Rexford Industrial Realty's Q2 2025: Unpacking Contradictions in Rent Growth, Redevelopment Yields, and Capital Strategy

Rent and leasing activity expectations, redevelopment yield expectations, capital allocation and acquisitions are the key contradictions discussed in Rexford Industrial Realty's latest 2025Q2 earnings call.



Leasing Activity and Occupancy:
- Rexford executed 1.7 million square feet of leases in Q2, with same-property occupancy ending at 96.1%, a 40 basis point increase sequentially.
- Leasing activity was driven by tenant retention and new leasing, reflecting the strength of the tenant base and infill locations, while market rents declined by 3.5% sequentially and 12.8% year-over-year due to macroeconomic uncertainties and tariff impacts.

Embedded Growth Opportunity:
- The company has identified $195 million of incremental cash NOI growth embedded in its portfolio, with $105 million from contractual rent steps and $70 million from repositioning and redevelopment projects.
- This embedded growth is supported by a substantial repositioning and redevelopment pipeline and strong tenant health, offsetting market rent declines.

Capital Allocation and Acquisitions:
- Rexford sold $134 million worth of properties, achieving an unlevered IRR of 11.9%, and has approximately $54 million of dispositions under contract.
- The company remains focused on accretive capital allocation, considering acquisitions that meet stringent underwriting criteria and offer higher yields, while prioritizing repositioning and redevelopment projects.

Market Rent Dynamics:
- Market rents across Rexford's portfolio declined by 3.5% sequentially and 12.8% year-over-year, impacting lease-up time frames.
- The declines were attributed to macroeconomic uncertainties, tariff volatility, and some tenants delaying decision-making, although Rexford's portfolio continues to exhibit relative strength compared to the broader market.