Thank you, and welcome to Rexford Industrial's second quarter 2026 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 the 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 Rexford CEO, Laura Clark, together with our COO, John Nahas, and our CFO, Mike Fitzmaurice. It's my pleasure to now introduce Laura Clark.

Laura?

Thank you, Doug, and thank you all for joining us today. The Rexford team delivered another quarter of strong execution.

Leasing volume is up 50% year-to-date compared to this time last year, and we are raising core FFO per share guidance for the second consecutive quarter. We are also encouraged by improving fundamentals across the broader infill Southern California industrial market, with increasing tenant demand driving positive net absorption and lower market vacancy.

Our second quarter results reflect continued progress against the strategic priorities we laid out earlier this year: opportunistic dispositions, accretive capital recycling, and operational rigor. We have moved with discipline, conviction, and speed, taking meaningful action to position Rexford to deliver durable growth and shareholder value.

Today, we are building on that momentum by announcing a comprehensive portfolio realignment through the planned disposition of approximately $2 billion of non-core assets. This is a pivotal and deliberate step to further strengthen Rexford's portfolio, enhance the quality and sustainability of our cash flows, and position the company to deliver outsized total shareholder returns.

Over the first half of the year, we conducted a comprehensive asset-by-asset review of the portfolio, evaluating every property through the lens of future growth potential, cash flow durability, and the opportunity to create value. That review identified approximately $2 billion of non-core assets, representing approximately 8 million square feet, that do not align with our long-term strategy.

These assets are generally characterized by more limited value creation opportunity, elevated competitive supply, shorter remaining lease durations, and substantially above-market in-place rents. Just as importantly, this process reinforced our conviction in the quality, durability, and embedded growth potential of the approximately 43 million square feet of core assets that will comprise our go-forward portfolio.

These are assets we believe will drive outsized FFO and NAV per share growth and form the foundation of Rexford's next chapter. We have made significant progress executing this planned portfolio realignment.

During the quarter, we launched a robust disposition process, and we are now in advanced discussions on a substantial portion of the planned sales. Based on the depth of interest and progress to date, we are confident in our ability to execute this realignment, and we expect the vast majority to be completed this year.

The current valuation gap between private and public markets creates a compelling window to act now. Our disciplined capital recycling strategy gives us the ability to capitalize on this opportunity in a way that is accretive over the long term.

As we redeploy capital, our priorities remain clear and unchanged. We will continue to allocate capital to the highest risk-adjusted return opportunities available.

This includes strengthening our balance sheet and liquidity profile, opportunistically repurchasing shares at a meaningful discount to intrinsic value, and selectively investing in high-yielding, repositioning, and development opportunities across our portfolio. Taken together, this portfolio realignment enhances our financial flexibility, improves the quality and consistency of our cash flows, and positions Rexford for long-term growth and value creation.

To be clear, these actions together reflect conviction around our long-term view of infill Southern California industrial real estate. This market is powered by a robust local economy larger than most countries.

New supply remains limited, and barriers to future development are increasing. In fact, supply under construction today is at multi-decade lows, and recent regulatory changes have introduced additional development constraints that will make it increasingly difficult to bring new industrial supply to the market.

These dynamics reinforce the scarcity and long-term value of the assets we are choosing to own and strengthen the competitive advantages of the Rexford business model. Operational rigor also remains a core priority and is reflected in our execution to date.

Through an in-depth and ongoing review of our cost structure, we identified an additional $3 million of G&A savings this quarter, bringing our total G&A savings since 2025 to $22 million. Our focus remains on driving greater operational effectiveness and efficiency across the business.

In summary, our transformative strategic actions, combined with the strength of our team, value creation framework, dynamic market fundamentals, and commitment to operational rigor, provide a powerful foundation for Rexford to deliver meaningful value for our shareholders in the years ahead. Before I turn it over, I want to thank the entire Rexford team for their extraordinary effort this quarter across the platform.

I am energized by the focus, dedication, and execution our team continues to bring every day. John?

Thank you, Laura, and good morning, everyone. The infill Southern California market experienced positive net absorption in the second quarter, with overall vacancy declining by 30 basis points.

Performance continues to vary by submarket, size range, and product type, reflecting diverse demand drivers and varying levels of competitive supply, but we are optimistic about the signals we're seeing. Net absorption turned positive in the IE West and San Diego markets this quarter, and greater Los Angeles posted its second consecutive positive quarter.

Orange County continued to experience negative net absorption, though we are encouraged by a recent pick-up in tour activity there. As the market works through elevated supply and landlords compete for deals, market rents remain under pressure, declining just over 1% sequentially in the quarter.

We are pleased by the overall trajectory and are closely monitoring the market for successive quarters of positive net absorption, which we believe is a precursor to market inflection. Leasing activity in our portfolio gained momentum throughout the second quarter.

We executed 2.1 million square feet, which brings our year-to-date total to 6.2 million square feet, a 2 million square foot improvement compared to the first half of last year. Cash releasing spreads for the quarter were -11.3%, driven primarily by rent roll-downs from leases signed at the peak of the market.

Rexford's leasing activity continues to be driven by a diverse mix of industries, including advanced manufacturing and consumption-related uses such as logistics, food and beverage, automotive, and construction. We are seeing healthy demand across our portfolio for spaces under 50,000 square feet, and activity is picking up in spaces over 100,000 square feet, partially driven by incremental corporate demand for Class A product.

Tenants continue to evaluate the efficiency of their operations, and Rexford has directly benefited from the resulting flight to more functional space, which supports our leasing pipeline and builds our confidence in our leasing expectations for the remainder of 2026. As we have done throughout the year, we will continue to aggressively prioritize occupancy to capture demand.

Shifting to capital allocation, our planned portfolio realignment will further concentrate ownership in the assets best aligned with our long-term strategy, focusing on the opportunities where we see the greatest long-term value creation potential. Through this process, we are targeting non-core disposition candidates generally having lease durations shorter than our portfolio average and in-place rents that are more than 20% above market, while having characteristics that do not align with our value creation strategy, operational focus on uniquely competitive assets.

We believe that executing upon this $2 billion rebalancing will enhance the portfolio's long-term growth profile and value. Our decision to execute this strategy now is supported by the increasing depth and activity of institutional capital focused on infill Southern California, as investors continue to be drawn to these markets because of their unique supply-constrained characteristics and long-term fundamentals.

This investor activity, in part, is why we are confident in our ability to execute this planned realignment at scale. With respect to repositioning and development, we continue to focus on creating value by executing on opportunities within our portfolio that are best suited to deliver appropriate risk-adjusted returns.

We started one new development project, 16425 Gale, which exceeds our return thresholds and will deliver a highly differentiated property to the City of Industry submarket, featuring best-in-class specifications in a demisable cross-dock layout that is unique to the market. The project is expected to be complete in late 2027.

I'll now pass the call over to Fitz.

Thanks Laura and John, and good morning, everyone. Through this phase of the cycle, we've remained focused on what we can control.

Today, we're taking the next step in executing our strategic priorities, acting on our comprehensive asset review to realign the portfolio and meaningfully strengthen our balance sheet to unlock significant capital allocation flexibility. Our updated full-year disposition guidance of $1.5 to $2 billion gives us optimal flexibility to allocate capital where it creates the most value.

We view balance sheet flexibility as an important strength, supporting both financial resilience and capital allocation optionality. We will use approximately $1 billion of the projected proceeds to repay debt maturing in 2027, rather than refinance into a higher rate environment, which will meaningfully strengthen our balance sheet.

We estimate this will bring us to 3.5 times on a net debt to adjusted EBITDA basis, down from 4.5 times today, reflecting a deliberate, disciplined sequencing of our capital allocation. This improved leverage profile puts us in a position of strength.

Combined with remaining disposition proceeds, it provides us significant flexibility and liquidity to allocate capital toward the highest risk-adjusted return opportunities, including share buybacks. As a result, making this planned portfolio realignment accretive over the long term.

The ultimate magnitude of that accretion will depend on how we deploy the remaining proceeds, which will be guided by market conditions and the most attractive opportunities available to us at that time. We're not delevering to sit idle.

We're delevering to redeploy. We are committed to being prudent and disciplined in deploying shareholders' capital.

Turning to results, second quarter core FFO per share came in at 63 cents, 2 cents above the first quarter, driven by accretive share buybacks, settlement income, and lower G&A. Same-property NOI growth was 1.5% on a cash basis and a -0.5% on a net effective basis, both ahead of expectations.

Same-property ending occupancy was 95.1%, up 30 basis points year-over-year. We ended the quarter with net debt to adjusted EBITDA of 4.5 times and total liquidity of approximately $1.3 billion.

During the quarter, we redeployed year-to-date disposition proceeds into $100 million of share buybacks, repurchasing approximately 3 million shares at a weighted average price of $36. Over the last year, that brings our buyback activity to approximately 15 million shares for $550 million, or approximately 6% of shares outstanding.

Given the additional capacity created by our planned portfolio realignment, our board has authorized a new $1 billion share repurchase program. As for guidance, we're raising our full-year core FFO per share midpoint by 1 cent, driven by better than expected same-property NOI growth, lower G&A, and second quarter settlement proceeds.

This is partially offset by modestly dilutive projected capital recycling activity due to the timing of deployment, but it meaningfully lowers leverage while also avoiding future rent roll-down risk and eliminating the need to refinance our 2027 maturities at higher rates. To execute this, we plan to pay off all but $575 million of our 2027 maturities in 2026, with the remainder repaid at maturity in March of '27.

As a result, we are reducing our 2026 interest expense guidance to $105 million. These prepayments carry little to no penalty, making this an efficient use of projected proceeds.

We've also raised our same-property NOI growth outlook by 75 basis points at the midpoint on both a net effective and cash basis, primarily reflecting the removal of lower growth assets tied to our 2026 expected dispositions along with continued leasing momentum. Consistent with that, we raised our average same-property occupancy guidance to a range of 95.3% to 95.7% for the year, up 15 basis points at the midpoint.

Cash releasing spreads are now expected to be a -15% to a -10%. This incremental change from last quarter reflects a change in the mix of leases we expect to execute in 2026.

Further, our total portfolio cash mark-to-market stands at approximately -4%, down from -3% last quarter. Lastly, G&A guidance now stands at $57 million, down from our original $60 million target, a tangible result of our continued cost discipline.

I also want to provide context on the $625 million impairment charge we recognized this quarter, which has no impact on cash flow and is excluded from core FFO. As part of our increased disposition guidance, we shortened the holding period on non-core assets, which triggered the charge, a deliberate portfolio decision to drive long-term value.

Before we turn to questions, here's the one thing I want you to walk away with: everything we're doing, including scaling our portfolio realignment, executing our plan to lower leverage, and authorizing a new $1 billion buyback plan, enhances our flexibility to act on the opportunities ahead. That's what will drive sustainable FFO and NAV per share growth over the long term.

Finally, I want to thank the entire Rexford team. I see the work everyone puts in every day, and I don't take it for granted.

I'll now turn the call back to the operator to open the line for questions.

Thanks. Our first question comes from Blaine Heck from Wells Fargo.

Blaine, please go ahead.

Great. Thanks Doug, and thanks everyone.

The disclosure on dilution in 2026 was very helpful, and obviously I'm not looking for guidance on '27 yet, but I think it would be helpful to contextualize how much dilution from these specific transactions we should expect to impact '27 earnings. I guess the question is, how should we think about cap rates on the dispositions, and how are you thinking about keeping cash on the balance sheet for eventual debt paydown at maturity in March of '27 versus maybe putting the cash to work immediately, or at least earlier, through the share repurchases?

Hey Blaine. I'll start and Fitz will jump in with some more detail around '27 and expectations.

What I'll say around cap rates and valuation is that, as I mentioned in my prepared remarks, we are well underway and in advanced negotiations on a substantial portion of the dispositions. Given that negotiations are ongoing, disclosing valuation at this point and cap rates could impact optimal execution.

As transactions close, we will provide cap rates and valuation at that time. What I can tell you is this: we have confidence in our ability to execute the planned dispositions by the end of the year.

We expect that pricing will be achieved at levels that allow us to redeploy proceeds on a neutral to accretive basis to our 2027 FFO per share, and this is not a dilutive exercise.

Look, we're going to redeploy the proceeds pretty quickly. We estimate that the $1.5 to $2 billion will close in probably the mid-fourth quarter.

We have an opportunity, like I said in my prepared remarks, to bring forward some of the billion of debt maturities that are maturing next year, about $500 million or so. We can pay off pretty quickly.

Then the remaining $575 million, which is tied to our converts, doesn't mature until March of '27, I can't get at that early. Then in between all that, we're going to be very opportunistic with share repurchases, depending on where our share price is.

We've been very active, very committed over the last 12 months, as I mentioned in my prepared remarks, where we've bought over $550 million. We're very grateful for the board to authorize a new program, and we're going to put it to work.

We do believe that this will be at the minimum neutral next year and potentially accretive, depending on market conditions.

Thanks Blaine. Our next question comes from Samir Khanal of BofA.

Samir?

Yeah. Good morning, everybody.

I guess, John, you talked about positive signs in the overall market there in Southern California. Maybe just expand on those comments.

Where are you seeing those sort of improvements, maybe some strength, and on the other side, where are things still under sort of pressure or weakness in terms of these submarkets? Thanks.

Yeah. Hi Samir.

Overall, consistent with last quarter, sub-50,000 square feet continues to be a good vein of strength. We're seeing pricing stability and some growth in some submarkets below that threshold.

That's fairly consistent across all the submarkets. We obviously like to talk about the under-50 and then everything above that.

When you get to the larger-size space, which for us, 100,000 square foot or larger, it starts to vary a little bit. What we saw overall in the market is a good step, right?

We saw positive net absorption, and that's been growing. As you look into where that's occurring within each submarket, that's an important nuance.

For example, in the IE, most of the positive net absorption was coming in much larger spaces, those over 500,000 square feet. We don't have a lot of exposure to that size range in that submarket.

Our average unit size there is around 30,000 square feet, but that falls into the sub-50, where we've seen some continued strength. Converse to the IE, if you look at greater LA, which had an additional quarter of positive net absorption, most of the gains there are sub-200, which fits right in the wheelhouse of the Rexford portfolio, and has been a good trend for us.

Where there's pockets of weakness continue to be around Class A in certain submarkets. As I mentioned in the prepared remarks, Orange County is one of those.

That's a market that received a lot of additional supply in the peak periods, and it's going to take some time to work through that. We saw negative net absorption there again this quarter, and I would say rents probably moved the most in that specific size range within that submarket.

It continues to be varied. This is expected.

As we've kind of progress towards recovery here, we do not expect it to be linear. We're going to see certain pockets of certain submarkets improve before others, and pricing stability will occur kind of in tune.

We continue to be very focused on the net absorption numbers by market and by size range, and are optimistic that things will continue to improve.

Thanks Samir. Our next question comes from Craig Mailman from Citi.

Craig?

Hey, good morning everybody. Mike or Laura, I just want to go back to the commentary that you think that at the end of this, the transaction could be potentially a push or accretive to '27.

Maybe just help me walk through the math on that. I know you guys don't want to talk about cap rates today, but if you're selling a good amount of assets with 20% above-market rents, I can't imagine you're getting super low cap rates on those because those would roll down even more, right?

If you assume that, I don't want to put a number out there, but if you assume 6% or higher on that, and you're paying off $1 billion of your '27 roll, which is on average 4.1%, I'm just trying to figure out how that can ultimately be accretive even if you then swap out and relever back up to 4.5 and buy back stock. Could you just try to help me bridge that math?

Also just, I know you guys said your math could be accretive, does that just mean that the dividend is safe here? Is there any risk to that going forward?

Sure Craig, thanks for the question. Good morning.

Look, directionally the the full-year interest savings from the from the $1 billion debt repayment, it it the in-place rents or in-place interest is about 4 4.1%. That's a highly certain, quantifiable benefit.

You combine that with the redeployment of the remaining proceeds, plus the option to lever up into buy buybacks. It's all designed to be accretive on a run-rate basis.

If you look at the the last 12 months and and what we bought in terms of share buybacks, that yielded anywhere between 6% and 7%. That that that's a toggle in terms of or the range of possibility as we look at share buybacks going into next year.

You combine those two factors with, how we're selling these assets and what we're selling them at in terms of pricing, we do believe it's going to be neutral to accretive next year. I'd remind you that in in our disclosure last night and in the prepared remarks, I think they're in John and Laura sections, that the the roll-down risk is real here, right?

That's what we're eliminating with the the sale of these assets. It's +20%.

That that roll-down risk is real. It's going to happen expected to happen in '27 and '28.

That also allows us to for this transaction to be accretive as well. As far as dividend, it it's it's it's safe.

Like this this portfolio realignment plan, one, it strengthens the the balance sheet, and two, it strengthens the the durability of our cash flows. We're we're very confident that we can that we can continue to grow the dividend.

Thanks Craig. Our next question comes from John Kim from BMO.

John?

Thank you. On the impairment, I just wanted to clarify.

Was that on the full $2 billion that you've identified for sale? Can we assume that you have a good sense of where the market value is for these assets?

Finally, can you confirm that these assets will be sold at a taxable loss, and there's no need for a 1031?

Good morning John. Great question.

The impairments, let's take a step back on that. The planned dispositions, the $1.5 to $2 billion that we expect to sell this year were largely bought at the height of the market.

To Laura's point, we're in advanced negotiations on a substantial amount of those planned dispositions where the intent to sell is very clear, which triggered the impairment charge. Look, further charges are possible if additional assets are added to the pool and there's an intent to sell.

This impairment charge is not indicative of any impairment risk within our broader portfolio. As far as any need to, I think this is what you're alluding to, issue a special dividend, the answer is no.

Similar to the impairment, there are tax losses which will offset any tax gains as part of these planned dispositions.

Thanks John. Our next question comes from Vikram Malhotra from Mizuho.

Vikram?

Morning. Thanks for taking the questions.

Congrats. There's a lot of work, I guess, done to get this step done, or at least started, I should say.

I just want to go back again, I know you've been asked on this sort of how to keep this accretive. I'm wondering in effect, are you saying that there are certain buyers willing to pay a 5 cap even though there's a big roll-down because they're assuming a lot of rent growth going forward?

Then do you mind just sort of clarifying on your presentation, you talked about 20% roll-down for these assets, and then the portfolio at 4. I just want to clarify, is the 4% or roll-down 4 including these assets as it is today, or is it ex these assets the roll-down is 4%?

Thanks.

Yes, as far as the roll-down that we put in our disclosure last night, the 4% includes the entire portfolio that exists today. We do believe that that 4% will get better after we get through the portfolio realignment.

That's just one part of our growth profile going forward. I want to spend a little time there to discuss that as we move through this portfolio realignment plan throughout the remaining part of this year.

Look, this puts us in a much better place just given the roll-down and the vacancy risk associated with this portfolio, and the firepower that it gives us, the $1.7 billion to reshape the business from a position of strength. Paying down debt ahead of a maturity wall, buying back stock at a discount to intrinsic value, and we're preserving the optionality to invest where we see the best risk-adjusted returns as conditions change.

We absolutely believe a stronger balance sheet plus real capital to deploy here is what creates the most value for shareholders. You can't forget the embedded opportunity that we have already underway within our repositioning and development pipeline that represents approximately $50 million of annualized NOI once it's fully leased.

The backdrop is getting better, as John John noted. Fundamentals are improving, real signs for improvement, net absorption turned positive, vacancy is going down, construction starts continue to remain at multi-decade lows.

Now, the releasing spreads that you're alluding to, Vikram, let's be clear-eyed on this. Releasing spreads on our retained portfolio will stay under pressure for a bit as we do have leases that were signed at the peak that are rolling over the next couple of years.

That's real, and that's something a portfolio this size fixes overnight. It's a known.

It's a shrinking headwind, I can tell you that. It's not an open-ended one, and it's why we prioritize selling the assets that face this steep reset.

Overall, one thing that we want you to continue to walk away with here, this is a cleaner, lower-risk portfolio, stronger balance sheet, and higher liquidity with a strong embedded growth in place from our pipeline.

Vikram, I'll offer some general commentary on the cap rate component of your question. In what we're seeing in the market, broadly across Southern California, is transactions that are focused on good product quality, good locations, with good credit and a decent amount of WALT.

That's hitting about a 5.5% on average is where I would put market cap rates. Cap rates, as we've discussed, fluctuate significantly up and down from there, largely depending on the mark-to-market and how much duration there is, in fact, on the lease, and the quality of the real estate, which is preeminently important.

We've seen some transactions in the market where there was a big positive mark-to-market opportunity. We've seen cap rates dip well below 5% for that type.

Conversely, it's well above 5.5% and can be into the 6s if you have lower quality assets or significant negative mark-to-market. Generally, the buyers in the market are going to underwrite to a restabilized yield that is congruent with today's market cap rates, adjusting for all those factors that I went through.

Thanks Vikram. Our next question comes from Greg McGinniss from Scotiabank.

Greg?

Hey, good morning. Appreciate the commentary on the market and the backdrop that's improving.

The market also saw vacancy go down while Rexford's vacancy increased. Was this related to timing, and so we should assume some occupancy growth in the back half of the year?

Were there specific assets that were drivers? Any explanation on this disconnect would be appreciated.

Sure. Hi Greg.

We saw quarter-over-quarter average occupancy decline about 60 basis points. This was largely driven by a few larger move-outs.

The two most significant ones were located in the IE West market, a couple of spaces that were just north of 200,000 square feet apiece. One of those move-outs was unplanned, it was related to a bankruptcy.

The other one was expected and budgeted. Just a quick note on the one that was a result of bankruptcy, we actually just released that unit this week with occupancy recommencing in September.

Good result on that. Part of it is just some of these move-outs that are getting offset by move-ins that you'll see in the next quarter's data.

Greg, in terms of the shape of the occupancy as we move through the second half of the year, we do expect it to decelerate some in the third quarter between 50 to 100 basis points due to planned move-outs, and then reaccelerate in the fourth quarter of this year.

Thanks Greg. Our next question comes from Rich Anderson from Cantor Fitzgerald.

Rich?

Thanks. Good morning.

On the positive net absorption figure for the second quarter, that sort of came out of nowhere relative to the historical patterns that we've seen. It's not in disagreement, though, with some of what your peers have said about the market.

Good sign. I'm curious if you can make any comment about subsequent to second quarter, what you're feeling about positive net absorption being somewhat repeatable as we go forward.

Obviously, you call it a prerequisite for a continuation of a market inflection. Any signs post-second quarter that you can talk about in terms of the cadence of fundamentals?

Thanks.

Thanks Rich. Thanks so much for your question.

In regards to third quarter and it's early, but what we can tell you is that when we look at what happened in the second quarter, our leasing pipeline built through the back half of the second quarter, and that has continued early into the third quarter. Executions and our pipeline, we're less than a month in, but I would say that it has been strong as we've entered the third quarter.

Those are all positive indications. As you noted, it was a strong quarter, positive absorption, lowering vacancy, and availability in the overall market.

I think it's important to also consider, obviously tenant demand is increasing, and that's a positive indication, but also to look at supply. Supply today under construction and what is going to be delivered to the market is at multi-decade lows.

Those are two good things to put together. While we still have elevated vacancy and availability in the market, we are not increasing the supply.

As tenant demand is increasing in the market, that incremental demand will continue to absorb this space, and that sets up the market for continued improvement and inflection in the future.

Thanks Rich. Our next question comes from Dave Rodgers from Raymond James.

Dave?

Good morning everybody. Fitz, all of your comments were really helpful earlier.

I wanted to take one other shot at the portfolio realignment. Everything you've sold, I think year-to-date, is a zero cap rate, zero occupancy.

As you look at the occupancy or where these assets of the portfolio realignment are coming from, can you give us a sense of kind of what the occupancy might be or whether they're coming out of same-store versus the redevelopment? Because you had made the comment about $50 million of real upside in redevelopment.

Trying to reconcile to see if we're selling some of that upside off going forward. Then maybe just a follow-up to Laura, your last comment about leasing during the second quarter.

Sounds like it ended stronger than it started. Was there anything in particular at the beginning of the quarter that kind of kept the second quarter leasing pace a little lower than where you saw in the first quarter?

Hey Dave, good morning. This is Fitz.

The vast, vast majority of the assets that we plan to sell this year are operating properties and are coming out of the same-property portfolio.

Going back to the leasing, I can offer a little bit more color there. This quarter, the number was a little bit lower, 2.1 million square feet.

Keep in mind, in the first quarter, we did have a renewal of our largest unit in the portfolio that increased the volumes there. When you adjust for that, and you also look at more than one quarter together, I think it is more indicative of the overall trend that we're seeing form, which is incrementally positive.

I wish everything lined up perfectly with quarter end, but subsequent to quarter end, we have seen continued touring activity, and we've actually made some good progress in certain areas of the market. I can give you a few examples.

We've touched on previously how the South Bay continues to be particularly strong. A lot of that's being driven by advanced manufacturing, which is focused on the most coastal areas of the South Bay market.

We have a project in art that's under construction currently in that market that's delivering two buildings, and we've just completed leases on both of those buildings ahead of the completion of construction. We're happy with that.

In the San Fernando Valley, we've been making some progress on some of our repositioning buildings, most recently signing leases at Plummer, which completed before as a new development, and more recently our Avenue Kearney project. Both of those were leased to tenants that are in the consumer products business.

Overall, we're pleased with levels of activity that we're seeing. I think it is a steady improvement, but it is moderated in pace, and we are carefully watching each submarket and our properties and what they're competing with in each case.

Dave, to answer your question about whether or not we're selling any of the $50 million of upside in our repositioning and development pipeline, the answer is no.

Thanks Dave. Our next question comes from Michael Griffin from Evercore ISI.

Michael?

Great. Thanks.

Not to belabor the point on the valuation for the portfolio realignment, but could we get a sense maybe, Laura, you started off the prepared remarks talking about $2 billion of asset sales on 8 million square feet. That would equate to about $250 a square foot versus what you've sold this year at about $300 a square foot.

I guess is 250 a good sort of floor valuation that we should look at? Then maybe just one more, just buyer pool and interest types.

Do you expect to sell these properties in one-off, portfolio deals, and then what kinds of capital is interested in buying them? Thank you.

Hey Griff, thanks for your question. As I mentioned in in her answer earlier, we're we'll certainly provide cap rates and valuations as these transaction clo transactions close.

Providing that today could impact execution, so that that's important that we continue to be able to execute these at at the highest level of pricing. In terms of the process that we ran, to give you a little bit more visibility around that, we ran a competitive process on a substantial portion of the planned dispositions.

We had multiple institutional buyers involved. We received offers that we believe represented competitive pricing.

Today, we're in advanced negotiations around a portfolio transaction. While a sub-store substantial portion of the pool will be sold via a portfolio sale, we're also in various stages of our process to transact on the remaining assets, which will likely be sold via one-off or maybe smaller portfolio transactions.

That's what, given our current visibility and the progress that we've made to date, that's what gives us the confidence in our ability to transact on the majority of these planned dispositions at attractive pricing by the end of the year.

Thanks Michael. Our next question comes from Brendan Lynch from Barclays.

Brendan?

Great. Thanks for taking my questions.

It looks like you lowered your development yield assumptions by 50 basis points quarter-over-quarter. Can you discuss the puts and takes there, and also maybe discuss the rent assumptions relative to where the market is and your currently expected yields?

Hi Brendan. The yield is aggregated based on what goes in and out of the pipeline, there's some impact there.

We do also adjust our returns based on what we're seeing in the market. Overall we saw, as we mentioned, slight decline, and particularly for new buildings that are getting developed, those are going to fall into the Class A segment, and in certain submarkets, we're seeing more movement around pricing based on competitive supply than others.

I will say, for what we have in the pipeline, we're pretty excited about those properties. They all represent assets that are going to be delivered with unique and differentiated functionality that we think are going to be completed at the appropriate returns and will be great long-term additions to our portfolio.

Look, we continue to be very disciplined around capital allocation related to our repositioning and developments, solving for 100 to 200 basis points above a stabilized cap rate. Then the ones we started to date have followed that framework.

In fact, the Gale project that we added to the pipeline this quarter is over 200 basis points in excess of the stabilized cap rate. Then another asset that we started under construction is 5 to 600 basis points above a stabilized cap rate.

We continue to be very, very disciplined around that front.

Thanks, Brendan. Our next question comes from Mike Mueller from J.P.

Morgan. Mike?

Hi. Can you give us a sense as to how much 2027 rent spreads should improve with the sales relative to what you previously messaged?

I think you said that '27 spreads were going to be worse than '26 before.

Look, like I mentioned in earlier answer, Mike, there's going to be continued pressure on rent spreads, but that's just one part of the P&L. We only have 15% of our rent roll expiring in any given year, which is a great natural hedge against market rate fluctuations with market rent.

What I can tell you, it's shrinking. Like I said, it's a known commodity.

We're just going to have to get through it over the next couple of years. We've got plenty of offsets with accretive capital recycling and occupancy upside across the portfolio.

Again, there'll be continued pressure next year on releasing spreads.

Thanks Mike. Our last question comes from Vince Tibone from Green Street.

Vince?

Hi, good morning. Could you just discuss how you think about intrinsic value for Rexford and kind of at what share price levels you'd consider taking a pause from buybacks?

John, you mentioned market cap rates are 5.5% on average, and on our numbers, after today's pop in the share price, the implied cap rate's also in the mid-5s. Just trying to get a sense of how you think about the gap between public and private valuations in your portfolio and stock.

By no means are we going to share what our NAV is on today's call. [laughter] But I appreciate the question, Vince.

The share price is the number one thing we look at when assessing whether or not we're going to buy back shares. Obviously, that's combined with where our balance sheet leverage is at, and then other competing uses of capital.

I think what we've proven over the last year is that this has been very accretive to FFO per share and NAV per share. As I mentioned earlier, the FFO yield that we're achieving that's compounding very quietly in the background to our earnings growth profile going forward has been between 6% and 7%.

Very, very good use of capital for us. We're committed to that, and we look forward to taking advantage of that going forward.

Thanks Mike. Jamie Feldman from Wells Fargo will be our last call.

Jamie?

Great. Thanks for taking the follow-up from our team.

Your commentary certainly sounds like transaction markets are getting healthier quicker. I'm just curious, we've now seen several big announcements across multiple sectors of large portfolio buys.

Can you just talk about how fast things are changing, both on the buyer pool and also on the cost of capital for buyers? It seems like there's a lot happening quickly.

Jamie, we have seen an incremental improvement in terms of the institutional demand for product in the market. I think that is what we are doing today is taking advantage of that change.

Certainly improving market conditions, there's a lot of conviction around the Southern California market, not just in the near term, but long term. I think that's all driving capital and more capital into the market.

Certainly, would say that there's been an incremental increase in institutional capital and demand for product in this market over the last 6 months. For us today, we really view this as an incredibly unique opportunity in a moment in time where we can capitalize upon this.

We are not reacting. This is incredibly proactive.

We're going to be able to achieve competitive pricing. At the same time, we can redeploy proceeds in an accretive manner, it's not a dilutive exercise, as we've talked about.

We can do this all at the same time while we're increasing the portfolio quality, our future cash flow durability, and value creation opportunities that align with our strategy. These factors rarely emerge together, and we are taking advantage of this unique opportunity that sets Rexford up for the future.

That concludes the Q&A portion of our earnings call. I'd now like to turn the call over to Laura Clark for closing remarks.

Thank you all for joining us today, and we look forward to spending time with you over the next few months.