A Hidden Gem in Industrial Real Estate
The pandemic brought a surge in demand for warehouses, and Rexford Industrial Realty (NYSE: REXR) was one of the beneficiaries. However, as Wall Street’s attention shifted to new trends like artificial intelligence, Rexford’s stock price plummeted, losing nearly half its value since 2022. But with a dividend yield now at an attractive 4.1%, this stock deserves a closer look.
A Unique Business Model
Rexford Industrial Realty is a real estate investment trust (REIT) that focuses on buying and leasing industrial properties. What sets it apart is its laser-like focus on Southern California, the largest industrial market in the United States. This concentration may seem risky, but it also provides a unique advantage.
The Southern California Advantage
Southern California’s strategic location as a gateway for Asian goods makes it an attractive market. Vacancy rates, although rising since 2023, remain lower than the national average. The limited supply of land and frequent conversion of industrial assets to other uses, such as housing, ensure that supply remains tight. Rexford’s expertise in redeveloping assets only adds to the region’s appeal.
Strong Performance Despite Cooling Demand
Rexford’s recent update revealed a strong occupancy rate of 95.9% and average rental increases of 80% on renewed or newly signed leases. The company’s $450 million capital spending projects will continue to drive rental growth through 2027. Despite the cooling demand, Rexford’s performance remains robust.
A Buy for Long-Term Income Investors
With its focus on an advantaged market and strong performance, Rexford Industrial Realty offers an attractive 4.1% dividend yield. This well-positioned REIT has been undervalued due to broader market concerns, making it an excellent buy for dividend investors with a long-term perspective.
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