Rexford Industrial Realty Downgraded By Analysts As South California Rental Market Shows Signs Of Decline

BMO Capital Markets analyst John P. Kim downgraded Rexford Industrial Realty Inc REXR from Outperform to Market Perform at a decreased price target of $56 from $69.

The analyst sees REXR's premium valuation as vulnerable amid weakness in South California fundamentals and expects an impact on medium-term growth.

Kim believes the market rental growth of South California has peaked (+61% since 2020, per REXR), with reduced port traffic leading to increased availability (+50 bps q/q to 3.6%, per CBRE).

REXR's mark-to-market (M2M) of 66% decreased in 1Q23, which the analyst believes can reduce further if market rents decline.

Consequently, the analyst lowered the estimate for EBITDA to $134.5 million (from $135.4 million) in Q2 2023, $548.8 million (from $551.5 million) in 2023, and $724.3 million (from $728.0 million) in 2024.

Also, Kim reduced the estimate for FFO per share to $0.54 (from $0.55) in Q2 2023, $2.17 (from $2.18) in 2023, and $2.49 (from $2.51) in 2024.

Apart from this, Citigroup analyst Emmanuel Korchman downgraded Rexford from Buy to Neutral and lowered the price target from $66 to $53.

Wells Fargo analyst Blaine Heck maintained Rexford Industrial Realty with an Overweight and lowered the price target from $71 to $66.

Price Action: REXR shares are trading higher by 3.47% at $52.76 on the last check Tuesday.