Rexford Swings to Loss as Asset Sales Expand
The industrial-property owner raised its 2026 disposition forecast to $1.5 billion to $2.0 billion.
Southern California industrial-property owner Rexford Industrial Realty (REXR) swung to a second-quarter loss after recording $624.8 million of noncash impairments, primarily on assets newly designated for sale. The company lost $506.9 million, or $2.26 a diluted share, compared with income of $113.4 million, or $0.48 a share, a year earlier.
The impairments accompanied a portfolio realignment covering roughly $2 billion of identified noncore assets. Rexford sharply expanded its disposition plans as it sought to concentrate its holdings and recycle capital.
Revenue declined 1.6% to $245.5 million, as a drop in interest income outweighed a 0.6% increase in rental income. Core funds from operations rose 1.2% to $141.4 million, while Core FFO per diluted share increased 6.8% to $0.63, reflecting the benefit of share repurchases even as first-half property sales reduced net operating income.
The Core FFO result marked an improvement from the first quarter, when the measure fell 0.9% from a year earlier. Core FFO per share increased from $0.61 sequentially after declining 1.6% year over year in the prior period.
Portfolio NOI edged 0.3% higher to $186.8 million after falling 4.2% in the first quarter. Same-property NOI declined 0.5% as rental-rate compression and higher bad debt offset higher average occupancy, though cash NOI growth improved to 1.5% from a 0.4% decline in the prior quarter.
Leasing conditions remained pressured. Average same-property occupancy fell 60 basis points sequentially to 95.7%, while leasing volume dropped to 2.1 million square feet from 4.1 million. Net-effective rents on signed leases declined 2.8% from prior rents, an improvement from a 10.0% decline in the first quarter, with renewal pricing outperforming new leases.
Rexford now expects 2026 Core FFO of $2.38 to $2.43 a share, one cent higher at both ends of its previous range. Its net-effective same-property NOI forecast also improved to a decline of 1.25% to 0.25%, while average same-property occupancy is projected at 95.3% to 95.7%.
The company sold seven properties for $137.9 million during the quarter, bringing first-half dispositions to $265.3 million. It also repurchased $100 million of shares, and the board replaced its previous authorization with a new $1.0 billion program after quarter-end, giving Rexford additional capacity as the portfolio realignment proceeds.