Unlocking the Yield Potential of Rexford Industrial's Series C Preferred Shares: A Deep Dive into Dividend Stability and Value

In the ever-evolving landscape of income investing, preferred stocks have long been a cornerstone for investors seeking consistent cash flow and downside protection. Among the most compelling opportunities is Rexford Industrial Realty Trust's (RREF) Series C Cumulative Redeemable Preferred Stock (REXR.PRC), a security that combines an attractive yield with the robust operational and financial fundamentals of a well-managed real estate company. With a current yield of 6.41%, a significant discount to par, and a track record of disciplined capital allocation, REXR.PRC merits serious consideration for investors prioritizing income generation.

The Attraction of REXR.PRC: A Discount to Par and a Premium in Yield

The Series C preferred shares, issued with a $25 liquidation preference, currently trade at $21.95 as of Q2 2025, a 12.2% discount. This creates immediate value for investors, as the shares are redeemable at $25 plus accrued dividends starting September 2024. The current yield of 6.41% (based on a $1.40625 annualized dividend) far outpaces the 5.625% coupon rate, reflecting the market's appetite for the security's stability. The dividend is paid quarterly, with the next payment scheduled for September 30, 2025, to shareholders of record as of September 15.

Historically, REXR.PRC has demonstrated resilience around ex-dividend events. From 2022 to the present, the stock has shown a 42.86% win rate over 3 days following ex-dividend dates and a 42.86% win rate over 30 days, with the average 30-day return trending toward neutrality. While short-term volatility (e.g., a -0.60% average 3-day return) is possible, the stock has historically recovered and even outperformed in the medium term, with a maximum return of 1.49% observed on day 6. This historical behavior underscores the potential for value retention and recovery, aligning with the long-term income focus of preferred shareholders.

The discount to par also introduces a compelling risk-rebalance: if Rexford Industrial chooses to redeem the shares, investors would lock in a 12.2% capital gain while collecting a final dividend. However, the company's recent operational performance and balance sheet strength suggest it may prioritize retaining these shares to fund growth rather than redeeming them, especially given the current yield's appeal in a rising-rate environment.

Rexford Industrial's Operational Momentum: A Foundation for Dividend Stability

Rexford Industrial's Q1 2025 results underscore its ability to sustain—and potentially grow—its dividend payments. The company reported 14.1% year-over-year growth in Core FFO (Funds From Operations) to $0.62 per diluted share, driven by a 23.8% net effective rent increase on 2.4 million rentable square feet of new and renewal leases. Its 95.9% average occupancy rate and 18.4% growth in consolidated Net Operating Income (NOI) highlight the strength of its industrial real estate portfolio, which is well-positioned to benefit from the ongoing shift toward e-commerce and supply chain resilience.

The company's disciplined execution is further reflected in its low-leverage balance sheet: a Net Debt to Enterprise Value of 22.8% and $504.6 million in unrestricted cash provide ample flexibility to fund dividends, share repurchases, or strategic acquisitions. With $995.0 million available under its unsecured revolving credit facility and $3.4 billion in debt with an average interest rate of 3.8%, Rexford Industrial is insulated from near-term refinancing risks. Fitch Ratings' affirmation of a BBB+ credit rating with a Stable Outlook reinforces the company's financial prudence.

Strategic Redemption Dynamics: Balancing Shareholder Value and Growth

The Series C preferred shares are redeemable at $25.00 per share plus accrued dividends starting September 2024. While this gives Rexford Industrial flexibility to optimize its capital structure, the current discount to par and the company's guidance for 2025 Same Property Portfolio NOI growth of 0.75–1.25% suggest that management may delay redemption. The company's updated full-year 2025 guidance includes Core FFO per share of $2.37–$2.41 and net income of $1.31–$1.35, both of which signal continued profitability to support preferred dividends.

A critical consideration is the Special Optional Redemption Right tied to a Change of Control. While no such event is imminent, the provision ensures that shareholders receive a fair price ($25.00 plus dividends) in the event of a strategic shift. This adds a layer of downside protection, particularly in a market where industrial REITs remain attractive to acquirers due to their cash flow visibility.

Risk Considerations and the Path Forward

Investors should remain cognizant of interest rate sensitivity, as preferred stocks can underperform in a steep rate environment. However, Rexford Industrial's fixed-rate debt portfolio (no floating-rate exposure) and strong liquidity position mitigate this risk. Additionally, while the Series C shares are callable, the company's $3.4 billion in debt with an average term of 3.3 years suggests it is unlikely to refinance short-term obligations at the expense of preferred shareholders.

For those considering REXR.PRC, the current discount offers a compelling entry point. The 6.41% yield is among the highest in the REIT sector, and the company's operational momentum—driven by a 95.9% occupancy rate and disciplined leasing—provides confidence in dividend continuity. However, investors should monitor the redemption activity closely, as a call could limit upside potential.

Conclusion: A High-Yield Opportunity with Strong Underlying Fundamentals

Rexford Industrial's Series C preferred shares represent a rare blend of attractive yield, downside protection, and capital appreciation potential. The company's operational success—marked by record leasing, strong NOI growth, and a fortress balance sheet—positions it to sustain dividend payments while navigating macroeconomic challenges. For income-focused investors, REXR.PRC offers a compelling way to capitalize on the industrial real estate boom without overpaying for growth.

In a market where high-quality income opportunities are scarce, Rexford Industrial's Series C shares stand out as a well-structured, high-conviction play. With a current yield of 6.41%, a strong track record of dividend preservation, and a company poised for continued outperformance, REXR.PRC deserves a spot in the portfolios of those seeking both income and value.