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REXR Rexford Industrial Realty, Inc. - Initiation Note

Rexford Industrial Realty, Inc.

BUY (REXR, $21.68)

Southern California Focused Owner / Operator – Initiating at NEUTRAL with a $20.00 Price Target as Equity Looks Fully Valued and China Trade Data Strength In Question

July 12, 2016

John R. Benda

212.471.8127

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Investment Conclusion. We are initiating coverage of Rexford Industrial Realty, Inc. with a NEUTRAL rating and $20.00 price target. Though we are fundamentally positive on the industrial REIT sector, REXR is trading at a significant premium on a P/FFO and P/NAV basis relative to its larger, more established peers, implying that the upside we feel attainable with other operators in the space is largely already reflected in REXR’s current share price. Unique to REXR among all other public industrial REITs is its geographic footprint, which is 100% Southern California based, the largest and most constrained industrial real estate market in the country. According to the Bureau of Economic Analysis, in 2014 California’s GDP was an estimated $2.31 trillion, the highest in the nation and when measured by both the IMF and World Bank, it would be the world’s 8th largest economy. Specifically, REXR’s real estate is situated around the Port of Los Angeles and the Port of Long Beach, the two largest shipping ports in the United States and the 19th and 20th largest in the world. Why is this important; quite simply all those goods and services need to be manufactured and stored somewhere before being transported to world markets? Enter REXR, a Southern California focused industrial REIT poised to capitalize on the global economy. REXR owns and operates 12,152,138 square feet in one the most land constrained and population dense markets in the nation. REXR, like TRNO, also has an attractive existing portfolio from an acquisition vintage standpoint, with 21.6% of its assets acquired between 2009 and 2013, the bottom of the Moody’s / Real Capital Analytics Commercial Property Price Index. Our $20.00 price is based on an average of our $18.47 NAV, $18.10 book value + embedded equity and $22.64 discounted dividend model estimates.

REXRSource: Capital IQ, Company reports, National Securities Corporation Estimates

Portfolio Concentration in Areas with Lowest Availability Rates in Country. According to CBRE’s 1Q16 U.S. Industrial & Logistics Marketview report, Orange County and Los Angeles are #2 and #4 of the Top 5 U.S. markets with the lowest industrial real...


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