Rexford Industrial Realty is making good on its promise to sell at least $1.5B of its portfolio to help pay off $1B of debt slated to mature next year.
The Southern California-focused REIT announced plans Tuesday to sell an industrial portfolio to an affiliate of EQT Real Estate for around $1.2B. Rexford also plans to use the proceeds to buy back shares and invest in further development projects, according to a press release from the company.
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The $1B of debt maturing next year represents around 30% of Rexford’s total debt.
The deal is expected to close by the end of the third quarter. The portfolio’s estimated 2027 cash net operating income yield is estimated to be 5.5%, reflecting expected rent rolldowns and move-outs.
No further details about the portfolio were disclosed.
The sale will bring Rexford’s dispositions for the year to around $1.5B, a minimum threshold the company said in July that it planned to reach this year.
"This transaction is a significant step in our portfolio realignment and underscores our disciplined approach to capital allocation," Rexford CEO Laura Clark said in a statement. "By strategically recycling capital from select non-core assets, we are concentrating our portfolio around the properties we believe offer the strongest long-term cash flow growth and value creation opportunity.”
Rexford increased its full-year 2026 disposition guidance to between $1.5B and $2B as part of its second-quarter financial report last month. The increased guidance was a significant step up from the $400M to $500M it had planned to sell at the end of the first quarter.
The increase followed an extensive review of the company’s portfolio that identified around 8M SF of property, or $2B in assets, that didn’t align with Rexford’s long-term strategy, Clark told investors during the Q2 earnings call in July.
Those properties include assets with limited potential for long-term value creation and those with above-market in-place rents, shorter remaining lease durations and elevated competitive supply.
The dispositions will give Rexford more financial flexibility and better position the REIT to deliver long-term shareholder value, Clark said in Tuesday’s press release.
With the announcement of the portfolio sale, Rexford reaffirmed its disposition guidance and said it was in negotiations to sell more of its portfolio.
The REIT owns around 50M SF of rentable space, so the disposition of 8M SF would represent 16% of its portfolio.
The decision to sell more of its portfolio affected the REIT’s second-quarter earnings.
Rexford posted a net loss attributable to common stockholders of $506.9M, which it said was due to a noncash impairment resulting from the sales. Selling the properties sooner than previously planned changed their value on the company’s books, according to the Q2 results.
