Rexford Industrial’s $203M Buying Spree in Southern California

Image via Pixabay.com

Rexford Industrial Realty Inc. has acquired a 10-building portfolio of Southern California industrial properties for $203.2 million, or $234 per square foot, including assumed debt.

READ ALSO: Nuveen Industrial Fund Raises $660M

The properties, in Los Angeles and Orange counties, total 867,242 square feet on 43.06 acres of land and are 87.7 percent leased overall to 56 tenants. Three are single-tenant and seven are multi-tenant properties. The portfolio’s tenant pool is well diversified, with no single tenant occupying more than 12.9 percent of the total rentable area.

The properties are in four of Rexford’s core infill markets, including LA–South Bay, LA–Mid Counties, Inland Empire–West and Orange County, as follows:

• Kingshill Place, 169,069 square feet, LA–South Bay, 73.3 percent leased
• Manhattan Beach Blvd., 126,726 square feet, LA–South Bay, 95.5 percent leased
• Santa Fe Ave., 112,000 square feet, LA–South Bay, 100 percent leased
• 126th St., 63,532 square feet, LA–South Bay, 40.2 percent leased
• La Cienega Blvd., 63,462 square feet, LA–South Bay, 93.4 percent leased
• Knox St., 39,400 square feet, LA–South Bay, 100 percent leased
• Woodwind Drive, 62,377 square feet, Orange–West, 100 percent leased
• Atlantic Ocean Drive, 27,960 square feet, Orange–South, 100 percent leased
• Los Nietos Road, 107,740 square feet, LA–Mid-Counties, 100 percent leased
• Richton St., 94,976 square feet, San Bernardino–Inland Empire West, 86.0 percent leased.

Rexford estimates that the average in-place rents are “materially below-market,” such that the portfolio “provides an above-market cash yield” and the potential for favorable cash flow growth. The seller was not identified, and Rexford did not reply to Commercial Property Executive’s request for that and other information.

Rexford funded the acquisition through a combination of cash and an UPREIT transaction. In the latter, the seller contributed a portion of the portfolio value to Rexford’s operating partnership in exchange for a blend of operating partnership units and newly issued convertible preferred operating partnership units.

Steady in LA

The Greater Los Angeles industrial market had a surge of distribution and logistics activity late last year, according to a fourth-quarter report from CBRE. Asking rents continued a steady rise, and sales prices increased substantially faster, by 23.1 percent year-over-year.

In December, Rexford purchased two Greater LA industrial properties for about $100 million; the properties totaled more than 800,000 square feet. And only weeks ago, CBRE brokered the lease of an entire 50,930-square-foot Class A industrial building, at Valencia Commerce Center, in Santa Clarita’s Valencia area.