Elliott see opportunities to create value in Warehouse Reit Industrial

Company: Rexford Industrial Realty (Rexr)

Business: Rexford Industrial Realty It is an independent introduction and self -governing trust in investment real estate with full service (REIT). The company is focused on the possession, operation and acquisition of industrial facilities in southern California. It acquires, possesses, improves, redorates, renters and manages industrial real estate, mainly located in the southern California pouring markets, through Rexford Industrial Realty, LP (Operational Partnership) and its subsidiaries. The company also acquires either a mortgage debt provided by industrial property or property suitable for industrial development. It provides real estate management services and leasing services for real estate owners. Property management services include property inspections, repair and service monitoring, maintenance of tenants and providing financial and accounting. Its portfolio consists of 424 objects with approximately 51.0 million square feet.

The stock market value: $ 9.47 billion ($ 40.01 per share)

Activist: Elliott Investment Management

Property: N/a

Average cost: N/a

Activist comment: Elliott is a multi -seat investment firm that manages the assets of about $ 76.1 billion (as of June 30, 2025) and is one of the oldest firms according to permanent management. Elliott, who is known for its wide check and resources, regularly monitors the companies before making investments. Elliot is the most active investor activist, interacting with companies of different industries and several geography.

What is happening

On August 27, Elliott announced that he had taken the position in Rexford Industrial Realty.

Behind the scenes

Rexford is an internally managed industrial rega -oriented market. The Industrial Space of Reit took advantage of strong secular tail winds, as the rise of e -commerce, which averages more difficult places than traditional retail business, over time raised the needs of the warehouses. Moreover, southern California is a particularly attractive place because of the problems with the rights, the deficit of the land, the proximity to the ports and its thick urban populations, which fueled the demand and rapid growth of rent. Historically, this main and indispensable portfolio ordered a top assessment of a market assessment, trading 20-30% of the prize and the net asset value (NAV), as well as an 8-year premium for peers on adjusted funds from operations (Affo).

However, as we have seen many times with many activists, Reit is inherently badly managed and attracted by managerial groups with unequal interests. The rexford is no different. Despite the fact that the company based in California, they reside in Maryland, a state that shamefully in management, including the Maryland Law on undesirable absorptions that allows the company to classify its council without approval of shareholders.

California Reit, which includes Maryland, not for convenient reasons, but more for fixing. It is this type of company that will also have a seven -angle board with most (including two employees), which is more than 10 years old and has approximately 1% of excellent ordinary stocks in the group, almost all of which were provided to them. Once setup like this, Playbook Reit usually takes debt, issues stocks and buys as much real estate as up to control more related asset management than stock price. In addition, at the cocktail parties and clubs “Cool” to manage billions of dollars. Thus, since its IPO in 2013, the company has increased the number of shares more than 9 times, increased debt from $ 193 million to $ 3.5 billion and increased from $ 555 to $ 12.6 billion. This strategy has worked for some time when the rexford traded with a great prize to the highest value of its real estate, but it finally caught up with them when the sales are inflated, the total and administrative costs, corporate management and compensation of the executive. (Two heads of $ 13 million each). As its NAV prize has started to decline, and this strategy and rexford are now trading at 20% to Nav and 5-6 turns for peers, and the stock price up to $ 40 per share (before the Elliott announcement) with a maximum of more than $ 80 in December 2021.

Fortunately for shareholders, it’s time to change because Elliott Investment Management told about the top five in Rexford. Although this provides at least 5% of economic impact (approximately $ 400 million), given the history of the eliot investment, their impact is likely to be at least $ 1 billion from $ 76 billion.

Elliott has a rich car change in car driving in companies such as Rexford, so we expect they will be preferred by corporate management, the best capital distribution and restoration of the company’s strategic focus on creating a shareholder value.

Although it is important to note that the activity may be more complicated in Merilend, it did not act as a ban, especially for experienced and loyal activists such as Elliot. In fact, tools available companies that usually interfere with activity are in this situation a more poisonous glass. Any management attempt to gain a foothold before the activist will only further damage their reputation and supports the Elliot case that the changes are justified. So, we might expect Elliot to go well in the proxy if it came to it. But we don’t think it will come to it.

When the activist participates with the company, she often puts this company in a pseudo-game game, receiving the attention of strategic investors and private capital. This dynamics are even greater for a company such as Rexford, which has long become the subject of speculation with absorption.

For Rexford, their premium performances, consolidation in the Reit industry and their current reduced assessment makes the company a natural candidate for acquisition. Moreover, Elliot also has a reliable history of catalyzing strategic results in Reits.

In Healthcare Trust of America (previously HTA) Elliot has successfully pushed to a strategic review, resulting in a merger between HTA and Healthcare Realty Trust To form the largest owner of the medical office in the USA

Given the current Rexford discount 20% to NAV, we believe that any departure will take at least in Nav, but most likely to the prize, given the company’s historical assessment and the quality of the portfolio.

If such an opportunity were to be fulfilled, as a power of attorney for their investors and shareholders, Elliot weigh the cost of acquiring a long -term autonomous plan and advocates which way will give the best value to shareholders. Given that the long -term plan is likely to require the time and uncertainty of the council and the recovery of management, we think that the acquisition with a reasonable prize will become preferable.

Ken Skvir is the founder and president of the 13D monitor, an institutional scientific and research service for shareholders’ activity, as well as the founder and managers of the 13D -activist fund portfolio, a mutual fund that investes in the portfolio of 13D investments.