of properties owned for the full years of 2022 and 2023, increased by 8.2%, while Cash NOI grew by 10.0%. These figures indicate strong underlying tenant demand and effective asset management. The company's focus on maintaining high occupancy rates, evidenced by an average Same Property Portfolio occupancy of 97.8%, has been a critical factor in driving revenue growth.
Leasing and Transaction Activity
Rexford Industrial's leasing activity in the fourth quarter and throughout 2023 reflects the strong demand for industrial space in its target markets. The company executed a total of 459 leases over the year, covering 7.4 million rentable square feet, with GAAP and cash basis rental rates increasing by 77.5% and 58.7%, respectively. These impressive releasing spreads highlight the company's ability to command higher rents upon lease renewals or new leases, contributing to its revenue growth.
In terms of investment activity, Rexford Industrial completed 18 transactions totaling $1.5 billion, demonstrating the company's aggressive growth strategy. The sales of two properties generated a 21.4% weighted average unlevered Internal Rate of Return (IRR), showcasing the company's ability to realize value from its investments.
Balance Sheet and Dividends
Rexford Industrial's balance sheet remains strong, with $33.4 million in cash on hand and $1.0 billion available under its unsecured revolving credit facility. The company's debt profile is conservative, with a net debt-to-enterprise value ratio of 15.0%, and no significant debt maturities until 2026. This financial stability positions the company well for future growth and acquisitions.
The Board of Directors declared a quarterly common stock dividend of $0.4175 per share, representing a 10% increase, which is indicative of the company's confidence in its financial health and commitment to delivering shareholder value.
Guidance and Outlook
Rexford Industrial provided guidance for 2024, projecting a net income attributable to common stockholders per diluted share of $1.11 to $1.14 and a company share of Core FFO per diluted share of $2.27 to $2.30. The company anticipates continued growth in Same Property Portfolio NOI and maintains a positive outlook on occupancy rates.
Co-CEOs Michael Frankel and Howard Schwimmer expressed confidence in the company's position and its entrepreneurial business model, which they believe will continue to drive growth in 2024 and beyond. The company's strategic focus on Southern California's infill markets, characterized by high demand and limited supply, positions Rexford Industrial to capitalize on the region's robust industrial real estate dynamics.
For more detailed information, investors are encouraged to review the full earnings release and financial statements available on Rexford Industrial's investor relations website.
Explore the complete 8-K earnings release (here) from Rexford Industrial Realty Inc for further details.
This article first appeared on GuruFocus.
