Rexford Industrial Realty Q4 Earnings Call Highlights

Rexford Industrial Realty (NYSE:REXR) reported fourth-quarter 2025 results that management said met guidance expectations, while outlining a 2026 outlook shaped by softer infill Southern California industrial market conditions and a renewed focus on capital allocation discipline.

Leadership transition and strategic priorities

The call opened with brief recorded remarks from outgoing co-CEOs Howard and Michael, who reflected on building the company over more than two decades and thanked stakeholders. Management noted that COO Laura Clark is the incoming CEO. CFO Mike Fitzmaurice and Managing Director of Operations John Nahas also participated in the discussion.

Clark said Rexford executed 3 million square feet of leasing during the quarter and emphasized a set of strategic priorities first introduced in November. Those initiatives are aimed at improving cash flow quality, driving per-share FFO and NAV growth, and optimizing shareholder returns.

Key actions discussed included:

• Reducing development exposure: Rexford re-underwrote its near-term development pipeline and identified six projects totaling about 850,000 square feet that it does not plan to pursue. The company intends to dispose of these sites and said all six are under contract or accepted offer.
• Programmatic dispositions: Management said dispositions are intended to realize value creation and improve the quality of future cash flow growth. Rexford sold seven properties for $218 million in 2025 and is targeting $400 million to $500 million of dispositions in 2026.
• Operating efficiencies and compensation alignment: Clark reiterated a goal to bring G&A as a percentage of revenue below the peer average, and said 2026 guidance implies G&A at about 6% of revenue. She also noted the company recalibrated incentive compensation metrics and the absolute level of executive compensation, referencing a December filing.

Market backdrop: rent declines, higher vacancy, and early signs of stabilization

Clark said tenant demand remains influenced by macroeconomic forces and elevated availability, leading to a “more measured pace” of demand. Citing CBRE data, she said market rents declined 10 basis points during the quarter and were down 9% year-over-year, while vacancy increased 30 basis points in the quarter. Net absorption was negative, though management said it is beginning to see early signs of stabilization in select submarkets and size categories.

On the call, Clark highlighted that Rexford is prioritizing occupancy and cash flow in the current environment. As an example, she discussed an early renewal executed after year-end with the company’s largest tenant, Tireco, covering 1.1 million square feet at Production Avenue. Clark said the lease was expiring in January 2027, the tenant approached Rexford seeking a longer renewal, and the company negotiated a three-year renewal to “de-risk” cash flow while allowing a reset to market rents sooner.

Management said Tireco was paying above-market rent and the renewal represents about a 30% roll-down on an apples-to-apples basis. Clark added that the early renewal is expected to reduce 2026 same-property NOI by about 50 basis points and core FFO per share by about $0.015.

Fourth-quarter results: core FFO in line; impairments tied to development sites

Fitzmaurice reported fourth-quarter core FFO per share of $0.59, which he said was in line with expectations. He attributed the quarter’s performance to higher same-property NOI growth, lower G&A expense, and accretive share buybacks, partially offset by higher bad debt.

For the full year, Fitzmaurice said core FFO per share was $2.40 after adjusting for co-CEO transition severance charges and other non-recurring costs, placing results at the high end of initial expectations. He noted that the severance charges were fully recognized in the fourth quarter and will not affect 2026.

During the quarter, the company recognized $89 million of real estate impairments related to development sites it has elected to sell. Fitzmaurice said those projects no longer met investment hurdles and that selling the assets would allow Rexford to redirect about $285 million of capital into higher-yielding uses.

Fitzmaurice also said Rexford signed about 2 million square feet of repositioning and development leases in 2025, generating nearly $40 million of annualized incremental NOI.

Occupancy, rent trends, and bad debt commentary

Total portfolio occupancy ended the quarter at 90.2%, down 160 basis points sequentially, which management said was largely driven by near-term repositioning and development starts. Fitzmaurice said those opportunities are expected to achieve an overall stabilized yield of roughly 7%.

He also said additional move-outs were driven by large tenants consolidating or expanding, expirations of short-term renewals, and in some cases tenant financial difficulties.

On rents, Fitzmaurice said market rents in Rexford’s portfolio were down 1% and have fallen about 20% since a peak in early 2023, pressuring expected re-leasing spreads for 2026 as expiring leases roll from peak-period levels. In Q&A, he said the company expects to sign leases around $16.75 to $17.00 per square foot and guided to net effective re-leasing spreads of 5% to 10%, while cash spreads are expected to be flat to down 5%.

On bad debt, management said 2025 bad debt ran about 50 basis points, tied to three tenants. Fitzmaurice said the company had one tenant vacate in the first quarter, no bad debt in the second and third quarters, and two large tenant vacates in the fourth quarter. For 2026, management is assuming bad debt of about 75 basis points of revenue. Nahas added that the watch list is about the same size year-over-year, but with some larger spaces and a higher concentration in logistics, driven by tenant-specific business issues and changing rates from customers.

Management also provided detail on factors behind occupancy expectations. Fitzmaurice said the company is assuming longer downtime in 2026, with repositioning and redevelopment downtime moving from about nine months last year toward 10 to 11 months this year. Nahas cited two LA-area move-outs affecting same-property occupancy, including a 144,000-square-foot space at Rancho Pacifica Park (since re-leased with the new tenant moving in on Jan. 1) and an expected move-out at 3880 Valley, which remains on the market. He also noted three development pipeline properties—Gale, Balboa, and 190th—as key drivers of space moving into repositioning and development.

2026 guidance: core FFO $2.35-$2.40 and significant planned dispositions

Rexford introduced 2026 core FFO per share guidance of $2.35 to $2.40. Using the midpoint, Fitzmaurice outlined major drivers, including the stabilization and rent commencement of about 1.2 million square feet of repositioning and development projects expected to generate $20 million of annualized NOI, with most coming online by mid-year. Offsetting that, the company expects about $12 million of annualized in-place NOI to go offline due to new construction starts, primarily at 9000 Airport Boulevard, with the weighted average timing late in the third quarter.

Same-property NOI growth on a net effective basis is expected to decline about 2%. Assumptions include net effective re-leasing spreads of 5% to 10%, average occupancy of about 95%, and bad debt of 35 basis points of revenue. Fitzmaurice said the outlook also reflects lower termination income and the impact of the Tireco early renewal, as the above-market rent was reset to current market levels.

On dispositions, management said it expects to sell roughly $450 million of assets in 2026, with nearly $230 million already under contract or accepted offer. Proceeds are expected to be redeployed into the highest risk-adjusted returns, including repositioning and development projects and potential share repurchases.

Rexford repurchased $100 million of shares during the quarter, bringing full-year 2025 repurchases to $250 million. Fitzmaurice said buybacks will remain a consideration in 2026 depending on the discount to intrinsic value, competing capital needs, and maintaining balance sheet strength.

In response to an investor question on 2026 sources and uses, Fitzmaurice said the company expects to end 2026 with $166 million of cash and, including dispositions at the $450 million midpoint, to have $616 million of sources. With expected 2026 development and repositioning spend of about $203 million, he said Rexford would have about $413 million available to deploy toward what management views as the highest risk-adjusted returns, including share repurchases or future projects.

About Rexford Industrial Realty (NYSE:REXR)

Rexford Industrial Realty, Inc (NYSE: REXR) is a real estate investment trust (REIT) specializing in the acquisition, ownership and operation of industrial properties in Southern California. The company’s portfolio is concentrated in infill locations across key supply-chain markets, where it targets modern distribution centers, logistics facilities and light manufacturing spaces. Rexford’s strategy emphasizes buildings that offer proximity to major transportation routes and labor pools, catering to tenants in e-commerce, third-party logistics and manufacturing industries.

Since its founding in 2013, Rexford Industrial Realty has executed a disciplined growth plan driven by property acquisitions, selective development projects and strategic value-add initiatives.