Rexford Industrial Realty, Inc.

Greetings, welcome to the Rexford Industrial Realty Inc. second quarter 2022 earnings call. At this time, all participants are in a listen-only mode. A 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 this conference is being recorded. I will now turn the conference over to your host, David Lanza of General Counsel. You may begin.

We thank you for joining us for Rexford Industrial's second quarter 2022 earnings conference call. In addition to the press release distributed yesterday after market close, we posted a supplemental package and investor presentation in the investor relations section on our website at rexfordindustrial.com. On today's call, management's remarks and answers to your questions may 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, Laura Clark. They 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, David, and thank you, everyone, for joining our Rexford Industrial second quarter 2022 earnings call. We hope you and your families are well. I'll provide some brief remarks, followed by Howard, who will discuss our transaction activity, and then Laura will provide an update on our performance and guidance. As we head into the second half of the year, we continue to see strong levels of tenant demand and positive market rent growth within infill Southern California. Our portfolio continues to perform at essentially full occupancy, with our same property pool average occupancy over 99%. Demand continues to exceed supply, with overall market vacancy tracking at well below 1%. We expect the supply-demand imbalance within our infill markets to persist into the foreseeable future, due to an extreme lack of available space or developable land within infill Southern California. Rexford's performance continues to differentiate itself. Our team grew FFO per share by 26% compared to the prior year quarter. This brings our prior five-year FFO per share growth to over 15% on a CAGR basis, substantially exceeding the FFO per share growth of any other industrial REIT in the nation. Rexer's outperformance is a reflection of our entrepreneurial business model, focused on creating value by increasing the quality and functionality of industrial property throughout infill Southern California, the nation's highest demand and lowest vacancy industrial market. With over 1 billion square feet of industrial property built prior to 1980, within a nearly 2 billion square foot regional infill market, we are favorably positioned with proprietary access to an exceptionally deep well of value creation opportunities. Our team is executing upon a substantial range of internal and external growth strategies to unlock tremendous value. Leasing spreads for the quarter were a full 83% on a gap basis and 62% on a cash basis, representing an acceleration over the first quarter. On the external growth front, year-to-date, Our team acquired over $1.6 billion of irreplaceable assets with strong embedded value creation opportunities. And compared to the prior year quarter, we grew net operating income by 43% and grew core FFO by a full 55%. As we look forward, Rexford remains well positioned to continue to grow our cash flow and value. From an internal growth perspective, the mark-to-market on rental rates for our entire portfolio is estimated at 60% on a cash basis and 70% on a net effective basis. Over the next 24 months, we project approximately $172 million, equal to 43% of annualized cash NOI growth, embedded within our current portfolio, assuming no further acquisition, and based upon today's market rents. The components of our internal NOI growth include $73 million of incremental NOI as we roll in-place rents to higher market rates and as we ratchet up our annual contractual rent steps. $45 million of incremental NOI as our redevelopment and repositioning projects stabilize. And $54 million of incremental NOI contributed from recent acquisitions. Within our embedded NOI growth, we are projecting annual same-property cash NOI growth of approximately $8 to 10% over the next two years. In addition, with regard to external growth, we currently have over $500 million of new acquisitions under contract or accepted offer. To fuel this growth and to ensure we are well-positioned to capitalize upon emerging opportunities in today's dynamic market, we continue to maintain an exceptionally strong, low-leverage balance sheet, closing the quarter at 13.5% net debt to enterprise values With that, we'd like to thank our entire Rexford team for your extraordinary talent, dedication, and entrepreneurial approach to growing our great company. As demonstrated through prior cycles, we believe our unique team is the primary determinant of our success and our ability to differentiate Rexford's favorable performance through all phases of the economic cycle. Now, I'm very pleased to turn the call over to Howard.