Rexford Industrial Realty, Inc. (REXR)

Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and the related notes thereto that appear in Part I, Item 1 “Financial Statements” of this Quarterly Report on Form 10-Q. The terms “Company,” “we,” “us,” and “our” refer to Rexford Industrial Realty, Inc. and its consolidated subsidiaries except where the context otherwise requires.

Forward-Looking Statements

We make statements in this quarterly report that are forward-looking statements, which are usually identified by the use of words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “potential,” “possible,” “predicts,” “projects,” “results,” “seeks,” “should,” “will,” and variations of such words or similar expressions. Our forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by our forward-looking statements are reasonable, we can give no assurance that our plans, intentions, expectations, strategies or prospects will be attained or achieved and you should not place undue reliance on these forward-looking statements. Furthermore, actual results may differ materially from those described in the forward-looking statements and may be affected by a variety of risks and factors including, without limitation:

•the competitive environment in which we operate;

•real estate risks, including fluctuations in real estate values and the general economic climate in local markets and competition for tenants in such markets;

•decreased rental rates or increasing vacancy rates;

•potential defaults on or non-renewal of leases by tenants;

•potential bankruptcy or insolvency of tenants or our borrower;

•acquisition risks, including failure of such acquisitions to perform in accordance with expectations;

•the timing of acquisitions and dispositions;

•risks associated with development and repositioning activities, including the possibility that costs may exceed original estimates, the time to complete a project or to lease up the completed project may be greater than originally anticipated or changes in entitlements or laws may impact or prevent execution of intended projects, including without limitation, California Assembly Bill 98 and California Senate Bill 415;

•potential natural disasters such as earthquakes, wildfires or floods;

•the consequence of any future security alerts and/or terrorist attacks;

•national, international, regional and local economic conditions, including impacts and uncertainty from military conflicts in Iran and the greater Middle East and from trade disputes and tariffs on goods imported to the United States and goods exported to other countries;

•the general level of interest rates;

•potential impacts of inflation;

•potential changes in or interpretation and enforcement of the law, governmental regulations or executive orders that affect us and interpretations of those laws, regulations and executive orders, including changes in real estate and zoning or REIT tax laws, potential increases in real property tax rates and other matters related to operating our business;

•financing risks, including the risks that our cash flows from operations may be insufficient to meet required payments of principal and interest and we may be unable to refinance our existing debt upon maturity or obtain new financing on attractive terms or at all;

•lack of or insufficient amounts of insurance;

•our failure to complete acquisitions and dispositions;

•our failure to successfully integrate acquired properties;

•our ability to qualify and maintain our qualification as a REIT;

•our ability to maintain our current investment grade ratings by Fitch Ratings (“Fitch”), Moody’s Investors Services (“Moody’s”) or from Standard & Poor’s Ratings Services (“S&P”);

•litigation, including costs associated with prosecuting or defending pending or threatened claims and any adverse outcomes;

•possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us;

•impacts to the regional labor markets and inflationary pressures from smaller labor pools, costs of goods and construction, lower consumer demand and impacts to the overall economy related to U.S. Immigration and Customs Enforcement (ICE) arrests and detentions of immigrants within Southern California;

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•an epidemic or pandemic, and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities may implement to address it, which may precipitate or exacerbate one or more of the above-mentioned factors and/or other risks, and significantly disrupt or prevent us from operating our business in the ordinary course for an extended period; and

•other events outside of our control.

Accordingly, there is no assurance that our expectations will be realized. Except as otherwise required by the U.S. federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. The reader should carefully review our financial statements and the notes thereto, as well as the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025.

Company Overview

Rexford Industrial Realty, Inc. is a self-administered and self-managed full-service REIT focused on owning and operating industrial properties in Southern California infill markets. We were formed as a Maryland corporation on January 18, 2013, and Rexford Industrial Realty, L.P. (the “Operating Partnership”), of which we are the sole general partner, was formed as a Maryland limited partnership on January 18, 2013. Through our controlling interest in our Operating Partnership and its subsidiaries, we acquire, own, improve, reposition, develop, lease and manage industrial real estate principally located in Southern California infill markets, and, from time to time, acquire or provide mortgage debt secured by industrial zoned property or property suitable for industrial development. We also sell assets as part of our capital allocation strategy. We are organized and conduct our operations to qualify as a REIT under the Code and generally are not subject to federal taxes on our income to the extent we distribute our income to our stockholders and maintain our qualification as a REIT.

As of June 30, 2026, our consolidated portfolio consisted of 409 properties with approximately 49.9 million rentable square feet.

Our goal is to generate attractive risk-adjusted returns for our stockholders by providing superior access to industrial property investments in high-barrier Southern California infill markets. Our target markets provide us with opportunities to acquire both stabilized properties generating favorable cash flow, as well as properties or land parcels where we can enhance returns through value-add repositioning and developments. Scarcity of available space and high barriers limiting new construction of for-lease product all contribute to create superior long-term supply/demand fundamentals within our target infill Southern California industrial property markets. With our vertically integrated operating platform and extensive value-add investment and management capabilities, we believe we are positioned to capitalize upon the opportunities in our markets to achieve our objectives.

Management Update

Effective April 1, 2026, Laura Clark assumed the role of Chief Executive Officer and John Nahas assumed the role of Chief Operating Officer, as part of the Company’s leadership succession plan announced in November 2025. Howard Schwimmer and Michael Frankel ceased serving as Co‑Chief Executive Officers effective March 31, 2026 and continued to serve as directors on the Board until their terms expired at the 2026 Annual Meeting of Shareholders on May 19, 2026. The Company continues to execute on operating and capital initiatives announced in connection with this transition, including changes to capital allocation priorities, a reduction in development exposure and enhanced operational rigor and synergies.

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2026 Year to Date Highlights

Financial and Operational Highlights

•Net loss attributable to common stockholders was $419.0 million for the six months ended June 30, 2026, compared to net income attributable to common stockholders of $181.8 million for the prior-year period.

•Recognized impairment charges of $631.6 million for the six months ended June 30, 2026, including $624.8 million recognized during the second quarter of 2026, primarily related to certain properties identified for potential disposition as part of our ongoing portfolio review.

•Core funds from operations (Core FFO)(1) attributable to common stockholders increased by 0.2% to $281.2 million for the six months ended June 30, 2026, compared to the prior-year period.

•Net operating income (NOI)(1) decreased by 2.0% to $372.2 million for the six months ended June 30, 2026, compared to the prior-year period.

•Total portfolio occupancy at June 30, 2026 was 90.0%.

•Same Property Portfolio(2) NOI increased by 0.3% to $328.5 million and Same Property Portfolio Cash NOI(1) increased by 0.6% to $306.0 million for the six months ended June 30, 2026, compared to the prior-year period.

•Same Property Portfolio average occupancy for the six months ended June 30, 2026 was 96.0% and ending occupancy at June 30, 2026 was 95.1%.

•Executed a total of 261 new and renewal leases with a combined 6.2 million rentable square feet, with leasing spreads of (7.7)% on a net effective basis and (14.0)% on a cash basis. Excluding one lease extension covering 1.1 million rentable square feet, leasing spreads were 1.7% on a net effective basis and (6.1)% on a cash basis.

Dispositions

•During the first quarter of 2026, we sold five properties with a combined 314,693 rentable square feet for a total gross sale price of $127.4 million and recognized $26.3 million in gains on sale of real estate. Three of the properties had been previously impaired and were sold without a gain or loss.

•During the second quarter of 2026, we sold seven properties with a combined 571,708 rentable square feet for a total gross sale price of $137.9 million and recognized $21.9 million in gains on sale of real estate. Four of the properties had been previously impaired and were sold without a gain or loss.

•Subsequent to the second quarter of 2026, we sold one property with 22,667 rentable square feet for a gross sale price of $7.6 million.

Repositioning & Development

•During the first quarter of 2026, we stabilized our development project located at 12118 Bloomfield Avenue and our repositioning project located at 1315 Storm Parkway, which have a combined 144,889 rentable square feet.

•During the second quarter of 2026, we stabilized our development projects located at 3211 Mission Oaks Boulevard and 19900 Plummer Street, which have a combined 196,391 rentable square feet. We also leased our 46,653 rentable square foot repositioning project located at 14955 Salt Lake Avenue which will stabilize in the third quarter of 2026 upon lease commencement.

•During the second quarter of 2026, we also completed construction of four of our development properties with a combined 449,316 square feet that are now classified in the lease-up stage.

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Results of Operations

Our consolidated results of operations are often not comparable from period to period due to the effect of (i) property acquisitions, (ii) property dispositions and (iii) properties that are taken out of service for repositioning or development during the comparative reporting periods. Our “Total Portfolio” represents all of the properties owned during the reported periods. To eliminate the effect of changes in our Total Portfolio due to acquisitions, dispositions and repositioning/development and to highlight the operating results of our on-going business, we have separately presented the results of our “Same Property Portfolio.”

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Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024

For the comparison of the years ended December 31, 2025 and 2024, our Same Property Portfolio includes all properties in our industrial portfolio that were wholly-owned by us for the period from January 1, 2024 through December 31, 2025, and that were stabilized prior to January 1, 2024, which consisted of buildings aggregating approximately 37.5 million rentable square feet at 287 of our properties. Results for our Same Property Portfolio exclude properties that were acquired or sold during the period from January 1, 2024 through December 31, 2025, properties or buildings classified as current or future repositioning (including select buildings in “other repositioning”), development or lease-up during 2024 or 2025, management and leasing services revenue, interest income, interest expense, other expenses and corporate general and administrative expenses.

For the comparison of the years ended December 31, 2025 and 2024, our Total Portfolio includes the properties in our Same Property Portfolio, the 56 properties aggregating approximately 4.6 million rentable square feet that were acquired during 2024, and the 12 properties aggregating approximately 0.8 million rentable square feet that were sold during 2025 and 2024.

As of December 31, 2025 and 2024, our Same Property Portfolio occupancy was approximately 96.5% and 96.4%, respectively. For the years ended December 31, 2025 and 2024, our Same Property Portfolio weighted average occupancy was approximately 96.4% and 96.9%, respectively.

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Rental Income

The following table reports the breakdown of 2025 and 2024 rental income, as reported prior to the adoption of Accounting Standards Codification Topic 842, Leases (“ASC 842”) (dollars in thousands). We believe that the below presentation of rental income is not, and is not intended to be, a presentation in accordance with GAAP. We are presenting this information because we believe it is frequently used by management, investors, securities analysts and other interested parties to evaluate the Company’s performance.

Our Same Property Portfolio and Total Portfolio rental income increased by $13.3 million, or 1.8%, and $58.3 million, or 6.3%, respectively, during the year ended December 31, 2025, compared to the year ended December 31, 2024, for the reasons described below:

(1) Rental Revenue

Our Same Property Portfolio and Total Portfolio rental revenue increased by $8.4 million, or 1.4%, and $44.5 million, or 5.8%, respectively, for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase in our Same Property Portfolio rental revenue was primarily due to higher average rental rates on new and renewal leases and an increase of $0.8 million in lease termination income, partially offset by a decrease of $3.4 million in amortization of net below-market lease intangibles, an increase of $2.3 million in bad debt reserves and write-offs for tenant receivables not deemed probable of collection, and lower average occupancy rates. Our Total Portfolio rental revenue was also positively impacted by the incremental revenues from the 56 properties we acquired during 2024 and net lease termination income of $8.9 million recognized in the first quarter of 2025, which includes lump-sum lease termination fees and write-offs of deferred rent receivables and below-market lease intangibles associated with the lease terminations, partially offset by the decrease in revenues from the twelve properties that were sold during 2024 and 2025.

(2) Tenant Reimbursements

Our Same Property Portfolio and Total Portfolio tenant reimbursements revenue increased by $5.2 million, or 4.2%, and $13.6 million, or 8.7%, respectively, for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase in our Same Property Portfolio tenant reimbursements revenue was primarily driven by higher reimbursable property tax expenses, increased tenant reimbursements related to the completion of prior-year reconciliations for comparable periods, and higher billings for utilities and other reimbursable expenses, partially offset by lower reimbursable insurance expense. Our Total Portfolio tenant reimbursements revenue was also impacted by the incremental reimbursements from the 56 properties we acquired during 2024, partially offset by the decrease in reimbursements from the 12 properties that were sold during 2024 and 2025.

(3) Other Income

Our Same Property Portfolio and Total Portfolio other income decreased by $0.3 million, or 14.0%, and increased by $0.1 million, or 5.1%, respectively, for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to changes in miscellaneous income and fees charged for late rental payments.

Management and Leasing Services

Our Total Portfolio management and leasing services revenue remained relatively unchanged, decreasing by only $22 thousand during the year ended December 31, 2025, compared to the year ended December 31, 2024.

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Interest Income

Our Total Portfolio interest income increased by $8.5 million, or 61.8%, during the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to an increase in the average cash balance invested in money market accounts.

Property Expenses

Our Same Property Portfolio and Total Portfolio property expenses increased by $7.0 million, or 4.3%, and $17.5 million, or 8.3%, respectively, during the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase in our Same Property Portfolio property expenses was primarily driven by higher property tax expenses, repairs and maintenance expenses, allocated overhead costs and utility expenses, partially offset by a decrease in insurance expenses. Our Total Portfolio property expenses were also impacted by incremental expenses from the 56 properties we acquired during 2024, partially offset by the decrease in property expenses from the 12 properties that were sold during 2024 and 2025.

General and Administrative

Our Total Portfolio general and administrative expenses decreased by $3.3 million, or 4.0% for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to a net decrease in overall employee compensation costs.

Depreciation and Amortization

Our Same Property Portfolio depreciation and amortization expense increased by $5.8 million, or 2.9%, for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to an increase in depreciation expense related to capital improvements placed into service during 2024 and 2025, a $4.0 million write-off of acquisition-related in-place-lease costs resulting from an early lease termination in the first quarter of 2025, and an increase in amortization of deferred leasing costs. These increases were partially offset by decreases in depreciation and amortization expenses related to acquisition-related in-place lease intangibles that became fully depreciated at certain properties subsequent to January 1, 2024. Our Total Portfolio depreciation and amortization expense increased by $40.7 million, or 14.8%, for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to incremental expense from the 56 properties we acquired during 2024, as well as the write-off of certain buildings and improvements undergoing development.

Other Expenses

Our Total Portfolio other expenses increased by $70.4 million from $2.2 million for the year ended December 31, 2024, to $72.6 million for the year ended December 31, 2025, primarily due to $60.2 million of accelerated non-cash equity compensation expense recognized

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