Rexford Industrial Realty, Inc.

Good morning and welcome to the Rexford Industrials first quarter 2025 earnings conference call. All participants are in a listen-only mode. After the speaker's remarks, we will conduct a question and answer session. To ask a question at this time, you will need to press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Michaela Lynch, Director, Investor Relations and Capital Markets. Please go ahead.

Thank you, and welcome to Rexford Industrial's first quarter 2025 earnings conference call. In addition to yesterday's earnings release, we posted a supplemental package and earnings presentation in the investor relations section on our website to support today's remarks. As a reminder, management's remarks and responses to your questions may contain forward-looking statements as defined by federal securities laws, which are based on certain assumptions and subject to risks and uncertainties outlined in our 10-K and other SEC filings. As such, actual results may differ, and we assume no obligation to update any forward-looking statements in the future. We'll also discuss non-GAAP financial measures on today's call. Our earnings presentation and supplemental package provide GAAP reconciliations, as well as an explanation of why these measures are useful to investors. Joining me today are our Chief Operating Officer, Laura Clark, and Chief Financial Officer, Mike Fitzmaurice. Our co-CEO Michael Frankel and Howard Schwimmer will join us for the Q&A session following prepared remarks. It's my pleasure to now introduce Laura Clark. Laura.

Thank you, Michaela, and thank you all for joining us today. I'd like to begin by recognizing the Rexford team, your dedication and strong execution for a first quarter performance and position us well to navigate today's heightened macroeconomic uncertainty. Rexford delivered solid first quarter performance. in line with expectations. We executed 2.4 million square feet of leases, achieving net effective and cash rent spreads of 24% and 15%, respectively. Embedded rent steps in our executed leases averaged 3.6%. Notably, 400,000 square feet of new leasing activity in the quarter was from five repositioning and redevelopment projects. Overall absorption in the quarter was a positive 125,000 square feet and renewal activity remained strong. We achieved 82% tenant retention, the highest level over the past year. Market rents across our portfolio declined 2.8% sequentially and 9.4% year over year. Despite continued softness in market rents, Rexford's portfolio outperformed the overall market, which experienced a decline of 4.7% sequentially and 12.1% year-over-year, according to CBRE. The decline in Rexford's portfolio market rents was largely concentrated in spaces above 100,000 square feet, which are experiencing some excess supply in the submarkets of Mid-Counties, North Orange County, and the Inland Empire West. In contrast, market rents for Rexford's smaller format spaces under 50,000 square feet continue to show relative resilience, supported by limited supply comparable to our superior, highly functional product. Regarding the current leasing environment, at the start of the year, leasing activity had picked up as tenant requirements in the market were increasing. At the time of our last earnings call, we had activity on approximately 90% of our vacant spaces, representing a material pickup when compared to 2024. Since the recent tariff announcements, we have seen some tenants defer decision-making amid increased economic uncertainty. We currently have leasing activity on approximately 80% of our vacant spaces, and while overall engagement remains healthy, it is difficult to predict the near-term impacts surrounding the tariffs and overall levels of uncertainty. As Fitz will discuss in more detail, our guidance anticipates the potential for increased lease up timing. Turning to capital allocation. By stabilizing assets at above market yields and selling properties at low cap rates, we are driving a creative cash flow growth and long term value creation. By way of example, in the quarter, we stabilized five repositioning projects totaling 560,000 square feet at a 7.6% unlevered yield and completed two dispositions totaling $103 million at exit cap rates in the low 4% area. Our capital allocation and recycling strategy will continue to be focused on maximizing returns and accretion. Our value-add repositioning and redevelopments are a key driver of accretive growth, with $70 million of incremental NOI expected in the near term from the 3.2 million square feet of projects under construction or in lease-up. Regarding dispositions, we currently have approximately $30 million of dispositions under contract or accepted offer subject to customary closing conditions. We have no acquisitions under contract or accepted offer. In closing, we are facing a heightened level of uncertainty related to the introduction of new tariffs. However, our portfolio continues to be well positioned over the medium to longer term. We own a high-quality portfolio located in Enfield, Southern California, where the long-term supply, demand, and balance will continue to persist, making our portfolio even more valuable into the future. Our tenants serve the nation's largest regional population base and one of the largest economies in the world where leasing demand is driven by consumption. This is in contrast to larger format industrial product where demand is more closely linked to global trade flows. The health and diversity of our tenant base is strong. And we are seeing demand from a wide range of industries, including manufacturing, construction, defense and aerospace, and the warehousing and distribution of consumer staples, household goods, and food and beverage, to name a few. Our value-add focus strives to create cash flow growth. We currently have over $230 million of projected incremental NOI embedded within our portfolio, positioning us to grow shareholder value over the long term. We appreciate your continued support and look forward to sharing more progress in the quarters ahead. Now, I'll turn the call over to Fitz.