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10/11/21
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Rexford Industrial Realty completed two industrial property acquisitions that comprise an aggregate 421.8k sf of space and one 80.2-acre industrial storage site for a total purchase price of $285.6 mil. The company also sold a 71.6k sf property for $18.6 mil. The acquisitions were funded using a combination of 1031 disposition proceeds, cash on hand, and proceeds from the company's previously executed equity offerings.
One of the acquisitions was of 5772 Jurupa Street, located in Ontario, within the Inland Empire – West submarket, for $54 mil, or $150 per square foot. The 360k sf, 30-foot clear building on 16.8 acres of land is fully leased at rent estimated to be approximately 40% below market. Upon lease expiration, the company intends to drive cash flow growth through the renewal of the existing tenant at a higher market rent or through the execution of value-add improvements and re-tenanting. The initial unlevered 4.3% cash yield is projected to grow to a stabilized yield on total investment of 8.2%.
According to CBRE, the vacancy rate in the 316 msf Inland Empire – West submarket was 1.0% at the end of the second quarter 2021.
In Ontario, Rexford bought 1010 E. Belmont Street for $14.5 mil, or $235 per square foot. The 61.8k sf, single-tenant building on 2.8 acres of land is fully leased at rent estimated to be approximately 55% below market. Upon lease expiration, the company intends to drive cash flow growth through the renewal of the existing tenant at a market rent or through re-tenanting after execution of value-add improvements including the addition of twelve dock positions. The initial unlevered 3.0% cash yield is projected to grow to a stabilized yield on total investment of 5.5%.
According to CBRE, the vacancy rate in the 316 msf Inland Empire – West submarket was 1.0% at the end of the second quarter 2021.
The firm’s other purchase was for 2500 E. Victoria Street, located in Rancho Dominguez, within the LA – South Bay submarket, for $217.1 mil, or $62 per land square foot. The 80.2-acre infill industrial storage site is subject to a long-term sale lease-back with a leading operator of liquid storage terminals. Located in the heart of the LA – South Bay submarket, the site is strategically positioned between the Los Angeles-Long Beach port complex and LAX. The investment provides favorable cash flow with an initial 5.0% unlevered cash yield plus the potential longer-term value-add opportunity to redevelop the site into a modern, state-of-the-art industrial facility.
According to CBRE, the vacancy rate in the 218 msf LA – South Bay submarket was 0.6% at the end of the second quarter 2021.
The company also sold 5803 Newton Drive, located in Carlsbad, within the North County San Diego submarket for $18.6 mil, or $260 per square foot. The 71.6k sf building was fully leased at the time of sale. The unlevered IRR on this transaction to the company is 16.6%. Proceeds from the sale were reinvested into the acquisition of 2500 E. Victoria Street.
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