Elliott sees opportunities to create value at warehouse REIT Rexford Industrial

Company: Rexford Industrial Real (Rexr)

a job: Rexford Industrial Realty It is a fully -service real estate investment fund and is self -managed. The company focuses on possessing, operating and acquiring industrial real estate in Southern California markets. It gets industrial real estate, owns, improves, re -rents, and manages industrial properties mainly in Southern California markets, through Rexford Industrial Real, LP (operating partnership) and subsidiary companies. The company also gets or provides the guaranteed mortgage debts by the designated industrial property or the appropriate properties for industrial development. It provides property management services and leasing services for relevant real estate owners. Property management services include property inspections, monitoring reforms and maintenance, maintaining tenant relations and providing financial control and accounting. Its wallet consists of 424 properties of about 51.0 million square feet, leased.

Market value shares: 9.47 billion dollars ($ 40.01 per share)

Activist: Investment Department Elliot

ownership: us

Average cost: us

Activist’s comment: Elliott is a multi -asset investment company that manages about $ 76.1 billion of assets (as of June 30, 2025) and is one of the oldest companies of its kind under continuous management. Elliot, known for due care and due resources, is regularly known as companies for years before investing. Elliott is the most active among active investors, and to participate with companies across industries and multiple geographical regions.

What is happening

On August 27, Elliot announced that they had taken a position in Rexford Industrial Real.

backstage

Rexford is the internal Rit Industrial Company focusing on the Southern California market. The Rit Industrial space has benefited from the strong secular winds, as the height of the e -commerce, which requires a larger warehouse area on average traditional retail trade, has increased warehouse needs over time. Moreover, southern California is a particularly attractive position due to the challenges of entitlement, land scarcity, proximity to ports and residents in urban areas, all of which fed demand and rapid rental growth. Historically, this indispensable primary portfolio had led to the top of the market evaluation, as it was circulated by 20-30 % of the value of the net assets (NAV) and the 8-convert allowance to its peers on the basis of modified funds of operations (AFFO).

However, as we have seen many times before with many activists, real estate investment funds are subject to their nature in their arbitration and attract management teams with improved interests. Rexford is not different. Although it is a company based in California, it is based in Maryland, a notorious mandate for management friendly regulations, including unwanted acquisition law in Maryland, which allows the company to classify the board of directors without the approval of the shareholders.

Reit in California, which includes in Maryland, is not for comfort, but more for consolidation purposes. It is this type of company that will also have a panel of seven people with a majority (including two CO-CEOS) members for more than 10 years and have about 1 % of the suspended shared shares as a group, almost all of them were granted. Once prepared like this, the PlayBook Reit book is generally assigned and the shares are released and the largest amount of property is made as possible because the upper direction of the management is linked to the level of managed assets more than the stock price. Also, at cocktail and club parties, from “great” management of billions of dollars in real estate. Therefore, since the public subscription in 2013, the company has increased its shares by more than 9x, the debt increased from 193 million dollars to 3.5 billion dollars, and the assets grew from 555 million dollars to 12.6 billion dollars. This strategy worked for a period of time when Rexford was traded with a great allowance to the basic value of its real estate, but in the end it was exposed to them with the sales and public and administrative expenditures uprising, and corporate governance eroded and became executive compensation. (Two executives in $ 13 million each). Since its value to NAV has begun to decline, this strategy and Rexford are now trading with a 20 % discount on NAV and AFFO 5-6 discount for men for his peers with a decrease in the price of his share to $ 40 per share (before Elliott) from the top of $ 80 in December 2021.

Fortunately for the shareholders, it is time to change, as Elliott Investment Management revealed the five highest position in Rexford. While this means that the economic exposure of at least 5 % (about 400 million dollars to 500 million), given the date of investment in Elliot, its exposure is likely at least $ 1 billion of assets of $ 76 billion.

Elliott has a rich history of change in companies such as Rexford, so we expect them to better defend corporate governance, customize the best capital, and restore the company’s strategic focus on creating the value of shareholders.

Although it is important to note that the activity can be more challenging in Maryland, it was not a ban, especially for experienced and commitment activists like Elliot. In fact, the tools available to the company that would usually inhibit the activity are more in this case than the poison cup. Any attempt by the administration to consolidate themselves in the face of the activist will only lead to more harm to their reputation and support the situation of Elliot that change is justified. Therefore, we expect Elliot to do well in the battle of an agent here if it comes to that. But we do not think it will come to that.

When a activist participates with a company, he often puts this company in false play, attracts the attention of strategic investors and private stocks. This dynamic is larger for a company like Rexford, which has long been the subject of acquisition speculation.

For Rexford, their distinguished assets, uniformity in the RIT industry and its current evaluation make the company a candidate for natural acquisition. Moreover, Elliott also has a strong history in stimulating the strategic results in the Reits.

At Healthcare Trust of America (previously HTA), Elliot succeeded in paying a strategic review, in the end led to a merger between HTA and Realty Trust To form the largest owner of a medical office in the United States

Looking at 20 % Rexford discount on NAV, we believe that any eating will happen at least in NAV, but probably on a bonus due to the company’s historical evaluation and portfolio quality.

If this opportunity is achieved, as credit for its investors and shareholders of Rexford, the Eliott will weigh the value of the acquisition of a long -term independent plan and defending any path that will provide the best value for the shareholders. Given that the long -term plan is likely to require time and uncertainty in reshaping the Board of Directors and Administration, we believe that the acquisition is a reasonable acquisition will be the favorite path here.

Ken Squire is the founder and head of 13D Monitor, an institutional research service on shareholders ’activity, founder and manager of the 13D activist Fund portfolio, a joint fund that invests in a set of 13D active investments.