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12/09/20
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Rexford Industrial Realty Inc recently closed on a $154.6 mil industrial property portfolio acquisition. The off-market purchase was of Van Nuys Airport Industrial Center, an 18-building portfolio located in the central San Fernando Valley community of Van Nuys. The purchase was funded with cash on hand.
The portfolio buy includes 426.5k sf of space on 22.68 acres of land acquired for $140.6 mil ($330/sf), plus two fully-leased industrial outside storage land parcels totaling 4.14 acres acquired for $14 mil. These industrial properties offer high-demand spaces ranging up to 42k sf 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.
Commenting on the deal, Rexford execs point out that Van Nuys Airport Industrial Center, located adjacent to the Van Nuys Airport in the L.A. – San Fernando Valley submarket, provides exceptional last mile and ecommerce functionality servicing the San Fernando Valley and West Los Angeles markets.
According to CBRE, the vacancy rate in the 175 msf LA – San Fernando Valley submarket was 2.7% at the end of the third quarter 2020.
In connection with this transaction, Rexford expects to close on the acquisition of one additional property included with the portfolio referenced above located at 7817 Woodley Ave, within the L.A. – San Fernando Valley submarket, for $10 mil, or $270 per square foot. This fully leased, single tenant property contains 36.9k sf 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.
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