Q4 2024 Rexford Industrial Realty Inc Earnings Call
Hello, and thank you for standing by my name is Regina and I will be your conference operator today at this time I would like to welcome everyone to the Rexford Industrial's fourth quarter of 'twenty 'twenty four earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question.
During this time simply press Star then the number one on your telephone keypad to withdraw your question Press Star. One again, we kindly ask that you limit yourself to one question you may rejoin the queue for any additional questions. You may have I would now like to turn the conference over to Michela Lynch director of Investor Relations and capital markets. Please go ahead.
Michela Lynch: Thank you and welcome to Rexford Industrials fourth quarter 2024 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.
Michela Lynch: A reminder, management's remarks and responses to your questions may contain forward looking statements are defined by 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.
Michela Lynch: Future.
Michela Lynch: Well 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.
Speaker Change: Joining me today are co Ceos, Michael Frankel, and Howard Schwimmer, Our C O L. Laura Clark and our CFO, Mike Fitzmaurice today, Michel and Howard will provide an introduction followed by Laura on market conditions and operations and Mike on financial results and guidance. It is my pleasure to now introduce co CEO Michael Frankel Michael.
Thank you Kayla and thank you all for joining us today.
Speaker Change: I want to begin.
Speaker Change: The devastating wildfires that continue to impact of Los Angeles.
Speaker Change: While we are fortunate our portfolio sustained no damage our priority continues to be supporting our rexford team and are extended.
Speaker Change: We're very pleased to welcome Mike Morris as our new CFO with.
Speaker Change: With Mike onboard we completed Morris planned promotion from CFO to Chief operating officer.
Speaker Change: Both Mike and Lora will play key roles in unlocking the full potential of our portfolio and expanding our opportunities for future growth.
Howard Schwimmer: Now I'll turn the call over to Howard.
Howard Schwimmer: Thanks, Michael and thank you all for joining.
Howard Schwimmer: I Echo Michael's remarks, welcoming Mike or extra team and elevating Laura the C O O.
Howard Schwimmer: As a key step forward for the company and we're confident they will continue driving operational excellence across our platform.
Speaker Change: Before turning the call over to Laura Michael I want to take a moment to thank our entire rexford team for your dedication and strong performance over the past quarter and as we move into 2025.
Laura Michael: I will now turn the call to Lora.
Speaker Change: Thank you Howard and thank you all for joining us today.
Speaker Change: Starting with market conditions, we continue to navigate choppiness following pandemic era as well as recent macroeconomic interest rate and political uncertainty.
Speaker Change: While these factors are impacting our near term projected 2025 for the long term outlook for supply demand fundamentals and robust levels of regional consumption within our infill southern California market remain intact.
Speaker Change: Although market conditions have impacted overall occupancy and the lease up timing and some repositioning and redevelopment projects. We remain confident we will realize the substantial growth and value creation embedded within our portfolio.
Speaker Change: Notably since the start of the year, we have observed pick up internet activity and lease negotiations crocker vacant spaces that we are working to convert to execute those leases.
Speaker Change: Regarding market rents, we observed a decline in taking rents for quality product comparable to the rest of our portfolio of one 5% sequentially and 8% year over year.
Speaker Change: This compares favorably to the broader infill markets, which are down 12, 5% year over year, and even more favorably when compared to the larger box market in the inland Empire East and West where Revpar declined approximately 25% year over year. According to CBRE.
Speaker Change: Consistent with historical trends record superior and highly functional in fill locations, averaging 26000 square feet up continue to outperform.
Speaker Change: By way of example, the average executed lease rate on our 8 million square feet 2020, or leasing activity was 19% higher than the executed lease rate across the overall infill markets.
Speaker Change: Turning to our fourth quarter performance the Rexford team delivered solid results in line with our expectations we.
Speaker Change: We executed 1 million square feet of leasing at net effective leasing spreads of 55%.
Speaker Change: Cash leasing spreads of 41% with annual embedded rent steps, averaging three 9%.
Speaker Change: Same property average occupancy declined by 120 basis points sequentially, driven by the expected move outs communicated last quarter.
Speaker Change: Regarding investment activity in the fourth quarter, we stabilized three repositioning projects, which met or exceeded our forecasted stabilization timing and yields.
Speaker Change: For the full year, we stabilized 10, repositioning and redevelopment projects across 825000 square feet, achieving an aggregate seven 5% unlevered stabilized yield on total investments.
Speaker Change: During the quarter, we closed two acquisitions for $207 million and for the full year, we completed $1 5 billion of acquisitions projected to generate a 5.6% unlevered stabilized yield.
Speaker Change: In addition for the full year, we sold five properties for a total of $44 million generating a 12, 8% Unlevered IRR.
Speaker Change: In light of current market conditions, our capital allocation strategy is focused on maximizing returns and accretion through capital recycling and repositioning or redevelopment opportunities with.
Speaker Change: With regard to our acquisition pipeline. We currently have no acquisitions under contract or accepted offers.
Speaker Change: Separately, we have $105 million of dispositions under contract or accepted offer subject to customary closing conditions.
Speaker Change: Guarding our repositioning and Redevelopments, we have three 5 million square feet of projects under construction or in lease up which are projected to deliver a six 1% unlevered stabilized yield on total investments.
Speaker Change: Our value creation focus continues to differentiate the rexnord business model and generate substantial embedded NOI growth.
Speaker Change: They are embedded growth represents an estimated 40% increase in total incremental NOI equal to $280 million, which includes annual embedded rent steps, averaging three 7% for the total portfolio.
Speaker Change: The portfolio lease mark to market up 25% on a net effect he says.
Speaker Change: And projected incremental NOI of $75 million from our repositioning and redevelopment projects currently under construction or in lease up.
Speaker Change: In closing as I step into the C. O overall I am excited to expand upon my work with our rexford team to drive greater efficiency effectiveness and profitability.
Speaker Change: To that end recognizing current market conditions, we are taking proactive actions internally to drive further efficiency across the organization.
Speaker Change: These initiatives resulted in no increase to year over year projected G&A, despite growing consolidated NOI by 17% in 2024.
Speaker Change: And demonstrates our commitment to driving shareholder value through all points in the cycle.
Mike: With that I'm happy to turn the call over to Mike. We are excited to welcome fits to the team for all he brings direct effort.
Speaker Change: Mike.
Speaker Change: Thank you for the kind introduction Lora to you Michael Howard. Thank you for placing your trust in me as we work together to drive <unk> next phase of growth.
Speaker Change: I'll now briefly comment on quarterly and full year results.
Speaker Change: Walk through our 2025 guidance and that conclude with the balance sheet.
Speaker Change: Our fourth quarter 2024 earnings results were in line with our expectations for the full year, we delivered 7% growth in both core <unk> per share and same property cash NOI demonstrating the resilience of our earnings despite challenging market conditions.
Speaker Change: Moving onto our initial 2025 outlook for clarity as I walk through the components of guidance today, I will be referring to the midpoint of our assumption ranges as disclosed in yesterday's earnings release.
Speaker Change: Consistent with historical practice, our outlook does not include any assumptions for additional acquisitions dispositions or related balance sheet activities that have not closed.
Speaker Change: We are establishing our core <unk> guidance range of $2 37 to $2 41 per share, let's begin with our key same property drivers same property net effective NOI growth is expected to be 1%, primarily driven by longer projected downtime, resulting in a decline of 100 basis points.
Speaker Change: Average occupancy bad debt equating to 70 basis points of revenues cash re leasing spreads of 20% and contractual rent increases of three 7%.
Speaker Change: As for our value add construction projects, we estimate $35 million of incremental NOI from the lease up of repositioning and redevelopment projects of which $15 million is related to projects leased in 2020 for.
Speaker Change: This was partially offset by $20 million of NOI coming offline as we commence construction on new projects for.
Speaker Change: For the NOI coming online in 2025, we assume an average of lease up time of eight months up two months compared to our prior quarter expectations.
Speaker Change: And as Laura highlighted we're taking proactive measures to control costs.
So we scaled our platform by adding $4 6 million square feet last year, we were able to keep G&A flat compared to 2024, reinforcing our commitment to increasing operating leverage.
Regarding our balance sheet, we continue to maintain a low leverage profile and strong liquidity at quarter end net debt to EBITDA was four six times today liquidity totaled $1 4 billion, including nearly full availability on our $1 billion revolver and $400 million afford equity requiring <unk>.
Speaker Change: <unk> by the end of the first quarter as a reminder, the forward equity was raised in March 2024 at $48 95 per share.
Speaker Change: As it relates to capital needs for 2025, we have $275 million allocated for repositioning and redevelopment with no material debt maturities.
Speaker Change: Lastly, our board authorized a $300 million share repurchase program further expanding our opportunities to allocate capital.
Speaker Change: Before I turn the call over to the operator I want to thank the entire rexford team for their warm welcome and support as my family and I settled into southern California.
Speaker Change: Truly grateful to join the team at uphold such a high standard of excellence dedication and teamwork together, we're going to accomplish great things operator.
Speaker Change: At this time I'd like to remind everyone in order to ask a question press star followed by the number one on your telephone keypad, we kindly ask that you limit yourself to one question and rejoin the queue for any follow ups. We will take our first question from the line of Mike Mueller with JP Morgan. Please go ahead.
Speaker Change: Mike Your line might be on mute.
Mike Mueller: There you go sorry about that yeah I was wondering looking at the supplemental on page 20, where you have the leasing volumes going from.
Speaker Change: $3 2 million square feet and <unk>.
Speaker Change: Sequentially down to $1 million in <unk> can you just talk a little bit about what's happening real time, and how you see that craft playing out based on what youre guiding to for 2025.
Mike: Hey, Mike Thanks for joining us today.
Well, let's let's touch on fourth quarter, and then we'll look at an end to what we're seeing in the market today. So in terms of fourth quarter activity. It was the 1 million square feet of leasing was in line with our expectations that we discussed on the call last quarter are really driven by minimum level of lease expirations as well as our expectations around the slower demand environment.
Mike: We were experiencing in the back half of the year.
Mike: As we look forward to what we're seeing today and importantly in.
Mike: In January we did see a pick up in overall activity in the market and around our leasing negotiations on our vacant spaces. Our year to date, we've actually executed 1 million square feet of leasing through today through yesterday, which represents the same level of activity in all of Q4 that also include lease up of three of our repositioning.
Mike: Our redevelopment projects about 200000 square feet. So we're seeing good activity in the market I say on about 90% of our vacant spaces. We have some level of activity and so you know, we're really focused on converting that activity and two executed leases.
Speaker Change: Our next question comes from the line of Blaine Heck with Wells Fargo. Please go ahead.
Blaine Heck: Great. Thanks, and certainly want to pass along our sympathies to everyone affected by the wildfires.
Blaine Heck: With my one question I, just wanted to dig in a little bit more into the components of cash same store NOI growth with possible.
Blaine Heck: Obviously, there are some headwinds to occupancy, but maybe you can talk about the puts and takes related to rent spreads and rent bumps and bad debt.
Blaine Heck: EBIT margins in kind of the bridge or how that all builds up to get us closer to the midpoint of guidance.
Mike Mueller: Sure Glenn Good morning, this is Mike.
Blaine Heck: I'll start with the major drivers for us.
Mike Mueller: Elevated downtime.
Blaine Heck: Concessions higher bad debt.
Blaine Heck: And the components of those items are as follows 270 basis points from cash releasing spreads, which again are about 20% for the for the year, we have 320 basis points from rent steps.
Blaine Heck: They are driven by the three 6% in place for instance, we have in the portfolio. So those are the two positive drivers Bryan offset by about 130 basis points of concessions.
Blaine Heck: We're experiencing about.
Blaine Heck: Three months of concessions, which is about up one month from last year than.
Blaine Heck: Then we had 100 basis points of average occupancy decline that we noted in our press release last night and then there is just a tiny bit of erosion from that expenses of about 30 basis points and then the higher bad debt.
Blaine Heck: The MBA the profile drag about another 80 basis points that get to get down to the two 5%.
Blaine Heck: Most of last night.
Speaker Change: Our next question comes from the line of Andrew Berger with Bank of America. Please go ahead.
Andrew Berger: Hey, How's it going.
Speaker Change: I know you guys stopped providing.
Andrew Berger: Terry.
Andrew Berger: Rent growth growth forecast, but I saw obviously in the presentation you highlighted that rents for the comparable portfolio declined minus one 5% during the quarter and just curious if you have any high level thoughts as to how close to the bottom we are and whether or not you think we'll see that stabilize this year.
Speaker Change: Yes, it's Michael Thanks, so much for dialing in today and great to hear from you. It's always hard to call a bottom with respect to market rents a lot of drivers both on the demand and the supply side and I think really what we can tell you is what we're seeing in the markets today and I think Laura did a great job of describing current conditions.
Speaker Change: And look the business is fundamentally sound and I think a lot of the data out there tends to disproportionately cover the big box larger box markets, frankly, and I think what Youre also seeing with regard to market conditions is that our smaller medium sized tenant base is showing more resiliency in terms of market rents at least in southern California as compared to the larger box tenants.
Speaker Change: You have a larger box tenants are down about 25% year over year, whereas our portfolio.
Speaker Change: Tenant on average.
Speaker Change: Similar quality is down about 8% so the backdrop and the foundation is there ultimately for market rent growth. It's just hard to say, it's hard to call. When we start to see that inflection point.
Speaker Change: Our next question comes from the line of Steve <unk> with Evercore ISI. Please go ahead.
Speaker Change: Yeah. Thanks as you look at your 25 lease explorations, you got I guess, a little over 7 million feet.
Speaker Change: How would you sort of think about retention ratios on that and are there any large known move outs that you have.
Speaker Change: In the in the portfolio this year.
Speaker Change: Hey, Steve Thanks for joining us today in terms of our occupancy guidance.
Speaker Change: We are guiding to about 100 basis points of occupancy decline in the portfolio on average our average portfolio occupancy for 2025 that the largest driver of that is really higher projected downtime. So that's no longer time between and move out of a tenant in a new rent.
Speaker Change: Rent commencing so where we're projecting about six five months of projected downtime on average for 2025 and that compares to about five months that we experienced in 2024 and its really associated with longer tenant decision, making and the factors around the demand that we've talked about are.
Speaker Change: Just drilling into your question around specific tenants.
Speaker Change: About the 100 basis slight decline about 70% of it is impacted by by four tenants.
Speaker Change: Two of those four spaces actually were vacates in the fourth quarter and then the other two are expected vacates in 2025, and one thing I would add there Steve as I mentioned my prepared remarks, we've got about $20 million or so coming offline.
Speaker Change: NOI coming offline, it's one five related to preparing products for our repositioning redevelopment most of those on a weighted average basis come off in the first quarter, so from a shape or occupancy relative to the start of this year, it's going to decelerate in the first quarter and Reaccelerate the back nine months of the year.
Speaker Change: Our next question comes from the line of John Kim with BMO capital markets. Please go ahead.
John Kim: Thank you and good morning.
Speaker Change: That's up to you Mike.
Speaker Change: Can you just walk us through again, the GAAP same store NOI growth I'm a little bit.
Speaker Change: Unclear as to why that would be lower than your cash same store guidance. The GAAP spreads would likely be higher than cash you don't have the free rents impacting GAAP that would with cash I know you went through with a flat occupancy in the bad debt, but what else would be driving that GAAP same store lower than cash.
Speaker Change: Yes, so the delta between our midpoint on cash of two 5% and 1% on the matter of fact of is really a straight line rent as we burn off below market leases, which are generally in our portfolio, where we're at in our evolution of our leases were in the back half of the leases. So that's the drag there.
Speaker Change: Our next question comes from the line of Greg Mcginniss with Scotiabank. Please go ahead.
Greg Mcginniss: Hey, good morning.
Speaker Change: I was.
Speaker Change: I'm just wondering if you could talk about.
Speaker Change: Your view on it.
Speaker Change: Trying to understand the lease up.
Speaker Change: Sorry, the leasing has improved or the view on leasing activity is somewhat improved into the beginning of this year, but then.
Speaker Change: You know offset commentary I'm pushing out the development and leasing.
Speaker Change: So is that just reflective of the development leasing is whats happened recently versus whats kind of going on more recently on leasing or if you can just kind of reconcile those two comments for us I appreciate it.
Speaker Change: Yes, I'll just from from a guidance perspective, and the rates we set out there last night. It is based on today's realities with the most up to date information as of earlier this week some of the commentary.
Speaker Change: Laura just shared with you on the <unk>.
Speaker Change: Nice momentum we're experiencing here over the last week with leasing activity, we take a very bottom up approach with budgeting. Every every lease every asset we look at every specific assumption and align that with the risk of the market.
Speaker Change: And so we feel very good about where we're at with the range today and it takes into account all the information up until just a few days ago.
Speaker Change: And I think what I'll add is.
Speaker Change: What we're seeing around demand.
Speaker Change: Yeah, what strike well you know theres a number of factors I believe that are that are impacting has this increase in demand I think number one we're seeing some clarity the tenants we're seeing some clarity around the interest rate environment political environment and I do believe that unlocking some pent up demand that's been in the market.
Speaker Change: We're seeing that tenants are valuing the higher quality functional space in the market.
Speaker Change: They're really focused on base that allows them to drive higher revenue helicon they gain efficiencies.
Speaker Change: And that's the record product that we're delivering the highest quality highest functional space into the market.
Speaker Change: And I think that's driving some of our incremental demand as well.
Speaker Change: But we are continuing to see tenants being very thoughtful about their decisions, we're making around expansion in their space needs and it is continuing to take some time for those decisions to happen under lease up space and so as those opportunities convert into executed leases youll see that flow through our results.
Speaker Change: Our next question comes from the line of Nick Tillman with Baird. Please go ahead.
Nick Tillman: Hey, good morning, Mike I appreciate the commentary on redevelopment. So just taking some of the NOI offline. So just to drill down a little bit you guys identified three 3 million square feet of redevelopment and repositioning by what percentage of that I guess is from the 2025 explorations of a $7 5 million square feet.
Nick Tillman: What's the expected spend of that amount this year.
Nick Tillman: The spend for this year that we have earmarked for repositioning redevelopment is about $275 million.
Speaker Change: Our next question comes from the line of Vikram Malhotra with Mizuho. Please go ahead.
Vikram Malhotra: Hi, Thanks for taking the question.
Speaker Change: I guess I wanted to just touch upon your slide.
Speaker Change: Even some key messages one of them is capital allocation you referred to like no.
Speaker Change: Acquisitions, but dispositions, so perhaps maybe just stepping back two parts to that one.
Speaker Change: Environment.
Speaker Change: Given the superior quality you've outlined.
Speaker Change: There is sort of a portfolio kind of once in a generation that presents itself. Your peers, maybe hurting more do you act upon that and then capital allocation why is what about buybacks.
Andrew Berger: Hey, Vikram. Thanks, so much for joining us today, great questions all around capital allocation, but let's just take a step back and talk about our priorities.
Andrew Berger: Our priorities have changed in light of todays market and our current cost of capital.
Andrew Berger: To that end, our hurdle rates have increased and we are focused on capital recycling.
Andrew Berger: And executing on our repositioning and Redevelopments.
Andrew Berger: As we think about capital recycling, we believe dispositions continue to be an attractive source of capital obviously represented by the $105 million that we have under contract or accepted offers today.
Andrew Berger: Those allow us to capture value and redeploy that into accretive opportunities.
Andrew Berger: Certainly includes a repositioning redevelopments that drive substantial incremental yield.
Andrew Berger: Potentially our own stock through share repurchases and potentially acquisitions, but they would have to meet a very high hurdle rates in today's environment.
Howard Schwimmer: And Vikram Hi, It's Howard you asked about a once in a lifetime portfolio.
Howard Schwimmer: We monitor plenty of opportunities in the market, but.
Howard Schwimmer: I think we've made clear our hurdle rates are up and if we were going to buy something larger they certainly have to meet those hurdle rates and there is absolutely no reason for us to change those for rich just because our portfolio. It comes up available for sale.
Craig Mailman: Our next question comes from the line of Craig Mailman with Citi. Please go ahead.
Craig Mailman: Hey, everyone just a follow up on the capital allocation piece.
Craig Mailman: It seems like you guys are clearly shying away from acquisitions at least in the near term here, but could you just give us a sense of you know.
Craig Mailman: The stock is.
Craig Mailman: And depressed year for a couple of months now why go through with the <unk>.
Craig Mailman: <unk> acquisition, why not pumped on that use that capital for higher yielding redevelopment and then use some of the ATM issuance you have pulled out before.
I mean, I guess you keep them on the balance sheet is not overly earnings dilutive. If you can solve it for buybacks why even spend the money on the recent acquisition at that yield given where your stock is trading.
Craig Mailman: Hello.
Howard Schwimmer: Hi, Craig it's Howard.
Craig Mailman: Well first of all the property we bought has.
Craig Mailman: Fantastic functionality, it's in a location.
And I'll, just remind you that the capital we used in buying that asset.
Craig Mailman: Was the forward equity that was raised at about $49 a share.
Craig Mailman: And if you look at the transaction the initial yield.
Craig Mailman: It was about four eight and by year.
We're already at a five 5% in place yield so thats turning away with 4% rent increases.
Craig Mailman: And Theres about six and half years currently left on the term.
Craig Mailman: The lease.
Craig Mailman: And you know obviously.
Craig Mailman: Obviously, the hurdle rates would be different and I think I just made that clear on my last comment if we start looking at new transactions.
Craig Mailman: But with that capital that we used.
Craig Mailman: There was actually accretion.
Speaker Change: Our next question is a follow up on the line of Blaine Heck with Wells Fargo. Please go ahead.
Blaine Heck: Yeah, great. Thanks, clearly, we're still very early in the process of determining the ultimate impact of the wildfires in the region, but can you share any early reads or anecdotes around potential demand that could arise for industrial space to support the rebuilding effort and whether you.
Blaine Heck: Think any specific submarkets or building sizes might see the most incremental demand.
Michael: Hey, Blayne, Thanks, Ken for the question it's Michael.
Michael: Look it is early and obviously our hearts go out to everybody impacted by these tragic buyers.
Michael: But the fact matters if you look at the backdrop before the fires we already had a significant mandates increased housing in southern California by about $2 5 million units of affordable housing and we had already started to see.
Michael: A marginal increase in demand from the building trades et cetera, and I think that there is no question with the volume the magnitude of impact derived from the fires that were going to see demand and I think it will come in phases, and frankly, we have tenants that service all phases of rebuilding.
Going to start with infrastructure pipes conduit wire, we have tenants that service that and store that and deliver that and install that.
Michael: And then it's going to move on up to wood and framing and steel and everything that goes into a home and these arent just affordable houses and affordable housing units. This is these are homes that.
Michael: The play extensive finishes and extensive appliance level of appliances. So I think there's no question, it's going to drive incremental demand over time.
Michael: For the portfolio.
Speaker Change: Our next question is a follow up on the line of John Kim with BMO capital markets. Please go ahead.
Speaker Change: I do like the one question rule, but I did want to follow up on.
John Kim: My question on the GAAP spreads do you expect this year you signed at 55% in the fourth quarter I mentioned, a lot of that is going to commence in 2025, but what should we be modeling as far as GAAP spreads.
John Kim: Yes spreads are expected to be about 30%.
John Kim: Slide 25.
Speaker Change: Okay. Thank.
John Kim: Thank you.
Speaker Change: Youre welcome. Our next question is a follow up from the line of Vikram Malhotra with Mizuho. Please go ahead.
Vikram Malhotra: Thanks for clarifying essentially the follow ups. So first on leasing I think you said you've done a million square foot year to date I.
Vikram Malhotra: I was wondering if you could kind of break that out into new and renewals and clarify the comment you had on taking rents.
Vikram Malhotra: I think you said were up one 5% sequentially and 8% year over year I'm, just wondering how does that compare to what you have in the deck in terms of a comparable.
Vikram Malhotra: Comparable rent growth. Thanks.
Vikram Malhotra: Yeah in terms of the leasing activity today, it's about one third new two thirds renewable which is pretty consistent with what we typically see within our leasing quarter.
Vikram Malhotra: Our next question here.
Speaker Change: What was the second part of it.
Speaker Change: The second was just you mentioned something about 8%.
Speaker Change: Year over year rent growth and taking rents in one and a half sequentially I just wanted to understand how does that go.
Speaker Change: Compare or like what compared to what you put in the deck, which is year over year your rent growth is down 8%.
Speaker Change: 1% sequentially.
Speaker Change: Yeah.
Speaker Change: That's the market rent growth that we've experienced within the rexford portfolio comparable product.
Speaker Change: So ours within the portfolio, yes, and just from a guide perspective, what we've baked in for 2025, we're assuming flat growth throughout the year relative to last year.
Speaker Change: Market rate of substance.
Speaker Change: And we'll give more details next quarter in terms of lease spreads et cetera, and what we accomplished this quarter.
Speaker Change: Our next question is a follow up on the line of Steve <unk> with Evercore ISI. Please go ahead.
Speaker Change: Yes. Thanks, I just wanted to clarify Laura when you talked about or Mike when you talked about the 100 basis point decline.
Speaker Change: Relating to the same store occupancy decline, which is part of guidance or was that a 100 basis point decline on kind of the overall portfolio, which has continued to drift down I think it was a little over 91% at the end of the year. Thanks.
Speaker Change: Yes, it's 100 basis 100 basis points of average occupancy decline.
Speaker Change: For same property.
Speaker Change: And that will conclude our question and answer session I'll turn the call back over to Laura Clark for any closing remarks.
Speaker Change: Before we wrap up I'd like to leave you all with two final thoughts first is that our infill southern California market and portfolio are uniquely positioned for long term value creation. Despite some near term market challenges our projected NOI internal growth opportunity remains substantial equal to two.
Speaker Change: $180 million of incremental NOI and that represents 40% growth.
Speaker Change: And we maintain a strong financial position and are taking a disciplined approach to capital allocation with a focus on maximizing returns and accretion while also proactively enhancing operational efficiencies to drive shareholder value.
Speaker Change: We thank you all for joining us today.
Speaker Change: That will conclude today's call. Thank you all for joining and you may now disconnect.
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