Rexford Industrial Realty, Inc.

Greetings. Welcome to the Rexford Industrial Realty Second Quarter 2021 Earnings Call. At this time, all participants are in listen-only mode. Any question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. At this time, I'd like to turn the conference over to David Lanzer, General Counsel. Mr. Lanzer, you may now begin.

We thank you for joining us for Rexford Industrial's second quarter 2021 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 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 our Co-Chief Executive Officers, Michael Frankel and Howard Schwimmer, together with Chief Financial Officer, Laura Clark. They will make some prepared remarks, and then we will open the call for your questions. Now I turn the call over to Michael.

Thank you, and welcome to Rexford Industrials' second quarter 2021 earnings call. Today, I'll begin with a brief overview. Howard will then cover our markets and transaction activity, and Laura will discuss our financial results. We will then open the call for your questions. Our team continued to deliver exceptional results through the second quarter. We closed $257 million of new acquisitions. And from an operational perspective, a robust 2.2 million square feet of leasing produced 98.2% occupancy in our stabilized portfolio. Releasing spreads continued at extraordinary levels, averaging 21% on a cash basis and 34% on a gap basis. As a result, our strong internal and external growth produced year-over-year core FFO growth of 36% and 22% on a per-share basis. As we enter the second half of the year, the California economy shows robust growth and continued reopening. Industrial tenant demand remains at historically high levels, driven by strong secular growth across a wide range of industry sectors. In addition, the acceleration in e-commerce is driving shifts in supply chain and last mile distribution strategies. Further, emerging e-commerce and technology-enabled new businesses are intensifying the growing need for infill locations. From our vantage point, we believe that we are still in the early stages of these long-term market shifts, which are expected to drive ongoing growth. Our portfolio is particularly well positioned, as our properties generally represent mission-critical locations for our tenants, and as rent typically represents a very small share of our customers' economics, we continue to see a favorable degree of price elasticity in terms of our ability to drive rent growth. On top of historic rent spreads and rental rate acceleration, we are increasingly obtaining contractual annual rental rate increases above the historical 3% norm. For example, more than half of the second quarter's leasing activity achieved contractual annual rental rate increases above 3% and as high as 4%. As we scale our registered operating platform and deepen our market penetration, we are harvesting the benefits of more strategic relationships with our customers and expanding our proprietary access to high-quality investment opportunities within Infill Southern California. We also expect to see the company's operating margins continue to increase as we leverage our sector-leading NOI and cash flow growth. Looking forward, from an internal growth perspective, we project approximately 20% embedded NOI growth, equal to $64 million, within our in-place portfolio over the next 18 to 24 months. not including additional acquisitions. We're also pleased with our near-term external growth prospects with over $650 million of new investments under contract or accepted offer. The magnitude and quality of our growth opportunity is substantial as we grow beyond our current 1.8% market share. To put this into perspective, our target infill Southern California industrial market is exceptionally large. and would rank as the fourth largest market in the world, behind only the entire United States, China, and Japan in size. Our market is also highly fragmented, with about 50% of our 2 billion square foot market built prior to 1980, which translates to an expansive opportunity to create value by enhancing the functionality and cash flow of the nation's highest demand industrial locations. Finally, as our team's performance speaks for itself, we'd like to acknowledge and thank the entire Rexford team as you continue to prove yourselves as the most dedicated and high-performing team in our sector. And with that, I'm very pleased to turn the call over to Howard.