Southern California-based Rexford Industrial Realty is selling nearly two dozen industrial properties for more than $1 billion.
Los Angeles-based Rexford has a deal to sell 22 industrial holdings to an affiliate of EQT Real Estate for roughly $1.2 billion, L.A. Business First reported. Rexford has not disclosed the locations of the properties.
The deal, expected to close by October, is part of Rexford’s previously announced $2 billion portfolio realignment. The company has bought or put under contract roughly $1.5 billion in property this year, putting it within its full-year target of $1.5 billion to $2 billion in sales.
The portfolio is expected to generate a 5.5 percent cash net operating income yield next year. Rexford said the properties being targeted for sale generally have limited long-term value creation potential, elevated competitive supply, shorter lease durations or above-market in-place rents.
“We are concentrating our portfolio around the properties we believe offer the strongest long-term cash flow growth and value creation opportunity,” CEO Laura Clark said in a statement.
Rexford is focusing on strengthening its cash flow by “selling assets that potentially have risk, pressure on future cash flow growth or aren’t aligned with our strategy moving forward,” Clark told the outlet earlier this year.
The CEO said that buying properties was not a compelling use of capital in the current environment and that Rexford is focusing on improving occupancy and redeploying proceeds into investments offering higher returns.
The company plans to use proceeds from the EQT deal to help repay debt maturing next year, buy back shares under its $1 billion repurchase program and fund internal repositioning and development projects.
Rexford is under pressure by shareholders to sharpen efficiency and capital allocation. Activist investor Elliott Investment Management took a stake in the company last year and has been working with Rexford on reducing costs.
— Chris Malone Méndez
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