Rexford Industrial Announces Pricing of Offering of $500 Million Exchangeable Senior Notes due 2027 and $500 Million Exchangeable Senior Notes due 2029

Rhea-AI Summary

Rexford Industrial Realty, Inc. announces the pricing of $500 million each of 4.375% exchangeable senior notes due 2027 and 4.125% exchangeable senior notes due 2029 in a private offering. The notes are guaranteed by Rexford Industrial and will be settled on March 28, 2024. The offering includes a 30-day option for additional notes. The notes will accrue interest semi-annually and mature in 2027 and 2029. Noteholders have the right to exchange their notes under certain conditions. The initial exchange rate and price represent a premium over the last reported stock price. The net proceeds will be used for acquisitions, development activities, and general corporate purposes.

Positive

• Rexford Industrial Realty, Inc. announces the pricing of $500 million each of 4.375% exchangeable senior notes due 2027 and 4.125% exchangeable senior notes due 2029 in a private offering.
• The notes are fully and unconditionally guaranteed by Rexford Industrial and will be settled on March 28, 2024, after customary closing conditions.
• The offering includes a 30-day option for the initial purchasers to buy additional notes to cover over-allotments.
• The notes will accrue interest at rates of 4.375% per annum for the 2027 notes and 4.125% per annum for the 2029 notes, payable semi-annually starting in 2024.
• The notes will mature in 2027 and 2029, with noteholders having the right to exchange their notes under certain conditions.
• The initial exchange rate and price represent a premium over the last reported stock price on March 26, 2024.
• The net proceeds from the offering will be used for acquisitions, development activities, and general corporate purposes.

Negative

• None.

Insights

Financial Analyst

Rexford Industrial Realty's recent announcement of a $1 billion exchangeable senior notes offering is a significant capital market activity. The dual tranches, with varying maturities in 2027 and 2029 and interest rates of 4.375% and 4.125% respectively, reflect a strategic approach to managing the company's capital structure. Given the current interest rate environment, these rates seem competitive and could indicate confidence in Rexford Industrial's creditworthiness and future performance.

Moreover, the option for additional purchases to cover over-allotments suggests strong demand expectations from institutional investors. This could be a positive signal for the company's stock, as it implies investor confidence. However, the impact on the stock price will depend on how the market interprets the use of proceeds. If used effectively for acquisitions and developments, it could lead to growth, but it also increases the company's leverage, which could be a concern if not managed properly.

Real Estate Market Analyst

The use of proceeds from the notes for potential acquisitions and development activities is a clear indication of Rexford Industrial's growth strategy in the industrial real estate sector. This sector has been performing well due to the e-commerce boom and the subsequent demand for warehouse and distribution centers. If Rexford can secure good locations and enhance their portfolio, this could lead to increased rental income and property values over time.

The exchangeable nature of the notes, allowing conversion to common stock at a 30% premium to the current share price, also aligns investors' interests with the company's success. However, the dilution effect upon conversion needs to be monitored, as it could potentially affect existing shareholders' value. The redemption feature of the 2029 notes provides flexibility to the company to manage debt in response to market conditions, which is a prudent feature from a risk management perspective.

Legal Expert

The offering's compliance with Rule 144A is noteworthy as it targets qualified institutional buyers, streamlining the process and potentially reducing the time to market compared to a public offering. The associated registration rights agreement is a commitment to provide liquidity for the exchangeable shares, which could enhance the notes' attractiveness to investors. However, the limitations within this agreement and the absence of a current resale registration statement underscore the importance of understanding the legal complexities and risks involved in such private offerings.

The stipulation of a 'fundamental change' clause in the indentures is a protective measure for investors, offering them an exit strategy in case of significant corporate events that could impact their investment. This highlights the company's attempt to balance investor protection with its financing objectives.

LOS ANGELES, March 26, 2024 /PRNewswire/ -- Rexford Industrial Realty, Inc. (the "Company" or "Rexford Industrial") (NYSE: REXR) today announced that its operating partnership, Rexford Industrial Realty, L.P. (the "operating partnership"), priced its offering of $500 million aggregate principal amount of 4.375% exchangeable senior notes due 2027 (the "2027 notes") and $500 million aggregate principal amount of 4.125% exchangeable senior notes due 2029 (the "2029 notes" and, together with the 2027 notes, the "notes") in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). The notes will be fully and unconditionally guaranteed, on a senior, unsecured basis, by Rexford Industrial. The issuance and sale of the notes are scheduled to settle on March 28, 2024, subject to customary closing conditions. The operating partnership also granted the initial purchasers of the notes a 30-day option to purchase up to an additional $75 million aggregate principal amount of 2027 notes and up to an additional $75 million aggregate principal amount of 2029 notes, in each case solely to cover over-allotments.

The notes will be senior, unsecured obligations of the operating partnership and will accrue interest at a rate of 4.375% per annum (in the case of the 2027 notes) and 4.125% per annum (in the case of the 2029 notes), payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2024. The 2027 notes will mature on March 15, 2027, and the 2029 notes will mature on March 15, 2029, in each case unless earlier repurchased, exchanged or (in the case of the 2029 notes) redeemed. Before December 15, 2026 (in the case of the 2027 notes) or December 15, 2028 (in the case of the 2029 notes), noteholders will have the right to exchange their notes only upon the occurrence of certain events. From and after December 15, 2026 (in the case of the 2027 notes) or December 15, 2028 (in the case of the 2029 notes), noteholders may exchange their notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date of the applicable series of notes. Exchanges will be settled in cash and, if applicable, shares of Rexford Industrial's common stock. The initial exchange rate is 15.7146 shares of Rexford Industrial's common stock per $1,000 principal amount of 2027 notes, which represents an initial exchange price of approximately $63.64 per share of Rexford Industrial's common stock, in the case of the 2027 notes, and 15.7146 shares of Rexford Industrial's common stock per $1,000 principal amount of 2029 notes, which represents an initial exchange price of approximately $63.64 per share of Rexford Industrial's common stock, in the case of the 2029 notes. The initial exchange price represents a premium of approximately 30.0% (in the case of the 2027 notes) and 30.0% (in the case of the 2029 notes) over the last reported sale price of $48.95 per share of Rexford Industrial's common stock on March 26, 2024. The exchange rate and exchange price of each series of notes will be subject to adjustment upon the occurrence of certain events.

The 2027 notes will not be redeemable at the operating partnership's option before their maturity. The 2029 notes will be redeemable, in whole or in part (subject to certain limitations), for cash at the operating partnership's option at any time, and from time to time, on or after May 20, 2027 and on or before the 41st scheduled trading day immediately before the maturity date of the 2029 notes, but only if the last reported sale price per share of Rexford Industrial's common stock exceeds 130% of the exchange price of the 2029 notes for a specified period of time and certain other conditions are satisfied. The redemption price will be equal to the principal amount of the 2029 notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

If a "fundamental change" (as defined in the indentures that will govern the notes) occurs, then, subject to a limited exception, noteholders may require the operating partnership to repurchase their notes for cash. The repurchase price will be equal to the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.

The notes of each series will be entitled to the benefits of a registration rights agreement pursuant to which Rexford Industrial will agree to register the resale of the shares of Rexford Industrial's common stock, if any, deliverable upon exchange of the notes of such series under the Securities Act.

The operating partnership estimates that the net proceeds from the offering of the notes will be approximately $978.8 million (or approximately $1,126.2 million if the initial purchasers fully exercise their over-allotment options), after deducting the initial purchasers' discounts and commissions and estimated offering expenses. The operating partnership intends to use the net proceeds from the offering to fund future acquisitions, to fund its development or repositioning/redevelopment activities and for general corporate purposes.

The offer and sale of the notes, the guarantees and any shares of Rexford Industrial's common stock deliverable upon exchange of the notes have not been registered under the Securities Act or any other securities laws, and the notes and any such shares cannot be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws. Although the operating partnership and Rexford Industrial intend to enter into a registration rights agreement pursuant to which Rexford Industrial will agree to file a resale registration statement under the Securities Act covering the resale of shares of Rexford Industrial's common stock, if any, deliverable upon exchange of the notes, the registration rights agreement will contain significant limitations, and a resale registration statement may not be available at the time investors wish to resell the shares of Rexford Industrial's common stock, if any, deliverable upon exchange of their notes. This press release does not constitute an offer to sell, or the solicitation of an offer to buy, the notes or any shares of Rexford Industrial's common stock deliverable upon exchange of the notes, nor will there be any sale of the notes or any such shares of Rexford Industrial's common stock, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful.

About Rexford Industrial

Rexford Industrial creates value by investing in, operating and redeveloping industrial properties throughout infill Southern California, the world's fourth largest industrial market and consistently the highest-demand, lowest supply market in the nation. The Company's highly differentiated strategy enables internal and external growth opportunities through its proprietary value creation and asset management capabilities. Rexford Industrial's high-quality, irreplaceable portfolio comprises 374 properties with approximately 46.1 million rentable square feet occupied by a stable and diverse tenant base. Structured as a real estate investment trust (REIT) listed on the New York Stock Exchange under the ticker "REXR," Rexford Industrial is an S&P MidCap 400 Index member.

Forward-Looking Statements

This press release includes forward-looking statements, including statements regarding the completion of the offering and the expected amount and intended use of the net proceeds. Forward-looking statements represent Rexford Industrial's current expectations regarding future events and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those implied by the forward-looking statements. Among those risks and uncertainties are market conditions, the satisfaction of the closing conditions related to the offering and risks relating to Rexford Industrial's business, including those described in periodic reports that Rexford Industrial files from time to time with the U.S. Securities and Exchange Commission. Rexford Industrial may not consummate the offering described in this press release and, if consummated, cannot provide any assurances regarding the ability to effectively apply the net proceeds as described above. The forward-looking statements included in this press release speak only as of the date of this press release, and Rexford Industrial does not undertake to update the statements included in this press release for subsequent developments, except as may be required by law.

Contact:
investorrelations@rexfordindustrial.com

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SOURCE Rexford Industrial Realty, Inc.

FAQ

What are the details of Rexford Industrial Realty, Inc.'s recent private offering?

Rexford Industrial Realty, Inc. announced a private offering of $500 million each of 4.375% exchangeable senior notes due 2027 and 4.125% exchangeable senior notes due 2029.

When will the settlement of the notes take place?

The settlement of the notes is scheduled for March 28, 2024.

What is the purpose of the net proceeds from the offering?

The net proceeds will be used for acquisitions, development activities, and general corporate purposes.

What is the initial exchange rate for the notes?

The initial exchange rate is 15.7146 shares of Rexford Industrial's common stock per $1,000 principal amount of the notes.

How will note exchanges be settled?

Exchanges will be settled in cash and, if applicable, shares of Rexford Industrial's common stock.

Are the notes redeemable before maturity?

The 2027 notes are not redeemable before maturity, while the 2029 notes can be redeemed at the operating partnership's option.

What are the interest rates for the notes?

The notes will accrue interest at rates of 4.375% per annum for the 2027 notes and 4.125% per annum for the 2029 notes.

What is the maturity date for the notes?

The 2027 notes will mature on March 15, 2027, and the 2029 notes will mature on March 15, 2029, unless earlier repurchased, exchanged, or redeemed.

What rights do noteholders have regarding exchanges?

Noteholders can exchange their notes under certain conditions before and after specified dates.

What is the purpose of the registration rights agreement?

The registration rights agreement allows for the registration of the resale of shares of Rexford Industrial's common stock deliverable upon exchange of the notes.

Are the notes and shares of common stock registered under the Securities Act?

No, the offer and sale of the notes, guarantees, and any shares of common stock deliverable upon exchange have not been registered under the Securities Act.

What happens in case of a 'fundamental change'?

Noteholders may require the operating partnership to repurchase their notes for cash if a 'fundamental change' occurs.