Rexford Industrial Seals $245M Deals in LA
The REIT's acquisition of a suburban facility includes the option of buying an adjacent development site.
Rexford Industrial acquired 15801 West 1st Street, Irwindale, Calif., in the Los Angeles San Gabriel Valley submarket. Image courtesy of CommercialEdge
Rexford Industrial Realty Inc. has both acquired for $120 million a nearly 1 million-square-foot industrial facility in Greater Los Angeles and loaned the seller an additional $125 million collateralized by an adjacent 150-acre industrial development site.
Pabst Brewing sold the property, according to CommercialEdge data. Rexford did not respond to Commercial Property Executive’s request for additional information.
The existing building is a 993,142-square-foot structure on a 75-acre site at 15801 W. First St., Irwindale, adjacent to the I-210 freeway, in the San Gabriel Valley submarket.
It’s fully leased to what Rexford describes as “a deeply entrenched tenant with an eight-year lease term subject to long-term extension options.”
READ ALSO: What’s Ahead for Industrial?
Rexford noted that this was an off-market transaction and provides “an initial 5.6 percent unlevered cash yield,” along with the possibility of redeveloping the site following lease expiration.
On the other side of this transaction, the REIT issued to the seller a $125 million five-year, fixed-rate loan with an effective interest rate of 8.0 percent. The loan also features a right of first offer for Rexford to acquire the industrial development site in the future.
Rexford funded the twin deals using proceeds from forward equity settlements and cash on hand.
In a prepared statement, Rexford co-CEOs Howard Schwimmer and Michael Frankel noted that the REIT “has a near-term pipeline comprising approximately $100 million of new investments under contract or accepted offer.”
La-La Land doldrums
The metro Los Angeles industrial space market is seeing negative net absorption, with buildings in a wide range of sizes returning to the market, according to a third-quarter report from Kidder Mathews. Further, newly completed Class A buildings are getting little love, as 3PL users, the primary tenant base, remain on the sidelines.
As a result, vacancy has increased to 3.2 percent, and the average asking rent has slid to $1.83. On the positive side, new deliveries are down, and Kidder Mathews expects an increase in cargo at the ports of Long Beach and Los Angeles going into 2024.
Earlier this month, IDS Real Estate Group obtained an $84 million four-year, floating-rate loan as post-close acquisition financing for IDS’s July purchase of the three-building Azusa Industrial Center in Azusa, Calif. The 432,500-square-foot asset is fully leased to four tenants.
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