Rexford Industrial Realty, Inc.

Greetings and welcome to the Rexford Industrial Realty, Inc. Second Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone wants to require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kara Smith of Investor Relations. Thank you. You may begin.

We thank you for joining us for Rexford Industrial's second quarter 2020 earnings conference call. In addition to the press release distributed yesterday after market closed, we posted a supplemental package in the Investor Relations section on our website at www.rexfordindustrial.com. On today's call... Management's remarks and answers to your questions contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. For more information about these risk factors, we encourage you to review our 10-K and other SEC filings. Rexford Industrial assumes no obligation to update any forward-looking statements in the future. In addition, certain financial information presented on this call represents non-GAAP financial measures. Our earnings release and supplemental package present GAAP reconciliations and an explanation of why such non-GAAP financial measures are useful to investors. Today's conference call is hosted by Rexford Industrial's Co-Chief Executive Officers, Michael Frankel and Howard Schwimmer, together with Chief Financial Officer Adeel Khan and our General Counsel, David Lanzer. We will make some prepared remarks, and then we will open the call for your questions. Now, I will turn the call over to Michael.

Thank you, and welcome to Rexford Industrial's Second Quarter 2020 Earnings Call. We hope that everyone joining us today, as well as your colleagues, families, and friends, remain well during these very challenging times. Today, I'll begin with a brief summary of our second quarter operating results. Howard will then cover our transaction activity, and a deal will follow with more details on our financial results, balance sheet, and outlook. We will then open the call for your questions. With regard to the second quarter, we are humbled by the exceptional work from our team The extreme scarcity of developable land, means there's no path to resolve our market supply-demand imbalance through new construction, one of the many reasons we choose to remain focused on creating value within infill Southern California. Our team's quarterly performance speaks for itself, highlighted by the following. We increased company share of core FFO by 21% to $38.8 million and generated a 6.7% increase in core FFO per share to 32 cents. Our stabilized same property NOI grew by 3.1% on a GAAP basis. Our stabilized same property cash NOI decreased by 2.3%, which was driven by short-term rent deferrals averaging one to two months. We achieved 97.6% occupancy in our stabilized same property portfolio. We signed 123 leases for 1.4 million square feet during the second quarter. Our leasing spreads were 32.3% on a GAAP basis, and 18.2% on a cash basis. Our leasing performance reflects the fundamental strength of our infill market and our team's intense entrepreneurial focus. During the quarter, pent-up demand re-entered our Southern California infill market as many government-mandated shutdown restrictions were lifted and as e-commerce continues its dramatic growth. We experienced a notable acceleration in tenant demand through the second half of the quarter. During the quarter, we also acquired seven properties for approximately $76 million, and subsequent to quarter end, completed three acquisitions to bring our year-to-date investment volume to more than $350 million. With regard to rent collections, we proactively worked with tenants, some of whom were impacted by COVID, and some of whom simply took advantage of their government-mandated ability to unilaterally defer rent in California. Overall for the quarter, just over 98% of tenant billings were accounted for through cash collections and relief agreements. Cash collections represented about 87% of billings for the quarter. We were pleased to see the quarter end on a positive trend with June cash collections at 91%. Of the tenants not covered under deferment or relief agreements, cash collections equaled 98.5% for the quarter. Further, July is off to a very strong start, tracking very close to a typical non-COVID month at this point in the monthly collection cycle, with 92% of tenant billings collected in cash so far. July's cash collection numbers are particularly impressive given that most of our rent deferment, which on average was about one to two months, has already burned off, leaving only 1.6% of tenant billings covered under relief agreements during July. In addition, for July, of the tenants not covered under deferment or relief agreements, cash collections are already at about 96%. With regard to balance sheet activity, we completed a total of approximately $295 million of equity issuance during the quarter. We continue to maintain a low-leverage, fortress-like balance sheet, completing the quarter with leverage of 2.9 times net debt to EBITDA, which equaled about 10.5% debt to total enterprise value. We also ended the quarter in a very favorable liquidity position with access to upwards of $1 billion of liquidity as we move forward. We believe we are very well positioned both defensively to weather COVID-related uncertainty as well as offensively to capitalize upon emerging internal and external growth opportunities to drive shareholder value. Finally, I'd like to take a moment to fully acknowledge and thank each Rexford team member, each of whom has worked so diligently to drive our performance and to distinguish our company despite working remotely and despite a range of COVID-related personal and professional challenges. Tremendous thanks to all of our Rexford teammates. You continue to prove yourselves as the best team in the business. There is one special person who deserves additional mention. As you know, Adil Khan, our CFO, had expressed a desire to pursue a new chapter in his professional career. On behalf of our entire team, I'd like to thank Adil for his exceptional service and contributions to the company, and personally, for his partnership and dedication. It's been a true privilege to work with Adil. Although Adil is a very hard act to follow, we are exceptionally pleased to have Laura Clark starting as our new CFO on September 1. For those of you who know Laura from her prior experience, I'm sure you can appreciate how fortunate we are to have her join our team. And with that, I'm very pleased to turn the call over to Howard.