Speaker #1: Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Rexford Industrial Inc. Fourth Quarter 2025 Earnings Conference Call.
Speaker #1: 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.
Speaker #1: To withdraw your question, press star one again. We ask that you please limit yourself to one question. We answer the queue for any additional follow-ups.
Operator: To withdraw your question, press star one again. We ask that you please limit yourself to one question. Re-enter the queue for any additional follow-ups. I'd now like to turn the conference over to Mikayla Lynch, Director of Investor Relations and Capital Markets. Please go ahead.
Speaker #1: I'd now like to turn the conference over to Mikayla Lynch, Director of Investor Relations and Capital Markets. Please go ahead.
Speaker #1: ahead.
Speaker #2: Thank you,
Mikayla Lynch: Thank you, and welcome to Rexford Industrial's Q4 2025 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 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. Before we begin, our outgoing Co-CEOs recorded some brief remarks that they'd like to share.
Mikayla Lynch: Thank you, and welcome to Rexford Industrial's Q4 2025 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 federal securities laws, which are based on certain assumptions and subject to risks and uncertainties outlined in our 10-K and other SEC filings.
Speaker #2: And welcome to Rexford Industrial's fourth quarter 2025 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.
Speaker #2: As a reminder, management's remarks and responses to your questions may contain forward-looking statements as 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.
Speaker #2: 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.
Mikayla Lynch: 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. Before we begin, our outgoing Co-CEOs recorded some brief remarks that they'd like to share.
Speaker #2: Our earnings presentation and supplemental package provide GAAP reconciliations, as well as an explanation of why these measures are useful to investors. Before we begin, our outgoing co-CEOs recorded some brief remarks that they'd like to share.
Speaker #3: Good morning. Before the call begins, Michael and I wanted to share a brief personal note. Building Rexford, from a startup into a leading industrial real estate company, has been an extraordinary journey.
Howard Schwimmer: Good morning. Before the call begins, Michael and I wanted to share a brief personal note. Building Rexford from a startup into a leading industrial real estate company has been an extraordinary journey. What we've achieved reflects the talent, discipline, and commitment of a remarkable team, as well as the trust and support of our partners and shareholders.
Howard Schwimmer: Good morning. Before the call begins, Michael and I wanted to share a brief personal note. Building Rexford from a startup into a leading industrial real estate company has been an extraordinary journey. What we've achieved reflects the talent, discipline, and commitment of a remarkable team, as well as the trust and support of our partners and shareholders.
Speaker #3: What we've achieved reflects the talent, discipline, and commitment of a remarkable team, as well as the trust and support of our partners and
Speaker #3: shareholders. Thank you, Howard.
Michael Frankel: Thank you, Howard. I'd like to add that it's been a pleasure to build the company together with you over the prior 20-plus years. I'm deeply grateful to everyone who contributed to Rexford's growth and success, and I'm proud of what the team has accomplished. Looking forward, I'm also excited for Rexford's opportunity to create significant shareholder value through its next phase of growth.
Michael Frankel: Thank you, Howard. I'd like to add that it's been a pleasure to build the company together with you over the prior 20-plus years. I'm deeply grateful to everyone who contributed to Rexford's growth and success, and I'm proud of what the team has accomplished. Looking forward, I'm also excited for Rexford's opportunity to create significant shareholder value through its next phase of growth.
Speaker #4: I'd like to add that it's been a pleasure to build the company together with you over the prior 20-plus years. I'm deeply grateful to everyone who contributed to Rexford's growth and success, and I'm proud of what the team has accomplished.
Speaker #4: Looking forward, I'm also excited for Rexford's opportunity to create significant shareholder value through its next phase of growth.
Speaker #2: I'd like to thank Michael and Howard, and wish them the very best going forward. Turning now to our fourth quarter earnings call, joining me today are Rexford's COO and incoming CEO, Laura Clark, together with our CFO, Mike Fitzmaurice.
Mikayla Lynch: I'd like to thank Michael and Howard and wish them the very best going forward. Turning now to our Q4 earnings call. Joining me today are Rexford's COO and incoming CEO, Laura Clark, together with our CFO, Mike Fitzmaurice. John Nahas, our Managing Director of Operations, will also be joining in the Q&A portion of today's call. I'd now like to turn the call over to COO and incoming CEO, Laura Clark. Laura?
Mikayla Lynch: I'd like to thank Michael and Howard and wish them the very best going forward. Turning now to our Q4 earnings call. Joining me today are Rexford's COO and incoming CEO, Laura Clark, together with our CFO, Mike Fitzmaurice. John Nahas, our Managing Director of Operations, will also be joining in the Q&A portion of today's call. I'd now like to turn the call over to COO and incoming CEO, Laura Clark. Laura?
Speaker #2: John will also be joining in the Q&A portion. Nahas, our Managing Director of Operations, will also be joining today's call. I'd now like to turn the call over to COO and incoming CEO, Laura.
Speaker #2: Clark. Laura.
Speaker #5: Thank
Speaker #5: Thank you, Mikayla. And thank you all for joining us today. The Rexford team delivered a solid quarter of results, including the execution of 3 million square feet of leasing and meeting our guidance expectations.
Laura Clark: Thank you, Mikayla, and thank you all for joining us today. The Rexford team delivered a solid quarter of results, including the execution of 3 million sq ft of leasing and meeting our guidance expectations. Rexford's portfolio continues to outperform the broader market, and we remain confident in the long-term fundamentals of Infill Southern California, despite near-term pressure impacting our 2026 growth expectations. I'll provide additional detail on overall market dynamics following an update on our recent initiatives. In November, we outlined the immediate strategic priorities that position Rexford to enhance the quality of our cash flow, drive per share FFO and NAV growth, and optimize return for shareholders. I'm proud of the progress that we've made in just a few short months. First, we took a rigorous approach to re-underwriting our near-term development pipeline.
Laura Clark: Thank you, Mikayla, and thank you all for joining us today. The Rexford team delivered a solid quarter of results, including the execution of 3 million sq ft of leasing and meeting our guidance expectations. Rexford's portfolio continues to outperform the broader market, and we remain confident in the long-term fundamentals of Infill Southern California, despite near-term pressure impacting our 2026 growth expectations. I'll provide additional detail on overall market dynamics following an update on our recent initiatives.
Speaker #5: Rexford's portfolio continues to outperform the broader market, and we remain confident in the long-term fundamentals of infill Southern California, despite near-term pressure impacting our 2026 growth expectations.
Speaker #5: I'll provide additional detail on overall market dynamics following an update on a recent initiative. In November, we outlined the immediate strategic priorities that position Rexford to enhance the quality of our cash flow, drive per-share SFO and NAV growth, and optimize return for shareholders.
Laura Clark: In November, we outlined the immediate strategic priorities that position Rexford to enhance the quality of our cash flow, drive per share FFO and NAV growth, and optimize return for shareholders. I'm proud of the progress that we've made in just a few short months. First, we took a rigorous approach to re-underwriting our near-term development pipeline.
Speaker #5: I'm proud of the progress that we've made in just a few short months. First, we took a rigorous approach to re-underwriting our near-term development pipeline. At this point, we have identified six projects representing approximately 850,000 square feet of future development that we are not moving forward with and intend to dispose of.
Laura Clark: At this point, we have identified six projects representing approximately 850,000 sq ft of future development that we are not moving forward with and intend to dispose of, giving us flexibility to redeploy capital into more accretive opportunities. Our decisive actions to reduce our development exposure have resulted in swift progress to date, and we currently have all six projects under contract or accepted offer to be sold. Importantly, as we continue to refine our strategy, maximizing risk-adjusted returns remains a critical component of driving value creation. All capital allocation decisions will be evaluated through our revamped, rigorous underwriting criteria that considers our current cost of capital and market dynamics. Second, a programmatic disposition plan is a key component of our broader capital allocation strategy.
Laura Clark: At this point, we have identified six projects representing approximately 850,000 sq ft of future development that we are not moving forward with and intend to dispose of, giving us flexibility to redeploy capital into more accretive opportunities. Our decisive actions to reduce our development exposure have resulted in swift progress to date, and we currently have all six projects under contract or accepted offer to be sold. Importantly, as we continue to refine our strategy, maximizing risk-adjusted returns remains a critical component of driving value creation. All capital allocation decisions will be evaluated through our revamped, rigorous underwriting criteria that considers our current cost of capital and market dynamics. Second, a programmatic disposition plan is a key component of our broader capital allocation strategy.
Speaker #5: Giving us flexibility to redeploy capital into more accretive opportunities. Our decisive actions to reduce our development exposure have resulted in swift progress to date, and we currently have all six projects under contract or accepted offer to be sold.
Speaker #5: Importantly, as we continue to refine our strategy, maximizing risk-adjusted returns remains a critical component of driving value creation. All capital allocation decisions will be evaluated through our criteria that consider our current, revamped, rigorous underwriting cost of capital and market dynamics.
Speaker #5: Second, a programmatic disposition plan is a key component of our broader capital allocation strategy. We are focused on disposing of properties that allow us to realize value creation, as well as properties that enhance the quality of our future cash flow growth.
Laura Clark: We are focused on disposing of properties that allow us to realize value creation, as well as properties that enhance the quality of our future cash flow growth. In 2025, we opportunistically sold 7 properties, totaling $218 million. Looking forward to 2026, we are currently targeting between $400 and 500 million dispositions that will support our ability to continue recycling capital to accretive opportunities. Third is our commitment to driving operating efficiencies across our business. As outlined in our November release, we targeted a reduction in G&A as a percentage of revenue below the peer average. And based on 2026 guidance, our G&A as a percentage of revenue will be 6%, in line with our commitment. We also communicated the importance of better aligning executive compensation with our shareholders.
Laura Clark: We are focused on disposing of properties that allow us to realize value creation, as well as properties that enhance the quality of our future cash flow growth. In 2025, we opportunistically sold 7 properties, totaling $218 million. Looking forward to 2026, we are currently targeting between $400 and 500 million dispositions that will support our ability to continue recycling capital to accretive opportunities. Third is our commitment to driving operating efficiencies across our business. As outlined in our November release, we targeted a reduction in G&A as a percentage of revenue below the peer average. And based on 2026 guidance, our G&A as a percentage of revenue will be 6%, in line with our commitment. We also communicated the importance of better aligning executive compensation with our shareholders.
Speaker #5: In 2025, we opportunistically sold seven properties totaling $218 million. Looking forward to 2026, we are currently targeting between $400 million and $500 million of dispositions that will support our ability to continue recycling capital to accretive opportunities.
Speaker #5: Third is our commitment to driving operating efficiencies across our business. As outlined in our November release, we targeted a reduction in G&A as a percentage of revenue below the peer average.
Speaker #5: And based on 2026 guidance, our G&A as a percentage of revenue will be 6%, in line with our commitment. We also communicated the importance of better aligning executive compensation with our shareholders.
Speaker #5: Per our December filing, we recalibrated our short- and long-term incentive compensation metrics, as well as the absolute level of executive compensation, underscoring our commitment to operate in direct alignment with shareholder priorities.
Laura Clark: Per our December filing, we recalibrated our short and long-term incentive compensation metrics, as well as the absolute level of executive compensation, underscoring our commitment to operate in direct alignment with shareholder priorities. We will continue to identify opportunities to drive further efficiencies across the business, and we are confident we can further reduce G&A as a percentage of revenue over time. Next, I'll provide an overview of the conditions we are seeing across the overall Infill Southern California market, observations that are shaping our strategic actions and informing our expectations going forward. Today, tenant demand continues to be influenced by broader macroeconomic forces and elevated levels of market availability. These conditions are contributing to a more measured pace of demand. As a result, according to CBRE, market rents declined 10 basis points in the quarter and 9% year-over-year.
Laura Clark: Per our December filing, we recalibrated our short and long-term incentive compensation metrics, as well as the absolute level of executive compensation, underscoring our commitment to operate in direct alignment with shareholder priorities. We will continue to identify opportunities to drive further efficiencies across the business, and we are confident we can further reduce G&A as a percentage of revenue over time. Next, I'll provide an overview of the conditions we are seeing across the overall Infill Southern California market, observations that are shaping our strategic actions and informing our expectations going forward. Today, tenant demand continues to be influenced by broader macroeconomic forces and elevated levels of market availability. These conditions are contributing to a more measured pace of demand. As a result, according to CBRE, market rents declined 10 basis points in the quarter and 9% year-over-year.
Speaker #5: We will continue to identify opportunities to drive further efficiencies across the business, and we are confident we can further reduce G&A as a percentage of revenue over time.
Speaker #5: Next, I'll provide an overview of the conditions we are seeing across the overall infill Southern California market. Observations that are shaping our strategic actions and informing our expectations going forward.
Speaker #5: Today, tenant demand continues to be influenced by broader macroeconomic forces and elevated levels of market availability. These conditions are contributing to a more measured pace of demand.
Speaker #5: As a result, according to CBRE, market rents declined 10 basis points in the quarter and 9% year over year. Vacancy also increased 30 basis points during the quarter.
Laura Clark: Vacancy also increased 30 basis points during the quarter. Net absorption is another key metric we monitor closely, as it typically begins to stabilize ahead of market rent. While net absorption was negative this quarter, reflecting broader market softness, we are starting to see some early signs of stabilization emerging across select submarkets and size categories. Given the current market backdrop, we are maintaining rigorous capital discipline and aggressively prioritizing occupancy, driving leasing to maintain cash flow. By way of example, subsequent to year-end, we executed a strategic early renewal of our largest tenant, Tireco, who occupies our 1.1 million sq ft Production Avenue property. The three-year renewal allows us to significantly de-risk cash flow and preserve occupancy.
Laura Clark: Vacancy also increased 30 basis points during the quarter. Net absorption is another key metric we monitor closely, as it typically begins to stabilize ahead of market rent. While net absorption was negative this quarter, reflecting broader market softness, we are starting to see some early signs of stabilization emerging across select submarkets and size categories. Given the current market backdrop, we are maintaining rigorous capital discipline and aggressively prioritizing occupancy, driving leasing to maintain cash flow. By way of example, subsequent to year-end, we executed a strategic early renewal of our largest tenant, Tireco, who occupies our 1.1 million sq ft Production Avenue property. The three-year renewal allows us to significantly de-risk cash flow and preserve occupancy.
Speaker #5: Net absorption is another key metric we monitor closely, as it typically begins to stabilize ahead of market rents. While net absorption was negative this quarter, reflecting broader market softness, we are starting to see some early signs of stabilization emerging across select submarkets and size categories.
Speaker #5: Given the current market backdrop, we are maintaining rigorous capital discipline and aggressively prioritizing occupancy, driving leasing to maintain cash flow. By way of example, subsequent to year-end, we executed a strategic early renewal of our largest tenant, Tire Co., who occupies our 1.1 million square foot Production Avenue property.
Speaker #5: The three-year renewal allows us to significantly de-risk cash flow and preserve occupancy. Although we are not yet able to call an inflection point in the market, we are excited about Rexford's unique upside potential and believe Rexford is a compelling investment opportunity today.
Laura Clark: Although we are not yet able to call an inflection point in the market, we are excited about Rexford's unique upside potential and believe Rexford is a compelling investment opportunity today. Beyond the actions we are taking to position Rexford for outright value creation, it is our unique assets, differentiated geographic focus, and on-the-ground operating expertise that underpin our confidence in our business model. Southern California stands as one of the most dynamic economic engines in the country, powered by a deep, highly skilled labor pool and a robust local consumption base that consistently fuels strong, diverse tenant demand over the long term. We have a superior portfolio of high-quality assets in a market where demand consistently outweighs supply. In fact, supply under construction in the market is near historic lows, supporting future rent growth potential.
Laura Clark: Although we are not yet able to call an inflection point in the market, we are excited about Rexford's unique upside potential and believe Rexford is a compelling investment opportunity today. Beyond the actions we are taking to position Rexford for outright value creation, it is our unique assets, differentiated geographic focus, and on-the-ground operating expertise that underpin our confidence in our business model. Southern California stands as one of the most dynamic economic engines in the country, powered by a deep, highly skilled labor pool and a robust local consumption base that consistently fuels strong, diverse tenant demand over the long term. We have a superior portfolio of high-quality assets in a market where demand consistently outweighs supply. In fact, supply under construction in the market is near historic lows, supporting future rent growth potential.
Speaker #5: Beyond the actions we are taking to position Rexford for outside value creation, it is our unique assets, differentiated geographic focus, and on-the-ground operating expertise that underpin our confidence in our business model.
Speaker #5: Southern California stands as one of the most dynamic economic engines in the country, powered by a deep, highly skilled labor pool and a robust local consumption base that consistently fuels strong, diverse tenant demand over the long term.
Speaker #5: We have a superior portfolio of high-quality assets, and a market where demand consistently outweighs supply. In fact, supply under construction in the market is near historic lows, supporting future rent growth potential.
Speaker #5: We are confident that, as a market inflex, Rexford is well positioned to capture recovering demand to drive occupancy and NOI growth. We are entering 2026 with a clear action plan, focused on maximizing risk-adjusted returns through executing on our programmatic dispositions, reducing development exposure, accretively recycling capital, driving operational efficiencies, and prioritizing occupancy.
Laura Clark: We are confident that as a market influx, Rexford is well positioned to capture recovering demand to drive occupancy and NOI growth. We are entering 2026 with a clear action plan focused on maximizing risk-adjusted returns through executing on our programmatic dispositions, reducing development exposure, accretively recycling capital, driving operational efficiencies, and prioritizing occupancy. We will continue to thoroughly evaluate opportunities to increase per share, FFO, and NAV, guided by our commitment to optimizing shareholder returns. Finally, I'd like to thank our exceptional Rexford team for their dedication that continues to drive our success today and through our next phase of growth. I also want to acknowledge and thank Howard and Michael on behalf of the entire Rexford team for their contributions in co-founding this incredible business, and we look forward to this next chapter at Rexford. I'll now turn the call over to Fitz.
Laura Clark: We are confident that as a market influx, Rexford is well positioned to capture recovering demand to drive occupancy and NOI growth. We are entering 2026 with a clear action plan focused on maximizing risk-adjusted returns through executing on our programmatic dispositions, reducing development exposure, accretively recycling capital, driving operational efficiencies, and prioritizing occupancy. We will continue to thoroughly evaluate opportunities to increase per share, FFO, and NAV, guided by our commitment to optimizing shareholder returns. Finally, I'd like to thank our exceptional Rexford team for their dedication that continues to drive our success today and through our next phase of growth. I also want to acknowledge and thank Howard and Michael on behalf of the entire Rexford team for their contributions in co-founding this incredible business, and we look forward to this next chapter at Rexford. I'll now turn the call over to Fitz.
Speaker #5: We will continue to thoroughly evaluate opportunities to increase per-share SFO and NAB, guided by our commitment to optimizing shareholder returns. Finally, I'd like to thank our exceptional Rexford team for their dedication that continues to drive our success today and through our next phase of growth.
Speaker #5: I also want to acknowledge and thank Howard and Michael on behalf of the entire Rexford team for their contributions in co-founding this incredible business.
Speaker #5: And we look forward to this next chapter at Rexford. I'll now turn the call over to Fitz.
Speaker #2: Thank you, Laura, and good morning. I would also like to thank Michael and Howard for their leadership over many years, and wish them both much success in their next chapter.
Michael Fitzmaurice: Thank you, Laura, and good morning. I would also like to thank Michael and Howard for their leadership over many years and wish them both much success in their next chapter. Today, I'll discuss Q4 results and provide additional details on our 2026 outlook. Q4 Core FFO per share of $0.59 was in line with expectations, driven by higher same property NOI growth, lower G&A expense, and accretive share buybacks, partially offset by higher bad debt. For the full year, after adjusting for the co-CEO transition severance charges, and other non-recurring costs, Core FFO per share was $2.40, placing us at the high end of our initial expectations. Note that co-CEO transition severance charges were fully recognized in the Q4 and will not impact 2026 results.
Michael Fitzmaurice: Thank you, Laura, and good morning. I would also like to thank Michael and Howard for their leadership over many years and wish them both much success in their next chapter. Today, I'll discuss Q4 results and provide additional details on our 2026 outlook. Q4 Core FFO per share of $0.59 was in line with expectations, driven by higher same property NOI growth, lower G&A expense, and accretive share buybacks, partially offset by higher bad debt. For the full year, after adjusting for the co-CEO transition severance charges, and other non-
Speaker #2: Today, I'll discuss fourth quarter results and provide additional details on our 2026 outlook. Fourth quarter core FFO per share at $0.59 was in line with expectations.
Speaker #2: Driven by higher same-property NOI growth, lower G&A expense, and accretive share buybacks, partially offset by higher bad debt. For the full year, after adjusting for the co-CEO transition severance charges and other non-recurring costs, core FFO per share was $2.40.
Michael Fitzmaurice: recurring costs, Core FFO per share was $2.40, placing us at the high end of our initial expectations. Note that co-CEO transition severance charges were fully recognized in the Q4 and will not impact 2026 results.
Speaker #2: Placing us at the high end of our initial expectations. Note that co-CEO transition severance charges were fully recognized in the fourth quarter and will not impact 2026 results.
Speaker #2: During the quarter, we recognized $89 million of real estate impairments related to our development sites that we have elected to sell. These projects no longer meet our investment hurdles, and selling these assets allows us to redirect $285 million of capital into higher-yielding uses.
Michael Fitzmaurice: During the quarter, we recognized $89 million of real estate impairments related to our development sites that we have elected to sell. These projects no longer meet our investment hurdles, and selling these assets allows us to redirect $285 million of capital into higher-yielding uses. This approach drives the best economic outcome and aligns with our strategic shift, de-risk cash flows, and reduce development exposure. During the full year operations, in 2025, we signed approximately 2 million sq ft of repositioning and development leases, generating nearly $40 million of annualized incremental NOI. While we are encouraged by the pace of recent leasing activity, we continue to experience pressure on occupancy and market rents. Total portfolio occupancy ended the quarter at 90.2%, down 160 basis points sequentially, largely driven by near-term repositioning and development starts.
Michael Fitzmaurice: During the quarter, we recognized $89 million of real estate impairments related to our development sites that we have elected to sell. These projects no longer meet our investment hurdles, and selling these assets allows us to redirect $285 million of capital into higher-yielding uses. This approach drives the best economic outcome and aligns with our strategic shift, de-risk cash flows, and reduce development exposure. During the full year operations, in 2025, we signed approximately 2 million sq ft of repositioning and development leases, generating nearly $40 million of annualized incremental NOI. While we are encouraged by the pace of recent leasing activity, we continue to experience pressure on occupancy and market rents. Total portfolio occupancy ended the quarter at 90.2%, down 160 basis points sequentially, largely driven by near-term repositioning and development starts.
Speaker #2: This approach drives the best economic outcome and aligns with our strategic shift to de-risk cash flows and reduce development exposure. During full-year operations in 2025, we signed approximately 2 million square feet of repositioning and development leases.
Speaker #2: Generating nearly $40 million of annualized incremental NOI. While we are encouraged by the pace of recent leasing activity, we continue to experience pressure on occupancy and market rent.
Speaker #2: Total portfolio occupancy at the end of the quarter was 90.2%, down 160 basis points sequentially. This was largely driven by near-term repositioning and development starts. These opportunities are expected to achieve an overall stabilized yield of roughly 7%.
Michael Fitzmaurice: These opportunities are expected to achieve an overall stabilized yield of roughly 7%. Additional move-outs were primarily driven by large tenants pursuing consolidation or expansion, the expiration of short-term renewals, and in a limited number of cases, tenant financial difficulties. Regarding market rent, we continue to experience a deceleration compared to last quarter, with market rents within our portfolio down 1%. Market rents have now fallen 20% since the peak in early 2023... which has put pressure on our expected re-leasing spreads for 2026 as we address expiring leases that were signed near the height of the market. Touching on share buybacks, we continue to take advantage of market dislocation between our share price and intrinsic value. During the quarter, we repurchased $100 million of shares, bringing our 2025 full year total to $250 million.
Michael Fitzmaurice: These opportunities are expected to achieve an overall stabilized yield of roughly 7%. Additional move-outs were primarily driven by large tenants pursuing consolidation or expansion, the expiration of short-term renewals, and in a limited number of cases, tenant financial difficulties. Regarding market rent, we continue to experience a deceleration compared to last quarter, with market rents within our portfolio down 1%. Market rents have now fallen 20% since the peak in early 2023... which has put pressure on our expected re-leasing spreads for 2026 as we address expiring leases that were signed near the height of the market. Touching on share buybacks, we continue to take advantage of market dislocation between our share price and intrinsic value. During the quarter, we repurchased $100 million of shares, bringing our 2025 full year total to $250 million.
Speaker #2: Additional move-outs were primarily driven by large tenants pursuing consolidation or expansion, the expiration of short-term renewals, and, in a limited number of cases, tenant financial difficulties.
Speaker #2: Regarding market rent, we continue to experience a deceleration compared to last quarter, with market rents within our portfolio down 1%. Market rents have now fallen 20% since the peak in early '23, which has put pressure on our expected releasing spreads for 2026 as we address expiring leases that were signed near the height of the market.
Speaker #2: Touching on share buybacks, we continue to take advantage of market dislocation between our share price and intrinsic value. During the quarter, we repurchased $100 million of shares, bringing our 2025 full-year total to $250 million.
Speaker #2: Share buybacks will remain a consideration in 2026, subject to a meaningful discount to intrinsic value, competing capital needs, and preservation of balance sheet strength.
Michael Fitzmaurice: Share buybacks will remain a consideration in 2026, subject to a meaningful discount to intrinsic value, competing capital needs, and preservation of balance sheet strength. Moving to our 2026 expectations, we are introducing 2026 core FFO per share guidance of $2.35 to $2.40. Our outlook reflects a mix of puts and takes, which I'll walk through using the midpoint of the range. Starting with repositioning and development, we expect to stabilize and commence rent on approximately 1.2 million sq ft of evaluated projects, generating $20 million of annualized NOI, with the majority coming online by mid-year. Conversely, approximately $12 million of annualized in-place NOI will come offline due to new construction starts, primarily related to our project at 9,000 Airport Boulevard.
Michael Fitzmaurice: Share buybacks will remain a consideration in 2026, subject to a meaningful discount to intrinsic value, competing capital needs, and preservation of balance sheet strength. Moving to our 2026 expectations, we are introducing 2026 core FFO per share guidance of $2.35 to $2.40. Our outlook reflects a mix of puts and takes, which I'll walk through using the midpoint of the range. Starting with repositioning and development, we expect to stabilize and commence rent on approximately 1.2 million sq ft of evaluated projects, generating $20 million of annualized NOI, with the majority coming online by mid-year. Conversely, approximately $12 million of annualized in-place NOI will come offline due to new construction starts, primarily related to our project at 9,000 Airport Boulevard.
Speaker #2: Looking ahead to 2026, we are introducing our 2026 core FFO per share guidance of $2.35 to $2.40. Our outlook reflects a mix of puts and takes, which I'll walk through using the midpoint of the range.
Speaker #2: Starting with repositioning and development, we expect to stabilize and commence rent on approximately 1.2 million square feet of value-added projects, generating $20 million of annualized NOI, with the majority coming online by mid-year.
Speaker #2: Conversely, approximately 12 million of annualized in-place NOI will come offline due to new construction starts, primarily related to our project at 9,000 Airport Boulevard.
Speaker #2: The weighted average timing of the annualized NOI coming offline is late in the third quarter. Same property NOI growth on a net effective basis is expected to decline approximately 2%.
Michael Fitzmaurice: The weighted average timing of the annualized NOI coming offline is late in Q3. Same property NOI growth on a net effective basis is expected to decline approximately 2%. Key assumptions include net effective re-leasing spreads of 5% to 10%, average occupancy of approximately 95%, and bad debt of 35 basis points of revenue. Of note, we expect unfavorable impacts from lower termination and income and the early renewal of the Tireco lease, as the above-market rent was reset to current market levels. With respect to dispositions, we expect to sell roughly $450 million of assets, with nearly $230 million already under contract or accepted offer. Proceeds will be redeployed toward the highest risk-adjusted returns, including future repositioning and development projects, as well as opportunistic share repurchases.
Michael Fitzmaurice: The weighted average timing of the annualized NOI coming offline is late in Q3. Same property NOI growth on a net effective basis is expected to decline approximately 2%. Key assumptions include net effective re-leasing spreads of 5% to 10%, average occupancy of approximately 95%, and bad debt of 35 basis points of revenue. Of note, we expect unfavorable impacts from lower termination and income and the early renewal of the Tireco lease, as the above-market rent was reset to current market levels. With respect to dispositions, we expect to sell roughly $450 million of assets, with nearly $230 million already under contract or accepted offer. Proceeds will be redeployed toward the highest risk-adjusted returns, including future repositioning and development projects, as well as opportunistic share repurchases.
Speaker #2: Key assumptions include net effective releasing spreads of 5% to 10%, average occupancy of approximately 95%, debt of 75 basis points, and bad revenue.
Speaker #2: Of note, we expect unfavorable impacts from lower termination income and the early renewal of the Tyreco lease, as the above-market rent was reset to current market levels.
Speaker #2: With respect to dispositions, we expect to sell roughly $450 million of assets, with nearly $230 million already under contract or accepted offer. Proceeds will be redeployed toward the highest risk-adjusted returns, including future repositioning and development projects, as well as opportunistic share repurchases.
Speaker #2: Before I wrap it up, I'd like to generally express my gratitude to everyone on our team for their commitment and tireless effort throughout this quarter.
Michael Fitzmaurice: Before I wrap it up, I'd like to generally express my gratitude to everyone on our team for their commitment and tireless effort throughout this quarter. I'd also like to congratulate Laura on her appointment as CEO. Laura's leadership, sound judgment, and vision have already made a meaningful impact. I'm excited to partner with her as we lead Rexford into its next chapter. With that, I'll turn the call back to the operator.
Michael Fitzmaurice: Before I wrap it up, I'd like to generally express my gratitude to everyone on our team for their commitment and tireless effort throughout this quarter. I'd also like to congratulate Laura on her appointment as CEO. Laura's leadership, sound judgment, and vision have already made a meaningful impact. I'm excited to partner with her as we lead Rexford into its next chapter. With that, I'll turn the call back to the operator.
Speaker #2: I'd also like to congratulate Laura on her appointment as CEO. Laura's leadership, sound judgment, and vision have already made a meaningful impact, and I'm excited to partner with her as we lead Rexford into its next chapter.
Speaker #2: With that, I'll turn the call back to the
Speaker #2: Operator: We will now begin the
Operator: We will now begin the question-and-answer session. To ask a question, press star, then the number one on your telephone keypad. We ask that you please limit yourself to one question and reenter the queue for any follow-ups. One moment please, for our first question.
Operator: We will now begin the question-and-answer session. To ask a question, press star, then the number one on your telephone keypad. We ask that you please limit yourself to one question and reenter the queue for any follow-ups. One moment please, for our first question.
Speaker #3: Question and answer session. To ask a question, press star, then the number one on your telephone keypad. We ask that you please limit yourself to one question and re-enter the queue for any follow-ups.
Speaker #3: One moment, please. For our first question.
Speaker #4: Thank you, Regina. Our first question comes from Greg McGuinness from Scotiabank. Greg, please go ahead.
Mikayla Lynch: Thank you, Regina. Our first question comes from Greg McGinniss from Scotiabank. Greg, please go ahead.
Mikayla Lynch: Thank you, Regina. Our first question comes from Greg McGinniss from Scotiabank. Greg, please go ahead.
Speaker #4: ahead. Hey, good morning out
Greg McGinniss: Hey, good morning out there. I was just hoping just for a little more understanding on the, on the Tireco lease re-signing there. And, you know, I think the original plan was in 2024, you looked out to 2027, and there's kind of the expectation that you'd be able to release at a higher rent then. Has the competitive market changed much for that type of product, you know, or is, you know, is there just, like, more competition for that space out there? And then why address it now versus, you know, early next year or later in this year?
Greg McGinniss: Hey, good morning out there. I was just hoping just for a little more understanding on the, on the Tireco lease re-signing there. And, you know, I think the original plan was in 2024, you looked out to 2027, and there's kind of the expectation that you'd be able to release at a higher rent then. Has the competitive market changed much for that type of product, you know, or is, you know, is there just, like, more competition for that space out there? And then why address it now versus, you know, early next year or later in this year?
Speaker #5: There, I was just hoping for a little more understanding on the tire co-lease resigning there. And I think the original plan was in 2024.
Speaker #5: You looked out to '27, and there was kind of the expectation that you'd be able to release at a higher rent then. Has the competitive market changed much for that type of product?
Speaker #5: Or is there just more competition for that space out there? And then, why address it now versus early next year, or later in this year?
Speaker #4: Yeah, Greg, this is Laura. Thanks for joining us today. Really, given the overall market backdrop, we made the decision here to prioritize occupancy and de-risk future cash flow growth.
Laura Clark: Yeah, Greg, this is Laura. Thanks for joining us today. Really, given the overall market backdrop, we made the decision here to prioritize occupancy and de-risk future cash flow growth. You know, the lease was expiring a year from now, in January of 2027. It's our largest, single largest tenant. They came to us to discuss an early renewal, and they were actually seeking a longer lease term of 5+ years. And given the significant cash flow impacts from the downtime of that space, especially considering the capital investment that would be required to position that space for lease, we did engage in discussions around an early renewal. Although they were seeking a longer lease term, we strategically negotiated a three-year lease here, which allows us to reset at market rent sooner.
Laura Clark: Yeah, Greg, this is Laura. Thanks for joining us today. Really, given the overall market backdrop, we made the decision here to prioritize occupancy and de-risk future cash flow growth. You know, the lease was expiring a year from now, in January of 2027. It's our largest, single largest tenant. They came to us to discuss an early renewal, and they were actually seeking a longer lease term of 5+ years. And given the significant cash flow impacts from the downtime of that space, especially considering the capital investment that would be required
Speaker #4: The lease was expiring a year from now, in January of 2027. It's our single largest tenant. They came to us to discuss an early renewal, and they were actually seeking a longer lease term of five-plus years.
Speaker #4: And given the significant cash flow impacts from the downtime of that space, especially considering the capital investment that would be required to position that space for lease, we did engage in discussions around an early renewal.
Laura Clark: to position that space for lease, we did engage in discussions around an early renewal. Although they were seeking a longer lease term, we strategically negotiated a three-year lease here, which allows us to reset at market rent sooner.
Speaker #4: Although they were seeking a longer lease term, we strategically negotiated a three-year lease here, which allows us to reset at market rents sooner. So, the tire co-lease was above market.
Laura Clark: So the Tireco lease was above market. The rolldown is about 30% on that space. And as I mentioned, I mean, the strategic renewal for us allows us to preserve occupancy and cash flow, given the current market dynamics and de-risk future growth.
Laura Clark: So the Tireco lease was above market. The rolldown is about 30% on that space. And as I mentioned, I mean, the strategic renewal for us allows us to preserve occupancy and cash flow, given the current market dynamics and de-risk future growth.
Speaker #4: The roll down is about 30% on that space. And as I mentioned in the strategic renewal for us, it allows us to preserve occupancy and cash flow, given the current market dynamics and de-risk.
Speaker #4: Future growth. And Greg, the one thing
Michael Fitzmaurice: And Greg, the one thing I would add there is the impact of same property NOI for 2026 and our FFO per share impact as well. So it impacts same property about 50 basis points, and then an FFO per share impact is about a penny and a half.
Michael Fitzmaurice: And Greg, the one thing I would add there is the impact of same property NOI for 2026 and our FFO per share impact as well. So it impacts same property about 50 basis points, and then an FFO per share impact is about a penny and a half.
Speaker #6: I would add there is the impact of same property NOI for 2026 and our FFO per share impact as well. So, it impacts same property about 50 basis points.
Speaker #6: And then an FFO per share impact is about a penny and a half.
Speaker #4: Thank you, Greg. Our next question comes from Blaine Heck at Wells Fargo. Blaine, please go ahead.
Mikayla Lynch: Thank you, Greg. Our next question comes from Blaine Heck at Wells Fargo. Blaine, please go ahead.
Mikayla Lynch: Thank you, Greg. Our next question comes from Blaine Heck at Wells Fargo. Blaine, please go ahead.
Speaker #7: Great, thank you. As you guys mentioned, market rents showed less moderation during the quarter, down 1% overall in the fourth quarter. And Laura, I know you said you're not calling an inflection today, but do you have any additional commentary on how much further you'd expect rents to decline based on what you're seeing from vacancy in the market and how aggressive some of your competitors have been on pricing?
Blaine Heck: Great, thank you. As you guys talked about, market rents showed less moderation during the quarter, down 1% overall in Q4. And Laura, I know you said you're not calling an inflection today, but do you have any additional commentary on how much further you'd expect rents to decline based on, you know, what you're seeing from vacancy in the market and how aggressive some of your competitors have been on pricing? I guess, you know, would you expect that bottoming and inflection to come at some point during 2026?
Blaine Heck: Great, thank you. As you guys talked about, market rents showed less moderation during the quarter, down 1% overall in Q4. And Laura, I know you said you're not calling an inflection today, but do you have any additional commentary on how much further you'd expect rents to decline based on, you know, what you're seeing from vacancy in the market and how aggressive some of your competitors have been on pricing? I guess, you know, would you expect that bottoming and inflection to come at some point during 2026?
Speaker #7: I guess, would you expect that bottoming and inflection to come at some point during—
Speaker #7: 2026? Hey, Blaine, thanks so much for your
Laura Clark: Hey, Blaine, thanks so much for your question. I think it may be helpful to spend a little bit more time diving into the market and kind of what we're seeing across the markets. And as I mentioned in my prepared remarks, we're certainly seeing some signs of stabilization, while there's other indicators that show some continued challenge. So collectively, when I put all those together, I think those are indicating that we're still bouncing around the bottom here, and we're not gonna be able to call an inflection point at this point, but maybe can talk about some of the positives that we're seeing around stabilization and then also maybe some of the challenges.
Laura Clark: Hey, Blaine, thanks so much for your question. I think it may be helpful to spend a little bit more time diving into the market and kind of what we're seeing across the markets. And as I mentioned in my prepared remarks, we're certainly seeing some signs of stabilization, while there's other indicators that show some continued challenge. So collectively, when I put all those together, I think those are indicating that we're still bouncing around the bottom here, and we're not gonna be able to call an inflection point at this point, but maybe can talk about
Speaker #4: I think it may be helpful to spend a little bit more time diving into the market and kind of what we're seeing across the markets. As I mentioned in my prepared remarks, we're certainly seeing some signs of stabilization.
Speaker #4: While there are other indicators that show some continued challenge, collectively, when I put all those together, I think those are indicating that we're still bouncing around the bottom here.
Speaker #4: And we're not going to be able to call an inflection point at this—an inflection at this point—but maybe we can talk about some of the positives that we're seeing around stabilization, and then also maybe some of the challenges.
Laura Clark: some of the positives that we're seeing around stabilization and then also maybe some of the challenges.
Speaker #4: So, on the positive side, I’d say that third- and fourth-quarter leasing activity levels were steady. Although a portion of this activity was driven by some pent-up demand that we have seen in the first half of ’25.
Laura Clark: So on the positive side, I'd say that third and fourth quarter leasing activities levels were steady, although a portion of this activity was driven by some pent-up demand that we had seen in the first half of 2025. We are seeing some tenants enter the market a bit sooner than they would historically, and we're seeing some early renewals come to us, like Tireco. I think that's a sign of tenants seeing where market rents are today and wanting to lock those in for longer term. Some submarkets and size ranges, as I mentioned, especially those in the, we'll call it sub-50,000 sq ft area, seem to have stabilized. Other lease terms like concessions and TIs are steady quarter to quarter. That's another good indication of some stabilization in the market.
Laura Clark: So on the positive side, I'd say that third and fourth quarter leasing activities levels were steady, although a portion of this activity was driven by some pent-up demand that we had seen in the first half of 2025. We are seeing some tenants enter the market a bit sooner than they would historically, and we're seeing some early renewals come to us, like Tireco. I think that's a sign of tenants seeing where market rents are today and wanting to lock those in for longer term. Some submarkets and size ranges, as I mentioned, especially those in the, we'll call it sub-50,000 sq ft area, seem to have stabilized. Other lease terms like concessions and TIs are steady quarter to quarter. That's another good indication of some stabilization in the market.
Speaker #4: We are seeing some tenants enter the market a bit sooner than they would historically, and we're seeing some early renewals come to us—like Tire Co. I think that's a sign of tenants seeing where market rents are today and wanting to lock those in for a longer term.
Speaker #4: Some submarkets and size ranges, as I mentioned—especially those in the, we'll call it, sub-50,000 square foot area—seem to have stabilized. Other lease terms, like concessions and TIs, are steady quarter to quarter.
Speaker #4: That's another good indication of some stabilization in the market. And as you mentioned, market rent declines this quarter—we're down 1%. That's in line with what we saw in the third quarter, which was also down 1%.
Laura Clark: As you mentioned, market rent declines this quarter were down 1%. That's in line with what we saw in the third quarter, which were down 1%, and that has moderated from more elevated levels of decline in the first half. So I'd say those are all positive things that we're seeing and that you need to see, you know, in a more stable market. All that being said, I think there's some market challenges that really impede our ability to say we've hit the bottom. You know, leasing activity levels have moderated a bit as we started the year. We measure activity on our vacant spaces. We have activity on about 75% of our vacant spaces today. That compares to about 80% this time last quarter.
Laura Clark: As you mentioned, market rent declines this quarter were down 1%. That's in line with what we saw in the third quarter, which were down 1%, and that has moderated from more elevated levels of decline in the first half. So I'd say those are all positive things that we're seeing and that you need to see, you know, in a more stable market. All that being said, I think there's some market challenges that really impede our ability to say we've hit the bottom. You know, leasing activity levels have moderated a bit as we started the year. We measure activity on our vacant spaces. We have activity on about 75% of our vacant spaces today. That compares to about 80% this time last quarter.
Speaker #4: And that has moderated from more elevated levels of decline in the first half. So I'd say those are all positive things that we're seeing, and that you need to see in a more stable market.
Speaker #4: All that being said, I think there are some market challenges that really impede our ability to say we've hit the bottom. Leasing activity levels have moderated a bit as we've started the year.
Speaker #4: We measure activity on our vacant spaces. We have activity on about 75% of our vacant spaces, versus 80% this time last quarter. I'll note, though, that we're trading paper on probably a lower percentage of that activity than we had last quarter.
Laura Clark: I'll note, though, that we're trading paper on probably a lower percentage of that activity than we had last quarter. As I mentioned in my remarks, net absorption is a really key indicator that we pay really close attention to. As we look at net absorption, today continues to be negative in the market, and to see the inflection and really to see that pricing power shift to landlords, we need to be at a point where we're experiencing some continued quarters of positive absorption. A few other notes about the market. You know, I'd say that, given the availability in the market, I'd say leasing is taking a bit longer.
Laura Clark: I'll note, though, that we're trading paper on probably a lower percentage of that activity than we had last quarter. As I mentioned in my remarks, net absorption is a really key indicator that we pay really close attention to. As we look at net absorption, today continues to be negative in the market, and to see the inflection and really to see that pricing power shift to landlords, we need to be at a point where we're experiencing some continued quarters of positive absorption. A few other notes about the market. You know, I'd say that, given the availability in the market, I'd say leasing is taking a bit longer.
Speaker #4: As I mentioned in my remarks, net absorption is a really key indicator that we pay really close attention to. And as we look at net absorption today, it continues to be negative in the market. To see the inflection, and really to see that pricing power shift to landlords, we need to be at a point where we're experiencing some continued quarters of positive absorption.
Speaker #4: A few other notes, a few other notes about the market. I'd say that, given the availability in the market, I'd say leasing's taking a bit longer. Tenants are certainly out shopping.
Laura Clark: Tenants are certainly out shopping, and we're seeing tenants focused on, you know, wanting to capture more functional space in the market to operate their businesses. So some consolidations are happening as well. But, you know, Rexford is positioned well to capture that demand. So all that being said, challenging to call the inflection point or when that will occur. But I do feel like that we are, you know, seeing that we're bouncing around the bottom here. We are prioritizing occupancy to drive cash flow, making capital allocation decisions that take into account these market dynamics.
Laura Clark: Tenants are certainly out shopping, and we're seeing tenants focused on, you know, wanting to capture more functional space in the market to operate their businesses. So some consolidations are happening as well. But, you know, Rexford is positioned well to capture that demand. So all that being said, challenging to call the inflection point or when that will occur. But I do feel like that we are, you know, seeing that we're bouncing around the bottom here. We are prioritizing occupancy to drive cash flow, making capital allocation decisions that take into account these market dynamics.
Speaker #4: And we're seeing tenants focused on wanting to capture more functional space in the market to operate their businesses, so some consolidations are happening as well.
Speaker #4: But Rexford is positioned well to capture that demand. So, all that being said, it’s challenging to call the inflection point or when that will occur.
Speaker #4: But I do feel like we are seeing that we’re bouncing around the bottom here. We are prioritizing occupancy to drive cash flow and making capital allocation decisions that take into account these market dynamics.
Speaker #4: Thank you, Blaine. Our next question comes from Craig Neelman at Citigroup. Craig, please go ahead.
Mikayla Lynch: Thank you, Blaine. Our next question comes from Craig Mailman at Citigroup. Craig, please go ahead.
Mikayla Lynch: Thank you, Blaine. Our next question comes from Craig Mailman at Citigroup. Craig, please go ahead.
Speaker #4: ahead. Hey,
Speaker #8: Everyone—Laura, since you both kind of gave some good color here on, I guess, my question to dig a little deeper into the leasing environment is: Laura, you just mentioned you guys are prioritizing occupancy over rate.
Craig Mailman: Hey, everyone. Laura, Fitz, you both kind of gave some good color here on the leasing environment. I guess my question to dig a little deeper is, Laura, you just, you know, mentioned you guys are prioritizing occupancy over rate. I understand that, you know, maybe showing activity is down a little bit. But could you just give us a sense of what you guys are specifically seeing that's underpinning the occupancy decline versus, you know, what is just kind of a feel at this point? Like, are there big known move-outs that we should be modeling in outside of the spaces coming off for redevelopment or repositioning? And maybe talk a little about, you know, the 75 basis points of bad debt.
Craig Mailman: Hey, everyone. Laura, Fitz, you both kind of gave some good color here on the leasing environment. I guess my question to dig a little deeper is, Laura, you just, you know, mentioned you guys are prioritizing occupancy over rate. I understand that, you know, maybe showing activity is down a little bit. But could you just give us a sense of what you guys are specifically seeing that's underpinning the occupancy decline versus, you know, what is just kind of a feel at this point?
Speaker #8: And I understand that maybe showing activity is down a little bit, but could you just give us a sense of what you guys are specifically seeing that's underpinning the occupancy decline versus what is just kind of a feel at this point?
Speaker #8: Are there any big known move-outs that we should be modeling in, outside of the spaces coming off for redevelopment or repositioning? And maybe talk a little about the 75 basis points of bad debt—I think you guys are running closer to a quarter of a point through the first three quarters.
Craig Mailman: Like, are there big known move-outs that we should be modeling in outside of the spaces coming off for redevelopment or repositioning? And maybe talk a little about, you know, the 75 basis points of bad debt.
Craig Mailman: I think you guys are running, you know, closer to a quarter of a point through Q1, Q2, Q3. You know, what happened in Q4, and kind of what does the watch list look like?
Craig Mailman: I think you guys are running, you know, closer to a quarter of a point through Q1, Q2, Q3. You know, what happened in Q4, and kind of what does the watch list look like?
Speaker #8: What happened in the fourth quarter, and kind of what does the watch list look like?
Speaker #1: Sure, Craig. I'll start. This is Fitz. First, we're assuming a longer downtime in our occupancy assumption for 2026, both from a same-property perspective and for repositioning and redevelopment.
Laura Clark: Sure, Craig. I'll start. This is Fitz. You know, first, we're assuming a lot longer downtime in our occupancy assumption for 2026, both in a same property perspective and repositioning and redevelopment. From a same property perspective, we took about 1 million sq ft back in the Q4, and it's taken a bit of time for that to lease up. Also, repositioning and redevelopment, given the mix in terms of a change relative to last year, it's a bit longer. Last year was around 9 months. It's approaching 10 to 11 months this year. So that's what's driving the occupancy decline, both in same property and, or at least expectations in the same property and total portfolio.
Michael Fitzmaurice: Sure, Craig. I'll start. This is Fitz. You know, first, we're assuming a lot longer downtime in our occupancy assumption for 2026, both in a same property perspective and repositioning and redevelopment. From a same property perspective, we took about 1 million sq ft back in the Q4, and it's taken a bit of time for that to lease up. Also, repositioning and redevelopment, given the mix in terms of a change relative to last year, it's a bit longer. Last year was around 9 months.
Speaker #1: From our same property perspective, we took about a million square feet back in the fourth quarter, and it's taken a bit of time for that to lease up.
Speaker #1: Also, repositioning and redevelopment, given the mix in terms of a change relative to last year, it's a bit longer. Last year was around nine months.
Michael Fitzmaurice: It's approaching 10 to 11 months this year. So that's what's driving the occupancy decline, both in same property and, or at least expectations in the same property and total portfolio.
Speaker #1: It's approaching ten to eleven months this year. So that's what's driving the occupancy decline, both in the same property and in early expectations for the same property and total portfolio.
Speaker #2: Yeah, I'm happy to add a little bit more color. Hi, Craig, this is John. So, for a couple of specific examples, if you're looking at our same property ending occupancy, we did have a sequential decline of about 50 basis points.
John Nahas: Yeah, I'm happy to add a little bit more color. Hi, Craig, this is John. So for a couple of specific examples, if you're looking at our same property ending occupancy, we did have a sequential decline of about 50 basis points. There's a couple of bigger drivers in that bucket. We had two properties in the LA market that had some move-outs that were expected. One was at our Rancho Pacifica Park, a 144,000 sq ft space that was leased to a temp tenant, and they moved out in the quarter. We've since released that space, and the new tenant moved in as of January 1, so it's not showing in that quarterly number.
John Nahas: Yeah, I'm happy to add a little bit more color. Hi, Craig, this is John. So for a couple of specific examples, if you're looking at our same property ending occupancy, we did have a sequential decline of about 50 basis points. There's a couple of bigger drivers in that bucket. We had two properties in the LA market that had some move-outs that were expected. One was at our Rancho Pacifica Park, a 144,000 sq ft space that was leased to a temp tenant, and they moved out in the quarter.
Speaker #2: There's a couple of bigger drivers in that bucket. We had two properties in the LA market that had some move-outs that were expected. One was at our Rancho Pacific Park, a 144,000 square foot space that was leased to a temp tenant.
Speaker #2: And they moved out in the quarter; we've since released that space, and the new tenant moved that quarterly number. The other big driver in the same property bucket was an asset that we own at 3880 Valley.
John Nahas: We've since released that space, and the new tenant moved in as of January 1, so it's not showing in that quarterly number.
John Nahas: The other big driver in the same property bucket was an asset that we own at 3880 Valley, and that was an expected move-out as well. That is on the market for re-lease. With respect to the bucket of properties that moved out and going into repositioning and development, the bigger drivers there are three properties that are on our development pipeline. Those are Gale, Balboa, and 190th. These are assets that we are really excited to move forward with. They are great pieces of real estate, and the development returns are meeting our expectations, so we're very excited to move forward with those.
John Nahas: The other big driver in the same property bucket was an asset that we own at 3880 Valley, and that was an expected move-out as well. That is on the market for re-lease. With respect to the bucket of properties that moved out and going into repositioning and development, the bigger drivers there are three properties that are on our development pipeline. Those are Gale, Balboa, and 190th. These are assets that we are really excited to move forward with. They are great pieces of real estate, and the development returns are meeting our expectations, so we're very excited to move forward with those.
Speaker #2: And that was an expected move-out as well that is on the market for release. With respect to the bucket of properties that moved out and going into repositioning and development, the bigger drivers there are three properties that are on our development 190th.
Speaker #2: These are assets that we are really excited to move forward in the pipeline with. Those are Gale and Balboa, and are great pieces of real estate, and the development returns are meeting our expectations.
Speaker #2: So, we're very excited to move forward with those.
Speaker #1: Thanks, Craig. In regards to bad debt, first, in the watch list, if I compare year over year, in terms of the size of our watch list, in terms of tenants and rent, it's about the same.
Laura Clark: Thanks, Craig. In regards to bad debt, you know, first in the watch list, you know, if I compare year-over-year, in terms of the size of our watch list, in terms of tenants and rent, it's about the same. In 2025, we experienced about 50 basis points of bad debt. That was tied to 3 tenants. We experienced 1 tenant that vacated in Q1. We had 0 bad debt in Q2 and Q3, and in Q4, we had 2 tenants, 2 large tenants, vacate.
Michael Fitzmaurice: Thanks, Craig. In regards to bad debt, you know, first in the watch list, you know, if I compare year-over-year, in terms of the size of our watch list, in terms of tenants and rent, it's about the same. In 2025, we experienced about 50 basis points of bad debt. That was tied to 3 tenants. We experienced 1 tenant that vacated in Q1. We had 0 bad debt in Q2 and Q3, and in Q4, we had 2 tenants, 2 large tenants, vacate.
Speaker #1: In 2025, we experienced about 50 basis points of bad debt. That was tied to three tenants. We experienced one tenant that vacated in the first quarter. We had zero bad debt in the second and third quarter, and in the fourth quarter, we had two tenants, two vacate.
Speaker #1: As we look into large tenants in 2026, it's the same story. We have a handful of tenants that are larger tenants that we're keeping an eye on.
Michael Fitzmaurice: ... As we look into 2026, same story. We have a handful of tenants that are larger tenants that we're keeping an eye on. And therefore, we're gonna take the same expectation that we set in 2025 in terms of being pretty judicious and having an appropriate bad debt reserve of about 35 basis points on revenues.
Michael Fitzmaurice: ... As we look into 2026, same story. We have a handful of tenants that are larger tenants that we're keeping an eye on. And therefore, we're gonna take the same expectation that we set in 2025 in terms of being pretty judicious and having an appropriate bad debt reserve of about 35 basis points on revenues.
Speaker #1: And therefore, we're going to take the same expectation that we set in 2025, in terms of being pretty judicious and having the appropriate bad debt reserve of about 75 basis points.
Speaker #1: On
Speaker #1: revenues. Thank you,
Speaker #4: Craig, our next question comes from Andrew Berger from Bank of America. Andrew, please go ahead.
Mikayla Lynch: Thank you, Craig. Our next question comes from Andrew Berger from Bank of America. Andrew, please go ahead.
Mikayla Lynch: Thank you, Craig. Our next question comes from Andrew Berger from Bank of America. Andrew, please go ahead.
Speaker #8: Great, thanks. Maybe just following up on the last question, Fitz, were there any particular industries for the watch—
Andrew Berger: Great, thanks. Maybe just following up on the last question. Fitz, were there any particular industries for the 2026 reserves watch list?
Andrew Berger: Great, thanks. Maybe just following up on the last question. Fitz, were there any particular industries for the 2026 reserves watch list?
Speaker #8: list?
Speaker #2: Hi, Andrew. This is John.
John Nahas: Hi, Andrew. This is John. Yeah, you know, this quarter, we had the same number of tenants on our watch list. The difference from Q3 is that there's some larger spaces that are showing up, and there is some concentration in logistics. When we dive into each situation, they're a little different. There's specific business issues with the businesses that are operating in these properties. Many of the tenants in this space really are contending with changing rates from their customers. And so anytime there's some misalignment between their contract revenue and their occupancy costs, it can create some disruption. So it's something that we're very focused on, and working with these tenants to resolve, but that is representing a higher concentration this time around.
John Nahas: Hi, Andrew. This is John. Yeah, you know, this quarter, we had the same number of tenants on our watch list. The difference from Q3 is that there's some larger spaces that are showing up, and there is some concentration in logistics. When we dive into each situation, they're a little different. There's specific business issues with the businesses that are operating in these properties. Many of the tenants in this space really are contending with changing rates from their customers.
Speaker #2: Quarter, we had the same number of tenants on our watch list. The difference from Q3 is that there are some larger spaces that are showing up.
Speaker #2: And there is some concentration in logistics. When we dive into each situation, they're a little different. Business issues with the businesses that are operating in these, there's specific properties.
Speaker #2: Many of the tenants in this space really are contending with changing rates from their customers. And so, anytime there's some misalignment between their contract revenue and their occupancy cost, it can create some disruption.
John Nahas: And so anytime there's some misalignment between their contract revenue and their occupancy costs, it can create some disruption. So it's something that we're very focused on, and working with these tenants to resolve, but that is representing a higher concentration this time around.
Speaker #2: So it's something that we're very focused on and working with these tenants to resolve. But that is representing a higher concentration this time.
Speaker #2: around. Thank
Speaker #4: You, Andrew. Our next question comes from Michael Griffin from Evercore ISI. Griff, please go ahead.
Mikayla Lynch: Thank you, Andrew. Our next question comes from Michael Griffin from Evercore ISI. Griff, please go ahead.
Mikayla Lynch: Thank you, Andrew. Our next question comes from Michael Griffin from Evercore ISI. Griff, please go ahead.
Speaker #4: ahead. Great.
Speaker #9: Thanks. Maybe just circling back to sort of expectations for leasing and rents on the year. If I look at the expiration schedule, you've got about $16.50 rents.
Michael Griffin: Great, thanks. Maybe just circling back to sort of expectations for leasing and rents on the year. You know, if I look at the expiration schedule, you've got about $16.50 rents expiring versus, you know, you were signing in the past quarter, call it $14.50, you know, $15. Maybe this is better for Fitz just on the guidance side, but if you're anticipating, you know, 5% to 10% re-leasing spreads this year, I guess, does that imply you're gonna be signing leases in the $17 range? Like, I'm just kind of curious how to marry the, you know, expectation for where rents could be versus what you've currently been signing. And I realize that, you know, you can have a mix issue quarter to quarter, but any context there would be great.
Michael Griffin: Great, thanks. Maybe just circling back to sort of expectations for leasing and rents on the year. You know, if I look at the expiration schedule, you've got about $16.50 rents expiring versus, you know, you were signing in the past quarter, call it $14.50, you know, $15. Maybe this is better for Fitz just on the guidance side, but if you're anticipating, you know, 5% to 10% re-leasing spreads this year, I guess, does that imply you're gonna be signing leases in the $17 range?
Speaker #9: Expiring versus what you were signing in the past quarter, call it 1,450, 15 bucks. Maybe this is better for Fitz, just on the guidance side.
Speaker #9: But if you're anticipating 5 to 10 percent releasing spreads this year, I guess, does that imply you're going to be signing leases in the $17 range?
Speaker #9: I'm just kind of curious how to marry the expectation for where rents could be versus what you've currently been signing. And I realize that you can have a mixed-issue quarter to quarter.
Michael Griffin: Like, I'm just kind of curious how to marry the, you know, expectation for where rents could be versus what you've currently been signing. And I realize that, you know, you can have a mix issue quarter to quarter, but any context there would be great.
Speaker #9: But any context there would be great.
Speaker #2: Yeah, it always comes down to a mixed issue, Griff, for sure. But yeah, I think you're roughly around the right rent per square foot in terms of your 17th, between $16.75 and $17.00, what we expect to sign.
Michael Fitzmaurice: Yeah, yeah, it always comes down to a mix issue, Griff, for sure. But yeah, I think you're roughly around the right rent per square foot in terms of your $17. It's between $16.75 and 17, what we expect to sign. And like you said, on the net effective perspective in re-leasing spreads expectation, it is between 5% and 10%. You know, some of that obviously is impacted by Tireco. As Laura mentioned earlier, we do have a 30% negative spread on that lease. And then from a cash perspective, we'll give you the other side of that as well. We do expect those to be flat to negative 5%.
Michael Fitzmaurice: Yeah, yeah, it always comes down to a mix issue, Griff, for sure. But yeah, I think you're roughly around the right rent per square foot in terms of your $17. It's between $16.75 and 17, what we expect to sign. And like you said, on the net effective perspective in re-leasing spreads expectation, it is between 5% and 10%. You know, some of that obviously is impacted by Tireco. As Laura mentioned earlier, we do have a 30% negative spread on that lease. And then from a cash perspective, we'll give you the other side of that as well.
Speaker #2: And like you said, on the net effective perspective, in releasing spreads expectation, it is between 5% and 10%. Some of that, obviously, is impacted by Tyraco, as Laura mentioned earlier.
Speaker #2: We do have a 30% negative spread on that lease. And then, from a cash perspective, we'll give you the other side of that as well.
Speaker #2: We do expect those to be flat to negative 5 percent, and that is one of the more significant drivers—or lack of drivers—in both our same property net effective and cash NOI expectations.
Michael Fitzmaurice: We do expect those to be flat to negative 5%.
Michael Fitzmaurice: And that is one of the more significant, you know, drivers or lack of drivers in both our same property net effective and cash NOI expectations.
Michael Fitzmaurice: And that is one of the more significant, you know, drivers or lack of drivers in both our same property net effective and cash NOI expectations.
Mikayla Lynch: Thanks, Griff. Our next question comes from Michael Mueller from JP Morgan. Mike, please go ahead.
Mikayla Lynch: Thanks, Griff. Our next question comes from Michael Mueller from JP Morgan. Mike, please go ahead.
Speaker #4: The question comes from Michael Mueller from JP. Thanks, Griff. Morgan. Mike, please go ahead. Our next...
Speaker #4: ahead. Yeah.
Speaker #8: Hi. 96.5—your year-end occupancy, it seems—and it looks like the 95 percent average for the year. So can you give us a little color on where you expect…
Michael Mueller: Yeah. Hi, your year-end same-store occupancy was 96.5, and it looks like the guidance is for about 95% average for the year. So can you give us a little color on where you expect occupancy to end 2026?
Michael Mueller: Yeah. Hi, your year-end same-store occupancy was 96.5, and it looks like the guidance is for about 95% average for the year. So can you give us a little color on where you expect occupancy to end 2026?
Speaker #1: Good morning. So the 96.5% that we ended last year with was based on a different same-property pool. Our pool did change from 25 to 26.
Michael Fitzmaurice: Hi, Mike. Good morning. So the 96.5 that we ended last year was based on a different same property pool. Our pool did change from 25 to 26. That was primarily driven by the acquisition activity that we experienced in 2024, that entered the same property pool in 2026. So the appropriate starting point is actually 95.6%. And our expectation is that it will decelerate into 2026, and our midpoint of our guide is about 95%. And it generally, it's a deceleration from this point throughout the year and with a little bit of acceleration in Q4.
Michael Fitzmaurice: Hi, Mike. Good morning. So the 96.5 that we ended last year was based on a different same property pool. Our pool did change from 25 to 26. That was primarily driven by the acquisition activity that we experienced in 2024, that entered the same property pool in 2026. So the appropriate starting point is actually 95.6%. And our expectation is that it will decelerate into 2026, and our midpoint of our guide is about 95%. And it generally, it's a deceleration from this point throughout the year and with a little bit of acceleration in Q4.
Speaker #1: That was primarily driven by the acquisition activity that we experienced in the same property pool in 2024 that entered into 2026. So the appropriate starting point is actually 95.6 percent.
Speaker #1: And we are expectations that it will decelerate into 2026. And our midpoint of our guide is about 95 percent. And it generally is a deceleration from this point throughout the year, with a little bit of acceleration in the fourth quarter.
Speaker #4: Thanks, Mike. Our next question comes from—please go ahead.
Mikayla Lynch: Thanks, Mike. Our next question comes from Vince Tibone from Green Street. Vince, please go ahead.
Mikayla Lynch: Thanks, Mike. Our next question comes from Vince Tibone from Green Street. Vince, please go ahead.
Speaker #10: Hi, good morning. I'd like to drill a bit further down into the cash same store guide. Based on the components you gave, I'm having trouble getting to the range where spreads are only going to be slightly negative, with a 60 basis point occupancy decline. It seems like there's a modest headwind from bad debt, lease term fees, and free rent, while contractual bumps are still at three and a half.
Vince Tibone: Hi, good morning. I'd like to drill down further into the cash same-store guide. Based on the components you're gave, I'm having trouble getting to the range. If, you know, spreads are only gonna be slightly negative, you know, 60 basis points occupancy decline, and, you know, it seems like a modest headwind from bad debt, lease term fees, free rent, and, you know, contractual bumps are still 3.5. So just want to understand what I'm missing, and just want to confirm: the Tireco lease extension does not have an impact on cash same store in 2026, right? So if you can help me kind of stitch together how, you know, cash guidance is, you know, -1 to 2, given all those factors.
Vince Tibone: Hi, good morning. I'd like to drill down further into the cash same-store guide. Based on the components you're gave, I'm having trouble getting to the range. If, you know, spreads are only gonna be slightly negative, you know, 60 basis points occupancy decline, and, you know, it seems like a modest headwind from bad debt, lease term fees, free rent, and, you know, contractual bumps are still 3.5. So just want to understand what I'm missing, and just want to confirm: the Tireco lease extension does not have an impact on cash same store in 2026,
Speaker #10: So I just want to understand what I'm missing, and just want to confirm the Tyraco lease extension does not have an impact on cash same store in '26, right?
Speaker #10: So just, if you can help me kind of stitch together how cash guidance is negative one to two, given all those factors.
Vince Tibone: right? So if you can help me kind of stitch together how, you know, cash guidance is, you know, -1 to 2, given all those factors.
Speaker #1: Yeah. Hi, Vince. Good morning. This is Fitz. I appreciate the question. But yeah, to quickly answer your Tyraco question on the cash side, we do have concessions in '26 versus '25.
Michael Fitzmaurice: Yeah, Hi, Vince. Good morning. This is Fitz. I appreciate the question. But yeah, to quickly answer your Tireco question on the cash side, we do have concessions in 2026 versus 2025, so that is impacting. But to pull back and give you the components of the buildup, so our 60 basis points decline in average occupancy translates into about 100 basis points of unfavorability. If you add on the NOI margin, which is, you know, correlated to occupancy, it's another 50 basis points. The lower term fees and the Tireco impact is about negative 75 basis points. And then bad debt, which includes some straight line...
Michael Fitzmaurice: Yeah, Hi, Vince. Good morning. This is Fitz. I appreciate the question. But yeah, to quickly answer your Tireco question on the cash side, we do have concessions in 2026 versus 2025, so that is impacting. But to pull back and give you the components of the buildup, so our 60 basis points decline in average occupancy translates into about 100 basis points of unfavorability. If you add on the NOI margin, which is, you know, correlated to occupancy, it's another 50 basis points.
Speaker #1: So, that is impacting, but to pull back and give you the components of the buildup: our 60 basis point, so decline in average occupancy translates into some unfavorability.
Speaker #1: About 100 basis points is correlated to—if you add on the NOI margin with occupancy, it's another 50 basis points. The lower term fees and the Tyraco impact is about negative 75 basis points.
Michael Fitzmaurice: The lower term fees and the Tireco impact is about negative 75 basis points. And then bad debt, which includes some straight line...
Speaker #1: And then bad debt, which includes some—straight line, or, I'm sorry, not straight line, but about 50 basis points. And that gets you to a negative 2.75.
Michael Fitzmaurice: I'm sorry, not straight line, but about 50 basis points. And that gets you to, like, a negative 2.75. And then concessions brings you down even further. It's about 200 basis points, and then bumps brings you back up at about 3.25, and that gets you to the 1.5% at the midpoint on cash.
Michael Fitzmaurice: I'm sorry, not straight line, but about 50 basis points. And that gets you to, like, a negative 2.75. And then concessions brings you down even further. It's about 200 basis points, and then bumps brings you back up at about 3.25, and that gets you to the 1.5% at the midpoint on cash.
Speaker #1: And then concessions bring you down even further—it's about 200 basis points. And then bumps, that gets you to the 1.5 percent at the midpoint on cash.
Speaker #1: And
Speaker #4: Thank you, Vince. Our next question comes from Rich Anderson from Cantor Fitzgerald. Rich, please go ahead.
Mikayla Lynch: ... You, Vince. Our next question comes from Rich Anderson from Cantor Fitzgerald. Rich, please go ahead.
Mikayla Lynch: ... You, Vince. Our next question comes from Rich Anderson from Cantor Fitzgerald. Rich, please go ahead.
Speaker #9: Thanks. Good, brings you back up at about three and a quarter.
Rich Anderson: Thanks. Good morning out there. So I guess, bigger picture question here. I'm wondering what the measurement of success will be from everything you're doing. You know, the things that are under your control, you're doing, you know, higher dispositions, lower development, lower G&A. But so much is out of your control when you think of the macro and politics in a blue state and tenant behaviors. So come a year from now or two years from now, if we're still talking about the same growth profile, does that incite the board to, like, think, you know, to do something even more substantive with the company? Or do you think, you know, you know, you have, you know, a few years to see this through?
Rich Anderson: Thanks. Good morning out there. So I guess, bigger picture question here. I'm wondering what the measurement of success will be from everything you're doing. You know, the things that are under your control, you're doing, you know, higher dispositions, lower development, lower G&A. But so much is out of your control when you think of the macro and politics in a blue state and tenant behaviors. So come a year from now or two years from now, if we're still talking about the same growth profile, does that incite the board to, like, think, you know, to do
Speaker #9: morning out there. So I
Speaker #9: Guess bigger picture question here. I'm wondering what the measurement of success will be from everything you're doing—the things that are under your control: you're doing higher dispositions, lower development, lower G&A.
Speaker #9: But so much is out of your control when you think of the macro and politics, and a blue state, and tenant behaviors. So, come a year from now or two years from now, if we're still talking about the same growth profile, does that incite the board to think to do something even more substantive with the company?
Rich Anderson: something even more substantive with the company? Or do you think, you know, you know, you have, you know, a few years to see this through?
Speaker #9: Or do you think you have a few years to see this through? I understand, Laura, you're just fresh in the seat, so I don't mean to be overly aggressive with this question.
Rich Anderson: I understand, Laura, you're just fresh in the seat, so I don't mean to, you know, be overly aggressive with this question. But I am curious as to what the timeline is to sort of see some fruits of your labor.
Rich Anderson: I understand, Laura, you're just fresh in the seat, so I don't mean to, you know, be overly aggressive with this question. But I am curious as to what the timeline is to sort of see some fruits of your labor.
Speaker #9: But I am curious as to what the timeline is to sort of see some fruits of your labor.
Speaker #4: Yeah, Rich. Great question, and thanks so much for joining us today. In 2026, as we've outlined, I mean, we're focused on executing our strategic priorities.
Laura Clark: Yeah, Rich, great question, and thanks so much for joining us today. Yeah, in 2026, as we've outlined, I mean, we're focused on executing our strategic priorities. And we believe that this will position us to create long-term value. And you asked about what's the measurement of success. It's about driving outsized shareholder returns for you all. So that's the guidepost, and that's the measurement stick. Our priority there is to drive those returns, and we are going to be the best stewards of your capital. So that's our commitment, is to continue to assess opportunities within the portfolio to drive value and position Rexford for future success. We're gonna do that through a variety of ways. We've talked about how we're gonna exercise a renewed capital allocation discipline.
Laura Clark: Yeah, Rich, great question, and thanks so much for joining us today. Yeah, in 2026, as we've outlined, I mean, we're focused on executing our strategic priorities. And we believe that this will position us to create long-term value. And you asked about what's the measurement of success. It's about driving outsized shareholder returns for you all. So that's the guidepost, and that's the measurement stick. Our priority there is to drive those returns, and we are going to be the best stewards of your capital.
Speaker #4: And we believe that this will position us to create long-term value. And you asked about what's the measurement of success—it's about driving outsized shareholder returns.
Speaker #4: For you all. So that's the guidepost, and that's the measurement stick. And our priority there is to drive those—to be the best stewards of your returns, and we are going to capital.
Laura Clark: So that's our commitment, is to continue to assess opportunities within the portfolio to drive value and position Rexford for future success. We're gonna do that through a variety of ways. We've talked about how we're gonna exercise a renewed capital allocation discipline.
Speaker #4: Continue to assess opportunities within the portfolio to drive value and position Rexford for future success. So that's our commitment—we're going to do that through a variety of ways.
Speaker #4: We've talked about how we're going to exercise a renewed capital allocation discipline. We're focused on driving to the highest risk-adjusted returns, taking into account dynamics.
Laura Clark: We're focused on driving to the highest risk-adjusted returns, taking into account our cost of capital and market dynamics. We've embedded a more rigorous underwriting criteria into how we're making decisions. You know, we're limiting our development exposure. We've adjusted the spreads at which we need to achieve to move forward with those projects. We're focused on executing on value creation. I mean, it's a key component of our business model, and that's really gonna drive, you know, drive our cash flow and position us into the future. And we're committed to operating this company also as effectively and efficiently as possible. That allows us to maximize shareholder value, and we will continue to identify other ways to drive efficiencies across the business.
Laura Clark: We're focused on driving to the highest risk-adjusted returns, taking into account our cost of capital and market dynamics. We've embedded a more rigorous underwriting criteria into how we're making decisions. You know, we're limiting our development exposure. We've adjusted the spreads at which we need to achieve to move forward with those projects. We're focused on executing on value creation. I mean, it's a key component of our business model, and that's really gonna drive, you know, drive our cash flow and position us into the future. And we're committed to operating this company also as effectively and efficiently as possible. That allows us to maximize shareholder value, and we will continue to identify other ways to drive efficiencies across the business.
Speaker #4: We've embedded a more rigorous underwriting criteria into how we account for our cost of capital and the markets where we're making decisions. We're limiting our development exposure. We've adjusted the spreads that we need to achieve to move forward with those projects.
Speaker #4: We're focused on executing on value creation. I mean, it's a key component of our business model, and that's really going to drive our cash flow and position us into the future.
Speaker #4: And we're committed to operating this company as effectively and efficiently as possible. That allows us to maximize shareholder value, and we will continue to identify other ways to drive efficiencies across the business.
Speaker #4: So, all that said, we're going to continue to assess those opportunities and focus today. Thank you, Rich. Our next question comes from Brooklyn Malhotra from Mizuho.
Laura Clark: So all, all that said, we're gonna continue to assess those opportunities to drive value, and, and that is our focus today.
Laura Clark: So all, all that said, we're gonna continue to assess those opportunities to drive value, and, and that is our focus today.
Mikayla Lynch: Thank you, Rich. Our next question comes from Vikram Malhotra from Mizuho. Vikram, please go ahead.
Mikayla Lynch: Thank you, Rich. Our next question comes from Vikram Malhotra from Mizuho. Vikram, please go ahead.
Speaker #4: Brooklyn, please go ahead.
Speaker #10: Morning. Thanks for the questions. I just want to clarify two things. So, one, I guess just real quick—the mark-to-market kind of was only down 1%.
Vikram Malhotra: Morning. Thanks for taking the questions. I just want to clarify two things. So one, I guess, just real quick, the mark-to-market, kind of was only down 1%, and it seemed like no impact from, you know, either move-outs, or re-leasing. So if you'd just clarify, you know, kind of how you expect that mark-to-market to trend in the year. And then just clarifying on that last answer, I guess, you know, given what you've said, still very tepid leasing, et cetera, your rent spreads are probably a headwind next year, and then you have a lot of dispositions. So sort of, Laura, as you right-size the ship, so to say, there will be a lot of dilution. Is that like a multiyear effort? In other words, you think it takes a while before we see earnings to cross?
Vikram Malhotra: Morning. Thanks for taking the questions. I just want to clarify two things. So one, I guess, just real quick, the mark-to-market, kind of was only down 1%, and it seemed like no impact from, you know, either move-outs, or re-leasing. So if you'd just clarify, you know, kind of how you expect that mark-to-market to trend in the year. And then just clarifying on that last answer, I guess, you know, given what you've said, still very tepid leasing, et cetera, your rent spreads are probably a headwind next year, and then you have a lot of dispositions.
Speaker #10: And it seemed like no impact from either move-outs or releasings. So, if you could just clarify kind of how you expect that mark-to-market to trend in the year.
Speaker #10: And then, just clarifying on that last answer—I guess, given what you’ve said, with still very tepid leasing, etc.—your rent spreads are probably a headwind next year.
Speaker #10: And then you have a lot of dispositions. So, sort of, Laura, as you right-size the ship, so to say, there will be a lot of dilution.
Vikram Malhotra: So sort of, Laura, as you right-size the ship, so to say, there will be a lot of dilution. Is that like a multiyear effort? In other words, you think it takes a while before we see earnings to cross?
Speaker #10: Is that like a multi-year effort? In other words, do you think it takes a while before we see earnings drop?
Speaker #10: Is that like a multi-year effort? In other words, you think it takes a while before we see earnings drop? Thanks. Good morning, Vikram.
Vikram Malhotra: Thanks.
Vikram Malhotra: Thanks.
Michael Fitzmaurice: Good morning, Vikram. This is Fitz. I'll take the first question. We had offsetting items for the impact on both our net effective and cash mark-to-market for our portfolio. In Q4, you know, leasing, we had a positive impact of about 50 basis points as we converted below-market leases to, you know, positive spreads. That was offset one for one by spaces that vacated during the quarter that had an above-market rate.
Michael Fitzmaurice: Good morning, Vikram. This is Fitz. I'll take the first question. We had offsetting items for the impact on both our net effective and cash mark-to-market for our portfolio. In Q4, you know, leasing, we had a positive impact of about 50 basis points as we converted below-market leases to, you know, positive spreads. That was offset one for one by spaces that vacated during the quarter that had an above-market rate.
Speaker #1: This is Fitz. I'll take the first question. We had offsetting items for the impact on both our net effective and cash mark-to-market for our portfolio.
Speaker #1: In the fourth quarter, in leasing, we had a positive impact of about 50 basis points as we converted below-market leases to positive spreads.
Speaker #1: That was offset one-for-one by spaces that vacated during the quarter that had an above-market rate.
Laura Clark: Yeah, and in terms of how we're thinking about dispositions, I mean, we've, we've got $230 million identified between the near-term development pipeline and other operating properties. But as we think about additional properties and, and what's the strategy, you know, it's comprised of future opportunistic sales where we can realize value creation, opportunities that we can sell that de-risk future cash flow growth, and then the potential for future re-positioning and development properties as we assess the strategic plan for each asset and evaluate what the right appropriate risk-adjusted return is to move forward with those assets. All that being said, the goal is to, to execute on a programmatic disposition strategy that's neutral to accretive, to FFO and NAV growth over time.
Laura Clark: Yeah, and in terms of how we're thinking about dispositions, I mean, we've, we've got $230 million identified between the near-term development pipeline and other operating properties. But as we think about additional properties and, and what's the strategy, you know, it's comprised of future opportunistic sales where we can realize value creation, opportunities that we can sell that de-risk future cash flow growth, and then the potential for future re-positioning and development properties as we assess the strategic plan for each
Speaker #4: Dispositions, and we've got—yeah. And in terms of how we're thinking about $230 million identified between the near-term development pipeline and other operating properties.
Speaker #4: But as we think about additional properties and what strategy it's comprised of—future opportunistic sales, where we can realize value creation; opportunities that we can sell that de-risk future cash flow growth; and then the potential for future repositioning and development properties as we assess the strategic plan for each asset.
Laura Clark: asset and evaluate what the right appropriate risk-adjusted return is to move forward with those assets. All that being said, the goal is to, to execute on a programmatic disposition strategy that's neutral to accretive, to FFO and NAV growth over time.
Speaker #4: And evaluate what the right, appropriate risk-adjusted return is to move forward with those assets. All that being said, the goal is to execute on a programmatic disposition strategy that's neutral to accretive to FFO and NAV growth over time.
Speaker #1: Yeah, and the one piece I would add there is just the continued cash flow generation for, excuse me, for repositioning and development. We had about $15 million or so that stabilized during the quarter for about 750,000 square feet.
Michael Fitzmaurice: Yeah, and then the one piece I would add there is just the continued cash flow generation for, excuse me, for repositioning and development. We had about $15 million or so that stabilized during the quarter, which is about 750,000sq ft. And then we have another $53 million that's in leased up or under construction. 20 of that 53, as I mentioned in my prepared remarks, is going to commence in 2026, and then the remaining 33 will be in 2027 and beyond. So there are some offsetting impacts to the re-lease requests.
Michael Fitzmaurice: Yeah, and then the one piece I would add there is just the continued cash flow generation for, excuse me, for repositioning and development. We had about $15 million or so that stabilized during the quarter, which is about 750,000sq ft. And then we have another $53 million that's in leased up or under construction. 20 of that 53, as I mentioned in my prepared remarks, is going to commence in 2026, and then the remaining 33 will be in 2027 and beyond. So there are some offsetting impacts to the re-lease requests.
Speaker #1: And then we have another 53 under construction. Twenty of that 53, as I mentioned in my prepared remarks, is going to commence in 2026. And then the remaining 33 will be in 2027 and beyond.
Speaker #1: So, there are some offsetting impacts to the releasing spreads.
Speaker #4: Thank you, Vikram. Our next question comes from Nick Fillman from Baird. Nick, please go ahead.
Mikayla Lynch: Thank you, Vikram. Our next question comes from Nick Thillman from Baird. Nick, please go ahead.
Mikayla Lynch: Thank you, Vikram. Our next question comes from Nick Thillman from Baird. Nick, please go ahead.
Speaker #4: ahead. Hey,
Speaker #6: Good morning out there. Maybe touching a little bit on that disposition side—maybe some color on what you guys are seeing from the bidder pool, the type of bidders you're seeing in the market, and what you're seeing on the pricing front.
Nick Thillman: Hey, good morning out there. Maybe touching a little bit on that disposition side, maybe some color and on what you guys are seeing from the bidder pool, the type of bidders you're seeing in the market, and what you're seeing on the pricing front. And then it seems as though most of the dispositions are targeted towards redevelopment and repositioning properties that have some vacancy. But as you are evaluating this portfolio, is there anything you're seeing from a sub-market level that has a changing thesis or targeting different sub-markets, or looking to exit, as well, as we just evaluate the portfolio construction today?
Nick Thillman: Hey, good morning out there. Maybe touching a little bit on that disposition side, maybe some color and on what you guys are seeing from the bidder pool, the type of bidders you're seeing in the market, and what you're seeing on the pricing front. And then it seems as though most of the dispositions are targeted towards redevelopment and repositioning properties that have some vacancy. But as you are evaluating this portfolio, is there anything you're seeing from a sub-market level that has a changing thesis or targeting different sub-
Speaker #6: And then it seems as though most of the dispositions are targeted towards redevelopment and repositioning properties that have some vacancy. But as you are evaluating this portfolio, is there anything you're seeing from a sub-market level that has a changing thesis, or targeting different sub-markets, or looking to exit as well, as we just evaluate the portfolio construction today?
Nick Thillman: markets, or looking to exit, as well, as we just evaluate the portfolio construction today?
Speaker #4: Yeah, Nick, I'll start on this one. In terms of the buyer pool, the buyer pool is really different depending on kind of what we're in the market selling.
Laura Clark: ... Yeah, Nick, I'll start on this one. In terms of the buyer pool, the buyer pool is really different depending on kind of what we're in the market selling. In terms of the 6 development sites, near-term development sites that we have under contract, that buyer pool is made up of mostly developers that have local Southern California development expertise. The pool was pretty deep, you know, for the total sales value of those is about $135 million or $80 per land square foot on those 6 properties. I'll also note that those were projected to yield those properties a 4% yield upon stabilization, which is why we didn't move forward with those projects.
Laura Clark: ... Yeah, Nick, I'll start on this one. In terms of the buyer pool, the buyer pool is really different depending on kind of what we're in the market selling. In terms of the 6 development sites, near-term development sites that we have under contract, that buyer pool is made up of mostly developers that have local Southern California development expertise. The pool was pretty deep, you know, for the total sales value of those is about $135 million or $80 per land square foot on those 6 properties.
Speaker #4: In terms of the six development sites and near-term development sites that we have under contract, that buyer pool is made up of mostly developers that have local Southern California development expertise.
Speaker #4: The pool was pretty deep on out, for the total sales value of those is about $135 million, or $80 per land square foot on those six properties.
Speaker #4: I'll also note that those were projected to yield those properties a 4% yield upon stabilization, which is why we didn't move forward with those projects.
Laura Clark: I'll also note that those were projected to yield those properties a 4% yield upon stabilization, which is why we didn't move forward with those projects.
Speaker #4: In terms of other buyers in the market, I would say that we continue to see user sales have increased across the market, and it was a significant portion of the assets that we sold in 2025.
Laura Clark: In terms of other buyers in the market, I would say that we continue to see user sales have increased across the market, and it was a significant portion of the assets that we sold in 2025. User sales, users typically pay premium pricing, and we were able to take advantage of those opportunities, selling that $218 million on an average cap rate of 4.2%. As I look into the pool of what we have under contract, $135 million is under development in the near-term, and then another $95 million is under contract. And those are operating properties mostly to user sales at about a 4% cap rate.
Laura Clark: In terms of other buyers in the market, I would say that we continue to see user sales have increased across the market, and it was a significant portion of the assets that we sold in 2025. User sales, users typically pay premium pricing, and we were able to take advantage of those opportunities, selling that $218 million on an average cap rate of 4.2%. As I look into the pool of what we have under contract, $135 million is under development in the near-term, and then another $95 million is under contract. And those are operating properties mostly to user sales at about a 4% cap rate.
Speaker #4: User sales typically pay a premium pricing, and we were able to take advantage of those opportunities, selling that $218 million at an average cap rate of 4.2%.
Speaker #4: As I look into the pool of what we have under contract, $135 million is under the near-term development, and then another $95 million is under contract, and those are operating properties—mostly to user sales at about a 4% cap rate.
Speaker #4: Thank you, Nick. Our next question comes from Brendan Lynch from Barclays. Brendan, please go ahead.
Mikayla Lynch: Thank you, Nick. Our next question comes from Brendan Lynch, from Barclays. Brendan, please go ahead.
Mikayla Lynch: Thank you, Nick. Our next question comes from Brendan Lynch, from Barclays. Brendan, please go ahead.
Speaker #6: Great, thanks for taking my question. I think in the past, you've highlighted that your port exposure is somewhat limited, and that was kind of limiting some of the tariff risks over the past year.
Brendan Lynch: Great, thanks for taking my question. I think in the past, you've highlighted that your port exposure is somewhat limited, and that was kind of limiting some of the tariff risks over the past year. Has your view evolved at all on that consideration? And do you see it as a potential catalyst if some of these tariffs are removed in the relatively near future?
Brendan Lynch: Great, thanks for taking my question. I think in the past, you've highlighted that your port exposure is somewhat limited, and that was kind of limiting some of the tariff risks over the past year. Has your view evolved at all on that consideration? And do you see it as a potential catalyst if some of these tariffs are removed in the relatively near future?
Speaker #6: Has your view evolved at all on that consideration, and do you see it as a potential catalyst if some of these tariffs are removed in the relatively near future?
Speaker #4: Yeah, I think overall—I mean, as we've talked about in the past—our tenant base is very much focused on the local consumption, and there hasn't been a direct, we haven't seen as much of a direct impact from changes in port volumes.
Laura Clark: Yeah, I think overall, I mean, as we've talked about in the past, our tenant base is very much focused on the local consumption, and there hasn't been a direct, we haven't seen as much of a direct impact from changes in port volumes. You know, port volumes year over year are roughly flat, in this market. All that being said, what I would say in terms of the impacts of tariffs with our tenants is they have a very keen focus on their expense structures, and driving operating efficiency, and I think tariffs are certainly playing a role in how they're making decisions. They're taking a more conservative approach to decision making, and we're seeing this come through in some of their decision making, either if it's around consolidation, or space rationalization needs.
Laura Clark: Yeah, I think overall, I mean, as we've talked about in the past, our tenant base is very much focused on the local consumption, and there hasn't been a direct, we haven't seen as much of a direct impact from changes in port volumes. You know, port volumes year over year are roughly flat, in this market. All that being said, what I would say in terms of the impacts of tariffs with our tenants is they have a very keen focus on their expense structures, and driving operating efficiency, and I think tariffs are certainly playing a role in how they're making
Speaker #4: Port volumes year over year are roughly flat in this market. All that being said, what I would say in terms of the impacts to tariffs with our tenants is they have a very keen focus on their expense structures.
Speaker #4: And driving operating efficiency, and I think tariffs are certainly playing a role in how they're making decisions. They're taking a more conservative approach to decision-making, and we're seeing this come through in some of their decision-making, either if it's around consolidation or space rationalization needs.
Laura Clark: decisions. They're taking a more conservative approach to decision making, and we're seeing this come through in some of their decision making, either if it's around consolidation, or space rationalization needs.
Speaker #4: And so, yeah, I do think tariffs are playing a role as our tenants are looking to drive operating margins and efficiencies. Thank you, Brendan.
Laura Clark: And so, yeah, I do think tariffs are playing a role as our tenants are looking to drive operating margins and efficiencies.
Laura Clark: And so, yeah, I do think tariffs are playing a role as our tenants are looking to drive operating margins and efficiencies.
Mikayla Lynch: Thank you, Brendan. Our next question comes from John Kim from BMO. John, please go ahead.
Mikayla Lynch: Thank you, Brendan. Our next question comes from John Kim from BMO. John, please go ahead.
Speaker #4: Our next question comes from John Kim from BMO. John, please go ahead.
Speaker #4: ahead.
John Kim: Thank you. Thank you. I wanted to ask on the, on the roll down at Tireco of 30%, how that compares to the roughly 12% change in AVR. I'm wondering if this number is more of a net effective number that includes concessions, and if not, or just generally, like, how did this transaction work in terms of concessions and maybe lower annual escalators?
John Kim: Thank you. Thank you. I wanted to ask on the, on the roll down at Tireco of 30%, how that compares to the roughly 12% change in AVR. I'm wondering if this number is more of a net effective number that includes concessions, and if not, or just generally, like, how did this transaction work in terms of concessions and maybe lower annual escalators?
Speaker #7: I wanted to ask on the thank you, thank you, roll-down entire code of 30%—how that compares to the 12% roughly change in AVR?
Speaker #7: I'm wondering if this number is more of a net effective number that includes concessions. And if not, or just generally, how does this transaction work in terms of concessions and maybe lower annual escalators?
Speaker #7: I'm wondering if this number is more of a net effective number that includes concessions. And if not, or just generally, how does this transaction work in terms of concessions and maybe lower annual?
Speaker #1: Sure. Sure, John. Good morning. This is Fitz. So, the new lease—the new from a triple net lease. So, on an apples-to-apples basis, the releasing spread was an unfavorable 30%, including the rent and the triple net charges.
Michael Fitzmaurice: Sure, sure, John. Good morning. It's Seth. So the new lease, the new lease shifted to a gross lease from a triple net lease. So on an apples-to-apples basis, the re-lease spread was an unfavorable 30%, including the rent and the triple net charges.
Michael Fitzmaurice: Sure, sure, John. Good morning. It's Seth. So the new lease, the new lease shifted to a gross lease from a triple net lease. So on an apples-to-apples basis, the re-lease spread was an unfavorable 30%, including the rent and the triple net charges.
Speaker #4: Thank you, John. Our last question comes from Vince Tabone from Green Street. Vince, please go ahead.
Mikayla Lynch: Thank you, John. Our last question comes from Vince Tibone from Green Street. Vince, please go ahead.
Mikayla Lynch: Thank you, John. Our last question comes from Vince Tibone from Green Street. Vince, please go ahead.
Vince Tibone: Hi, thanks for taking my follow-up. Could you just walk through the expected sources and uses of cash for 2026? So if you sell, you know, $400 to 500 million of properties this year with the guide, I'm just trying to get a sense of how much free cash flow, after all development spend, could be available to potentially buy back shares or, you know, redeploy in some fashion this year.
Vince Tibone: Hi, thanks for taking my follow-up. Could you just walk through the expected sources and uses of cash for 2026? So if you sell, you know, $400 to 500 million of properties this year with the guide, I'm just trying to get a sense of how much free cash flow, after all development spend, could be available to potentially buy back shares or, you know, redeploy in some fashion this year.
Speaker #8: Follow-up. Could you just walk through the—hi, thanks for taking my question—expected sources and uses of cash for '26? So, if you sell the $400 to $500 million of properties this year with the guide, I'm just trying to get a sense of how much free cash flow.
Speaker #8: After all, development spend could be available to potentially buy back shares or redeploy in some fashion this year.
Speaker #1: Yeah, good question, Vince. So at the end of the year, we'd have $166 million of cash, including disposed at the midpoint of $450 million. That puts us at sources.
Michael Fitzmaurice: Yeah, good question, Vince. So at the end of the year, we'd have $166 million of cash, including dispositions at the midpoint of $450. That puts us at $616 million of sources. The redevelopment, sorry, development and repositioning spend is expected to be about $203 million in 2026. So that leaves about $413 million of available cash to deploy to the highest risk-adjusted returns, and that can include share repurchases or future reposition or development.
Michael Fitzmaurice: Yeah, good question, Vince. So at the end of the year, we'd have $166 million of cash, including dispositions at the midpoint of $450. That puts us at $616 million of sources. The redevelopment, sorry, development and repositioning spend is expected to be about $203 million in 2026. So that leaves about $413 million of available cash to deploy to the highest risk-adjusted returns, and that can include share repurchases or future reposition or development.
Speaker #1: The redevelopment—I'm sorry, development and repositioning spread is expected to be about $203 million in 2026, so that leaves about $413 million of available cash to deploy to the highest risk-adjusted returns, and that can include share repurchases or future repositioning or development.
Speaker #4: Thank you, Vince. That concludes the Q&A portion of our fourth quarter 2025 earnings call. Back over to Laura for some brief closing remarks. I'd now like to turn the remarks over.
Mikayla Lynch: Thank you, Vince. That concludes the Q&A portion of our Q4 2025 earnings call. I'd now like to turn the call back over to Laura for some brief closing remarks. Laura?
Mikayla Lynch: Thank you, Vince. That concludes the Q&A portion of our Q4 2025 earnings call. I'd now like to turn the call back over to Laura for some brief closing remarks. Laura?
Speaker #4: Laura.
Speaker #3: Thank you all for joining us today, and we look forward to connecting with you all over the quarter.
Laura Clark: Thank you all for joining us today, and we look forward to connecting with you all over the quarter.
Laura Clark: Thank you all for joining us today, and we look forward to connecting with you all over the quarter.
Operator: This will conclude today's call. Thank you all for joining. You may now disconnect.
Operator: This will conclude today's call. Thank you all for joining. You may now disconnect.
