Nikita Bely: I promise someone ask about the bridge to earnings anymore. Easy one. Can you talk a little bit more about a $125 million loan that you guys extended a little more color just how they all came about, what the loan is it’s securitized by land, what do you plan to do with it, converting into ownership and when? And if you’re going to build something on it, like what can — how much investment can that site support over time?
Howard Schwimmer: It’s Howard. Thank you. That was an amazing transaction. On surface, there was an effective interest rate of 8%. But what you’re not seeing is the opportunity that Rexford has surrounding that. We have a right of first offer to purchase a site. We have a right of first offer to JV the site and if we choose not to do either of those, we actually have a kicker on top of these interest rates if the property is sold to somebody else, we’re going to achieve 5% net equity fee on that sale. And that’s going to be in place for 20 years. So we really were successful in structuring a transaction around that loan that puts us in a great position to create value on the site. And our loan to value on that today is just about 50%, low 50s and the work that’s being done on the site right now by the ownership is to fill in some of the other excavated areas there that this was a strip mining former use and on top of the buildable 60 acres there over time, the first completion within the next three years would drop the loan-to-value down to 35% at a very low value on the land.
So not only is it a very safe and secure transaction, but it has a lot of upside for us on the site. And I believe the site would accommodate upwards of 3.5 million square feet in development once the entirety of the land is available to be built for.
Nikita Bely: How did you guys do this transaction? Was it something you’ve been working on for years of market deal?
Howard Schwimmer: It was an off-market deal. There was a lot of circling of relationships and so forth. And the borrower had a dire need to complete a transaction based on another loan that was a repayment was due on. So that’s, I guess, why we are in the driver’s seat on this one to get some of the other goodies toss in here.
Nikita Bely: Got you. Interesting, interesting. My last question is, did you talk about the — your expectation for overall 2024 market rents for comparable properties for the full year?
Laura Clark: Yes, Nikita, as we discussed last year, we’re not going to be providing market rent growth expectations going forward. We’re going to be providing an update on the market on a quarterly basis. We’ll be very transparent around that. As you can see, we provided market rent growth by submarket and we’ll continue to communicate what we’re seeing in the market as we see it from a demand and activity perspective.
Operator: Our next question comes from the line of Anthony Hau with Truist Securities.
Anthony Hau: Laura, I have a quick one for you. What is the cadence of the $0.06 redevelopment and repositioning drag throughout the year?
Laura Clark: It’s pretty even throughout the year. And we provide actually within our disclosure on the repositionings and redevelopments, we provide the 4Q NOI that was realized in 4Q of 2023 from each of our repositioning and redevelopments that are in the pipeline. And then we provide color around and dates around construction start as well as completion and stabilization. So that should be — should allow you to model appropriately in terms of the timing data and the cadence.
Anthony Hau: And what’s that on an annualized basis? Is it also like $0.16 similar to the contribution from good development?
Michael Frankel: That’s correct. It’s about $0.16 fully leased up annualized basis.
Operator: Our next question comes from the line of Vikram Malhotra with Mizuho.
Vikram Malhotra: Just two quick clarifications. Just one on the equity line that you have in the guidance, it has a line there, which says there’s add some additional equity for, I think, redevelopment. So I just want to be clear, are you assuming any more incremental equity in the guide?
Laura Clark: It’s a marginal amount. We have about $300 million of repositioning and redevelopment spend remaining for 2024 related to the projects that we’ve disclosed. We first fund that with free cash flow, and then we have $138 million of net forward equity remaining for settlement. And then remaining in terms of the remaining funding, we have a number of options. We could fund that with equity. We could fund that through debt. We could fund that through dispositions. So for purposes of the roll forward, we’ve attributed that to equity, but we’ve got a lot of optionalities in terms of how we may fund that as the year goes on.
Vikram Malhotra: Got it. And then just last clarification. The reported GAAP mark-to-market for the portfolio that you gave was a 50-plus percent. Does that — is that — does that include the impact of say, all the volume of acquisitions you’ve done over the last, call it, year or two years has been a big volume. And I just asked that because if you acquire those, you arguably, those are already marked up. And so I just want to understand if that is reflective of those acquisitions as well?
Laura Clark: Yes, it’s included.
Operator: Thank you. We have reached the end of the question-and-answer session. I’ll now turn the call back over to Michael Frankel for closing remarks.
Michael Frankel: Well, we’d like to thank everybody for joining us today, and we very much look forward to connecting next quarter. Thanks, everybody. Have a great day.
Operator: This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.
