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1/06/21
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Rexford Industrial Realty has purchased a four-building industrial portfolio and an industrial outdoor storage property in deals totaling $103.1 mil. The acquisitions closed on December 31, 2020 and were funded using newly issued operating partnership units (the "OP Units") and cash on hand.
Rexford acquired a portfolio of four high-quality, modern single-tenant industrial properties located in the Santa Clarita Valley, Mid-Counties and Inland Empire West submarkets for $86.3 mil ($208/sf) in an off-market transaction. The properties contain a total of 414.7k sf of improvements on 25.23 acres of land and are 100% leased at rents estimated to be 15% below market rates. The unlevered yield on total investment is expected to stabilize at approximately 4.3% after near-term leases roll, with further cash flow growth over time.
The portfolio purchase was completed using 1.8 million OP Units, newly issued from the company's operating partnership, Rexford Industrial Realty L.P., at a value of $47.93 per share, which are redeemable by the seller on a one-to-one basis for shares of the Company's publicly traded common stock.
The properties are located at 29010 Avenue Paine in Valencia (100.2k sf); 29010 Commerce Center Drive in Valencia (117.2k sf); 13369 Valley Blvd in Fontana (105k sf); and 6635 Caballero Blvd in Buena Park (92.4k sf).
Rexford also purchased an industrial outdoor storage property located at 1235 South Lewis St in Anaheim, within the Orange County – North submarket, for $16.8 mil, or $80 per land square foot. The 4.83-acre, low-coverage site located near Anaheim's fast-growing Platinum Triangle area, contains a 62.5k sf building and is leased at a rent estimated to be 48% below market rates.
Over time, the firm has the potential to re-lease at expected higher market rental rates or redevelop the property by constructing a new 105.1k sf Class A distribution facility designed to appeal to a wide range of tenants including last-mile logistics providers. The stabilized unlevered cash yield on total investment for the two aforementioned scenarios ranges from approximately 4.8% to 5.3%.
According to CBRE, the vacancy rate in the 115 msf Orange County – North submarket was 1.4% at the end of the third quarter 2020.
For the full year 2020, Rexford acquired $1.22 bil in industrial properties, representing 5 msf, bringing the company's total portfolio to 248 properties comprising approximately 31.msf.
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