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
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.
Source: 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...
This publication does not constitute and should not be construed as an offer or the solicitation of any transaction to buy or sell any securities or any instruments or any derivatives of the securities mentioned herein, or to participate in any particular trading strategies. Although the information contained herein has been obtained from recognized services, and sources believed to be reliable, its accuracy or completeness cannot be guaranteed. Opinions, estimates or projections expressed in this report may make assumptions regarding economic, industry, company and political considerations, and constitute current opinions, at the time of issuance, which are subject to change without notice.
This report is being furnished for informational purposes only, and on the condition that it will not form a primary basis for any investment decision. Any recommendation(s) contained in this report is/are not intended to be, nor should it / they construed or inferred to be, investment advice, as such investments may not be suitable for all investors. When preparing this report, no consideration to one’s investment objectives, risk tolerance and other individual factors was given; as such, as with all investments, purchase or sale of any securities mentioned herein may not be suitable for all investors. By virtue of this publication, neither the Firm nor any of its employees shall be responsible for any investment decisions. Before committing funds to ANY investment, an investor should seek professional advice. Any information relating to the tax status of financial instruments discussed herein is not intended to provide tax advice, or to be used by anyone to provide tax advice. Investors are urged to consult an independent tax professional for advice concerning their particular circumstances. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, either expressed or implied, is made regarding future performance.
National Securities Corporation (NSC) and its affiliated companies, shareholders, officers, directors and / or employees (including persons involved with the preparation or issuance of this report) may, from time to time, have long or short positions in, and buy or sell the securities or derivatives (including options) thereof, of the companies mentioned herein. One or more directors, officers, and / or employees of NSC and its affiliated companies, or independent contractors affiliated with NSC may be a director of the issuer of the securities mentioned herein. NSC and / or its affiliated companies may have managed or co-managed a public offering of, or acted as initial purchaser or placement agent for a private placement of any of the securities of any issuer mentioned in this report within the last three (3) years, or may, from time to time, perform investment banking or other services for, or solicit investment banking business from any company mentioned in this report.
This research may be distributed by affiliated entities of National Securities Corporation (NSC). Affiliated entities of NSC may include, but are not limited to, vFinance Investments, Inc., National Asset Management and other subsidiaries of our parent company, National Holdings Corporation.
The securities mentioned in this document may not be eligible for sale in some states or countries, nor be suitable for all types of investors; their value and the income they produce if any, may fluctuate and/or be adversely affected by exchange rates, interest rates or other factors. Furthermore, NSC may follow emerging growth companies whose securities typically involve a higher degree of risk and more volatility than the securities of more established companies. This report does not take into account the particular investment objectives, financial situation or needs of individual investors. Before acting on any advice or recommendation in this material, the investor should exercise independent judgment as to whether it is suitable in light of his/her particular circumstances and, if necessary, seek professional advice. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance.
Additional information relative to securities, other financial products, or issuers discussed in this report is available upon request. Neither this entire report, nor any part thereof, may be reproduced, copied or duplicated in any form or by any means without the prior written consent of National Securities Corporation. All rights reserved. NSC is a member of both the Financial Industry Regulatory Authority (FINRA) and the Securities Investors Protection Corporation (SIPC).
For disclosures inquiries, please call us at 1-800-417-8000 and ask for your NSC representative, or write us at National Securities Corporation, Attn. Supervision Department, 410 Park Avenue, 14th Floor, New York, NY 10022, or visit our website at www.nationalsecurities.com