Rexford Industrial Teams Up with Blackstone in a $1 Billion Industrial Property Acquisition
In a significant move within the commercial real estate sector, Rexford Industrial Realty, Inc. (REXR), in partnership with Blackstone, has announced a monumental acquisition. The deal encompasses roughly 3 million square feet of industrial properties across Southern California, previously held by various Blackstone Real Estate entities, equating to a staggering $1.0 billion transaction.
This expansive portfolio, comprising 48 properties with an aggregate of 3,008,000 square feet, was secured for an average of $332 per square foot. Demonstrating high tenancy, the properties boast a 98% lease rate, predominantly situated in prime, infill submarkets of Los Angeles and Orange counties. Such strategic positioning suggests a robust potential for growth, underscoring the allure of infill locations amid the current market dynamics.
The acquisition, strategically financed through Rexford Industrial’s recent exchangeable senior note offerings and available cash, aims at cultivating a weighted average initial unlevered cash yield of 4.7%, with projections reaching 5.6% upon stabilization. Howard Schwimmer and Michael Frankel, Co-Chief Executive Officers of Rexford Industrial, articulated their enthusiasm for these strategic investments. They underscored the significant potential for accretive cash flow growth, enhanced operating margins, and sustainable long-term value creation within the Southern California industrial market.
From a strategic partnership perspective, this acquisition not only solidifies Rexford Industrial’s standing in the Southern California market but also deepens its relationship with Blackstone. With an additional $300 million of investments either under contract or offer, Rexford Industrial is on track to achieve a year-to-date total investment of $1.4 billion, highlighting an impressive operational and financial trajectory.
David Levine, Co-Head of Americas Acquisitions for Blackstone Real Estate, conveyed the transaction’s significance for their investors. He highlighted the strategic pursuit of high-quality assets within vibrant markets like Southern California, especially considering the logistics sector's near-record low vacancy rates. With $175 billion worth of warehouses globally, Blackstone Real Estate remains at the forefront of leveraging logistics as a key investment theme.
Rexford Industrial continues to focus on investing in, operating, and redeveloping industrial properties across infill Southern California. With a portfolio encompassing approximately 49.1 million rentable square feet, the firm is poised for unprecedented growth. Meanwhile, Blackstone, with US $337 billion of investor capital under management, maintains its stature as the world's leading commercial real estate owner, spanning diverse sectors from logistics to retail.
This acquisition marks a significant milestone in Southern California's industrial real estate landscape, potentially setting new benchmarks for future investments in this highly competitive market.
Analyst comment
Positive news. The partnership between Rexford Industrial Realty and Blackstone in a $1 billion industrial property acquisition in Southern California indicates a robust potential for growth in the infill submarkets of Los Angeles and Orange counties. The high lease rate and strategic positioning suggest enhanced operating margins and long-term value creation. This acquisition solidifies Rexford Industrial’s standing in the market and deepens its relationship with Blackstone. The transaction’s significance for investors highlights the pursuit of high-quality assets in vibrant markets like Southern California. Expect continued growth and potential new benchmarks for future investments.
