Elliott sees opportunities to create value at warehouse REIT Rexford Industrial

Company: Rexford Industrial Realty (Rexr)

Business: Rexford Industrial Realty It is a fully serviced real estate investment partnership (REIT). The company focuses on having industrial properties, businesses and acquisitions in Southern California filling markets. Rexford Industrial Realty, through LP (Operation Partnership) and its subsidiaries, maintains, develops, redevors, rents and manages industrial real estates found in the Southern California fill markets. The company also purchases or provides or provides mortgage debt provided by the appropriate property for industrial regional property or industrial development. The relevant party provides property owners property management services and rental services. Property management services include realizing property inspections, monitoring repair and maintenance, protection of tenant relations and ensuring financial and accounting supervision. The portfolio consists of 424 properties with approximately 51.0 million leasable square meters.

Stock market value: $ 9.47 billion ($ 40.01 per share)

Activist: Elliott Investment Management

Ownership: N/A

Average Cost: N/A

Activist Comment: Elliott is one of the oldest companies in the type of constant management that manages an asset of approximately $ 76.1 billion (as of June 30, 2025). Elliott, known for its comprehensive situation detection and resources, regularly follows companies for years before investing. Elliott is the most active of activist investors interacting with industries and companies in multiple geographies.

What’s going on

On August 27, Elliott announced that they took a position in Rexford Industrial Realty.

Behind the curtain

Rexford is an built -in industrial REIT that focuses on the Southern California market. The Industrial REIT area, the rise of e-commerce, which requires an average of more storage space than a traditional retail business, increased its storage needs over time, benefiting from powerful secular tail winds. Moreover, Southern California is a particularly attractive place that increases demand and rapid rent growth due to the challenges of authority, land scarcity, proximity to ports and intense urban population. Historically, this prime and indispensable portfolio was traded to the upper part of the market valuation with a net asset value (NAV) with 20-30% premium and 8 rounds of peers in the funds set from operations (affo).

However, as we have seen many times with many activists before, REITs are naturally managed badly and attract management teams with incorrectly aligned interests. Rexford is no different. Although it is a California -based company, Maryland, who allows the company to classify the Board without shareholder approval, are residing in Maryland, which is famous for the management -friendly regulations, including the law of unwanted follow -up.

A California REIT in Maryland is not for reasons for convenience, but more for settlement purposes. It is a company that has been a member of the majority (including two common CEOs) for more than 10 years and has a Board of Directors of seven people with approximately 1% of the extraordinary ordinary shareholder. After the installation of this way, the GYO game book is usually borrowing, giving stocks and buying as much property as possible, because the upper part of the administration depends on the level of assets that are more managed than the stock price. In addition, “cool” to manage billions of dollars in cocktail parties and clubs. Therefore, since the public offering in 2013, the company has increased its share count to over 9 times, the debt increased from 193 million dollars to $ 3.5 billion and its assets increased from $ 555 million to $ 12.6 billion. This strategy worked for a while when he exchanged a large premium to the underlying value of Rexford’s real estate, but at the end, sales, general and administrative expenses were inflated, corporate governance was worn and the execution compensation was loaded. (Two CEOs, each of which is $ 13 million). When NAV starts to fall, this strategy and Rexford are trading with a 20% discount and 5-6 round affo discount with a stock price (before Elliott’s announcement) per share in December 2021.

Fortunately, for shareholders, it is time to change as Elliott investment management announced the top five positions in Rexford. Considering Elliott’s investment history, minimum 5% economic exposure (approximately 400 million to 500 million dollars), while their exposure is probably at least $ 1 billion of $ 76 billion.

Elliott has a rich history of change in companies such as Rexford, so we expect them to defense for better corporate governance, better capital allocation, and the company’s strategic focus on creating shareholder value.

Although it is important to point out that activism could be more difficult in Maryland, it did not act as a prohibition, especially for experienced and stable activists such as Elliott. In fact, the current tools for the company that will normally deterre the activism in this case are more toxic glass. Any attempt by the administration to place themselves in the face of an activist will only damage their reputation and support Elliott’s change of change. So we would expect Elliott to get a good fee here in a power of attorney. But we don’t think it will come.

When an activist interacts with a company, it usually puts the company into a fake game, attracts the attention of strategic investors and private capital. This dynamic is even larger for a company that has been subject to speculation for a long time like Rexford.

For Rexford, premium assets, consolidation in the REIT industry and existing discounted values ​​make the company a natural purchase candidate. In addition, Elliott also has a solid history of catalysting strategic consequences in GYOs.

Elliott successfully pushed for a strategic examination in Healthcare Trust of America (formerly HTA), which ultimately Healthcare Realty Trust To create the largest medical office owner in the USA

Considering Rexford’s current 20% discount to NAV, we believe that any package will be at least in the NAV, but considering the historical valuation and portfolio quality of the company.

If such an opportunity would take place as a trust to its investors and Rexford shareholders, Elliott value would weigh a long -term independent plan and defend which ways to provide the best value for shareholders. Considering that the long -term plan will probably require the time and uncertainty of the administrative irrigation time, we think that it would be the preferred way to buy a reasonable premium.

Ken Squire is the founder and president of the 13D Monitor, a corporate research service on shareholder activism and is the founder and portfolio manager of the 13D Activist Fund, an investment fund investing in the investment portfolio of the activist 13D.