Benzinga | Dec 4, 2020 07:03AM EST

Rexford Industrial Acquires 18-Building Industrial Portfolio For $154.6M

LOS ANGELES, Dec. 4, 2020 /PRNewswire/ -- Rexford Industrial Realty, Inc. (the "Company" or "Rexford Industrial") (NYSE:REXR), a real estate investment trust focused on creating value by investing in and operating industrial properties located in Southern California infill markets, today announced the acquisition of an industrial property portfolio for $154.6 million. The acquisition was funded with cash on hand.

"This investment demonstrates Rexford's sharp-shooter advantage by leveraging our proprietary originations platform to acquire an 18-building portfolio of irreplaceable industrial properties through an off-market transaction in one of the nation's lowest-supply, highest-demand submarkets," stated Howard Schwimmer and Michael Frankel, Co-Chief Executive Officers of the Company. "Located adjacent to the Van Nuys Airport in the L.A. -- San Fernando Valley submarket, Van Nuys Airport Industrial Center provides exceptional last mile and ecommerce functionality servicing the San Fernando Valley and West Los Angeles markets, one of the largest concentrations of population and consumption in the nation. As we look forward, we remain very pleased with the opportunities before us to drive accretive internal and external growth designed to enhance shareholder value."

The Company acquired through an off-market transaction Van Nuys Airport Industrial Center, located in Van Nuys within the LA -- San Fernando Valley submarket, for $154.6 million. The investment comprises 18 separately parceled buildings totaling 426,466 square feet on 22.68 acres of land acquired for $140.6 million, or $330 per square foot, plus two fully-leased industrial outside storage land parcels totaling 4.14 acres acquired for $14.0 million. These industrial properties offer high-demand spaces ranging up to 42,000 square feet with premium functionality including dock-high loading, modern clear heights and secured truck storage yards, ideally positioned to serve last-mile distribution and logistics needs. The portfolio is 99% leased to a high-quality tenant base including Fortune 500 companies as well as the General Services Administration, with rents estimated to be approximately 6.0% below current market rates. The initial unlevered yield on total investment is approximately 4.0% and is expected to grow to mid-4% as in-place rents are increased to higher market rates. Projected contractual annualized rental rate increases of 3.0% or greater thereafter will provide for further investment yield expansion. According to CBRE, the vacancy rate in the 175 million square foot LA -- San Fernando Valley submarket was 2.7% at the end of the third quarter 2020.

In connection with this transaction, the Company expects to close on the acquisition of one additional property included with the portfolio referenced above located at 7817 Woodley Avenue within the L.A. -- San Fernando Valley submarket, for $10.0 million, or $270 per square foot. This fully leased, single tenant property contains 36,900 square feet on 1.63 acres. The close of this subsequent transaction is expected to occur in January 2021, and is subject to the assumption of existing debt on the property.