Rexford Industrial Realty Inc
For the period ended Dec 31, 2024. Filed Feb 10, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 10, 2025
REXR$37.80-0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-12.
0001571283-24-000007
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-10.
0001571283-25-000006
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 271 previous paragraphs and 258 current paragraphs.
132 unchanged; 99 reworded; 23 added; 35 removed; 5 previous and 4 current paragraphs rearranged.
Tables are not compared: 15 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
•During 2024, we completed $1.5 billion in total investments representing 56 properties with a combined 4.6 million rentable square feet of buildings on 218.3 acres of land.
Current report
•During 2024, we stabilized 10 of our repositioning/redevelopment properties located at 9755 Distribution Avenue, 8902-8940 Activity Road, 444 Quay Avenue, 263-321 Gardena Boulevard, 20851 Currier Road, 17311 Nichols Lane, 12752-12822 Monarch Street, 12907 Imperial Highway and 500 Dupont Avenue, which have a combined 826,442 rentable square feet of buildings, as well as 2880 Ana Street, which is an industrial outdoor storage sites with 3.7 acres of land.
Current report
•As of December 31, 2024, we had 12 repositioning/redevelopment properties with a combined 1,175,688 rentable square feet in the lease-up stage.
Current report
◦We settled the forward equity sale agreement that was outstanding as of December 31, 2023 under our 2023 at-the-market equity offering program by issuing 3,010,568 shares of our common stock for net proceeds of $164.5 million, based on a weighted average forward price of $54.65 per share at settlement.
Current report
◦In March 2024, we completed a public offering of 17,179,318 shares of common stock to an existing investor, subject to a forward equity sale agreement, at a price of $48.95 per share for a gross offering value of $840.9 million. In 2024, we partially settled the forward equity sale agreement by issuing 7,402,550 shares of common stock for net proceeds of $360.0 million, based on a weighted average forward price of $48.63 per share at settlement.
Current report
•In March 2024, we completed the issuance of three-year $575.0 million exchangeable senior notes with a 4.375% coupon and a 30% conversion premium and five-year $575.0 million exchangeable senior notes with a 4.125% coupon and a 30% conversion premium. Net proceeds were approximately $1.126 billion after deducting the initial purchasers’ discounts and commissions and offering expenses.
Current report
(3)14434-14527 San Pedro Street is a low coverage site with 61,398 rentable square feet of buildings on 335,905 square feet, or 7.7 acres, of land.
Current report
(5)As of December 31, 2024, we were performing repositioning work at 17000 Kingsview Avenue around a short-term tenant who subsequently vacated the property in January 2025.
Current report
(7)Harcourt & Susana is a low coverage site with 33,461 rentable square feet of buildings on 239,364 square feet, or 5.5 acres, of land.
Current report
(11)1500 Raymond Avenue contains one acre of excess paved land.
Current report
(12)17907-18001 Figueroa Street will be a low coverage site with 76,468 rentable square feet of buildings on 221,055 square feet, or 5.1 acres, of land.
Current report
(8)Reflects our renewal leasing activity, weighted average lease term, effective rent per square foot and leasing spreads for the year ended December 31, 2024, excluding a 1.1 million square foot lease extension with Tireco, Inc. at 10545 Production Avenue during the first quarter of 2024. The original Tireco, Inc. lease expiration date was January 2025 and included a fixed rate renewal option. In March 2024, the lease was extended through January 2027 at the current in-place rent at the time of execution and includes a 4% contractual rent increase in 2026 and two months of rent abatement. This lease extension was excluded for comparability purposes, in order to allow investors to compare quarterly and year-to-date leasing statistics to our prior periods.
Current report
Our Total Portfolio interest expense increased by $37.2 million, or 60.6%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a $41.7 million increase related to the aggregate $1.15 billion of exchangeable notes offering we completed in March 2024 and a $4.0 million increase related to the $300 million of 5.000% Senior Notes due 2028 offering we completed in March 2023, partially offset by a $7.8 million decrease due to an increase in capitalized interest related to repositioning and redevelopment activity.
Current report
During the year ended December 31, 2024, we did not sell any shares of common stock directly through sales agents or enter into any forward equity sale agreements under the 2023 ATM Program.
Current report
During the year ended December 31, 2024, we physically settled the forward equity sale agreements that were outstanding as of December 31, 2023 under the 2023 ATM Program by issuing 3,010,568 shares of our common stock for net proceeds of $164.5 million, based on a weighted average forward price of $54.65 per share at settlement.
Current report
Issuance of Exchangeable Senior Notes —In March 2024, we issued $575.0 million in aggregate principal amount of 4.375% exchangeable senior unsecured notes due 2027 and $575.0 million in aggregate principal amount of 4.125% exchangeable senior unsecured notes due 2029. The net proceeds from the issuance, after deducting the initial purchasers’ discounts, underwriting commissions and other offering expenses, were approximately $563.1 million for the 2027 Exchangeable Notes and $563.1 million for the 2029 Exchangeable Notes. Interest on the Exchangeable Notes is payable semiannually on March 15 and September 15 of each year beginning on September 15, 2024. The 2027 Exchangeable Notes will mature on March 15, 2027 and the 2029 Exchangeable Notes will mature on March 15, 2029, in each case unless earlier repurchased, exchanged or (in the case of 2029 Exchangeable Notes) redeemed.
Current report
Before December 15, 2026 (in the case of the 2027 Exchangeable Notes) or December 15, 2028 (in the case of the 2029 Exchangeable Notes), noteholders will have the right to exchange their notes only upon the occurrence of certain events. From and after December 15, 2026 (in the case of the 2027 notes) or December 15, 2028 (in the case of the 2029 notes), noteholders may exchange their notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date of the applicable series of Exchangeable Notes. Exchanges will be settled by delivering cash up to the principal amount of the Exchangeable Notes exchanged, and in respect of the remainder of the exchanged value, if any, in excess thereof, in cash or in a combination of cash and shares of our common stock, at our option. The initial exchange rate is 15.7146 shares of our common stock per $1,000 principal amount of the Exchangeable Notes, which represents an initial exchange price of approximately $63.64 per share of our common stock. The initial exchange price represents a premium of approximately 30.0% over the last reported sale price of $48.95 per share of our common stock on March 26, 2024.
Current report
During 2024, we partially settled the March 2024 Forward Sale Agreement by issuing 7,402,550 shares of common stock for net proceeds of $360.0 million, based on a weighted average forward price of $48.63 per share at settlement. Subsequent to December 31, 2024, through the date of this filing, we partially settled the March 2024 public offering by issuing 1,543,191 shares of common stock in exchange for net proceeds of $75.0 million, based on a weighted average forward price of $48.60 per share at settlement.
Current report
We currently expect to physically settle the remaining 8,233,577 shares under the March 2024 Forward Sale Agreement by issuing shares of our common stock in exchange for cash proceeds upon one or more settlement dates, at our discretion, prior to the scheduled maturity date of March 27, 2025. As of February 7, 2025, the date of this Annual Report on Form 10-K, the net forward sale price was $48.72 and would result in $401.1 million of cash proceeds upon physical settlement of the shares under the March 2024 Forward Sale Agreement.
Current report
(1)Holders of these units are entitled to cumulative cash distributions at the rate of 4.00% per annum through March 4, 2025, and 5.00% per annum thereafter. We have the option to convert the 4.00% Cumulative Redeemable Convertible Preferred Units into OP units at any time after March 5, 2025. See “Note 13 – Noncontrolling Interests” to the consolidated financial statements for additional details.
Current report
(7)Noteholders have the right to exchange their notes upon the occurrence of certain events. Exchanges will be settled by delivering cash up to the principal amount of the Exchangeable Notes exchanged, and in respect of the remainder of the exchanged value, if any, in excess thereof, in cash or in a combination of cash and shares of our common stock, at our option.
Current report
(8)As of December 31, 2024, Term SOFR for the $300 Million Term Loan has been swapped to a fixed rate of 2.81725%, resulting in an all-in fixed rate of 3.71725% after adding the SOFR adjustment, applicable margin and sustainability-related rate adjustment.
Current report
We were in compliance with all of our required quarterly and annual financial debt covenants as of December 31, 2024.
Removed paragraphs (35)
Previous report
Investments
Previous report
•During 2023, we completed 17 acquisitions representing 19 properties with a combined 4.3 million rentable square feet of buildings on 250.2 acres of land for an aggregate purchase price of $1.3 billion.
Previous report
•On October 26, 2023, we issued a $125.0 million loan securitized by a 150-acre industrial development site at an effective rate of 8.0%.
Previous report
•Subsequent to December 31, 2023, we completed the acquisition of one property with 0.2 million rentable square feet of buildings on 10.6 acres of land, for a purchase price of $84.0 million.
Previous report
•During 2023, we stabilized six of our repositioning/redevelopment properties located at 12821 Knott Street, 14100 Vine Place, 15601 Avalon Boulevard and 2800 Casitas Avenue, which have a combined 490,722 rentable square feet of buildings, and 12133 Greenstone Avenue and 19431 Santa Fe Avenue, which are both industrial outdoor storage sites with a combined 337,508 square feet of land.
Previous report
•During 2023, we completed construction of four of our repositioning/redevelopment properties located at 20851 Currier Road, 12752-12822 Monarch Street, 8210-8240 Haskell Avenue and 9755 Distribution Avenue. As of December 31, 2023, these four properties were in the lease-up stage.
Previous report
•As of December 31, 2023, we have pre-leased our two repositioning properties located at 1444 Quay Avenue and 8902 Activity Road. The leases are expected to commence in the first half of 2024, subject to completion of repositioning work.
Previous report
◦We sold 449,227 shares of common stock directly through sales agents under our 2023 ATM program at a weighted average price of $60.84 per share, for gross proceeds $27.3 million, and net proceeds of $27.0 million, after deducting the sales agents’ fees.
Previous report
◦We entered into forward equity sale agreements under our 2023 ATM program with respect to 5,137,392 shares of common stock at a weighted average initial forward sale price of $56.70 per share. We partially settled these forward equity sale agreements and the outstanding forward equity sale agreement from 2022 by issuing 2,763,708 shares of common stock in exchange for net proceeds of $163.2 million, based on a weighted average forward price of $59.04 per share at settlement.
Previous report
◦In May 2023, we entered into forward equity sale agreements with certain financial institutions acting as forward purchasers in connection with an underwritten public offering of 13,500,000 shares of our common stock at an initial forward sale price $55.24 per share, or $745.7 million. We partially settled these forward equity sale agreements by issuing 11,246,966 shares of common stock for net proceeds of $623.6 million, based on a weighted average forward price of $55.45 per share at settlement.
Previous report
•In February 2023, we certified that the sustainability performance target associated with our senior unsecured credit agreement was met for 2022, resulting in the reduction of the applicable margin and applicable credit facility fee by 0.04% and 0.01%, respectively.
Previous report
•In March 2023, we completed an underwritten public offering of $300.0 million of 5.000% Senior Notes due 2028 (the “$300 Million Notes”). The $300 Million Notes were issued to the public at 98.975% of the principal amount, and net proceeds were $295.1 million after deducting the underwriting discount.
Previous report
•In March 2023, we executed four forward starting interest rate swaps with an aggregate notional value of $400.0 million to fix daily Secured Overnight Financing Rate (“SOFR”) related to our $400.0 million term loan at a rate of 3.97231% commencing on April 3, 2023 and maturing on June 30, 2025, resulting in an all-in fixed rate of 4.83231%.
Previous report
•In March 2023, we executed one forward starting interest rate swap with a notional value of $60.0 million to fix 1-month term SOFR related to our $60.0 million term loan at a rate of 3.71% commencing on April 3, 2023 and maturing on July 30, 2026, resulting in an all-in fixed rate of 5.06%.
Previous report
In the Inland Empire West, which contains infill markets in which we operate, there was a trend of post-COVID normalization throughout 2023. Vacancy increased year-over-year to 5.0% and average taking lease rates decreased. The increased vacancy was primarily due to an increase in supply of units over 100,000 square feet that do not generally compete with our 30,000 average square foot spaces in the Inland Empire West market. In contrast, vacancy in the Company’s Same Property
Previous report
– See footnotes starting on page 64 –
Previous report
– See footnotes starting on page 64 –
Previous report
(3)As of December 31, 2023, 444 Quay has been leased and the tenant is expected to take occupancy in the second quarter of 2024.
Previous report
(4)As of December 31, 2023, 8902 Activity Road has been leased and the tenants are expected to take occupancy in the first quarter of 2024.
Previous report
(12)At 12821 Knott Street, we are repositioning the existing 120,800 rentable square foot building and constructing approximately 45,000 rentable square feet of new warehouse space.
Previous report
Valuation of Operating Lease Receivables
Previous report
We may be subject to tenant defaults and bankruptcies that could affect the collection of outstanding receivables. We perform an assessment of the collectability of operating lease receivables on a tenant-by-tenant basis, which includes reviewing the age and nature of our receivables, the payment history and financial condition of the tenant, our assessment of the tenant’s ability to meet its lease obligations and the status of negotiations of any disputes with the tenant. Accordingly, assumptions used to estimate collectability of operating lease receivables can change from period to period based on the tenants’ payment history, financial condition and other tenant specific factors. An increase or decrease in our assessment of the uncollectible amount for an operating lease receivable by $1,000 will have an opposite impact of an equivalent amount on our rental income in the consolidated statements of operations. See “Note 2 – Summary of Significant Accounting Policies” to our consolidated financial statements included in Item 15 of this Report on Form 10-K for further details regarding valuation of operating lease receivables.
Previous report
Equity Based Compensation
Previous report
We account for equity-based compensation in accordance with ASC Topic 718: Compensation – Stock Compensation. Total compensation cost for all share-based awards is based on the estimated fair market value on the grant date. The grant date fair value for equity awards that contain market-based vesting conditions (such as the Company’s total shareholder return (“TSR”) or the Company’s TSR relative to the TSR of a selected peer group of companies) are performed using complex pricing valuation models, specifically a Monte Carlo simulation pricing model, that require the input of assumptions, including judgments to estimate expected stock price volatility and expected dividend yield. For equity awards that contain performance-based vesting conditions (such as the Company’s FFO per share growth) we recognize compensation cost based on the number of awards that are expected to vest based on the probable outcome of the performance condition over the performance period. If factors change causing different assumptions to be made on the number of awards expected to vest, estimated compensation expense may differ significantly from that recorded in the current period but ultimately, the compensation cost for these awards will be adjusted in future periods to reflect the actual number of awards that vest. See “Note 2 – Summary of Significant Accounting Policies” and “Note 14 – Incentive Award Plan” to our consolidated financial statements included in Item 15 of this Report on Form 10-K for further details regarding our estimation process for equity-based compensation.
Previous report
Our Total Portfolio interest expense increased by $12.9 million, or 26.6%, during the year ended December 31, 2023, compared to the year ended December 31, 2022. The increase in interest expense is primarily comprised of the following: (i) $13.1 million related to the $400.0 million term loan facility borrowing we completed in July 2022 and the related interest rate swaps, (ii) $12.1 million related to the $300 Million Notes offering we completed in March 2023, and (iii) $5.3 million related to the $300.0 million term loan facility borrowing we completed in May 2022 and the related interest rate swaps. These increases were partially offset by the following decreases: (i) $11.4 million due to an increase in capitalized interest related to repositioning and redevelopment activity, (ii) $4.9 million due to a decrease in borrowings under our unsecured revolving credit facility, and (iii) $2.2 million related to the repayment of the $150.0 million term loan facility and termination of the related interest rate swap in May 2022.
Previous report
Loss on Extinguishment of Debt
Previous report
The loss on extinguishment of debt of $0.9 million for the year ended December 31, 2022, is comprised of the write-off of $0.7 million of unamortized debt issuance costs related to the $150 million unsecured term loan facility we repaid in May 2022 in advance of the May 2025 maturity date and the write-off of $0.2 million of unamortized debt issuance costs attributable to one of the creditors departing the unsecured revolving credit facility when we amended our senior unsecured credit agreement in May 2022.
Previous report
During the year ended December 31, 2023, we sold 449,227 shares of common stock directly through sales agents under the 2023 ATM Program at a weighted average price of $60.84 per share, for gross proceeds of $27.3 million, and net proceeds of $27.0 million, after deducting the sales agents’ fees.
Previous report
During the year ended December 31, 2023, we entered into forward equity sale agreements with certain financial institutions acting as forward purchasers under our 2023 ATM Program with respect to 5,137,392 shares of common stock at a weighted average initial forward price of $56.70 per share. We did not receive any proceeds from the sale of common shares by the forward purchasers at the time we entered into forward equity sale agreements.
Previous report
During the year ended December 31, 2023, we physically settled a portion of the aforementioned 2023 forward equity sale agreements and the outstanding forward equity sale agreement from 2022 by issuing 2,763,708 shares of our common stock for net proceeds of $163.2 million, based on a weighted average forward price of $59.04 per share at settlement.
Previous report
Subsequent to December 31, 2023, through the date of this filing, we physically settled a portion of the remaining forward equity sale agreements from 2023 by issuing 466,953 shares of common stock for net proceeds of $26.0 million, based on a weighted average forward price of $55.68 per share at settlement. As of February 9, 2024, the date of this Annual Report on Form 10-K, we had 2,543,615 shares of common stock, or approximately $137.8 million of forward net proceeds remaining for settlement to occur by the fourth quarter of 2024, based on a forward price of $54.16 per share.
Previous report
Issuance of $300 Million Notes Due 2028 —On March 28, 2023, we completed an underwritten public offering of $300.0 million of 5.000% Senior Notes due 2028. The $300 Million Notes were priced at 98.975% of the principal amount, with a coupon rate of 5.000%. Interest on the $300 Million Notes is payable semiannually on June 15 and December 15 in each year, beginning on June 15, 2023, until the maturity date of June 15, 2028.
Previous report
The net proceeds from this offering were used for general management activities including funding acquisitions and funding our redevelopment and repositioning activities.
Previous report
We may redeem the $300 Million Notes at our option and sole discretion, in whole at any time or in part from time to time prior to May 15, 2028 (one month prior to the maturity date of the $300 Million Notes) (the “Par Call Date”), at a redemption price equal to the greater of (i) the sum of the present values of the remaining scheduled payments of principal and interest on the $300 Million Notes discounted to the redemption date (assuming the notes matured on the Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined in the Third Supplemental Indenture) plus 25 basis points, less (b) interest accrued to the date of redemption, and (ii) 100% of the principal amount of the $300 Million Notes being redeemed. Notwithstanding the foregoing, on or after the Par Call Date, the redemption price will be equal to 100% of the principal amount of the $300 Million Notes being redeemed, plus accrued and unpaid interest.
Previous report
(7)As of December 31, 2023, Term SOFR related to $300.0 million of our variable rate debt has been effectively fixed at 2.81725% through the use of interest rate swaps. For details, see “Note 8 – Interest Rate Derivatives” to our consolidated financial statements. Including the impact of these interest rate swaps, the hedged effective interest rate on the $300 Million Term Loan is 3.67725%.
Reworded paragraphs (99)
Previous wording
As of December 31, 2023, our consolidated portfolio consisted of 373 properties with approximately 45.9 million rentable square feet.
Current wording
As of December 31, 2024, our consolidated portfolio consisted of 425 properties with approximately 50.8 million rentable square feet.
Previous wording
•Net income attributable to common stockholders increased by 44.4% to $227.4 million in 2023 compared to 2022.
Current wording
•Net income attributable to common stockholders increased by 15.6% to $262.9 million in 2024 compared to 2023.
Previous wording
•Core funds from operations (Core FFO)(1) attributable to common stockholders increased by 32.9% to $444.8 million in 2023 compared to 2022.
Current wording
•Core funds from operations (Core FFO)(1) attributable to common stockholders increased by 15.0% to $511.7 million in 2024 compared to 2023.
Previous wording
•Net operating income (NOI)(1) increased by 26.4% to $606.9 million in 2023 compared to 2022.
Current wording
•Net operating income (NOI)(1) increased by 17.3% to $711.8 million in 2024 compared to 2023.
Previous wording
•Total portfolio occupancy at year-end was 94.1%.
Current wording
•Total portfolio occupancy at year-end was 91.3%.
Previous wording
•Same Property Portfolio(2) average occupancy for the year ended December 31, 2023 was 97.8% and ending occupancy at year-end was 97.5%.
Current wording
•Same Property Portfolio(2) average occupancy for the year ended December 31, 2024 was 96.6% and ending occupancy at year-end was 94.1%.
Previous wording
•Executed a total 459 new and renewal leases with a combined 7.4 million rentable square feet, with leasing spreads of 77.5% on a GAAP basis and 58.7% on a cash basis.
Current wording
•Executed a total 436 new and renewal leases with a combined 8.1 million rentable square feet, with leasing spreads of 38.9% on a GAAP basis and 28.6% on a cash basis. Excluding one lease extension executed in the first quarter of 2024 on a 1.1 million rentable square foot lease, leasing spreads were 55.3% on a GAAP basis and 38.7% on a cash basis.
Previous wording
•During 2023, we sold two properties with 87,037 rentable square feet, for an aggregate gross sales price of $28.3 million and recognized $19.0 million in gains on sale of real estate.
Current wording
•During 2024, we sold five properties with a combined 170,293 rentable square feet for an aggregate gross sales price of $44.3 million and recognized $18.0 million in gains on sale of real estate.
Previous wording
•During 2023, we issued 22,751,622 shares of common stock for total net proceeds of $1.3 billion through a range of equity transactions, as follows:
Current wording
•During 2024, we issued 12,666,152 shares of common stock for total net proceeds of $650.2 million through a range of equity transactions, as follows:
Previous wording
◦We settled the outstanding forward equity sale agreements from our November 2022 underwritten public offering by issuing 8,291,721 shares of common stock for net proceeds of $462.8 million, based on a weighted average forward price of $55.81 per share at settlement.
Current wording
◦We settled the remaining forward equity sale agreements related to our May 2023 underwritten public offering by issuing 2,253,034 shares of common stock for net proceeds of $125.7 million, based on a weighted average forward price of $55.79 per share at settlement.
Previous wording
•Subsequent to December 31, 2023, through the date of this filing, we partially settled the forward equity sale agreements that were outstanding under the 2023 ATM program and fully settled the outstanding forward equity sale agreement related to the May 2023 public offering by issuing 2,719,987 shares of common stock for net proceeds of $151.7 million, based on a weighted average forward price of $55.77 per share at settlement.
Current wording
•Subsequent to December 31, 2024, through the date of this filing, we partially settled forward equity sale agreement related to the March 2024 public offering by issuing 1,543,191 shares of common stock in exchange for net proceeds of $75.0 million, based on a weighted average forward price of $48.60 per share at settlement.
Previous wording
•As of the date of this filing, we had 2,543,615 shares of common stock, or approximately $137.8 million of net forward proceeds remaining for settlement prior to December 2024, based on a weighted average forward price of $54.16 per share.
Current wording
•As of the date of this filing, we had 8,233,577 shares of common stock, or approximately $401.1 million of net forward proceeds remaining for settlement prior to March 27, 2025, based on a weighted average forward price of $48.72 per share.
Previous wording
The infill Southern California industrial real estate sector continues to exhibit strong long-term fundamentals. These high-barrier infill markets are characterized by a relative scarcity of available highly functional product, coupled with the limited ability to introduce new supply due to high land and redevelopment costs and a dearth of developable land in markets experiencing a net reduction in supply as over time more industrial property is converted to non-industrial uses than can be delivered. Meanwhile, underlying tenant demand within our infill target markets continues to be healthy, illustrated or driven by strong re-leasing spreads and renewal activity, a dynamic regional economy, growth in ecommerce transaction and delivery volumes, as well as further compression of delivery time-frames to consumers and to businesses, increasing the significance of last-mile facilities for timely fulfillment. While we believe that our infill Southern California industrial property markets have demonstrated a high degree of resiliency related to occupancy and rental rates in the context of key market drivers over the prior year, including post-pandemic normalization of demand, inflation, higher interest rates and protracted Los Angeles and Long Beach Ports’ labor negotiations, continued economic uncertainties such as these could impact future demand, rental rates and vacancy within our infill Southern California market.
Current wording
The infill Southern California industrial real estate sector continues to exhibit favorable long-term supply-demand fundamentals. These high-barrier infill markets are characterized by a relative scarcity of highly functional product, coupled with the limited ability to introduce new supply over the long-term due to high land and redevelopment costs, regulatory hurdles with restrictive development constraints and a dearth of developable land in markets experiencing a net reduction in supply as, over time, more industrial property is converted to non-industrial uses than can be delivered. Additionally, regional consumption, which we believe represents an important driver of industrial tenant demand within our target markets, continues to exhibit growth as measured by consumer spending with approximately $31.6 billion of incremental spending forecasted for 2025, according to Oxford Economics. While we believe that our infill Southern California industrial property markets have demonstrated resiliency related to occupancy and rental rates in the context of key market drivers over the last several years, we expect some ongoing volatility within our markets through the near term, principally driven by general macroeconomic and political uncertainty including an uncertain interest rate environment, persistent inflation, changes in trade policy, and global geopolitical unrest. Market rent growth continues to normalize, with rents decreasing approximately 12.5% over 2024, according to third-party market data, within our infill Southern California markets, after having increased by approximately 80.0%, on average, through the pandemic years of 2020 through 2022.
Previous wording
Tenant demand remains healthy within our portfolio, which is strategically located within prime infill Southern California industrial markets. The quality and intensity of tenant demand in 2023 is demonstrated through the Company’s strong leasing spreads and volume, achieving rental rates and related terms from new and renewing tenants that have generally exceeded those from historical years (see “—Leasing Activity and Rental Rates” below). This tenant demand has been driven by a wide range of sectors, from consumer products, healthcare and medical products to aerospace, food, construction, and logistics, as well as by an emerging electric vehicle industry, among other sectors. We continue to observe a notable volume of ecommerce-oriented tenants securing space within our portfolio, which accelerated the growth in the range and volume of goods and customers transacting through ecommerce. In addition, ecommerce-related delivery demand associated with last-mile distribution and local omnichannel retail fulfillment are driving discernible shifts in inventory-handling strategies among retailers and distributors, which we believe is driving incremental demand for our infill property locations. Our portfolio, which we believe represents prime locations with superior functionality within the largest last-mile logistics distribution market in the nation, is well-positioned to continue to serve our existing diverse tenant based and attract incremental ecommerce-oriented and traditional distribution demand over the long-term. Additionally, looking forward, with the prior year’s resolution of the ports’ labor contracts combined with disruptions to shipping via the Red Sea due to geopolitical instability and with a shipping slowdown via the Panama Canal due to a long-term drought, we believe the increased trade and container volumes through the ports of Los Angeles and Long Beach, as experienced in the fourth quarter of 2023, may drive incremental tenant demand for industrial space within our markets.
Current wording
The quality of tenant demand in 2024 is demonstrated through the Company’s strong leasing spreads and leasing volume (see “—Leasing Activity and Rental Rates” below). Tenant demand has been driven by a wide range of sectors, from consumer products, healthcare and medical products to aerospace, food and beverage, construction and logistics, among other sectors. We also continue to observe a notable volume of ecommerce-oriented tenants securing space within our infill property locations driven in part by delivery demand associated with last-mile distribution and local omnichannel retail fulfillment which are driving discernible shifts in inventory-handling strategies among retailers and distributors. Our portfolio, which we believe represents prime locations with superior functionality within the largest last-mile logistics distribution market in the nation, is well-positioned to continue to serve our existing diverse tenant base and attract incremental ecommerce-oriented and traditional distribution demand over the long-term.
Previous wording
We believe our portfolio’s leasing performance in 2023 has generally outpaced that of the infill markets within which we operate, and, as discussed in more detail below, our target infill markets continue to operate at high levels of occupancy. We believe this performance has been driven by our highly entrepreneurial business model focused on acquiring and improving industrial property in superior locations so that our portfolio reflects a higher level of quality and functionality, on average, as compared to typical available product within the markets within which we operate. We also believe the quality and entrepreneurial approach demonstrated by our team of real estate professionals actively managing our properties and our tenants enables the potential to outcompete within our markets that we believe are generally otherwise owned by more passive, less-focused real estate owners.
Current wording
We believe our portfolio’s leasing performance in 2024 has generally outpaced that of the infill markets within which we operate. By way of example, the observed rent decline within our portfolio of approximately 8.3% through 2024 compares favorably to the approximately 12.5% decline in rents, on average, for our broader infill Southern California market as reported by third-party market data. We believe this relative performance has been driven by our highly entrepreneurial business model focused on acquiring and improving industrial property in superior locations so that our portfolio reflects a higher level of quality and functionality, on average, as compared to typical available product within the markets within which we operate. We believe that our portfolio, with last-mile infill locations and a smaller average tenant size versus other non-infill competitors, is well positioned to serve regional consumption and less susceptible to changes in global trade flows. We also believe the quality and entrepreneurial approach demonstrated by our team of real estate professionals actively managing our properties and our tenants enables the potential to outcompete within our markets that we believe are generally otherwise owned by more passive, less-focused real estate owners.
Previous wording
In Los Angeles County, vacancy increased year-over-year to 2.1% and average asking lease rates were flat year-over-year after increasing by 76% over the prior three year period. Occupancy generally remains at high levels and new development is limited by a lack of land availability and an increase in land and development costs.
Current wording
In Los Angeles County, vacancy increased year-over-year to 4.2% and average asking lease rates decreased 13% year-over-year after increasing by 78% over the prior three year period. New development is limited by a lack of land availability and an increase in land and development costs.
Previous wording
In Orange County, market fundamentals remained strong during 2023. Average asking lease rates increased year-over-year and vacancy increased year-over-year to 1.2%, remaining at near record low vacancy levels. Market conditions are expected to be favorable over the long-term due to steady demand and the continued low availability of industrial product in this region.
Current wording
In Orange County, average asking lease rates decreased year-over-year and vacancy increased year-over-year to 3.1%. Market conditions are expected to be favorable over the long-term due to steady demand and the continued low availability of industrial product in this region.
Previous wording
Portfolio for the Inland Empire West improved by 50 basis points compared to the prior year driven by the Company’s limited exposure to unit sizes above 100,000 square feet. Overall supply under construction in the Inland Empire West market declined significantly in the fourth quarter of 2023. We generally do not focus on properties located within the non-infill Inland Empire East sub-market where available land and the development and construction pipeline for new supply is substantial.
Current wording
In the Inland Empire West, which contains infill markets in which we operate, vacancy increased year-over-year to 5.5% and average taking lease rates declined 21% year-over-year as the market readjusted from the unsustainable levels of hyper-growth from 2020 to 2022, which also drove a temporary increase in the development of new, typically larger space product. Consequently, the increased vacancy was primarily due to vacant construction deliveries, as well as an increase in the supply of buildings over 100,000 square feet. We generally do not focus on properties located within the non-infill Inland Empire East sub-market where available land and the development and construction pipeline for new supply is substantial.
Previous wording
In Ventura County, vacancy increased year-over-year and average asking lease rates decreased year-over-year.
Current wording
In Ventura County, vacancy increased year-over-year and average asking lease rates increased year-over-year.
Previous wording
The Company’s growth strategy comprises acquiring leased, stabilized properties as well as properties with value-add opportunities to improve functionality and to deploy our value-driven asset management programs in order to increase cash flow and value. Additionally, from time to time, we may acquire industrial outdoor storage sites, land parcels or properties with excess land for ground-up redevelopment projects. Acquisitions may comprise single property investments as well as the purchase of portfolios of properties, with transaction values ranging from approximately $10 million single property investments to portfolios potentially valued in the billions of dollars. The Company’s geographic focus remains infill Southern California. However, from time-to-time, portfolios could be acquired comprising a critical mass of infill Southern California industrial property that could include some assets located in markets outside of infill Southern California. In general, to the extent non-infill-Southern California assets were to be acquired as part of a larger portfolio, the Company may underwrite such investments with the potential to dispose such assets over a certain period of time in order to maximize its core focus on infill Southern California, while endeavoring to take appropriate steps to satisfy REIT safe harbor requirements to avoid prohibited transactions under REIT tax laws. Similarly, while our focus is owning and operating industrial properties in Southern California infill markets, occasionally an acquisition may include non-industrial properties, such as office and other uses, with the intent to reposition or redevelop the properties into industrial use or to dispose of the non-industrial assets in a manner intended to satisfy REIT safe harbor requirements to avoid prohibited transactions under REIT tax laws.
Current wording
The Company’s growth strategy targets industrial property investments demonstrating the potential for accretion in Core FFO and net asset value, both on a per share basis, over the near- to longer-term. These target investments may comprise acquiring leased, stabilized properties as well as properties with value-add opportunities to improve functionality and to deploy our value-driven asset management programs in order to increase cash flow and value. Additionally, from time to time, we may acquire industrial outdoor storage sites, land parcels or properties with excess land for ground-up redevelopment projects. Acquisitions may comprise single property investments as well as the purchase of portfolios of properties, with transaction values ranging from approximately $10 million single property investments to portfolios potentially valued in the billions of dollars. The Company’s geographic focus remains infill Southern California. However, from time-to-time, portfolios could be acquired comprising a critical mass of infill Southern California industrial property that could include some assets located in markets outside of infill Southern California. In general, to the extent non-infill-Southern California assets were to be acquired as part of a larger portfolio, the Company may underwrite such investments with the potential to dispose such assets over a certain period of time in order to maximize its core focus on infill Southern California, while endeavoring to take appropriate steps to satisfy REIT safe harbor requirements to avoid prohibited transactions under REIT tax laws. Similarly, while our focus is owning and operating industrial properties in Southern California infill markets, occasionally an acquisition may include non-industrial properties, such as office and other uses, with the intent to reposition or redevelop the properties into industrial use or to dispose of the non-industrial assets in a manner intended to satisfy REIT safe harbor requirements to avoid prohibited transactions under REIT tax laws.
Previous wording
As of December 31, 2023, 27 of our properties were under current repositioning or redevelopment and four of our properties were in the lease-up stage. In addition, we have a pipeline of 16 additional properties for which we anticipate beginning repositioning/redevelopment construction work between the first quarter of 2024 and the second quarter of 2025. The tables below set forth a summary of these properties, as well as the properties that were most recently stabilized in 2022 and 2023, as the timing of these stabilizations have a direct impact on our current and comparative results of operations. Furthermore, we estimate that we have up to approximately 5.0 million rentable square feet of additional repositioning/redevelopment projects embedded in our portfolio that are not currently listed in the tables below. We consider a repositioning/redevelopment property to be stabilized upon the earlier of (i) reaching 90% occupancy or (ii) one year from the date construction work is completed.
Current wording
As of December 31, 2024, 22 of our properties were under current repositioning or redevelopment and 12 of our properties were in the lease-up stage. In addition, we have a pipeline of 21 additional properties for which we anticipate beginning repositioning/redevelopment construction work over the near term. The tables below set forth a summary of these properties, as well as the properties that were most recently stabilized in 2023 and 2024, as the timing of these stabilizations have a direct impact on our current and comparative results of operations. We consider a repositioning/redevelopment property to be stabilized upon the earlier of (i) reaching 90% occupancy or (ii) one year from the date construction work is completed.
Previous wording
(2)“Total Property Rentable Square Feet” is the total rentable square footage of the entire property or particular building(s) (footnoted if applicable) under repositioning/lease-up. “Repositioning/Lease-up Rentable Square Feet” is the actual rentable square footage that is subject to repositioning at the property/building, and may be less than Total Property Rentable Square Feet.
Current wording
(2)“Repositioning/Lease-up Rentable Square Feet” is the actual rentable square footage that is subject to repositioning at the property/building, and may be less than the total rentable square footage of the entire property or particular building(s) under repositioning.
Previous wording
(5)As of December 31, 2023, 29120 Commerce Center Drive has been leased on a short-term basis through June 30, 2025. We are currently performing repositioning work around the short-term tenant.
Current wording
(4)As of December 31, 2024, 29120 Commerce Center Drive has been leased on a short-term basis through June 30, 2025. We are currently performing repositioning work around the short-term tenant.
Previous wording
(7)Represents the estimated rentable square footage of the project upon completion of redevelopment.
Current wording
(8)Represents the estimated rentable square footage of the project upon completion of redevelopment.
Previous wording
(8)As of December 31, 2023, 3233 Mission Oaks Boulevard comprises 409,217 rentable square feet that are currently occupied and not being redeveloped. We plan to construct one new building comprising 117,358 rentable square feet. We are also performing site work across the entire project. At completion, the total project will contain 526,575 rentable square feet.
Current wording
(9)As of December 31, 2024, 3233 Mission Oaks Boulevard comprises 409,217 rentable square feet that are currently occupied and not being redeveloped. We are constructing one new building comprising 116,852 rentable square feet. We are also performing site work across the entire project. At completion, the total project will contain 526,069 rentable square feet.
Previous wording
(9)Rancho Pacifica Building 5 is located at 2370-2398 Pacifica Place and comprises one building totaling 51,594 rentable square feet, out of six buildings at our Rancho Pacifica Park property, which has a total of 1,111,885 rentable square feet. We are currently demolishing the existing building and plan to construct a new building comprising approximately 76,500 rentable square feet in its place.
Current wording
(10)Rancho Pacifica Building 5 is located at 2370-2398 Pacifica Place and comprises one building totaling 51,594 rentable square feet, out of six buildings at our Rancho Pacifica Park property, which has a total of 1,111,885 rentable square feet.
Previous wording
(11)We consider a repositioning property to be stabilized upon the earlier of (i) reaching 90% occupancy or (ii) one year from the date construction work is completed.
Current wording
(13)We consider a repositioning property to be stabilized upon the earlier of (i) reaching 90% occupancy or (ii) one year from the date construction work is completed.
Previous wording
(10)As of December 31, 2023, 12752-12822 Monarch Street comprises 275,189 rentable square feet. The project includes 111,325 rentable square feet with tenants in-place that were not redeveloped. We repositioned 65,968 rentable square feet, and demolished 99,925 rentable square feet and constructed a new 97,896 rentable square feet building in its place.
Current wording
(14)12752-12822 Monarch Street comprises 275,189 rentable square feet. The project includes 111,325 rentable square feet with tenants in-place that were not redeveloped. We repositioned 65,968 rentable square feet, demolished 99,925 rentable square feet and constructed a new 97,896 rentable square foot building in its place.
Previous wording
Properties that are nonoperational as a result of repositioning or redevelopment activity may qualify for varying levels of interest, insurance and real estate tax capitalization during the redevelopment and construction period. An increase in our repositioning and redevelopment activities resulting from value-add acquisitions could cause an increase in the asset balances qualifying for interest, insurance and tax capitalization in future periods. We capitalized $23.6 million of interest expense and $7.1 million of insurance and real estate tax expense during the year ended December 31, 2023, related to our repositioning and redevelopment projects.
Current wording
Properties that are nonoperational as a result of repositioning or redevelopment activity may qualify for varying levels of interest, insurance and real estate tax capitalization during the redevelopment and construction period. An increase in our repositioning and redevelopment activities resulting from value-add acquisitions could cause an increase in the asset balances qualifying for interest, insurance and tax capitalization in future periods. We capitalized $31.4 million of interest expense and $8.1 million of insurance and real estate tax expenses during the year ended December 31, 2024, related to our repositioning and redevelopment projects.
Previous wording
Recent inflationary and supply chain pressures have led to increased construction materials and labor costs, which when combined with longer lead times for governmental approvals and entitlements, have led to an overall increase in budgeted and actual construction costs as well as delays in starting and completing certain of our redevelopment projects. While low vacancy in our markets and continued rent growth (see “—Leasing Activity and Rental Rates” below) has helped to mitigate some of the impact of rising construction costs and project delays, additional increases in costs, further delays or declining market rents could result in a lower expected yield on our redevelopment projects, which could negatively impact our future earnings.
Current wording
Recent inflationary and supply chain pressures have led to increased construction materials and labor costs, which when combined with longer lead times for governmental approvals and entitlements, have led to an overall increase in budgeted and actual construction costs as well as delays in starting and completing certain of our redevelopment projects. Additional increases in costs, further delays or declining market rents could result in a lower expected yield on our redevelopment projects, which could negatively impact our future earnings.
Previous wording
As of December 31, 2023, our consolidated portfolio, inclusive of space in repositioning as described in the subsequent paragraph, was approximately 94.1% occupied, while our stabilized consolidated portfolio exclusive of such space was approximately 97.6% occupied. We believe the opportunity to increase occupancy at our properties will be an important driver of future revenue growth. An opportunity to drive this growth will derive from the completion and lease-up of repositioning and redevelopment projects that are currently under construction.
Current wording
As of December 31, 2024, our consolidated portfolio, inclusive of space in repositioning as described in the subsequent paragraph, was approximately 91.3% occupied, while our stabilized consolidated portfolio exclusive of such space was approximately 96.0% occupied. We believe the opportunity to increase occupancy at our properties will be an important driver of future revenue growth. An opportunity to drive this growth will derive from the completion and lease-up of repositioning and redevelopment projects that are currently under construction.
Previous wording
As summarized in the tables under “Acquisitions and Value-Add Repositioning and Redevelopment of Properties” above, as of December 31, 2023, 27 of our properties with a combined 2.9 million of estimated rentable square feet at completion are under current repositioning or redevelopment, four properties with a combined 0.3 million rentable square feet are in lease-up, and we have a near-term pipeline of 16 repositioning and redevelopment projects with a combined 1.4 million of estimated rentable square feet at completion. Additionally, as of December 31, 2023, we had 0.4 million rentable square feet of other repositioning projects. Vacant space at these properties is concentrated in our Los Angeles, Orange County and San Bernardino markets and represents 3.5% of our total consolidated portfolio square footage as of December 31, 2023. Including vacant space at these properties, our weighted average occupancy rate as of December 31, 2023, in our Los Angeles, Orange County and San Bernardino markets was 95.4%, 92.4% and 90.8%, respectively. Excluding vacant space at these properties, our weighted average occupancy rate as of December 31, 2023, in these markets was 98.0%, 99.9% and 95.8%, respectively. We believe that an important portion of our long-term future growth will come from the completion of these projects currently under or scheduled for repositioning/redevelopment, as well as through the identification or acquisition of new opportunities for repositioning and redevelopment, whether in our existing portfolio or through new investments, which may vary from period to period subject to market conditions.
Current wording
As summarized in the tables under “Acquisitions and Value-Add Repositioning and Redevelopment of Properties” above, as of December 31, 2024, 22 of our properties with a combined 2.3 million of estimated rentable square feet at completion are under current repositioning or redevelopment, 12 properties with a combined 1.2 million rentable square feet are in lease-up, and we have a near-term potential pipeline of 21 repositioning and redevelopment projects with a combined 3.4 million of estimated rentable square feet at completion. Additionally, as of December 31, 2024, we had 0.6 million rentable square feet of other repositioning projects. Vacant space at these properties is concentrated in our Los Angeles, Orange County and San Bernardino markets and represents 4.9% of our total consolidated portfolio square footage as of December 31, 2024. Including vacant space at these properties, our weighted average occupancy rate as of December 31, 2024, in our Los Angeles, Orange County and San Bernardino markets was 90.2%, 90.3% and 96.0%, respectively. Excluding vacant space at these properties, our weighted average occupancy rate as of December 31, 2024, in these markets was 95.4%, 98.7% and 98.0%, respectively. We believe that an important portion of our long-term future growth will come from the completion of these projects currently under or scheduled for repositioning/redevelopment, as well as through the identification or acquisition of new opportunities for repositioning and redevelopment, whether in our existing portfolio or through new investments, which may vary from period to period subject to market conditions.
Previous wording
The occupancy rate of properties not undergoing repositioning is affected by regional and local economic conditions in our Southern California infill markets. Although there has been a post-COVID normalization of market vacancy over the past year, the Los Angeles, Orange County, San Bernardino and San Diego markets still have low vacancy, resulting from healthy tenant demand combined with low product availability. Accordingly, our properties in these markets have generally exhibited a similar trend. We believe that general market conditions will remain healthy in 2023, and the long-term opportunity to increase occupancy and rental rates at our properties will be an important driver of future revenue growth.
Current wording
The occupancy rate of properties not undergoing repositioning is affected by regional and local economic conditions in our Southern California infill markets. Although there has been a post-COVID normalization of market rates and vacancy over the past two years, the Los Angeles, Orange County, San Bernardino–Inland Empire West and San Diego markets are well-positioned for the long-term due to fundamental demand drivers and barriers for new supply. Although we cannot predict how our markets may perform in future periods, we believe that general market conditions will continue to offer the long-term opportunity to increase occupancy and rental rates at our properties which will be an important driver of future revenue growth.
Previous wording
(1)Effective rent per square foot is the average base rent calculated in accordance with GAAP, over the term of the lease, expressed in dollars per square foot per year. Includes all new and renewal leases that were executed during each respective quarter.
Current wording
(1)Net effective rent per square foot is the average base rent calculated in accordance with GAAP, over the term of the lease, expressed in dollars per square foot per year. Includes all new and renewal leases that were executed during each respective quarter.
Previous wording
(2)Calculated as the change between GAAP rents, which straightlines rental rate increases and abatements, for new or renewal leases and the expiring GAAP rents (excluding the impact of amortization of intangible assets or liabilities) on the expiring leases for the same space.
Current wording
(2)Calculated as the change between net effective rents for new or renewal leases and the expiring net effective rents (excluding the impact of amortization of intangible assets or liabilities) on the expiring leases for the same space.
Previous wording
(4)The GAAP and cash re-leasing spreads for new leases executed during the year ended December 31, 2023, exclude 69 leases aggregating 2,015,122 rentable square feet for which there was no comparable lease data. Of these 69 excluded leases, 41 leases aggregating 1,107,007 rentable square feet were recently repositioned/redeveloped space. Comparable leases generally exclude: (i) space that has never been occupied under our ownership, (ii) recently repositioned/redeveloped space, (iii) space that has been vacant for over one year or (iv) space with lease terms shorter than six months.
Current wording
(4)The net effective and cash re-leasing spreads for new leases executed during the year ended December 31, 2024, exclude 72 leases aggregating 1,922,676 rentable square feet for which there was no comparable lease data. Of these 72 excluded leases, 27 leases aggregating 1,118,439 rentable square feet were recently repositioned/redeveloped space. Comparable leases generally exclude: (i) space that has never been occupied under our ownership, (ii) repositioned/redeveloped space, including space in pre-development/entitlement process, (iii) space that has been vacant for over one year or (iv) space with lease terms shorter than six months.
Previous wording
(6)Includes leases totaling 1,966,564 rentable square feet that expired during the year ended December 31, 2023, for which the space has been or will be placed into repositioning (including “other repositioning project”) or redevelopment.
Current wording
(6)Includes leases totaling 2,298,380 rentable square feet that expired during the year ended December 31, 2024, for which the space has been or will be placed into repositioning (including “other repositioning projects”) or redevelopment.
Previous wording
Our leasing activity is impacted both by our repositioning and redevelopment efforts, as well as by market conditions. While we reposition a property, its space may become unavailable for leasing until completion of our repositioning efforts. As of December 31, 2023, we have 27 current repositioning/redevelopment projects with estimated construction completion periods ranging from the first quarter of 2024 through the fourth quarter of 2025, and an additional 16 repositioning and redevelopment projects in our pipeline with estimated completion dates through the third quarter of 2026. We expect these properties to have positive impacts on our leasing activity and revenue generation as we complete our value-add plans and place these properties in service.
Current wording
Our leasing activity is impacted both by our repositioning and redevelopment efforts, as well as by market conditions. While we reposition a property, its space may become unavailable for leasing until completion of our repositioning efforts. As of December 31, 2024, we have 22 current repositioning/redevelopment projects with estimated construction completion periods ranging from the first quarter of 2025 through the first quarter of 2027. We expect these properties to have positive impacts on our leasing activity and revenue generation as we complete our value-add plans and place these properties in service.
Previous wording
As of December 31, 2023, 1.1 million rentable square feet of our portfolio was available for lease, 1.6 million rentable square feet of vacant space was under repositioning/redevelopment or in the lease-up stage and leases representing 0.4 million rentable square feet of our portfolio expired on December 31, 2023. Additionally, leases representing 13.9% and 16.6% of the aggregate rentable square footage of our portfolio are scheduled to expire during the years ending December 31, 2024 and 2025, respectively. During the year ended December 31, 2023, we renewed 248 leases for 4.3 million rentable square feet, resulting in a 74.1% retention rate. Our retention rate during the period was impacted by the combination of low vacancy and high demand in many of our key markets. New and renewal leases signed during the current year had a weighted average term of 4.6 and 3.8 years, respectively, and we expect future new and renewal leases to have similar terms.
Current wording
As of December 31, 2024, 1.9 million rentable square feet of our portfolio was available for lease, 2.5 million rentable square feet of vacant space was under repositioning/redevelopment or in the lease-up stage and leases representing 0.4 million rentable square feet of our portfolio expired on December 31, 2024. Additionally, leases representing 14.4% and 17.1% of the aggregate rentable square footage of our portfolio are scheduled to expire during the years ending December 31, 2025 and 2026, respectively. During the year ended December 31, 2024, we renewed 226 leases for 4.9 million rentable square feet, resulting in a 67.9% retention rate. New and renewal leases signed during the current year had a weighted average term of 4.5 and 4.4 years (excluding the 1.1 million square foot lease extension noted above under “—Leasing Activity and Rental Rates”), respectively, and we expect future new and renewal leases to have similar terms.
Previous wording
The leases scheduled to expire during the years ending December 31, 2024 and 2025, represent 12.8% and 16.5%, respectively, of the total annualized base rent for our portfolio as of December 31, 2023. We estimate that, on a weighted average basis, in-place rents of leases scheduled to expire in 2024 and 2025 are currently below current market asking rates, although individual units or properties within any particular submarket may currently be leased either above, below, or at the current market asking rates within that submarket.
Current wording
The leases scheduled to expire during the years ending December 31, 2025 and 2026, represent 14.8% and 16.4%, respectively, of the total annualized base rent for our portfolio as of December 31, 2024. We estimate that, on a weighted average basis, in-place rents of leases scheduled to expire in 2025 and 2026 are currently below current market asking rates, although individual units or properties within any particular submarket may currently be leased either above, below, or at the current market asking rates within that submarket.
Showing the first 40 of 99 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
We demolished the existing building and are constructing a new building comprising approximately 76,553 rentable square feet in its place.
Current report — wording carried from elsewhere
(5)The net effective and cash re-leasing rent spreads for renewal leases executed during the year ended December 31, 2024, exclude nine leases aggregating 847,339 rentable square feet for which there was no comparable lease data. Comparable leases generally exclude space with lease terms shorter than six months or space in pre-development/entitlement process.
Current report — wording carried from elsewhere
(1)Reflects the contractual interest rate under the terms of each loan as of December 31, 2024 (and the weighted average interest rate for total consolidated debt) and includes the effect of interest rate swaps that were effective as of December 31,
Current report — wording carried from elsewhere
The interest rate is not adjusted to include the amortization of debt issuance costs or unamortized fair market value premiums/discounts or the facility fee on the Revolver.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
(5)The GAAP and cash re-leasing rent spreads for renewal leases executed during the year ended December 31, 2023, exclude 13 leases with 501,165 rentable square feet.
Previous report — wording carried elsewhere
$400.0 million of 2.125% Senior Notes due 2030 (the “$400 Million Notes due 2030”) and $400 million of 2.15% Senior Notes due 2031 (the “$400 Million Notes due 2031”). The obligations of the Operating Partnership to pay principal, premiums, if any, and interest on the $300 Million Notes due 2028, $400 Million Notes due 2030 and $400 Million Notes due 2031 are guaranteed on a senior basis by the Company. The guarantee is full and unconditional, and the Operating Partnership is a consolidated subsidiary of the Company. Accordingly, separate consolidated financial statements of the Operating Partnership have not been presented.
Previous report — wording carried elsewhere
During the year ended December 31, 2023, we partially settled the May 2023 Forward Sale Agreements by issuing 11,246,966 shares of common stock for net proceeds of $623.6 million, based on a weighted average forward price of $55.45 per share at settlement.
Previous report — wording carried elsewhere
Subsequent to December 31, 2023, in January 2024, we settled the outstanding May 2023 Forward Sale Agreements by issuing 2,253,034 shares of common stock in exchange for net proceeds of $125.7 million, based on a weighted average forward price of $55.79 per share at settlement.
Previous report — wording carried elsewhere
(1)Includes the effect of interest rate swaps that were effective as of December 31, 2023. Excludes the effect of amortization of debt issuance costs, premiums/discounts and the facility fee on the Revolver.