Rexford Industrial Realty, Inc. REXR recently announced shelling $73.2 million for the acquisition of five industrial properties in prime infill Southern California markets. With these buyouts, the company’s 2020 acquisition activity grossed $342.9 Million.
In the Sun Valley, within the LA — San Fernando Valley sub-market, the company has purchased a three-property industrial portfolio for $35.1 million. With a sprawling 207,374 square feet on 8.38 acres of land, this portfolio is fully occupied, at present. Further, it offers scope for value-add improvements as well as renewal or re-leasing of in-place leases, estimated to be roughly 35% below market, on average, at higher market rates.
In Los Angeles within the LA — South Bay sub-market, the company acquired 15650-15700 S. Avalon Boulevard for $28.1 million. This property comprises two buildings, with an aggregate area of 166,088 square feet on 7.24 acres of land. On expiration of a short-term leaseback, the company has plans to reposition the property as a class A single-tenant, low coverage industrial site and attract a vast array of last-mile distribution users.
Apart from the above-mentioned buyouts, the company has purchased 15850 Slover Avenue for $10 million in Fontana within the Inland Empire — West sub-market. Comprising 60,127 square feet on 2.79 acres of land, this is a newly-constructed, vacant single-tenant industrial property.
These acquisitions, which were funded using cash on hand, are a strategic fit for Rexford. Southern California is considered the nation's highly-valued industrial property market with supply constraints. Per CBRE Group CBRE, at the end of first-quarter 2020, the vacancy rate in the 175-million-square-foot LA — San Fernando Valley sub-market was 1.8%, the same in the 224 million LA — South Bay sub-market was 0.8%, while the same in the 305-million-square-foot Inland Empire — West sub-market was 2.4%, reflecting the strong demand for industrial properties in these markets.
Amid the e-commerce boom and supply-chain strategy transformations, demand for industrial real estate has been strong. Warehouse operations have become more essential with increasing e-commerce customers in light of the coronavirus pandemic. Apart from the fast adoption of e-commerce, the logistics real estate is expected to benefit from the likely rise in inventory levels post the pandemic crisis over the long term. This will open up prospects for Rexford and other industrial REITs like Duke Realty Corp. DRE, Prologis PLD and others.
Notably, equipped with a well-capitalized balance sheet, an active investment pipeline and an inorganic growth story of more than $342 million so far in the year, Rexford remains well poised to gain traction from solid market fundamentals.
However, the pandemic’s adverse impact on the economy will likely thwart demand for rental space in the near term. Rent relief and deferrals are added concerns.
Shares of this currently Zacks Rank #3 (Hold) company have depreciated 6.1% so far in the year compared with the 8.7% decline of its industry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Prologis, Inc. (PLD) : Free Stock Analysis Report
Duke Realty Corporation (DRE) : Free Stock Analysis Report
Rexford Industrial Realty, Inc. (REXR) : Free Stock Analysis Report
CBRE Group, Inc. (CBRE) : Free Stock Analysis Report
To read this article on Zacks.com click here.