|
|
|
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
MARYLAND
|
46-2024407
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
11620 Wilshire Boulevard, Suite 1000,
Los Angeles, California
|
90025
|
(Address of principal executive offices)
|
(Zip Code)
|
|
|
Large accelerated filer
|
þ
|
|
Accelerated filer
|
¨
|
|
|
Non-accelerated filer
|
¨
|
|
Smaller reporting company
|
¨
|
|
|
Emerging growth company
|
¨
|
|
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
ASSETS
|
|
|
|
||||
Land
|
$
|
1,020,652
|
|
|
$
|
997,588
|
|
Buildings and improvements
|
1,098,695
|
|
|
1,079,746
|
|
||
Tenant improvements
|
50,998
|
|
|
49,692
|
|
||
Furniture, fixtures and equipment
|
151
|
|
|
167
|
|
||
Construction in progress
|
45,688
|
|
|
34,772
|
|
||
Total real estate held for investment
|
2,216,184
|
|
|
2,161,965
|
|
||
Accumulated depreciation
|
(186,234
|
)
|
|
(173,541
|
)
|
||
Investments in real estate, net
|
2,029,950
|
|
|
1,988,424
|
|
||
Cash and cash equivalents
|
15,625
|
|
|
6,620
|
|
||
Restricted cash
|
4,211
|
|
|
250
|
|
||
Rents and other receivables, net
|
3,328
|
|
|
3,664
|
|
||
Deferred rent receivable, net
|
17,766
|
|
|
15,826
|
|
||
Deferred leasing costs, net
|
12,097
|
|
|
12,014
|
|
||
Deferred loan costs, net
|
1,775
|
|
|
1,930
|
|
||
Acquired lease intangible assets, net
|
45,876
|
|
|
49,239
|
|
||
Acquired indefinite-lived intangible
|
5,156
|
|
|
5,156
|
|
||
Interest rate swap asset
|
11,294
|
|
|
7,193
|
|
||
Other assets
|
5,961
|
|
|
6,146
|
|
||
Acquisition related deposits
|
4,525
|
|
|
2,475
|
|
||
Assets associated with real estate held for sale
|
8,300
|
|
|
12,436
|
|
||
Total Assets
|
$
|
2,165,864
|
|
|
$
|
2,111,373
|
|
LIABILITIES & EQUITY
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Notes payable
|
$
|
659,417
|
|
|
$
|
668,941
|
|
Interest rate swap liability
|
—
|
|
|
219
|
|
||
Accounts payable, accrued expenses and other liabilities
|
21,441
|
|
|
21,134
|
|
||
Dividends payable
|
13,294
|
|
|
11,727
|
|
||
Acquired lease intangible liabilities, net
|
17,783
|
|
|
18,067
|
|
||
Tenant security deposits
|
19,936
|
|
|
19,521
|
|
||
Prepaid rents
|
5,540
|
|
|
6,267
|
|
||
Liabilities associated with real estate held for sale
|
132
|
|
|
243
|
|
||
Total Liabilities
|
737,543
|
|
|
746,119
|
|
||
Equity
|
|
|
|
||||
Rexford Industrial Realty, Inc. stockholders’ equity
|
|
|
|
||||
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized,
|
|
|
|
||||
5.875% series A cumulative redeemable preferred stock, 3,600,000 shares outstanding at March 31, 2018 and December 31, 2017 ($90,000 liquidation preference)
|
86,651
|
|
|
86,651
|
|
||
5.875% series B cumulative redeemable preferred stock, 3,000,000 shares outstanding at March 31, 2018 and December 31, 2017, respectively ($75,000 liquidation preference)
|
72,443
|
|
|
73,062
|
|
||
Common Stock, $0.01 par value per share, 490,000,000 authorized and 80,667,789 and 78,495,882 shares outstanding at March 31, 2018, 2018 and December 31, 2017, respectively
|
804
|
|
|
782
|
|
||
Additional paid in capital
|
1,297,391
|
|
|
1,239,810
|
|
||
Cumulative distributions in excess of earnings
|
(67,622
|
)
|
|
(67,058
|
)
|
||
Accumulated other comprehensive income
|
11,014
|
|
|
6,799
|
|
||
Total stockholders’ equity
|
1,400,681
|
|
|
1,340,046
|
|
||
Noncontrolling interests
|
27,640
|
|
|
25,208
|
|
||
Total Equity
|
1,428,321
|
|
|
1,365,254
|
|
||
Total Liabilities and Equity
|
$
|
2,165,864
|
|
|
$
|
2,111,373
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
RENTAL REVENUES
|
|
|
|
||||
Rental income
|
$
|
40,911
|
|
|
$
|
29,614
|
|
Tenant reimbursements
|
7,293
|
|
|
5,155
|
|
||
Other income
|
229
|
|
|
232
|
|
||
TOTAL RENTAL REVENUES
|
48,433
|
|
|
35,001
|
|
||
Management, leasing and development services
|
103
|
|
|
126
|
|
||
Interest income
|
—
|
|
|
227
|
|
||
TOTAL REVENUES
|
48,536
|
|
|
35,354
|
|
||
OPERATING EXPENSES
|
|
|
|
||||
Property expenses
|
11,960
|
|
|
9,222
|
|
||
General and administrative
|
6,162
|
|
|
5,086
|
|
||
Depreciation and amortization
|
19,452
|
|
|
13,599
|
|
||
TOTAL OPERATING EXPENSES
|
37,574
|
|
|
27,907
|
|
||
OTHER EXPENSES
|
|
|
|
||||
Acquisition expenses
|
9
|
|
|
385
|
|
||
Interest expense
|
5,852
|
|
|
3,998
|
|
||
TOTAL OTHER EXPENSES
|
5,861
|
|
|
4,383
|
|
||
TOTAL EXPENSES
|
43,435
|
|
|
32,290
|
|
||
Equity in income from unconsolidated real estate entities
|
—
|
|
|
11
|
|
||
Loss on extinguishment of debt
|
—
|
|
|
(22
|
)
|
||
Gains on sale of real estate
|
9,983
|
|
|
2,668
|
|
||
NET INCOME
|
15,084
|
|
|
5,721
|
|
||
Less: net income attributable to noncontrolling interest
|
(318
|
)
|
|
(132
|
)
|
||
NET INCOME ATTRIBUTABLE TO REXFORD INDUSTRIAL REALTY, INC.
|
14,766
|
|
|
5,589
|
|
||
Less: preferred stock dividends
|
(2,423
|
)
|
|
(1,322
|
)
|
||
Less: earnings allocated to participating securities
|
(97
|
)
|
|
(91
|
)
|
||
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$
|
12,246
|
|
|
$
|
4,176
|
|
Net income attributable to common stockholders per share - basic
|
$
|
0.16
|
|
|
$
|
0.06
|
|
Net income attributable to common stockholders per share - diluted
|
$
|
0.15
|
|
|
$
|
0.06
|
|
Weighted average shares of common stock outstanding - basic
|
78,694,161
|
|
|
66,341,138
|
|
||
Weighted average shares of common stock outstanding - diluted
|
79,196,060
|
|
|
66,626,239
|
|
||
Dividends declared per common share
|
$
|
0.160
|
|
|
$
|
0.145
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net income
|
$
|
15,084
|
|
|
$
|
5,721
|
|
Other comprehensive income: cash flow hedge adjustment
|
4,320
|
|
|
752
|
|
||
Comprehensive income
|
19,404
|
|
|
6,473
|
|
||
Comprehensive income attributable to noncontrolling interests
|
(423
|
)
|
|
(153
|
)
|
||
Comprehensive income attributable to Rexford Industrial Realty, Inc.
|
$
|
18,981
|
|
|
$
|
6,320
|
|
|
Preferred Stock
|
|
Number of
Shares
|
|
Common
Stock
|
|
Additional
Paid-in Capital
|
|
Cumulative Distributions in Excess of Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Total
Stockholders’
Equity
|
|
Noncontrolling
Interests
|
|
Total Equity
|
|||||||||||||||||
Balance at January 1, 2018
|
$
|
159,713
|
|
|
78,495,882
|
|
|
$
|
782
|
|
|
$
|
1,239,810
|
|
|
$
|
(67,058
|
)
|
|
$
|
6,799
|
|
|
$
|
1,340,046
|
|
|
$
|
25,208
|
|
|
$
|
1,365,254
|
|
Issuance of common stock
|
—
|
|
|
2,085,663
|
|
|
21
|
|
|
58,430
|
|
|
—
|
|
|
—
|
|
|
58,451
|
|
|
—
|
|
|
58,451
|
|
||||||||
Offering costs
|
(32
|
)
|
|
—
|
|
|
—
|
|
|
(1,048
|
)
|
|
—
|
|
|
—
|
|
|
(1,080
|
)
|
|
—
|
|
|
(1,080
|
)
|
||||||||
Share-based compensation
|
—
|
|
|
79,427
|
|
|
1
|
|
|
409
|
|
|
—
|
|
|
—
|
|
|
410
|
|
|
2,604
|
|
|
3,014
|
|
||||||||
Shares acquired to satisfy employee tax withholding requirements on vesting restricted stock
|
—
|
|
|
(15,287
|
)
|
|
—
|
|
|
(418
|
)
|
|
—
|
|
|
—
|
|
|
(418
|
)
|
|
—
|
|
|
(418
|
)
|
||||||||
Conversion of units to common stock
|
—
|
|
|
22,104
|
|
|
—
|
|
|
208
|
|
|
—
|
|
|
—
|
|
|
208
|
|
|
(208
|
)
|
|
—
|
|
||||||||
Net income
|
2,423
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,343
|
|
|
—
|
|
|
14,766
|
|
|
318
|
|
|
15,084
|
|
||||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,215
|
|
|
4,215
|
|
|
105
|
|
|
4,320
|
|
||||||||
Preferred stock dividends
|
(3,010
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,010
|
)
|
|
—
|
|
|
(3,010
|
)
|
||||||||
Common stock dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,907
|
)
|
|
—
|
|
|
(12,907
|
)
|
|
—
|
|
|
(12,907
|
)
|
||||||||
Distributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(387
|
)
|
|
(387
|
)
|
||||||||
Balance at March 31, 2018
|
$
|
159,094
|
|
|
80,667,789
|
|
|
$
|
804
|
|
|
$
|
1,297,391
|
|
|
$
|
(67,622
|
)
|
|
$
|
11,014
|
|
|
$
|
1,400,681
|
|
|
$
|
27,640
|
|
|
$
|
1,428,321
|
|
|
Preferred Stock
|
|
Number of
Shares
|
|
Common
Stock
|
|
Additional
Paid-in Capital
|
|
Cumulative Distributions in Excess of Earnings
|
|
Accumulated
Other Comprehensive Income |
|
Total
Stockholders’
Equity
|
|
Noncontrolling
Interests
|
|
Total Equity
|
|||||||||||||||||
Balance at January 1, 2017
|
$
|
86,651
|
|
|
66,454,375
|
|
|
$
|
662
|
|
|
$
|
907,834
|
|
|
$
|
(59,277
|
)
|
|
$
|
3,445
|
|
|
$
|
939,315
|
|
|
$
|
22,825
|
|
|
$
|
962,140
|
|
Issuance of common stock
|
—
|
|
|
168,685
|
|
|
1
|
|
|
3,905
|
|
|
—
|
|
|
—
|
|
|
3,906
|
|
|
—
|
|
|
3,906
|
|
||||||||
Offering costs
|
—
|
|
|
—
|
|
|
—
|
|
|
(166
|
)
|
|
—
|
|
|
—
|
|
|
(166
|
)
|
|
—
|
|
|
(166
|
)
|
||||||||
Share-based compensation
|
—
|
|
|
78,829
|
|
|
1
|
|
|
562
|
|
|
—
|
|
|
—
|
|
|
563
|
|
|
833
|
|
|
1,396
|
|
||||||||
Shares acquired to satisfy employee tax withholding requirements on vesting restricted stock
|
—
|
|
|
(11,989
|
)
|
|
—
|
|
|
(277
|
)
|
|
—
|
|
|
—
|
|
|
(277
|
)
|
|
—
|
|
|
(277
|
)
|
||||||||
Conversion of units to common stock
|
—
|
|
|
18,852
|
|
|
—
|
|
|
189
|
|
|
—
|
|
|
—
|
|
|
189
|
|
|
(189
|
)
|
|
—
|
|
||||||||
Net income
|
1,322
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,267
|
|
|
—
|
|
|
5,589
|
|
|
132
|
|
|
5,721
|
|
||||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
731
|
|
|
731
|
|
|
21
|
|
|
752
|
|
||||||||
Preferred stock dividends
|
(1,322
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,322
|
)
|
|
—
|
|
|
(1,322
|
)
|
||||||||
Common stock dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,672
|
)
|
|
—
|
|
|
(9,672
|
)
|
|
—
|
|
|
(9,672
|
)
|
||||||||
Distributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(336
|
)
|
|
(336
|
)
|
||||||||
Balance at March 31, 2017
|
$
|
86,651
|
|
|
66,708,752
|
|
|
$
|
664
|
|
|
$
|
912,047
|
|
|
$
|
(64,682
|
)
|
|
$
|
4,176
|
|
|
$
|
938,856
|
|
|
$
|
23,286
|
|
|
$
|
962,142
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
15,084
|
|
|
$
|
5,721
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Equity in income from unconsolidated real estate entities
|
—
|
|
|
(11
|
)
|
||
Provision for doubtful accounts
|
221
|
|
|
303
|
|
||
Depreciation and amortization
|
19,452
|
|
|
13,599
|
|
||
Amortization of (below) above market lease intangibles, net
|
(1,116
|
)
|
|
(117
|
)
|
||
Accretion of loan origination fees
|
—
|
|
|
(75
|
)
|
||
Deferred interest income on notes receivable
|
—
|
|
|
(81
|
)
|
||
Loss on extinguishment of debt
|
—
|
|
|
22
|
|
||
Gain on sale of real estate
|
(9,983
|
)
|
|
(2,668
|
)
|
||
Amortization of debt issuance costs
|
312
|
|
|
275
|
|
||
Amortization of discount (premium) on notes payable
|
1
|
|
|
(58
|
)
|
||
Equity based compensation expense
|
2,963
|
|
|
1,346
|
|
||
Straight-line rent
|
(1,969
|
)
|
|
(956
|
)
|
||
Change in working capital components:
|
|
|
|
||||
Rents and other receivables
|
128
|
|
|
(475
|
)
|
||
Deferred leasing costs
|
(1,843
|
)
|
|
(905
|
)
|
||
Other assets
|
59
|
|
|
(829
|
)
|
||
Accounts payable, accrued expenses and other liabilities
|
2,529
|
|
|
2,424
|
|
||
Tenant security deposits
|
179
|
|
|
216
|
|
||
Prepaid rents
|
(817
|
)
|
|
1,346
|
|
||
Net cash provided by operating activities
|
25,200
|
|
|
19,077
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Acquisition of investments in real estate
|
(52,753
|
)
|
|
(17,099
|
)
|
||
Capital expenditures
|
(14,861
|
)
|
|
(6,093
|
)
|
||
Acquisition related deposits
|
(2,050
|
)
|
|
(500
|
)
|
||
Distributions from unconsolidated real estate entities
|
—
|
|
|
11
|
|
||
Proceeds from sale of real estate
|
24,896
|
|
|
6,537
|
|
||
Net cash used in investing activities
|
(44,768
|
)
|
|
(17,144
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Issuance of stock, net
|
57,371
|
|
|
3,740
|
|
||
Proceeds from notes payable
|
59,000
|
|
|
135,000
|
|
||
Repayment of notes payable
|
(68,232
|
)
|
|
(124,971
|
)
|
||
Debt issuance costs
|
(450
|
)
|
|
(1,940
|
)
|
||
Debt extinguishment costs
|
—
|
|
|
(193
|
)
|
||
Dividends paid to preferred stockholders
|
(3,010
|
)
|
|
(1,322
|
)
|
||
Dividends paid to common stockholders
|
(11,382
|
)
|
|
(8,971
|
)
|
||
Distributions paid to common unitholders
|
(345
|
)
|
|
(311
|
)
|
||
Repurchase of common shares to satisfy employee tax withholding requirements
|
(418
|
)
|
|
(277
|
)
|
||
Net cash provided by financing activities
|
32,534
|
|
|
755
|
|
||
Increase in cash and cash equivalents
|
12,966
|
|
|
2,688
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
6,870
|
|
|
15,525
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
19,836
|
|
|
$
|
18,213
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest (net of capitalized interest of $371 and $466 for the three months ended March 31, 2018 and 2017, respectively)
|
$
|
6,663
|
|
|
$
|
4,948
|
|
Supplemental disclosure of noncash investing and financing transactions:
|
|
|
|
||||
(Decrease) increase in capital expenditure accrual
|
$
|
(1,045
|
)
|
|
$
|
1,485
|
|
Accrual of dividends
|
$
|
13,294
|
|
|
$
|
10,008
|
|
1.
|
Organization
|
2.
|
Summary of Significant Accounting Policies
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Cash and cash equivalents
|
$
|
6,620
|
|
|
$
|
15,525
|
|
Restricted cash
|
250
|
|
|
—
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
$
|
6,870
|
|
|
$
|
15,525
|
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
15,625
|
|
|
$
|
11,676
|
|
Restricted cash
|
4,211
|
|
|
6,537
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
19,836
|
|
|
$
|
18,213
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Rents and other receivables
|
$
|
5,199
|
|
|
$
|
5,369
|
|
Allowance for doubtful accounts
|
(1,871
|
)
|
|
(1,705
|
)
|
||
Rents and other receivables, net
|
$
|
3,328
|
|
|
$
|
3,664
|
|
|
|
|
|
||||
Deferred rent receivable
|
$
|
17,856
|
|
|
$
|
15,912
|
|
Allowance for doubtful accounts
|
(90
|
)
|
|
(86
|
)
|
||
Deferred rent receivable, net
|
$
|
17,766
|
|
|
$
|
15,826
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Provision for doubtful accounts
|
$
|
225
|
|
|
$
|
326
|
|
3.
|
Investments in Real Estate
|
Property
|
|
Submarket
|
|
Date of Acquisition
|
|
Rentable Square Feet
|
|
Number of Buildings
|
|
Contractual Purchase Price
(1)
(in thousands)
|
|||
13971 Norton Avenue
(2)
|
|
Inland Empire - West
|
|
1/17/2018
|
|
103,208
|
|
|
1
|
|
$
|
11,364
|
|
Ontario Airport Commerce Center
(3)
|
|
Inland Empire - West
|
|
2/23/2018
|
|
213,603
|
|
|
3
|
|
24,122
|
|
|
16010 Shoemaker Avenue
(4)
|
|
Los Angeles - Mid-Counties
|
|
3/13/2018
|
|
115,600
|
|
|
1
|
|
17,218
|
|
|
Total 2018 Wholly-Owned Property Acquisitions
|
|
|
|
432,411
|
|
|
5
|
|
$
|
52,704
|
|
(1)
|
Represents the gross contractual purchase price before prorations, closing costs and other acquisition related costs.
|
(2)
|
This acquisition was partially funded through a 1031 Exchange using
$10.7 million
of net cash proceeds from the sale of our property located at 8900-8980 Benson Avenue and 5637 Arrow Highway and borrowings under our unsecured revolving credit facility.
|
(3)
|
The Ontario Airport Commerce Center is an industrial park which includes the following three properties: (i) 1900 Proforma Avenue, (ii) 1910 Archibald Avenue and (iii) 1920 Archibald Avenue. This acquisition was partially funded through a 1031 Exchange using
$10.3 million
of net cash proceeds from the sale of our property located at 700 Allen Avenue and 1851 Flower Street, borrowings under our unsecured revolving credit facility and available cash on hand.
|
(4)
|
This acquisition was funded with available cash on hand.
|
|
|
2018 Acquisitions
|
||
Assets:
|
|
|
||
Land
|
|
$
|
31,309
|
|
Buildings and improvements
|
|
20,006
|
|
|
Tenant improvements
|
|
476
|
|
|
Acquired lease intangible assets
(1)
|
|
2,570
|
|
|
Other acquired assets
(2)
|
|
29
|
|
|
Total assets acquired
|
|
54,390
|
|
|
Liabilities:
|
|
|
||
Acquired lease intangible liabilities
(3)
|
|
1,204
|
|
|
Other assumed liabilities
(2)
|
|
433
|
|
|
Total liabilities assumed
|
|
1,637
|
|
|
Net assets acquired
|
|
$
|
52,753
|
|
(1)
|
Acquired lease intangible assets is comprised of
$2.5 million
of in-place lease intangibles with a weighted average amortization period of
2.8
years and
$0.1 million
of above-market lease intangibles with a weighted average amortization period of
3.1
years.
|
(2)
|
Includes other working capital assets acquired and liabilities assumed, at the time of acquisition.
|
(3)
|
Represents below-market lease intangibles with a weighted average amortization period of
4.3
years.
|
4.
|
Intangible Assets
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Acquired Lease Intangible Assets:
|
|
|
|
||||
In-place lease intangibles
|
$
|
97,017
|
|
|
$
|
95,750
|
|
Accumulated amortization
|
(56,040
|
)
|
|
(51,735
|
)
|
||
In-place lease intangibles, net
|
40,977
|
|
|
44,015
|
|
||
Above-market tenant leases
|
10,631
|
|
|
10,718
|
|
||
Accumulated amortization
|
(5,732
|
)
|
|
(5,494
|
)
|
||
Above-market tenant leases, net
|
4,899
|
|
|
5,224
|
|
||
Acquired lease intangible assets, net
|
$
|
45,876
|
|
|
$
|
49,239
|
|
Acquired Lease Intangible Liabilities:
|
|
|
|
|
|
||
Below-market tenant leases
|
$
|
(26,047
|
)
|
|
$
|
(24,843
|
)
|
Accumulated accretion
|
8,405
|
|
|
6,925
|
|
||
Below-market tenant leases, net
|
(17,642
|
)
|
|
(17,918
|
)
|
||
Above-market ground lease
|
(290
|
)
|
|
(290
|
)
|
||
Accumulated accretion
|
149
|
|
|
141
|
|
||
Above-market ground lease, net
|
(141
|
)
|
|
(149
|
)
|
||
Acquired lease intangible liabilities, net
|
$
|
(17,783
|
)
|
|
$
|
(18,067
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
In-place lease intangibles
(1)
|
$
|
5,191
|
|
|
$
|
2,955
|
|
Net below-market tenant leases
(2)
|
$
|
(1,108
|
)
|
|
$
|
(109
|
)
|
Above-market ground lease
(3)
|
$
|
(8
|
)
|
|
$
|
(8
|
)
|
(1)
|
The amortization of in-place lease intangibles is recorded to depreciation and amortization expense in the consolidated statements of operations for the periods presented.
|
(2)
|
The amortization of net below-market tenant leases is recorded as an increase to rental revenues in the consolidated statements of operations for the periods presented.
|
(3)
|
The accretion of the above-market ground lease is recorded as a decrease to property expenses in the consolidated statements of operations for the periods presented.
|
5.
|
Notes Payable
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Principal amount
|
|
$
|
662,425
|
|
|
$
|
671,658
|
|
Less: unamortized discount and debt issuance costs
(1)
|
|
(3,008
|
)
|
|
(2,717
|
)
|
||
Carrying value
|
|
$
|
659,417
|
|
|
$
|
668,941
|
|
(1)
|
Excludes unamortized debt issuance costs related to our unsecured revolving credit facility, which are presented in the line item “Deferred loan costs, net” in the consolidated balance sheets.
|
|
March 31, 2018
|
|
December 31, 2017
|
|
|
|
|
|
|
|
||||||||||||||
|
Principal Amount
|
|
Unamortized Discount and Debt Issuance Costs
|
|
Principal Amount
|
|
Unamortized Discount and Debt Issuance Costs
|
|
Contractual
Maturity Date
|
|
Stated
Interest
Rate
(1)
|
|
Effective Interest Rate
(2)
|
|
||||||||||
Secured Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
$60M Term Loan
(3)
|
$
|
58,695
|
|
|
$
|
(105
|
)
|
|
$
|
58,891
|
|
|
$
|
(125
|
)
|
|
8/1/2019
|
(4)
|
LIBOR+1.90%
|
|
|
3.95
|
%
|
|
Gilbert/La Palma
(5)
|
2,730
|
|
|
(135
|
)
|
|
2,767
|
|
|
(138
|
)
|
|
3/1/2031
|
|
5.125
|
%
|
|
5.42
|
%
|
|
||||
Unsecured Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
$100M Term Loan Facility
|
100,000
|
|
|
(322
|
)
|
|
100,000
|
|
|
(343
|
)
|
|
2/14/2022
|
|
LIBOR+1.20%
|
|
(6)
|
3.18
|
%
|
(7)
|
||||
Revolving Credit Facility
|
51,000
|
|
|
—
|
|
|
60,000
|
|
|
—
|
|
|
2/12/2021
|
(8)
|
LIBOR+1.10%
|
|
(6)(9)
|
2.98
|
%
|
|
||||
$225M Term Loan Facility
|
225,000
|
|
|
(1,756
|
)
|
|
225,000
|
|
|
(1,398
|
)
|
|
1/14/2023
|
|
LIBOR+1.20%
|
|
(6)
|
2.95
|
%
|
(10)
|
||||
$100M Notes
|
100,000
|
|
|
(557
|
)
|
|
100,000
|
|
|
(576
|
)
|
|
8/6/2025
|
|
4.290
|
%
|
|
4.37
|
%
|
|
||||
$125M Notes
|
125,000
|
|
|
(133
|
)
|
|
125,000
|
|
|
(137
|
)
|
|
7/13/2027
|
|
3.930
|
%
|
|
3.94
|
%
|
|
||||
Total
|
$
|
662,425
|
|
|
$
|
(3,008
|
)
|
|
$
|
671,658
|
|
|
$
|
(2,717
|
)
|
|
|
|
|
|
|
|
(1)
|
Reflects the contractual interest rate under the terms of the loan, as of
March 31, 2018
.
|
(2)
|
Reflects the effective interest rate as of
March 31, 2018
, which includes the effect of the amortization of discounts and debt issuance costs and the effect of interest rate swaps that are effective as of
March 31, 2018
.
|
(3)
|
This term loan is secured by
six
properties. Beginning August 15, 2016, monthly payments of interest and principal are based on a
30
-year amortization table. As of
March 31, 2018
, the interest rate on this variable-rate term loan has been effectively fixed through the use of
two
interest rate swaps, one of which is an amortizing swap. See Note 7 for details.
|
(4)
|
One
additional
one
-year extension available at the borrower’s option.
|
(5)
|
Monthly payments of interest and principal are based on a
20
-year amortization table.
|
(6)
|
The LIBOR margin will range from
1.20%
to
1.70%
for the
$100.0 million
term loan facility,
1.10%
to
1.50%
for the unsecured revolving credit facility and
1.20%
to
1.70%
for the
$225.0 million
term loan facility depending on the ratio of our outstanding consolidated indebtedness to the value of our consolidated gross asset value, or leverage ratio, which is measured on a quarterly basis.
|
(7)
|
As of
March 31, 2018
, interest on the
$100.0 million
term loan facility has been effectively fixed through the use of two interest rate swaps. See Note 7 for details.
|
(8)
|
Two
additional
six
-month extensions are available at the borrower’s option.
|
(9)
|
The unsecured revolving credit facility is subject to an applicable facility fee which is calculated as a percentage of the total lenders’ commitment amount, regardless of usage. The applicable facility fee will range from
0.15%
to
0.30%
depending upon our leverage ratio.
|
(10)
|
As of
March 31, 2018
, interest on
$125.0 million
of this
$225.0 million
term loan facility has been effectively fixed through the use of an interest rate swap. See Note 7 for details.
|
April 1, 2018 - December 31, 2018
|
$
|
700
|
|
2019
|
58,266
|
|
|
2020
|
166
|
|
|
2021
|
51,175
|
|
|
2022
|
100,184
|
|
|
Thereafter
|
451,934
|
|
|
Total
|
$
|
662,425
|
|
•
|
Maintaining a ratio of total indebtedness to total asset value of not more than
60%
;
|
•
|
For the Credit Facility and the $225 Million Term Loan Facility, maintaining a ratio of secured debt to total asset value of not more than
45%
;
|
•
|
For the $100 Million Notes and the $125 Million Notes, maintaining a ratio of secured debt to total asset value of not more than
40%
;
|
•
|
Maintaining a ratio of total secured recourse debt to total asset value of not more than
15%
;
|
•
|
Maintaining a minimum tangible net worth of at least the sum of (i)
$760,740,750
, and (ii) an amount equal to at least
75%
of the net equity proceeds received by the Company after September 30, 2016;
|
•
|
Maintaining a ratio of adjusted EBITDA (as defined in each of the loan agreements) to fixed charges of at least
1.5
to
1.0
;
|
•
|
Maintaining a ratio of total unsecured debt to total unencumbered asset value of not more than
60%
; and
|
•
|
Maintaining a ratio of unencumbered NOI (as defined in each of the loan agreements) to unsecured interest expense of at least
1.75
to
1.00
.
|
6.
|
Operating Leases
|
7.
|
Interest Rate Swaps
|
|
|
|
|
|
|
|
|
Current Notional Value
(1)
|
|
Fair Value of Interest Rate
Derivative Assets /(Derivative Liabilities)
(2)
|
|||||||||||||
Derivative Instrument
|
|
Effective Date
|
|
Maturity Date
|
|
Interest Strike Rate
|
|
March 31, 2018
|
|
December 31, 2017
|
|
March 31, 2018
|
|
December 31, 2017
|
|||||||||
Interest Rate Swap
|
|
1/15/2015
|
|
2/15/2019
|
|
1.826
|
%
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
72
|
|
|
$
|
(11
|
)
|
Interest Rate Swap
|
|
7/15/2015
|
|
2/15/2019
|
|
2.010
|
%
|
|
$
|
28,695
|
|
|
$
|
28,891
|
|
|
$
|
22
|
|
|
$
|
(70
|
)
|
Interest Rate Swap
|
|
8/14/2015
|
|
12/14/2018
|
|
1.790
|
%
|
|
$
|
50,000
|
|
|
$
|
50,000
|
|
|
$
|
89
|
|
|
$
|
(18
|
)
|
Interest Rate Swap
|
|
2/16/2016
|
|
12/14/2018
|
|
2.005
|
%
|
|
$
|
50,000
|
|
|
$
|
50,000
|
|
|
$
|
14
|
|
|
$
|
(120
|
)
|
Interest Rate Swap
|
|
2/14/2018
|
|
1/14/2022
|
|
1.349
|
%
|
|
$
|
125,000
|
|
|
$
|
—
|
|
|
$
|
5,209
|
|
|
$
|
3,582
|
|
Interest Rate Swap
|
|
8/14/2018
|
|
1/14/2022
|
|
1.406
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,782
|
|
|
$
|
2,521
|
|
Interest Rate Swap
|
|
12/14/2018
|
|
8/14/2021
|
|
1.764
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,106
|
|
|
$
|
1,090
|
|
(1)
|
Represents the notional value of swaps that are effective as of the balance sheet date presented.
|
(2)
|
The fair value of derivative assets are included in the line item “Interest rate swap asset” in the accompanying consolidated balance sheets and the fair value of (derivative liabilities) are included in the line item “Interest rate swap liability” in the accompanying consolidated balance sheets.
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Interest Rate Swaps in Cash Flow Hedging Relationships:
|
|
|
|
||||
Amount of gain recognized in AOCI on derivatives
|
$
|
4,246
|
|
|
$
|
304
|
|
Amount of loss reclassified from AOCI into earnings under “Interest expense”
|
$
|
(74
|
)
|
|
$
|
(448
|
)
|
Total interest expense presented in the Consolidated Statement of Operations in which the effects of cash flow hedges are recorded (line item “Interest expense”)
|
$
|
5,852
|
|
|
$
|
3,998
|
|
|
|
|
|
|
|
|
|
Gross Amounts Not Offset in the Balance Sheet
|
|
|
||||||||
Offsetting of Derivative Assets
|
|
Gross Amounts of Recognized Assets
|
|
Gross Amounts Offset in the Balance Sheet
|
|
Net Amounts of Assets presented in the Balance Sheet
|
|
Financial Instruments
|
|
Cash Collateral Received
|
|
Net Amount
|
||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swaps
|
|
11,294
|
|
|
—
|
|
|
11,294
|
|
|
—
|
|
|
—
|
|
|
11,294
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swaps
|
|
7,193
|
|
|
—
|
|
|
7,193
|
|
|
(219
|
)
|
|
—
|
|
|
6,974
|
|
|
|
|
|
|
|
|
|
Gross Amounts Not Offset in the Balance Sheet
|
|
|
||||||||
Offsetting of Derivative Liabilities
|
|
Gross Amounts of Recognized Liabilities
|
|
Gross Amounts Offset in the Balance Sheet
|
|
Net Amounts of Assets presented in the Balance Sheet
|
|
Financial Instruments
|
|
Cash Collateral Received
|
|
Net Amount
|
||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swaps
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swaps
|
|
219
|
|
|
—
|
|
|
219
|
|
|
(219
|
)
|
|
—
|
|
|
—
|
|
8.
|
Fair Value Measurements
|
|
|
Fair Value Measurement Using
|
||||||||||||||
|
|
Total Fair Value
|
|
Quoted Price in Active
Markets for Identical
Assets and Liabilities
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
Interest Rate Swap Asset
|
|
$
|
11,294
|
|
|
$
|
—
|
|
|
$
|
11,294
|
|
|
$
|
—
|
|
Interest Rate Swap Liability
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Interest Rate Swap Asset
|
|
$
|
7,193
|
|
|
$
|
—
|
|
|
$
|
7,193
|
|
|
$
|
—
|
|
Interest Rate Swap Liability
|
|
$
|
(219
|
)
|
|
$
|
—
|
|
|
$
|
(219
|
)
|
|
$
|
—
|
|
|
|
Fair Value Measurement Using
|
|
|
||||||||||||||||
Liabilities
|
|
Total Fair Value
|
|
Quoted Price in Active
Markets for Identical
Assets and Liabilities
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
|
Carrying Value
|
||||||||||
Notes Payable at:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
March 31, 2018
|
|
$
|
659,444
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
659,444
|
|
|
$
|
659,417
|
|
December 31, 2017
|
|
$
|
673,377
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
673,377
|
|
|
$
|
668,941
|
|
9.
|
Related Party Transactions
|
10.
|
Commitments and Contingencies
|
|
|
Office Leases
|
|
Ground Lease
|
||||
April 1, 2018 - December 31, 2018
|
|
$
|
591
|
|
|
$
|
108
|
|
2019
|
|
569
|
|
|
144
|
|
||
2020
|
|
164
|
|
|
144
|
|
||
2021
|
|
120
|
|
|
144
|
|
||
2022
|
|
—
|
|
|
144
|
|
||
Thereafter
|
|
—
|
|
|
5,676
|
|
||
Total
|
|
$
|
1,444
|
|
|
$
|
6,360
|
|
11.
|
Dispositions and Real Estate Held for Sale
|
Property
|
|
Submarket
|
|
Date of Disposition
|
|
Rentable Square Feet
|
|
Contractual Sales Price
(1)
(in thousands)
|
|
Gain Recorded
(in thousands)
|
|||||
8900-8980 Benson Avenue and 5637 Arrow Highway
|
|
Inland Empire West
|
|
1/2/2018
|
|
88,016
|
|
|
$
|
11,440
|
|
|
$
|
4,029
|
|
700 Allen Avenue and 1851 Flower Street
|
|
Los Angeles - San Fernando Valley
|
|
1/17/2018
|
|
25,168
|
|
|
$
|
10,900
|
|
|
$
|
4,753
|
|
200-220 South Grand Avenue
|
|
Orange County - Airport
|
|
3/7/2018
|
|
27,200
|
|
|
$
|
4,515
|
|
|
$
|
1,201
|
|
Total
|
|
|
|
|
|
140,384
|
|
|
$
|
26,855
|
|
|
$
|
9,983
|
|
(1)
|
Represents the gross contractual sales price before commissions, prorations and other closing costs.
|
|
March 31, 2018
|
|
December 31, 2017
|
|
|||
Land
|
$
|
5,874
|
|
|
$
|
5,671
|
|
Buildings and improvements
|
1,949
|
|
|
7,180
|
|
||
Tenant improvements
|
82
|
|
|
429
|
|
||
Construction in progress
|
—
|
|
|
16
|
|
||
Real estate held for sale
|
7,905
|
|
|
13,296
|
|
||
Accumulated depreciation
|
—
|
|
|
(1,609
|
)
|
||
Real estate held for sale, net
|
7,905
|
|
|
11,687
|
|
||
Acquired lease intangible assets, net
|
371
|
|
|
71
|
|
||
Other assets associated with real estate held for sale
|
24
|
|
|
678
|
|
||
Total assets associated with real estate held for sale, net
|
$
|
8,300
|
|
|
$
|
12,436
|
|
|
|
|
|
||||
Tenant security deposits
|
$
|
75
|
|
|
$
|
193
|
|
Other liabilities associated with real estate held for sale
|
57
|
|
|
50
|
|
||
Total liabilities associated with real estate held for sale
|
$
|
132
|
|
|
$
|
243
|
|
12.
|
Equity
|
|
Unvested Awards
|
|||||||
|
Restricted
Common Stock
|
|
LTIP Units
|
|
Performance Units
|
|||
Balance at January 1, 2018
|
190,695
|
|
|
293,485
|
|
|
703,248
|
|
Granted
|
89,637
|
|
|
57,443
|
|
|
—
|
|
Forfeited
|
(10,210
|
)
|
|
—
|
|
|
—
|
|
Vested
(1)
|
(43,671
|
)
|
|
(45,034
|
)
|
|
—
|
|
Balance at March 31, 2018
|
226,451
|
|
|
305,894
|
|
|
703,248
|
|
(1)
|
During the
three
months ended
March 31, 2018
,
15,287
shares of the Company’s common stock were tendered in accordance with the terms of the Plan to satisfy minimum statutory tax withholding requirements associated with the vesting of restricted shares of common stock.
|
|
Unvested Awards
|
|||||||
|
Restricted
Common Stock |
|
LTIP Units
|
|
Performance Units
(1)
|
|||
March 1, 2018 - December 31, 2018
|
37,957
|
|
|
111,721
|
|
|
315,998
|
|
2019
|
69,991
|
|
|
114,818
|
|
|
199,000
|
|
2020
|
56,462
|
|
|
73,151
|
|
|
188,250
|
|
2021
|
40,102
|
|
|
3,102
|
|
|
—
|
|
2022
|
21,939
|
|
|
3,102
|
|
|
—
|
|
Total
|
226,451
|
|
|
305,894
|
|
|
703,248
|
|
(1)
|
Represents the maximum number of Performance Units that would become earned and vested on December 14, 2018, December 28, 2019 and December 14, 2020, in the event that the specified maximum total shareholder return (“TSR”) goals are achieved over the three-year performance period from December 15, 2015 through December 14, 2018, the three-year performance period from December 29, 2016 through December 28, 2019, and the three-year performance period from December 15, 2017 through December 14, 2020, respectively. The number of Performance Units that ultimately vest will be based on both the Company’s absolute TSR and the Company’s TSR performance relative to a peer group over each three-year performance period. The maximum number of Performance Units will be earned only if the Company both (i) achieves
50%
or higher absolute TSR, inclusive of all dividends paid, over each three-year performance period with respect to the awards vesting on December 14, 2018 and December 28, 2019, and achieves
36%
or higher absolute TSR, inclusive of all dividends paid, over the three-year performance period with respect to the awards vesting on December 14, 2020, and (ii) finishes in the
75
th or greater percentile of the peer group for TSR over each three-year performance period.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Expensed share-based compensation
(1)
|
|
$
|
2,963
|
|
|
$
|
1,346
|
|
Capitalized share-based compensation
(2)
|
|
51
|
|
|
50
|
|
||
Total share-based compensation
|
|
$
|
3,014
|
|
|
$
|
1,396
|
|
(1)
|
Amounts expensed are included in “General and administrative” and “Property expenses” in the accompanying consolidated statements of operations.
|
(2)
|
Amounts capitalized, which relate to employees who provide construction and leasing services, are included in “Building and improvements” and “Deferred leasing costs, net” in the consolidated balance sheets.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Accumulated other comprehensive income - beginning balance
|
|
$
|
6,799
|
|
|
$
|
3,445
|
|
Other comprehensive income before reclassifications
|
|
4,246
|
|
|
304
|
|
||
Amounts reclassified from accumulated other comprehensive income to interest expense
|
|
74
|
|
|
448
|
|
||
Net current period other comprehensive income
|
|
4,320
|
|
|
752
|
|
||
Less other comprehensive income attributable to noncontrolling interests
|
|
(105
|
)
|
|
(21
|
)
|
||
Other comprehensive income attributable to common stockholders
|
|
4,215
|
|
|
731
|
|
||
Accumulated other comprehensive income - ending balance
|
|
$
|
11,014
|
|
|
$
|
4,176
|
|
13.
|
Earnings Per Share
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Numerator:
|
|
|
|
||||
Net income
|
$
|
15,084
|
|
|
$
|
5,721
|
|
Less: Preferred stock dividends
|
(2,423
|
)
|
|
(1,322
|
)
|
||
Less: Net income attributable to noncontrolling interests
|
(318
|
)
|
|
(132
|
)
|
||
Less: Net income attributable to participating securities
|
(97
|
)
|
|
(91
|
)
|
||
Net income attributable to common stockholders
|
$
|
12,246
|
|
|
$
|
4,176
|
|
|
|
|
|
||||
Denominator:
|
|
|
|
||||
Weighted average shares of common stock outstanding – basic
|
78,694,161
|
|
|
66,341,138
|
|
||
Effect of dilutive securities - performance units
|
501,899
|
|
|
285,101
|
|
||
Weighted average shares of common stock outstanding – diluted
|
79,196,060
|
|
|
66,626,239
|
|
||
|
|
|
|
||||
Earnings per share
—
Basic
|
|
|
|
|
|||
Net income attributable to common stockholders
|
$
|
0.16
|
|
|
$
|
0.06
|
|
Earnings per share
—
Diluted
|
|
|
|
||||
Net income attributable to common stockholders
|
$
|
0.15
|
|
|
$
|
0.06
|
|
14.
|
Subsequent Events
|
•
|
the competitive environment in which we operate;
|
•
|
real estate risks, including fluctuations in real estate values and the general economic climate in local markets and competition for tenants in such markets;
|
•
|
decreased rental rates or increasing vacancy rates;
|
•
|
potential defaults on or non-renewal of leases by tenants;
|
•
|
potential bankruptcy or insolvency of tenants;
|
•
|
acquisition risks, including failure of such acquisitions to perform in accordance with expectations;
|
•
|
the timing of acquisitions and dispositions;
|
•
|
potential natural disasters such as earthquakes, wildfires or floods;
|
•
|
the consequence of any future security alerts and/or terrorist attacks;
|
•
|
national, international, regional and local economic conditions;
|
•
|
the general level of interest rates;
|
•
|
potential changes in the law or governmental regulations that affect us and interpretations of those laws and regulations, including changes in real estate and zoning or real estate investment trust (“REIT”) tax laws, and potential increases in real property tax rates;
|
•
|
financing risks, including the risks that our cash flows from operations may be insufficient to meet required payments of principal and interest and we may be unable to refinance our existing debt upon maturity or obtain new financing on attractive terms or at all;
|
•
|
lack of or insufficient amounts of insurance;
|
•
|
our failure to complete acquisitions;
|
•
|
our failure to successfully integrate acquired properties;
|
•
|
our ability to qualify and maintain our qualification as a REIT;
|
•
|
our ability to maintain our current investment grade rating by Fitch;
|
•
|
litigation, including costs associated with prosecuting or defending pending or threatened claims and any adverse outcomes; and
|
•
|
possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us.
|
•
|
During the first quarter of 2018, we completed the acquisition of five properties with a combined
432,411
rentable square feet, for a total gross purchase price of
$52.7 million
.
|
•
|
Subsequent to March 31, 2018, we completed the acquisition of five properties with a combined
373,691
rentable square feet, for a total gross purchase price of
$55.3 million
.
|
•
|
During the first quarter of 2018, we completed the repositioning and lease-up of 43,927 rentable square feet of space at 3233 Mission Oaks Boulevard.
|
•
|
During the first quarter of 2018, we sold three properties with a combined
140,384
rentable square feet, for a total gross sales price of
$26.9 million
, and total net cash proceeds of
$25.2 million
, which were used to partially fund the acquisition of three properties through tax-deferred like-kind exchange transactions.
|
•
|
In January 2018, we amended our $225.0 million unsecured term loan facility, resulting in the reduction of the applicable margin for LIBOR-based borrowings from a range of 1.50% to 2.25% per annum to a range of 1.20% to 1.70% per annum.
|
•
|
During the first quarter of 2018, we sold
2,085,663
shares of common stock under our at-the-market equity offering program for gross proceeds of
$58.5 million
, or approximately
$28.02
per share, and net proceeds of approximately
$57.6 million
after deducting the sales agents’ fee.
|
|
|
|
|
|
|
|
|
|
|
Estimated Construction Period
(1)
|
|
|
|
||
Property (Submarket)
|
|
Market
|
|
Total Property Rentable Square Feet
|
|
Vacant Rentable Square Feet Under Repositioning/Lease-up
|
|
Estimated Development Rentable Square Feet
|
|
Start
|
|
Completion
|
|
Total Property Leased % at 3/31/18
|
|
Current Repositioning:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14750 Nelson - Repositioning
|
|
|
|
138,090
|
|
138,090
|
|
—
|
|
3Q-2016
|
|
2Q-2018
|
|
—%
|
|
14750 Nelson - Development
|
|
|
|
—
|
|
—
|
|
63,900
|
|
3Q-2016
|
|
3Q-2018
|
|
—%
|
|
14750 Nelson (San Gabriel Valley)
|
|
LA
|
|
138,090
|
|
138,090
|
|
63,900
|
|
3Q-2016
|
|
3Q-2018
|
|
—%
|
|
301-445 Figueroa Street (South Bay)
(2)
|
|
LA
|
|
133,650
|
|
52,200
|
|
—
|
|
4Q-2016
|
|
3Q-2018
|
|
61%
|
|
28903 Avenue Paine - Repositioning
|
|
|
|
111,346
|
|
111,346
|
|
—
|
|
1Q-2017
|
|
2Q-2018
|
|
—%
|
|
28903 Avenue Paine - Development
|
|
|
|
—
|
|
—
|
|
115,817
|
|
1Q-2017
|
|
1Q-2019
|
|
—%
|
|
28903 Avenue Paine (SF Valley)
|
|
LA
|
|
111,346
|
|
111,346
|
|
115,817
|
|
1Q-2017
|
|
1Q-2019
|
|
—%
|
|
2722 Fairview Street (OC Airport)
|
|
OC
|
|
116,575
|
|
58,802
|
|
—
|
|
1Q-2018
|
|
2Q-2018
|
|
50%
|
|
3233 Mission Oaks Blvd - Unit 3233 (Ventura):
|
|
VC
|
|
461,210
|
|
111,419
|
|
—
|
|
2Q-2017
|
|
4Q-2018
|
|
67%
|
|
Total
|
|
|
|
|
|
471,857
|
|
179,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease-up Stage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1601 Alton Parkway (OC Airport)
|
|
OC
|
|
124,988
|
|
15,874
|
|
—
|
|
4Q-2014
|
|
4Q-2017
|
|
87%
|
|
Total
|
|
|
|
|
|
15,874
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future Repositioning:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9615 Norwalk Boulevard (Mid-Counties)
|
|
LA
|
|
38,362
|
|
—
|
|
201,808
|
|
3Q-2018
|
|
3Q-2019
|
|
100%
|
(3)
|
15401 Figueroa Street (South Bay)
|
|
LA
|
|
38,584
|
|
—
|
|
—
|
|
2Q-2018
|
|
3Q-2018
|
|
100%
|
(3)
|
Total Current Repositioning, Lease-up Stage and Future Repositioning
|
|
|
|
|
|
487,731
|
|
381,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stabilized:
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3233 Mission Oaks Blvd - Unit H (Ventura):
|
|
VC
|
|
461,210
|
|
—
|
|
—
|
|
N/A
|
|
N/A
|
|
67%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The estimated construction period is subject to change as a result of a number of factors including but not limited to permit requirements, delays in construction, changes in scope, and other unforeseen circumstances.
|
(2)
|
The property located at 301-445 Figueroa Street has 14 units, all of which will be repositioned in various phases. As of March 31, 2018, the property consists of: five units (57,220 rentable square feet) that have been completed and leased; five units (45,240 RSF) that have been completed and are vacant; one unit (6,960 rentable square feet) that is currently under repositioning; and three units (24,230 rentable square feet) in which repositioning has not yet started. We estimate that the latter four units (31,190 rentable square feet) will be completed by the end of
3Q-2018
.
|
(3)
|
As of March 31, 2018, the tenants at these properties are either under a month-to-month (“MTM”) lease or have holdover tenancy.
|
(4)
|
We consider a repositioning property to be stabilized at the earlier of the following: (i) upon reaching 90% occupancy or (ii) one year from the date of completion of repositioning construction work.
|
|
|
New Leases
|
|||||||||||||||||
Quarter
|
|
Number
of Leases |
|
Rentable Square Feet
|
|
Weighted Average Lease Term
(in years) |
|
Effective Rent Per Square Foot
(1)
|
|
GAAP Leasing Spreads
(2)(4)
|
|
Cash Leasing Spreads
(3)(4)
|
|||||||
Q1-2018
|
|
47
|
|
|
281,844
|
|
|
4.8
|
|
|
$
|
11.29
|
|
|
32.0
|
%
|
|
18.1
|
%
|
|
|
Renewals
|
|
Expiring Leases
|
|
Retention %
(7)
|
||||||||||||||||||||||
Quarter
|
|
Number
of Leases |
|
Rentable Square Feet
|
|
Weighted Average Lease Term
(in years) |
|
Effective Rent Per Square Foot
(1)
|
|
GAAP Leasing Spreads
(2)(5)
|
|
Cash Leasing Spreads
(3)(5)
|
|
Number
of Leases |
|
Rentable Square Feet
(6)
|
|
Rentable Square Feet
|
||||||||||
Q1-2018
|
|
70
|
|
|
566,551
|
|
|
2.8
|
|
|
$
|
10.66
|
|
|
23.1
|
%
|
|
13.8
|
%
|
|
119
|
|
|
913,468
|
|
|
68.4
|
%
|
(1)
|
Effective rent per square foot is the average base rent calculated in accordance with GAAP, over the term of the lease, expressed in dollars per square foot per year. Includes all new and renewal leases that were executed during the quarter.
|
(2)
|
Calculated as the change between GAAP rents for new or renewal leases and the expiring GAAP rents on the expiring leases for the same space.
|
(3)
|
Calculated as the change between starting cash rents for new or renewal leases and the expiring cash rents on the expiring leases for the same space.
|
(4)
|
The GAAP and cash re-leasing spreads for new leases executed during the
three
months ended
March 31, 2018
, exclude
10
leases aggregating
113,185
rentable square feet for which there was no comparable lease data. Comparable leases generally exclude: (i) space that has never been occupied under our ownership, (ii) recently repositioned/redeveloped space, (iii) space that has been vacant for over one year or (iv) space with lease terms shorter than six months.
|
(5)
|
The GAAP and cash re-leasing rent spreads for renewal leases executed during the
three
months ended
March 31, 2018
, exclude
one
lease for
1,205
rentable square feet for which there was no comparable lease data. Comparable leases generally exclude: (i) space with different lease structures or (ii) space with lease terms shorter than six months.
|
(6)
|
Includes two leases totaling
65,762
rentable square feet that expired during the
three
months ended
March 31, 2018
, for which the space was placed into repositioning after each tenant vacated.
|
(7)
|
Retention is calculated as renewal lease square footage plus relocation/expansion square footage, divided by the square footage of leases expiring during the period. Retention excludes expiring leases associated with space that is placed into repositioning after the tenant vacates.
|
Year of Lease Expiration
|
|
Number of Leases Expiring
|
|
Total Rentable Square Feet
(1)
|
|
Percentage of Total Owned Square Feet
|
|
Annualized Base Rent
(2)
|
|
Percentage of Total Annualized Base Rent
(3)
|
|
Annualized Base Rent per Square Foot
(4)
|
||||||||
Vacant
(5)
|
|
—
|
|
|
427,471
|
|
|
2.3
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
Current Repositioning
(6)
|
|
—
|
|
|
471,857
|
|
|
2.5
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
MTM Tenants
(7)
|
|
88
|
|
|
200,469
|
|
|
1.1
|
%
|
|
$
|
2,052
|
|
|
1.3
|
%
|
|
$
|
10.23
|
|
Remainder of 2018
|
|
251
|
|
|
1,758,546
|
|
|
9.4
|
%
|
|
$
|
16,516
|
|
|
10.4
|
%
|
|
$
|
9.39
|
|
2019
|
|
319
|
|
|
2,814,872
|
|
|
15.0
|
%
|
|
$
|
25,519
|
|
|
16.0
|
%
|
|
$
|
9.07
|
|
2020
|
|
306
|
|
|
3,977,895
|
|
|
21.2
|
%
|
|
$
|
33,817
|
|
|
21.2
|
%
|
|
$
|
8.50
|
|
2021
|
|
179
|
|
|
3,728,051
|
|
|
19.9
|
%
|
|
$
|
31,281
|
|
|
19.6
|
%
|
|
$
|
8.39
|
|
2022
|
|
105
|
|
|
1,844,282
|
|
|
9.8
|
%
|
|
$
|
15,776
|
|
|
9.9
|
%
|
|
$
|
8.55
|
|
2023
|
|
55
|
|
|
1,059,152
|
|
|
5.7
|
%
|
|
$
|
10,553
|
|
|
6.6
|
%
|
|
$
|
9.96
|
|
2024
|
|
14
|
|
|
757,895
|
|
|
4.0
|
%
|
|
$
|
7,260
|
|
|
4.6
|
%
|
|
$
|
9.58
|
|
2025
|
|
5
|
|
|
155,506
|
|
|
0.8
|
%
|
|
$
|
1,805
|
|
|
1.2
|
%
|
|
$
|
11.61
|
|
2026
|
|
6
|
|
|
273,904
|
|
|
1.5
|
%
|
|
$
|
3,235
|
|
|
2.0
|
%
|
|
$
|
11.81
|
|
2027
|
|
6
|
|
|
220,311
|
|
|
1.2
|
%
|
|
$
|
2,077
|
|
|
1.3
|
%
|
|
$
|
9.43
|
|
Thereafter
|
|
8
|
|
|
1,051,093
|
|
|
5.6
|
%
|
|
$
|
9,450
|
|
|
5.9
|
%
|
|
$
|
8.99
|
|
Total Consolidated Portfolio
|
|
1,342
|
|
|
18,741,304
|
|
|
100.0
|
%
|
|
$
|
159,341
|
|
|
100.0
|
%
|
|
$
|
8.98
|
|
(1)
|
Represents the contracted square footage upon expiration.
|
(2)
|
Calculated as monthly contracted base rent (before rent abatements) per the terms of such lease, as of
March 31, 2018
, multiplied by 12. Excludes billboard and antenna revenue. Amounts in thousands.
|
(3)
|
Calculated as annualized base rent set forth in this table divided by annualized base rent for the total portfolio as of
March 31, 2018
.
|
(4)
|
Calculated as annualized base rent for such leases divided by the occupied square feet for such leases as of
March 31, 2018
.
|
(5)
|
Represents vacant space (not under repositioning) as of
March 31, 2018
. Includes new leases aggregating
69,639
rentable square feet that have been signed but had not yet commenced as of
March 31, 2018
.
|
(6)
|
Represents space at five of our properties that were classified as current repositioning as of
March 31, 2018
. Refer to the table under “
Acquisitions and Redevelopment of Properties”
for a summary of these properties. Excludes completed repositioning properties and properties in lease-up.
|
(7)
|
Represents tenants under MTM leases or having holdover tenancy. Includes
62
MTM leases aggregating
65,390
rentable square feet at our property located at 14723-14825 Oxnard Street, where due to number and the small size of spaces, we typically only enter into MTM leases.
|
|
Same Properties Portfolio
|
|
Total Portfolio
|
||||||||||||||||||||||||||
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
|
%
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
|
%
|
||||||||||||||||||
|
2018
|
|
2017
|
|
|
Change
|
|
2018
|
|
2017
|
|
|
Change
|
||||||||||||||||
RENTAL REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Rental income
|
$
|
31,145
|
|
|
$
|
28,575
|
|
|
$
|
2,570
|
|
|
9.0
|
%
|
|
$
|
40,911
|
|
|
$
|
29,614
|
|
|
$
|
11,297
|
|
|
38.1
|
%
|
Tenant reimbursements
|
5,056
|
|
|
5,004
|
|
|
52
|
|
|
1.0
|
%
|
|
7,293
|
|
|
5,155
|
|
|
2,138
|
|
|
41.5
|
%
|
||||||
Other income
|
221
|
|
|
201
|
|
|
20
|
|
|
10.0
|
%
|
|
229
|
|
|
232
|
|
|
(3
|
)
|
|
(1.3
|
)%
|
||||||
TOTAL RENTAL REVENUES
|
36,422
|
|
|
33,780
|
|
|
2,642
|
|
|
7.8
|
%
|
|
48,433
|
|
|
35,001
|
|
|
13,432
|
|
|
38.4
|
%
|
||||||
Management, leasing and development services
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
103
|
|
|
126
|
|
|
(23
|
)
|
|
(18.3
|
)%
|
||||||
Interest income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
227
|
|
|
(227
|
)
|
|
(100.0
|
)%
|
||||||
TOTAL REVENUES
|
36,422
|
|
|
33,780
|
|
|
2,642
|
|
|
7.8
|
%
|
|
48,536
|
|
|
35,354
|
|
|
13,182
|
|
|
37.3
|
%
|
||||||
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Property expenses
|
8,997
|
|
|
8,680
|
|
|
317
|
|
|
3.7
|
%
|
|
11,960
|
|
|
9,222
|
|
|
2,738
|
|
|
29.7
|
%
|
||||||
General and administrative
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
6,162
|
|
|
5,086
|
|
|
1,076
|
|
|
21.2
|
%
|
||||||
Depreciation and amortization
|
12,629
|
|
|
12,828
|
|
|
(199
|
)
|
|
(1.6
|
)%
|
|
19,452
|
|
|
13,599
|
|
|
5,853
|
|
|
43.0
|
%
|
||||||
TOTAL OPERATING EXPENSES
|
21,626
|
|
|
21,508
|
|
|
118
|
|
|
0.5
|
%
|
|
37,574
|
|
|
27,907
|
|
|
9,667
|
|
|
34.6
|
%
|
||||||
OTHER EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Acquisition expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
9
|
|
|
385
|
|
|
(376
|
)
|
|
(97.7
|
)%
|
||||||
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
5,852
|
|
|
3,998
|
|
|
1,854
|
|
|
46.4
|
%
|
||||||
TOTAL OTHER EXPENSES
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
5,861
|
|
|
4,383
|
|
|
1,478
|
|
|
33.7
|
%
|
||||||
TOTAL EXPENSES
|
21,626
|
|
|
21,508
|
|
|
118
|
|
|
0.5
|
%
|
|
43,435
|
|
|
32,290
|
|
|
11,145
|
|
|
34.5
|
%
|
||||||
Equity in income from unconsolidated real estate entities
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
11
|
|
|
(11
|
)
|
|
|
||||||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
(22
|
)
|
|
22
|
|
|
|
||||||||
Gains on sale of real estate
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
9,983
|
|
|
2,668
|
|
|
7,315
|
|
|
|
||||||||
NET INCOME
|
$
|
14,796
|
|
|
$
|
12,272
|
|
|
$
|
2,524
|
|
|
|
|
$
|
15,084
|
|
|
$
|
5,721
|
|
|
$
|
9,363
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
|
|
|
|
||
Net income
|
$
|
15,084
|
|
|
$
|
5,721
|
|
Add:
|
|
|
|
||||
Depreciation and amortization
|
19,452
|
|
|
13,599
|
|
||
Deduct:
|
|
|
|
||||
Gains on sale of real estate
|
9,983
|
|
|
2,668
|
|
||
Gain on acquisition of unconsolidated joint venture property
|
—
|
|
|
11
|
|
||
Funds From Operations (FFO)
|
$
|
24,553
|
|
|
$
|
16,641
|
|
Less: preferred stock dividends
|
(2,423
|
)
|
|
(1,322
|
)
|
||
Less: FFO attributable to noncontrolling interest
(1)
|
(557
|
)
|
|
(449
|
)
|
||
Less: FFO attributable to participating securities
(2)
|
(158
|
)
|
|
(137
|
)
|
||
FFO attributable to common stockholders
|
$
|
21,415
|
|
|
$
|
14,733
|
|
(1)
|
Noncontrolling interests represent holders of outstanding common units of the Company's operating partnership that are owned by unit holders other than the Company.
|
(2)
|
Participating securities include unvested shares of restricted stock, unvested LTIP units and unvested performance units.
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Rental income
|
$
|
40,911
|
|
|
$
|
29,614
|
|
Tenant reimbursements
|
7,293
|
|
|
5,155
|
|
||
Other income
|
229
|
|
|
232
|
|
||
Total operating revenues
|
48,433
|
|
|
35,001
|
|
||
Property expenses
|
11,960
|
|
|
9,222
|
|
||
Net Operating Income
|
$
|
36,473
|
|
|
$
|
25,779
|
|
Amortization of (below) above market lease intangibles, net
|
(1,116
|
)
|
|
(117
|
)
|
||
Straight line rental revenue adjustment
|
(1,969
|
)
|
|
(956
|
)
|
||
Cash Net Operating Income
|
$
|
33,388
|
|
|
$
|
24,706
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net income
|
$
|
15,084
|
|
|
$
|
5,721
|
|
Add:
|
|
|
|
|
|
||
General and administrative
|
6,162
|
|
|
5,086
|
|
||
Depreciation and amortization
|
19,452
|
|
|
13,599
|
|
||
Acquisition expenses
|
9
|
|
|
385
|
|
||
Interest expense
|
5,852
|
|
|
3,998
|
|
||
Loss on extinguishment of debt
|
—
|
|
|
22
|
|
||
Deduct:
|
|
|
|
|
|
||
Management, leasing and development services
|
103
|
|
|
126
|
|
||
Interest income
|
—
|
|
|
227
|
|
||
Equity in income from unconsolidated real estate entities
|
—
|
|
|
11
|
|
||
Gains on sale of real estate
|
9,983
|
|
|
2,668
|
|
||
Net Operating Income
|
$
|
36,473
|
|
|
$
|
25,779
|
|
Amortization of (below) above market lease intangibles, net
|
(1,116
|
)
|
|
(117
|
)
|
||
Straight line rental revenue adjustment
|
(1,969
|
)
|
|
(956
|
)
|
||
Cash Net Operating Income
|
$
|
33,388
|
|
|
$
|
24,706
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net income
|
$
|
15,084
|
|
|
$
|
5,721
|
|
Interest expense
|
5,852
|
|
|
3,998
|
|
||
Depreciation and amortization
|
19,452
|
|
|
13,599
|
|
||
Gains on sale of real estate
|
(9,983
|
)
|
|
(2,668
|
)
|
||
Gain on sale of real estate from unconsolidated joint ventures
|
—
|
|
|
(11
|
)
|
||
EBITDA
re
|
$
|
30,405
|
|
|
$
|
20,639
|
|
|
|
Three Months Ended March 31, 2018
|
|||||||||
|
|
Total
|
|
Square
Feet
(1)
|
|
Per Square Foot
(2)
|
|||||
Non-Recurring Capital Expenditures
(3)
|
|
$
|
11,392
|
|
|
9,944,261
|
|
|
$
|
1.15
|
|
Recurring Capital Expenditures
(4)
|
|
854
|
|
|
18,765,796
|
|
|
$
|
0.05
|
|
|
Total Capital Expenditures
|
|
$
|
12,246
|
|
|
|
|
|
(1)
|
For non-recurring capital expenditures, reflects the aggregate square footage of the properties in which we incurred such capital expenditures. For recurring capital expenditures, reflects the weighted average square footage of our consolidated portfolio during the period.
|
(2)
|
Per square foot amounts are calculated by dividing the aggregate capital expenditure costs by the square footage as defined in (1) above.
|
(3)
|
Non-recurring capital expenditures are expenditures made in respect of a property for improvement to the appearance of such property or any other major upgrade or renovation of such property, and further includes capital expenditures for seismic upgrades, or capital expenditures for deferred maintenance existing at the time such property was acquired.
|
(4)
|
Recurring capital expenditures are expenditures made in respect of a property for maintenance of such property and replacement of items due to ordinary wear and tear including, but not limited to, expenditures made for maintenance of parking lots, roofing materials, mechanical systems, HVAC systems and other structural systems.
|
|
Payments by Period
|
||||||||||||||||||||||||||
|
Total
|
|
Remainder of 2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
||||||||||||||
Principal payments and debt maturities
|
$
|
662,425
|
|
|
$
|
700
|
|
|
$
|
58,266
|
|
|
$
|
166
|
|
|
$
|
51,175
|
|
|
$
|
100,184
|
|
|
$
|
451,934
|
|
Interest payments - fixed-rate debt
(1)
|
79,858
|
|
|
5,931
|
|
|
9,333
|
|
|
9,325
|
|
|
9,316
|
|
|
9,307
|
|
|
36,646
|
|
|||||||
Interest payments - variable-rate debt
(2)
|
48,052
|
|
|
9,686
|
|
|
11,557
|
|
|
10,277
|
|
|
8,984
|
|
|
7,278
|
|
|
270
|
|
|||||||
Office lease payments
|
1,444
|
|
|
591
|
|
|
569
|
|
|
164
|
|
|
120
|
|
|
—
|
|
|
—
|
|
|||||||
Ground lease payments
|
6,360
|
|
|
108
|
|
|
144
|
|
|
144
|
|
|
144
|
|
|
144
|
|
|
5,676
|
|
|||||||
Contractual obligations
(3)
|
30,806
|
|
|
30,806
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total
|
$
|
828,945
|
|
|
$
|
47,822
|
|
|
$
|
79,869
|
|
|
$
|
20,076
|
|
|
$
|
69,739
|
|
|
$
|
116,913
|
|
|
$
|
494,526
|
|
(1)
|
Reflects scheduled interest payments on our fixed rate debt, including the $100 million unsecured guaranteed senior notes, the $125 million unsecured guaranteed senior notes and the Gilbert/La Palma mortgage loan.
|
(2)
|
Reflects an estimate of interest payments due on variable rate debt, including the impact of interest rate swaps. For variable rate debt where interest is paid based on LIBOR plus an applicable LIBOR margin, we used the applicable LIBOR margin in effect as of
March 31, 2018
, and the one-month LIBOR rate of
1.88313%
, as of
March 31, 2018
. Furthermore, it is assumed that any maturity extension options available are not exercised.
|
(3)
|
Includes total commitments for tenant improvement and construction work related to obligations under certain tenant leases and vendor contracts. We anticipate these obligations to be paid as incurred through the remainder of 2018 and 2019, however, as the timing of these obligations is subject to a number of factors, for purposes of this table, we have included the full amount under “Remainder of 2018”.
|
|
|
Maturity Date
|
|
Stated
Interest Rate
|
|
Effective
Interest Rate
(1)
|
|
Principal Balance
(in thousands)
(2)
|
|
Maturity Date of Effective Swaps
|
|||
Secured Debt:
|
|
|
|
|
|
|
|
|
|
|
|||
$60M Term Loan
|
|
8/1/2019
(3)
|
|
LIBOR + 1.90%
|
|
3.816
|
%
|
(4)
|
$
|
58,695
|
|
|
2/15/2019
|
Gilbert/La Palma
|
|
3/1/2031
|
|
5.125%
|
|
5.125
|
%
|
|
2,730
|
|
|
--
|
|
Unsecured Debt:
|
|
|
|
|
|
|
|
|
|
|
|||
$100M Term Loan Facility
|
|
2/14/2022
|
|
LIBOR +1.20%
(5)
|
|
3.098
|
%
|
(6)
|
100,000
|
|
|
12/14/2018; 8/14/2021
(6)
|
|
Revolver
(7)
|
|
2/12/2021
(8)
|
|
LIBOR +1.10%
(5)
|
|
2.983
|
%
|
|
51,000
|
|
|
--
|
|
$225M Term Loan Facility
|
|
1/14/2023
|
|
LIBOR +1.20%
(5)
|
|
2.549
|
%
|
(9)
|
125,000
|
|
|
1/14/2022
(9)
|
|
$225M Term Loan Facility
|
|
1/14/2023
|
|
LIBOR +1.20%
(5)
|
|
3.083
|
%
|
|
100,000
|
|
|
--
(10)
|
|
$100M Senior Notes
|
|
8/6/2025
|
|
4.290%
|
|
4.290
|
%
|
|
100,000
|
|
|
--
|
|
$125M Senior Notes
|
|
7/13/2027
|
|
3.930%
|
|
3.930
|
%
|
|
$
|
125,000
|
|
|
--
|
Total Consolidated
|
|
|
|
|
|
3.392
|
%
|
|
$
|
662,425
|
|
|
|
(1)
|
Includes the effect of interest rate swaps that were effective as of
March 31, 2018
. Assumes a 1-month LIBOR rate of
1.88313%
as of
March 31, 2018
, as applicable. Excludes the effect of amortization of debt issuance costs, discounts and the facility fee on the Revolver.
|
(2)
|
Excludes unamortized debt issuance costs and discounts aggregating
$3.0 million
as of
March 31, 2018
.
|
(3)
|
One additional one-year extension is available, if certain conditions are satisfied.
|
(4)
|
As of
March 31, 2018
, this term loan has been effectively fixed at
3.816%
through the use of two interest rate swaps as follows: (i) $30 million at 3.726% with an effective date of January 15, 2015 and (ii)
$28.7 million
at 3.91% with an effective date of July 15, 2015.
|
(5)
|
The LIBOR margin will range from 1.20% to 1.70% for the $100 Million Term Loan Facility, 1.10% to 1.50% for the Revolver and 1.20% to 1.70% for the $225 million term loan facility depending on our leverage ratio, which is the ratio of our outstanding consolidated indebtedness to the value of our consolidated gross asset value. This leverage ratio is measured on a quarterly basis, and as a result, the effective interest rate will fluctuate from period to period.
|
(6)
|
As of
March 31, 2018
, the $100 Million Term Loan Facility has been effectively fixed at 1.8975% plus the applicable LIBOR margin through the use of two interest rate swaps as follows: (i) $50 million with a strike rate of 1.79% with an effective date of August 14, 2015, and (ii) $50 million with a strike rate of 2.005% with an effective date of February 16, 2016. We have an interest rate swap that will effectively fix the $100 Million Term Loan Facility at 1.764% plus an applicable LIBOR margin from December 14, 2018 (the expiration date of the current swap) through August 14, 2021.
|
(7)
|
The Revolver is subject to an applicable facility fee which is calculated as a percentage of the total lenders’ commitment amount, regardless of usage. The applicable facility fee will range from
0.15%
to
0.30%
depending upon our leverage ratio.
|
(8)
|
Two additional six-month extensions available at the borrower’s option.
|
(9)
|
As of
March 31, 2018
, through the use of an interest rate swap, $125 million of the $225 million term loan facility has been effectively fixed at 1.349% plus the applicable LIBOR margin from February 14, 2018 to January 14, 2022.
|
(10)
|
We have an interest rate swap that will effectively fix $100 million of the $225 million term loan facility at 1.406% plus an applicable LIBOR margin from August 14, 2018 through January 14, 2022.
|
|
|
Average Term Remaining
(in years)
|
|
Stated
Interest Rate
|
|
Effective
Interest Rate
(1)
|
|
Principal Balance
(in thousands)
(2)
|
|
% of Total
|
||
Fixed vs. Variable:
|
|
|
|
|
|
|
|
|
|
|
||
Fixed
|
|
5.9
|
|
3.49%
|
|
3.49%
|
|
$
|
511,425
|
|
|
77%
|
Variable
|
|
4.1
|
|
LIBOR + 1.17%
|
|
3.05%
|
|
$
|
151,000
|
|
|
23%
|
Secured vs. Unsecured:
|
|
|
|
|
|
|
|
|
|
|
||
Secured
|
|
1.9
|
|
|
|
3.87%
|
|
$
|
61,425
|
|
|
9%
|
Unsecured
|
|
5.8
|
|
|
|
3.34%
|
|
$
|
601,000
|
|
|
91%
|
(1)
|
Includes the effect of interest rate swaps that were effective as of
March 31, 2018
. Excludes the effect of amortization of debt issuance costs, discounts/premiums and the facility fee on the Revolver. Assumes a 1-month LIBOR rate of
1.88313%
as of
March 31, 2018
, as applicable.
|
(2)
|
Excludes unamortized debt issuance costs and discounts aggregating
$3.0 million
as of
March 31, 2018
.
|
•
|
Maintaining a ratio of total indebtedness to total asset value of not more than 60%;
|
•
|
For the Credit Facility and the $225 Million Term Loan Facility, maintaining a ratio of secured debt to total asset value of not more than 45%;
|
•
|
For the $100 Million Notes and the $125 Million Notes, maintaining a ratio of secured debt to total asset value of not more than 40%;
|
•
|
Maintaining a ratio of total secured recourse debt to total asset value of not more than 15%;
|
•
|
Maintaining a minimum tangible net worth of at least the sum of (i) $760,740,750, and (ii) an amount equal to at least 75% of the net equity proceeds received by the Company after September 30, 2016;
|
•
|
Maintaining a ratio of adjusted EBITDA (as defined in each of the loan agreements) to fixed charges of at least 1.50 to 1.0;
|
•
|
Maintaining a ratio of total unsecured debt to total unencumbered asset value of not more than 60%;
|
•
|
Maintaining a ratio of unencumbered NOI (as defined in each of the loan agreements) to unsecured interest expense of at least 1.75 to 1.0.
|
•
|
Maintaining a Debt Service Coverage Ratio (as defined in the term loan agreement) of at least 1.10 to 1.00, to be tested quarterly;
|
•
|
Maintaining Unencumbered Liquid Assets (as defined in the term loan agreement) of not less than (i) $5 million, or (ii) $8 million if we elect to have Line of Credit Availability (as defined in the term loan agreement) included in the calculation, of which $2 million must be cash or cash equivalents, to be tested annually as of December 31 of each year;
|
•
|
Maintaining a minimum Fair Market Net Worth (as defined in the term loan agreement) of at least $75 million, to be tested annually as of December 31 of each year.
|
|
|
Three Months Ended March 31,
|
|
|
||||||||
|
|
2018
|
|
2017
|
|
Change
|
||||||
Cash provided by operating activities
|
|
$
|
25,200
|
|
|
$
|
19,077
|
|
|
$
|
6,123
|
|
Cash used in investing activities
|
|
$
|
(44,768
|
)
|
|
$
|
(17,144
|
)
|
|
$
|
(27,624
|
)
|
Cash provided by financing activities
|
|
$
|
32,534
|
|
|
$
|
755
|
|
|
$
|
31,779
|
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price
Paid per Share
|
|
Total Number of Shares Purchased as Part of
Publicly Announced Plans or Programs
|
|
Maximum
Number (or approximate dollar value) of Shares that May Yet Be Purchased Under the Plans
or Programs
|
|||
January 1, 2018 to January 31, 2018
|
|
—
|
|
|
$
|
—
|
|
|
N/A
|
|
N/A
|
February 1, 2018 to February 28, 2018
(1)
|
|
4,563
|
|
|
$
|
27.68
|
|
|
N/A
|
|
N/A
|
March 1, 2018 to March 31, 2018
(1)
|
|
10,724
|
|
|
$
|
27.20
|
|
|
N/A
|
|
N/A
|
|
|
15,287
|
|
|
$
|
27.34
|
|
|
N/A
|
|
N/A
|
(1)
|
In February 2018 and March 2018, these shares were tendered by certain of our employees to satisfy minimum statutory tax withholding obligations related to the vesting of restricted shares.
|
Exhibit
|
|
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
3.4
|
|
|
3.5
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
10.1
|
|
|
10.2*
|
|
|
31.1*
|
|
|
31.2*
|
|
|
31.3*
|
|
|
32.1*
|
|
|
32.2*
|
|
|
32.3*
|
|
|
101.1*
|
|
The registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Operations (unaudited), (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Equity (unaudited), (v) Consolidated Statements of Cash Flows (unaudited) and (vi) the Notes to the Consolidated Financial Statements (unaudited) that have been detail tagged.
|
*
|
Filed herein
|
|
|
Rexford Industrial Realty, Inc.
|
|
|
|
May 7, 2018
|
|
/s/ Michael S. Frankel
|
|
|
Michael S. Frankel
|
|
|
Co-Chief Executive Officer (Principal Executive Officer)
|
|
|
|
May 7, 2018
|
|
/s/ Howard Schwimmer
|
|
|
Howard Schwimmer
|
|
|
Co-Chief Executive Officer (Principal Executive Officer)
|
|
|
|
May 7, 2018
|
|
/s/ Adeel Khan
|
|
|
Adeel Khan
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
a.
|
Purchase Price
. Buyer and Seller hereby agree that the Purchase Price shall be increased to Four Million Five Hundred Fifteen Thousand and 00/100 Dollars ($4,515,000). Notwithstanding anything to the contrary contained in the Purchase Agreement, Buyer rather than Seller shall be charged through Escrow at Closing for the portion of both (i) the county and city documentary transfer taxes and (ii) the premium for the ALTA Standard Coverage Owner’s Policy of Title Insurance, in each case as attributable to a $100,000 portion of the Purchase Price.
|
b.
|
Prorations
. Notwithstanding Section 10.1 of the Purchase Agreement, the Parties shall handle proration credits and debits of rents and taxes, and transfers of security deposits,
|
SELLER:
|
|
|
|
|
|
|
|
RIF IV – GRAND, LLC, a
|
|||
California limited liability company
|
|||
|
|
|
|
By:
|
REXFORD INDUSTRIAL REALTY, L.P.,
|
||
|
a Maryland limited partnership,
|
||
|
its Manager
|
||
|
|
|
|
|
By:
|
Rexford Industrial Realty, Inc.,
|
|
|
|
a Maryland corporation
|
|
|
|
its: General Partner
|
|
|
|
|
|
|
|
By:
|
/s/ David Lanzer
|
|
|
|
|
|
|
Name Printed:
|
David Lanzer
|
|
|
|
|
|
|
Title:
|
General Counsel
|
|
|
|
|
|
|
|
|
BUYER:
|
|
|
|
|
|
|
|
6110-6114 CAHUENGA, LLC, a
|
|||
California limited liability company
|
|||
|
|
|
|
By:
|
/s/ Larry Schwimmer
|
|
|
|
|
|
|
Name Printed:
|
Larry Schwimmer
|
|
|
|
|
|
|
Title:
|
Managing Partner
|
|
If to Seller:
|
RIF IV – Grand, LLC
|
|
c/o Rexford Industrial Realty, L.P.
|
|
11620 Wilshire Blvd., Ste. 1000
|
|
Los Angeles, CA 90025
|
|
Attn: General Counsel
|
|
Email: dlanzer@rexfordindustrial.com
|
|
|
|
|
If to Buyer:
|
Attn: Larry Schwimmer
|
|
Email: c/o howards@rexfordindustrial.com
|
|
|
|
|
If to Escrow Agent:
|
Commerce Escrow Company
|
|
1055 Wilshire Blvd., Ste 1000
|
|
Los Angeles, CA 90017
|
|
Attn: Shannon Kinnard
|
|
Email: skinnard@comescrow.com
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Rexford Industrial Realty, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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May 7, 2018
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By:
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/s/ Michael S. Frankel
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Michael S. Frankel
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|
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Co-Chief Executive Officer
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1.
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I have reviewed this quarterly report on Form 10-Q of Rexford Industrial Realty, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
May 7, 2018
|
|
By:
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/s/ Howard Schwimmer
|
|
|
|
Howard Schwimmer
|
|
|
|
Co-Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Rexford Industrial Realty, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
May 7, 2018
|
|
By:
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/s/ Adeel Khan
|
|
|
|
Adeel Khan
|
|
|
|
Chief Financial Officer
|
(1)
|
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Michael S. Frankel
|
|
Michael S. Frankel
|
|
Co-Chief Executive Officer
|
|
May 7, 2018
|
|
(1)
|
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Howard Schwimmer
|
|
Howard Schwimmer
|
|
Co-Chief Executive Officer
|
|
May 7, 2018
|
|
(1)
|
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Adeel Khan
|
|
Adeel Khan
|
|
Chief Financial Officer
|
|
May 7, 2018
|
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