Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the sections of this Annual Report on Form 10-K entitled “Risk Factors,” “Forward-Looking Statements,” “Business” and our audited consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements reflecting current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled “Risk Factors” and elsewhere in this Annual Report on Form 10-K.
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. From time to time 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 shareholders and maintain our qualification as a REIT.
As of December 31, 2025, our consolidated portfolio consisted of 419 properties with approximately 51.2 million rentable square feet.
Our goal is to generate attractive risk-adjusted returns for our stockholders by providing superior access to industrial property investments and mortgage debt investments secured by industrial property in high-barrier Southern California infill markets. Periodically we also engage in mortgage debt investments secured by industrial zoned property or property suitable for industrial development within these 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 over time 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
In November 2025, the Company announced that Laura Clark, Chief Operating Officer, will assume the role of Chief Executive Officer effective April 1, 2026, as part of the Company’s leadership succession plan. Ms. Clark was appointed to the Board of Directors in November 2025 and will succeed Co‑Chief Executive Officers Howard Schwimmer and Michael Frankel, who will depart from their roles effective March 31, 2026. Mr. Schwimmer and Mr. Frankel will continue to serve as members of the Board of Directors until their terms expire at the Company’s 2026 Annual Meeting of Stockholders. Management does not expect the leadership transition to disrupt the Company’s operations.
Following the November 2025 announcement, the Company began certain operating and capital initiatives, including changes to capital deployment priorities and a reduction in development exposure as part of its evaluation of potential property dispositions. In connection with these initiatives and the leadership transition, the Company incurred certain costs and non‑cash charges during 2025. These amounts are reflected in the Company’s 2025 results and have been considered in its outlook for 2026.
Highlights
Full Year Financial and Operational Highlights
• Net income attributable to common stockholders decreased by 23.9% to $200.2 million in 2025 compared to 2024.
• Core funds from operations (Core FFO) (1) attributable to common stockholders increased by 9.2% to $558.6 million in 2025 compared to 2024.
• Net operating income (NOI) (1) increased by 5.7% to $752.7 million in 2025 compared to 2024.
• Total portfolio occupancy at year-end was 90.2%.
• Same Property Portfolio (2) average occupancy for the year ended December 31, 2025 was 96.4% and ending occupancy at year-end was 96.5%.
• Executed a total 478 new and renewal leases with a combined 10.4 million rentable square feet, with leasing spreads of 23.4% on a GAAP basis and 10.7% on a cash basis.
(1) For a reconciliation to net income and a discussion of why we believe Core FFO and NOI are useful supplemental measures of operating performance, see “Non-GAAP Supplemental Measures: Funds From Operations” and “Non-GAAP Supplemental Measures: NOI and Cash NOI” included under Item 7 of this Annual Report on Form 10-K.
(2) For a definition of “Same Property Portfolio,” see “Results of Operations” included under Item 7 of this Annual Report on Form 10-K.
Acquisitions
• We did not complete any property acquisitions during 2025.
Dispositions
• During 2025, we sold seven properties totaling 589,534 rentable square feet for an aggregate gross sales price of $217.5 million and recognized $106.0 million in gains on sale of real estate.
Repositioning & Development
◦ During 2025, we stabilized 21 repositioning and development properties totaling 2,225,865 rentable square feet, with projects delivered throughout the year across our portfolio.
◦ As of December 31, 2025, our development project located at 12118 Bloomfield Avenue (107,045 rentable square feet) was 100% leased and is expected to stabilize in mid-2026 upon lease commencement. Excluding this property, as of December 31, 2025, we had 13 additional repositioning and development properties totaling 1,354,385 rentable square feet in the lease-up stage.
Equity
• During the first quarter of 2025, we settled the remaining portion of the forward equity sale agreement related to our March 2024 underwritten public offering by issuing 9,776,768 shares of common stock for net proceeds of $478.0 million, based on a weighted average forward price of $48.89 per share at settlement.
• During the second half of 2025, we repurchased 6,327,283 shares of our common stock under our stock repurchase programs at a weighted average price of $39.51 per share for a total of $250.1 million, including commissions.
Financing
• On May 30, 2025, we amended our senior unsecured credit agreement to, among other changes, increase the borrowing capacity under our unsecured revolving credit facility from $1.0 billion to $1.25 billion, extend the maturity date of the unsecured revolving credit facility from May 26, 2026 to May 30, 2029 (with two extension options of six months each), extend the maturity date of the $400.0 million unsecured term loan facility from July 18, 2025 to May 30, 2030, and lower the interest rate by eliminating the 0.10% SOFR adjustment that previously applied to both the unsecured revolving credit facility and the $400.0 million unsecured term loan facility.
• On November 21, 2025, we further amended our senior unsecured credit agreement to eliminate the 0.10% SOFR adjustment applicable to our $300.0 million unsecured term loan facility.
• On June 30, 2025, we executed three interest rate swaps with an aggregate notional value of $400.0 million to fix daily SOFR related to our $400.0 million unsecured term loan facility at a rate of 3.41375%, commencing on July 1, 2025 through May 30, 2030. These swaps take the place of the swaps that were previously in place from April 3, 2023 through June 30, 2025, which fixed daily SOFR at 3.97231%.
• On August 6, 2025, we paid in full the outstanding principal balance on the $100 million unsecured senior notes.
• On September 2, 2025, we amended our $60.0 million term loan facility to, among other changes, add two additional one-year extension options. As of December 31, 2025, we have three remaining one-year extension options available, subject to certain terms and conditions.
• Subsequent to December 31, 2025, we certified that the sustainability performance targets associated with our unsecured credit agreement were met for 2025, resulting in a reduction of the applicable margin and applicable credit facility fee by 0.040% and 0.01%, respectively.
Factors That May Influence Future Results of Operations
Market and Portfolio Fundamentals
Our operating results depend upon the infill Southern California industrial real estate market.
The infill Southern California industrial real estate sector continues to exhibit favorable long-term supply-demand fundamentals. These high-barrier infill markets are characterized by a relative scarcity of highly functional product, coupled with the limited ability to introduce new supply over the long-term due to high land and development costs, regulatory hurdles with restrictive development constraints and a dearth of developable land in markets experiencing a net reduction in supply as, over time, more industrial property is converted to non-industrial uses than can be delivered. That said, we expect some ongoing volatility within our markets through the near term, principally driven by general macroeconomic and political uncertainty including recent changes in trade and tariff policy, an uncertain interest rate environment, persistent inflation and global geopolitical unrest. According to third-party market data, market rent growth within our infill Southern California markets has decreased by approximately 22% from the peak levels reached in mid-2023. This decline follows an average increase of approximately 80% during the pandemic years of 2020 through 2022. Based on the same third-party market data, overall market rents remain approximately 40% above pre-pandemic levels.
Leasing activity across our portfolio was steady in 2025, with positive absorption for the year, when excluding properties placed into repositioning or development, driven in part by leasing at our repositioning and development projects. Activity at these projects increased in the second half of 2025 compared to the first half. However, we recognize that heightened macroeconomic and tariff uncertainty continues to weigh on tenant decision-making and may influence tenant demand going forward.
Tenant demand has been driven by a wide range of sectors, from consumer products, healthcare and medical products to aerospace and defense, food and beverage, construction and logistics, e-commerce, among other sectors. Our portfolio, which we believe represents prime locations with superior functionality within the largest last-mile logistics distribution market in the nation, is well-positioned to continue to serve our diverse tenant base and attract incremental ecommerce-oriented and traditional distribution demand over the long-term.
General Market Condition s
We believe our portfolio’s leasing performance in 2025 has generally outpaced that of the infill markets within which we operate. We believe this relative performance has been driven by our highly entrepreneurial business model focused on acquiring and improving industrial property in superior locations so that our portfolio reflects a higher level of quality and functionality, on average, as compared to typical available product within the markets within which we operate. We believe that our portfolio, comprised of smaller space sizes averaging 26,000 square feet located entirely within last-mile, infill Southern California locations is well positioned to serve regional consumption and may be less susceptible to changes in global trade flows as compared to large warehouses located within non-infill submarkets. We also believe the quality and entrepreneurial approach demonstrated by our team of real estate professionals actively managing our properties and our tenants enables the potential to outcompete within our markets where we believe competing properties are generally otherwise owned by more passive, less-focused real estate owners.
The following general market conditions have been sourced from third-party market data and do not necessarily reflect the results of our portfolio. For our portfolio specific results see “—Rental Revenues” and “—Results of Operations” below.
In Los Angeles County, vacancy increased year-over-year to 5.2% and average asking lease rates decreased 14% year-over-year. New development is limited by a lack of land availability and an increase in land and development costs.
In Orange County, vacancy increased year-over-year to 4.9% and average asking lease rates decreased 4% year-over-year. Market conditions are expected to be favorable over the long-term due to steady demand and the continued low availability of industrial product in this region.
In the Inland Empire West, which contains infill markets in which we operate, vacancy increased year-over-year to 6.0% and average taking lease rates declined 6% year-over-year. We generally do not focus on properties located within the non-infill Inland Empire East sub-market where available land and the development and construction pipeline for new supply is substantial.
In San Diego, vacancy increased year-over-year and average asking lease rates increased year-over-year.
In Ventura County, vacancy increased year-over-year and average asking lease rates increased year-over-year.
Acquisitions and Value-Add Repositioning and Development of Properties
The Company’s growth strategy remains centered on creating long‑term, per‑share value through disciplined capital allocation, targeted industrial investment within infill Southern California, and the execution of value‑add initiatives across our industrial portfolio. While we did not complete any acquisitions during the current year, our long‑term strategy continues to prioritize opportunities that demonstrate the potential for accretion to Core FFO and net asset value per share that will be evaluated through rigorous underwriting criteria reflecting current market conditions and our cost of capital. We will continue to evaluate and execute upon the repositioning and improvement of properties already within our portfolio to enhance functionality, marketability, future cash‑flow growth and drive value creation that meet our strengthened risk-adjusted return thresholds.
Consistent with our refined capital‑allocation strategy communicated in November 2025, the Company is placing heightened emphasis on maximizing risk‑adjusted returns through a programmatic disposition strategy, recycling capital into higher‑return repositioning projects within our existing portfolio, share repurchases, and selective development and acquisition opportunities aligned with rigorous underwriting standards. These refinements build upon our longstanding focus on infill Southern California industrial real estate, a market that we believe continues to offer superior long‑term fundamentals.
The Company’s historical investment strategy targets industrial property investments demonstrating the potential for accretion in Core FFO and net asset value, both on a per share basis, over the near- to longer-term. These target investments may comprise acquiring leased, stabilized properties as well as properties with value-add opportunities to improve functionality and to deploy our value-driven asset management programs in order to increase cash flow and value. Additionally, from time to time, we may acquire industrial outdoor storage sites, land parcels or properties with excess land for ground-up development projects. Acquisitions may comprise single property investments as well as the purchase of portfolios of properties, with transaction values ranging from approximately $10 million single property investments to portfolios potentially valued in the billions of dollars. The Company’s geographic focus remains infill Southern California. However, from time-to-time, portfolios could be acquired comprising a critical mass of infill Southern California industrial property that could include some assets located in markets outside of infill Southern California. In general, to the extent non-infill-Southern California assets were to be acquired as part of a larger portfolio, the Company may underwrite such investments with the potential to dispose such assets over a certain period of time in order to maximize its core focus on infill Southern California, while endeavoring to take appropriate steps to satisfy REIT safe harbor requirements to avoid prohibited transactions under REIT tax laws. Similarly, while our focus is owning and operating industrial properties in Southern California infill markets, occasionally an acquisition may include non-industrial properties, such as office and other uses, with the intent to reposition or develop the properties into industrial use or to dispose of the non-industrial assets in a manner intended to satisfy REIT safe harbor requirements to avoid prohibited transactions under REIT tax laws.
A key component of our growth strategy has historically been to acquire properties through off-market and lightly marketed transactions that are often operating at below-market occupancy or below-market rent at the time of acquisition or that have near-term lease roll-over or that provide opportunities to add value through functional or physical repositioning and improvements. Through various repositioning, development, and professional leasing and marketing strategies, we seek to increase the properties’ functionality and attractiveness to prospective tenants and, over time, to stabilize the properties at occupancy rates that meet or exceed market rates.
Repositioning remains a central component of our value‑creation strategy, as we seek to modernize, reconfigure, and enhance existing properties to align with tenant demand and maximize risk‑adjusted returns. A repositioning can provide a range of property improvements. This may include a complete structural renovation of a property whereby we convert large underutilized spaces into a series of smaller and more functional spaces, or it may include the creation of additional square footage, the modernization of the property improvements, the elimination of functional obsolescence, the addition or enhancement of loading areas and truck access, the enhancement of fire-life-safety systems or other accretive improvements, in each case designed to improve the cash flow and value of the property.
We have a number of repositioning properties, which are individually presented in the tables below. A repositioning property that is considered significant is typically defined as a property where a significant amount of space is held vacant in order to implement capital improvements, the cost to complete repositioning work and lease-up is estimated to be greater than $2.5 million and the repositioning and lease-up time frame is estimated to be greater than six months. We also have a range of other spaces in repositioning, that due to their smaller size, relative scope, projected repositioning costs or relatively nominal amount of down-time, are not presented below, however, in the aggregate, may be substantial (and which we refer to as “other repositioning projects”).
A repositioning is generally considered complete once the investment is fully or nearly fully deployed and the property is available for occupancy. Because each repositioning effort is unique and determined based on the property, targeted tenants and overall trends in the general market and specific submarket, the timing and effect of the repositioning on our rental revenue and occupancy levels will vary, and, as a result, will affect the comparison of our results of operations from period to period with limited predictability.
A development property is defined as a property where we plan to fully demolish an existing building(s) due to building obsolescence and/or construct a ground-up building on a property with excess or vacant land. We recently re-evaluated our near-term development pipeline to focus on opportunities that satisfy enhanced underwriting criteria. As part of this process, we evaluated alternatives including proceeding with development, postponing construction, or selling the site based on relative risk‑adjusted returns. Following this review, we determined not to proceed with six projects totaling approximately 850,000 square feet.
As of December 31, 2025, nine of our repositioning and development properties were under construction and 14 of our properties were in the lease-up stage. In addition, following our re-evaluation of the development pipeline, we have six properties as near-term potential future repositioning and development opportunities. The tables below set forth a summary of these properties, as well as the properties that were most recently stabilized in 2024 and 2025, as the timing of these stabilizations have a direct impact on our current and comparative results of operations. We consider a repositioning/development property to be stabilized upon the earlier of (i) reaching 90% occupancy or (ii) one year from the date construction work is completed.
Construction Period (1)
Property
Submarket
Repositioning/Development
Rentable Square Feet (2)
Start
Completion
Total Property Leased % at 12/31/2025
Under Construction
14940 Proctor Road
San Gabriel Valley
Development
11234 Rush Street
San Gabriel Valley
Development
3547-3555 Voyager Street
South Bay
Development
5235 Hunter Avenue
North Orange County
Development
7815 Van Nuys Boulevard
Greater San Fernando Valley
Development
14400 Figueroa Street (Figueroa & Rosecrans)
South Bay
Repositioning
950 West 190th Street
South Bay
Development
9323 Balboa Avenue
Central San Diego
Development
24935-24955 Avenue Kearny
Greater San Fernando Valley
Repositioning
Total Under Construction
– See footnotes starting on page 67 –
Construction Period (1)
Property
Submarket
Repositioning/Development
Rentable Square Feet (2)
Start
Completion
Total Property Leased % at 12/31/2025
Lease-Up
9615 Norwalk Boulevard
Mid-Counties
Development
3211-3233 Mission Oaks Boulevard (3)
Ventura
Development
12118 Bloomfield Avenue
Mid-Counties
Development
4416 Azusa Canyon Road
San Gabriel Valley
Development
15010 Don Julian Road
San Gabriel Valley
Development
12772 San Fernando Road
Greater San Fernando Valley
Development
19900 Plummer Street
Greater San Fernando Valley
Development
1500 Raymond Avenue
North Orange County
Development
19301 Santa Fe Avenue
South Bay
Repositioning
LAND
1315 Storm Parkway (5)
South Bay
Repositioning
14955 Salt Lake Avenue
San Gabriel Valley
Repositioning
8985 Crestmar Point
Central San Diego
Repositioning
9455 Cabot Drive
Central San Diego
Repositioning
1175 Aviation Place
Greater San Fernando Valley
Repositioning
Total Lease-up
Property
Submarket
Repositioning/Development
Projected Rentable Square Feet
Estimated Construction Start Period
Near-Term Potential Future Repositioning and Development:
16425 Gale Avenue
San Gabriel Valley
Development
17031-17037 Green Drive
San Gabriel Valley
Repositioning
10660 Mulberry Avenue
Inland Empire West
Repositioning
9400-9500 Santa Fe Springs Road (6)
Mid-Counties
Repositioning
3100 Fujita Street
South Bay
Repositioning
9000 Airport Boulevard
South Bay
Development
Total Near-Term Potential Future Repositioning and Development
– See footnotes starting on page 67 –
Property
Market
Stabilized Rentable Square Feet
Period Stabilized
2025 Stabilizations (7)
4039 Calle Platino (North County SD)
29120 Commerce Center Drive (SF Valley)
East 27th Street (Central LA)
122-125 N. Vinedo Avenue (SF Valley)
29125 Avenue Paine (SF Valley)
218 Turnbull Canyon (SG Valley)
1901 Via Burton (North OC)
11308-11350 Penrose Street (SF Valley) (8)
1020 Bixby Drive (SG Valley)
Harcourt & Susana (South Bay)
8888 Balboa Avenue (Central SD)
6027 Eastern Avenue (Central LA)
3071 Coronado Street (North OC) (8)
2390-2444 American Way (North OC)
14434-14527 San Pedro Street (South Bay) (9)
3935-3949 Heritage Oak Court (Ventura)
800 Sandhill Avenue (17000 Kingsview Avenue) (South Bay)
9920-10020 Pioneer Boulevard (Mid-Counties)
Rancho Pacifica - Building 5 (South Bay) (10)
17907 Figueroa Street (South Bay)
21515 Western Avenue (South Bay)
Total 2025 Stabilized
2024 Stabilizations (7)
9755 Distribution Avenue (Central SD)
8902-8940 Activity Road (Central SD)
444 Quay Avenue (South Bay)
263-321 Gardena Boulevard (South Bay)
20851 Currier Road (SG Valley)
17311 Nichols Lane (West OC)
12752-12822 Monarch Street (West OC)
500 Dupont Avenue (IE - West)
2880 Ana Street (South Bay)
LAND
12907 Imperial Highway (Mid-Counties)
Total 2024 Stabilized
(1) The estimated construction start period is the period we anticipate starting physical construction on a project. Prior to physical construction, we engage in pre-construction activities, which include design work, securing permits or entitlements, site work, and other necessary activities preceding construction. The estimated completion period is our current estimate of the period in which we will have substantially completed a project and the project is made available for occupancy. We expect to update our timing estimates on a quarterly basis. The estimated construction period is subject to change as a result of a number of factors including but not limited to permit requirements, delays in construction (including delays related to supply chain backlogs), changes in scope, and other unforeseen circumstances.
(2) Rentable square feet is the actual rentable square footage that is subject to repositioning at the property/building, and may be less than the total rentable square footage of the entire property or particular building(s) under repositioning. For developments, rentable square feet represents the estimated rentable square footage of the project upon completion of the development.
(3) As of December 31, 2025, the entire project includes 526,069 rentable square feet, comprised of: (i) 3211 Mission Oaks Boulevard, a newly constructed building totaling 116,852 rentable square feet, and (ii) 3233 Mission Oaks Boulevard, with 409,217 rentable square feet which were not redeveloped. Site improvements were completed across the entire project. The rentable square feet and property leased percentage apply only to 3211 Mission Oaks Boulevard.
(4) 1500 Raymond Avenue contains one acre of excess paved land.
(5) As of December 31, 2025, 1315 Storm Parkway is considered stabilized, as it reached one year from the date of completion of construction work, but remains in lease-up for presentation purposes, as the property has not yet achieved 90% occupancy.
(6) 9400-9500 Santa Fe Springs Road totals 595,304 rentable square feet and the proposed repositioning project pertains to work at only one of the units, totaling 184,270 rentable square feet.
(7) We consider a repositioning or development property to be stabilized upon the earlier of (i) reaching 90% occupancy or (ii) one year from the date construction work is completed.
(8) 11308-11350 Penrose Street and 3071 Coronado were both considered stabilized in the first quarter of 2025 as they reached one year from the date of completion of construction work and were still in lease-up. In the third quarter of 2025 both projects achieved 100% occupancy and for presentation purposes above are reflected as stabilized in the third quarter of 2025.
(9) 14434-14527 San Pedro Street is a low coverage site with 58,225 rentable square feet of buildings on 335,905 square feet, or 7.7 acres, of land.
(10) Rancho Pacifica Building 5 is located at 2370-2398 Pacifica Place and comprises one building totaling 51,594 rentable square feet, out of six buildings at our Rancho Pacifica Park property, which has a total of 1,111,885 rentable square feet. We demolished the existing building and are constructing a new building comprising approximately 76,553 rentable square feet in its place.
Capitalized Costs
Properties that are nonoperational as a result of repositioning or development activity may qualify for varying levels of interest, insurance and real estate tax capitalization during the development and construction period. An increase in our repositioning and development activities resulting from value-add acquisitions could cause an increase in the asset balances qualifying for interest, insurance and tax capitalization in future periods. We capitalized $35.3 million of interest expense and $10.1 million of insurance and real estate tax expenses during the year ended December 31, 2025, related to our repositioning and development projects.
Construction Costs and Timing
Currently proposed trade and other political policies may lead to increased construction materials and labor costs, which when combined with longer lead times for governmental approvals and entitlements, has the potential to increase budgeted and actual construction costs and may cause delays in starting and completing certain development projects. Additional increases in costs, further delays or declining market rents could result in a lower expected yield on our development projects, which could negatively impact our future earnings.
Rental Revenues
Our operating results depend primarily upon generating rental revenue from the properties in our portfolio. The amount of rental revenue generated by these properties is affected by our ability to maintain or increase occupancy levels and rental rates at our properties, which will depend upon our ability to lease vacant space and re-lease expiring space at favorable rates.
Occupancy Rates
As of December 31, 2025, our consolidated portfolio, inclusive of space in repositioning as described in the subsequent paragraph, was approximately 90.2% occupied, while our stabilized consolidated portfolio exclusive of such space was approximately 96.0% occupied. Our improved land and industrial outdoor storage (IOS) sites, totaling approximately 8.4 million land square feet or 191.9 acres, were 97.8% occupied at December 31, 2025. We believe the opportunity to increase occupancy at our properties will continue to be an important driver of future revenue growth, particularly as repositioning and development projects are completed and move through the lease-up phase.
Vacant space at our repositioning, development and lease-up properties is concentrated in our Los Angeles, Orange County and San Diego markets and represented 6.0% of our total consolidated portfolio square footage as of December 31, 2025. Including vacant space at these properties, our weighted average occupancy rate as of December 31, 2025, in our Los Angeles, Orange County and San Diego markets was 88.3%, 93.6% and 85.9%, respectively. Excluding vacant space at these properties, our weighted average occupancy rate as of December 31, 2025, in these markets was 95.3%, 99.2% and 96.4%, respectively. We believe that an important portion of our long-term future growth will come from the completion and lease-up of projects currently under or scheduled for repositioning/development, as well as from select opportunities that meet established return thresholds, whether within our existing portfolio or through new investments, which may vary from period to period subject to market conditions.
The occupancy rate of properties not undergoing repositioning is affected by regional and local economic conditions in our Southern California infill markets. In the current market environment, our near‑term leasing focus for these operating properties is on preserving occupancy and maintaining cash flow. Although there has been a post-pandemic normalization of market rates and vacancy over the last few years, the Los Angeles, Orange County, San Bernardino–Inland Empire West and San Diego markets are well-positioned for the long-term due to fundamental demand drivers and barriers for new supply. Although we cannot predict how our markets may perform in future periods, we believe that general market conditions will continue to offer the long-term opportunity to increase occupancy and rental rates at our properties, which will be an important driver of future revenue growth.
Leasing Activity and Rental Rates
The following tables set forth our leasing activity for new and renewal leases on a quarterly basis for the year ended December 31, 2025:
New Leases
Quarter
Number of Leases
Rentable Square Feet
Weighted Average
Lease Term
(in years)
Net Effective Rent Per Square Foot (1)
Net Effective Leasing
Spreads (2)(4)
Cash Leasing
Spreads (3)(4)
Total/Weighted Average
Renewal Leases
Expiring Leases
Retention % (9)
Quarter
Number of Leases
Rentable Square Feet
Weighted Average
Lease Term
(in years)
Net Effective Rent Per Square Foot (1)
Net Effective Leasing
Spreads (2)(7)
Cash Leasing
Spreads (3)(7)
Number of Leases
Rentable Square Feet (8)
Rentable Square Feet
Total/Weighted Average
(1) Net effective rent per square foot is the average base rent calculated in accordance with GAAP, over the term of the lease, expressed in dollars per square foot per year. Includes all new and renewal leases that were executed during each respective quarter.
(2) Calculated as the change between net effective rents for new or renewal leases and the expiring net effective rents (excluding the impact of amortization of intangible assets or liabilities) on the expiring leases for the same space.
(3) Calculated as the change between starting cash rents, excluding any abatements, for new or renewal leases and the expiring cash rents on the expiring leases for the same space.
(4) The net effective and cash re-leasing spreads for new leases executed during the year ended December 31, 2025, exclude 103 leases aggregating 3,617,125 rentable square feet for which there was no comparable lease data. Of these 103 excluded leases, 46 leases aggregating 2,646,805 rentable square feet were recently repositioned or developed space. Comparable leases generally exclude: (i) space that has never been occupied under our ownership, (ii) repositioned/developed space, including space in pre-development/entitlement process, (iii) space that has been vacant for over one year or (iv) space with lease terms shorter than twelve months. Because leasing spreads are based on building square footage, land lease activity is not captured in these calculations. However, during the year ended December 31, 2025, we executed the following land lease transactions: (i) two new leases totaling 65,424 land square feet and (ii) four renewal leases totaling 388,079 land square feet. For the renewal land lease transactions, the net effective and cash leasing spreads were 94.0% and 27.0%, respectively. The new land lease transactions did not have any prior comparable lease data, and therefore no spread calculation is applicable.
(5) The net effective and cash releasing spreads for new leases signed in the second quarter were disproportionately impacted by a 106,251-square-foot lease with a net effective and cash releasing spread of (31.6)% and (36.9)%, respectively. This lease represented approximately 54% of the 196,430 square feet of comparable new leases signed during the second quarter. Excluding this lease, net effective and cash releasing spreads for new leases signed in the second quarter would have been 4.2% and (0.5)%, respectively.
(6) New leases signed in the third quarter included a 504,016-square-foot lease with a net effective leasing rate of $6.31 per square foot and a net effective and cash releasing spread of 68.2% and 42.8%, respectively. Excluding this lease, the net effective leasing rate would have been $16.82 per square foot, with net effective and cash releasing spreads of 15.1% and 2.5% respectively.
(7) The net effective and cash re-leasing rent spreads for renewal leases executed during the year ended December 31, 2025, exclude six leases aggregating 48,440 rentable square feet for which there was no comparable lease data. Comparable leases generally exclude space with lease terms shorter than twelve months or space in pre-development/entitlement process.
(8) Includes leases totaling 2,514,365 rentable square feet that expired during the year ended December 31, 2025, for which the space has been or will be placed into repositioning or development.
(9) Retention is calculated as renewal lease square footage plus relocation/expansion square footage, divided by the square footage of leases expiring during the period. Retention excludes square footage related to the following: (i) expiring leases associated with space that is placed into repositioning (including “other repositioning projects”) after the tenant vacates, (ii) early terminations with pre-negotiated replacement leases and (iii) move outs where space is directly leased by subtenants.
Our leasing activity is impacted both by our repositioning and development efforts, as well as by market conditions. While we reposition a property, its space may become unavailable for leasing until completion of our repositioning efforts. As of December 31, 2025, we have nine projects under construction that are expected to become available for leasing beginning in the second quarter of 2026 through the fourth quarter of 2027. We expect these properties to have positive impacts on our leasing activity and revenue generation as we complete our value-add plans and place these properties in service.
Scheduled Lease Expirations
Our ability to re-lease space subject to expiring leases is affected by economic and competitive conditions in our markets and by the relative desirability of our individual properties, which may impact our results of operations.
As of December 31, 2025, 1.9 million rentable square feet of our portfolio was available for lease, 3.1 million rentable square feet of vacant space was under repositioning/development or in the lease-up stage, and leases representing 0.7 million rentable square feet of our portfolio expired on December 31, 2025. Additionally, leases representing 15.1% and 14.0% of the aggregate rentable square footage of our portfolio are scheduled to expire during the years ending December 31, 2026 and 2027, respectively. During the year ended December 31, 2025, we renewed 257 leases for 4.9 million rentable square feet, resulting in a 66.6% retention rate. New and renewal leases signed during the current year had a weighted average term of 5.0 and 4.6 years, respectively.
Conditions in Our Markets
The properties in our portfolio are located primarily in Southern California infill markets. Positive or negative changes in economic or other conditions, trade policy, high or persistent inflation and adverse weather conditions and natural disasters in this market may affect our overall performance.
Property Expenses
Our property expenses generally consist of utilities, real estate taxes, insurance, site repair and maintenance costs, and the allocation of overhead costs. For the majority of our properties, our property expenses are recovered, in part, by either the triple net provisions or modified gross expense reimbursements in tenant leases. The majority of our leases also comprise contractual three percent or greater annual rental rate increases meant, in part, to help mitigate potential increases in property expenses over time. However, the terms of our leases vary and, in some instances, we may absorb property expenses. Our overall financial results will be impacted by the extent to which we are able to pass-through property expenses to our tenants.
Taxable REIT Subsidiary
As of December 31, 2025, our Operating Partnership indirectly and wholly owns Rexford Industrial Realty and Management, Inc., which we refer to as our services company. We have elected, together with our services company, to treat our services company as a taxable REIT subsidiary for federal income tax purposes. A taxable REIT subsidiary generally may provide non-customary and other services to our tenants and engage in activities that we or our subsidiaries (other than a taxable REIT subsidiary) may not engage in directly without adversely affecting our qualification as a REIT, provided a taxable REIT subsidiary may not operate or manage a lodging facility or health care facility or provide rights to any brand name under which any lodging facility or health care facility is operated. We may form additional taxable REIT subsidiaries in the future, and our Operating Partnership may contribute some or all of its interests in certain wholly owned subsidiaries or their assets to our services company. Any income earned by our taxable REIT subsidiaries will not be included in our taxable income for purposes of the 75% or 95% gross income tests, except to the extent such income is distributed to us as a dividend, in which case such dividend income will qualify under the 95%, but not the 75%, gross income test. Because a taxable REIT subsidiary is subject to federal income tax and state and local income tax (where applicable) as a regular corporation, the income earned by our taxable REIT subsidiaries generally will be subject to an additional level of tax as compared to the income earned by our other subsidiaries. However, our services company has a cumulative unrecognized net operating loss carryforward and therefore there is no income tax provision for the years ended December 31, 2025 and 2024. Additionally, our services company had minimal activity during these periods.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions in certain circumstances that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses for the reporting periods. Actual amounts may differ from these estimates and assumptions. We have summarized below those accounting policies that require material subjective or complex judgments and that have the most significant impact on financial condition and results of operations. Management evaluates these estimates on an ongoing basis, based upon information currently available and on various assumptions that it believes are reasonable as of the date hereof. In addition, other companies in similar businesses may use different estimation policies and methodologies, which may impact the comparability of our results of operations and financial condition to those of other companies.
A critical accounting policy is one that is both important to the portrayal of an entity’s financial condition and results of operations and requires judgment on the part of management. Generally, the judgment requires management to make estimates and assumptions about the effect of matters that are inherently uncertain. Estimates are prepared using management’s best judgment, after considering past and current economic conditions and expectations for the future. Changes in estimates could affect our financial position and specific items in our results of operations that are used by the users of our financial statements in their evaluation of our performance.
The following critical accounting policies discussion reflects what we believe are the most significant estimates, assumptions, and judgments used in the preparation of our consolidated financial statements. For further discussion of our significant accounting policies and discussion of new accounting pronouncements (if applicable), see “Note 2 – Summary of Significant Accounting Policies” to our consolidated financial statements under Item 15 of this Annual Report on Form 10-K.
Impairment of Investments in Real Estate, Net
In accordance with the provisions of the Impairment or Disposal of Long-Lived Assets Subsections of ASC 360, we assess the carrying values of our real estate assets whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. In evaluating whether such indicators exist, we consider operating performance, market conditions, as well as the effects of demand and other economic factors, including projected rental revenue, operating costs and capital expenditures, capitalization rates and expected holding periods.
We generally hold and operate our real estate assets for long-term investment, which decreases the likelihood that their carrying values are not recoverable. However, changes in events, circumstances or our intent or strategy, including a decision to shorten the expected holding period or to pursue a sale, may result in an impairment loss.
When indicators of impairment are present, we assess recoverability by comparing the carrying amount of a real estate asset to the sum of undiscounted future cash flows expected to result from its use and eventual disposition. If the carrying value is not recoverable on an undiscounted cash flow basis, we recognize an impairment charge for the amount by which the carrying value exceeds the asset’s estimated fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, the application of capitalization rates to estimated net operating income, quoted market values and third-party appraisals, where considered necessary.
The assumptions and estimates used in our recoverability and fair value analyses, including future cash flows, discount rates, capitalization rates and expected holding periods, are complex and subjective and are based on assumptions consistent with our estimates of future expectations and the strategic plan used to manage our underlying business. Changes in economic and operating conditions or our intent with respect to an asset that occur subsequent to our impairment analyses could impact these assumptions and result in future impairment of our real estate assets.
See “Note 2 – Summary of Significant Accounting Policies” to our consolidated financial statements included in Item 15 of this Annual Report on Form 10-K for further details regarding our estimation process for impairment of long-lived assets.
Investment in Real Estate
We account for acquisitions of properties under ASU 2017-01, Business Combinations (Topic 805)—Clarifying the Definition of a Business , which provides a framework for determining whether transactions should be accounted for as acquisitions of assets or businesses and further revises the definition of a business. Our acquisitions of properties generally do not meet the revised definition of a business and accordingly are accounted for as asset acquisitions. We did not complete any property acquisitions during the year ended December 31, 2025. For the acquisitions completed during the year ended December 31, 2024, we concluded that each should be accounted for as asset acquisitions.
For asset acquisitions, we allocate the cost of the acquisition, which includes the purchase price and associated acquisition transaction costs, to the individual assets acquired and liabilities assumed on a relative fair value basis. These individual assets and liabilities typically include land, building and improvements, tenant improvements, intangible assets and liabilities related to above- and below-market leases, intangible assets related to in-place leases, and from time to time, assumed debt.
Our estimates for the fair value of the individual assets acquired and liabilities assumed are subject to uncertainty given the significant assumptions used to determine their fair value. The use of different assumptions in the determination of fair value could significantly affect the reported amounts of the allocation of our acquisition related assets and liabilities and the related depreciation and amortization expense recorded for such assets and liabilities. In addition, because the value of above- and below-market leases are amortized as either a reduction or increase to rental income, respectively, our judgments for these intangibles could have a significant impact on our reported rental revenues and results of operations. Our estimation process and the valuation model we use to determine the fair value of the individual assets acquired and liabilities assumed are discussed in more detail in “Note 2 – Summary of Significant Accounting Policies” to our consolidated financial statements included in Item 15 of this Annual Report on Form 10-K.
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.”
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.
Same Property Portfolio
Total Portfolio
Year Ended December 31,
Increase/
(Decrease)
Change
Year Ended December 31,
Increase/
(Decrease)
Change
($ in thousands)
REVENUES
Rental income
Management and leasing services
Interest income
TOTAL REVENUES
OPERATING EXPENSES
Property expenses
General and administrative
Depreciation and amortization
TOTAL OPERATING EXPENSES
OTHER EXPENSE
Other expenses
Interest expense
TOTAL EXPENSES
Impairment of real estate
Loss on extinguishment of debt
Gains on sale of real estate
NET INCOME
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.
Same Property Portfolio
Total Portfolio
Year Ended December 31,
Increase/(Decrease)
Year Ended December 31,
Increase/(Decrease)
Category
Change
Change
Rental revenue (1)
Tenant reimbursements (2)
Other income (3)
Rental income
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.
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 in the fourth quarter of 2025 in connection with transition and separation arrangements with two executive officers. For additional information, see Note 14 to our consolidated financial statements included in Item 15 of this Report on Form 10-K. The increase also reflects $6.9 million of nonrecurring advisory costs and $4.4 million of severance costs related to a workforce reduction and reorganization, both incurred during 2025.
Interest Expense
Our Total Portfolio interest expense increased by $6.3 million, or 6.4%, during the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to a $13.6 million increase related to the aggregate $1.15 billion of exchangeable notes offering we completed in March 2024, partially offset by a $4.0 million decrease resulting from higher capitalized interest associated with repositioning and development activities, a $1.8 million decrease due to the repayment of our $100.0 million unsecured senior notes in August 2025, and a $1.4 million decrease resulting from new interest rate swaps on our $400.0 million term loan facility, which became effective on July 1, 2025 and carry lower fixed rates than the swaps they replaced.
Impairment of Real Estate
During the year ended December 31, 2025, we recognized impairment charges totaling $89.1 million related to seven development properties. In the fourth quarter of 2025, management approved a change in strategy for these properties, resulting in a shortened expected holding period and a plan to pursue their sale rather than continue with future development for long-term ownership and operation. For additional information, see Note 3 to our consolidated financial statements included in Item 15 of this Report on Form 10-K. No impairment charges were recognized during the year ended December 31, 2024.
Debt Extinguishment and Modification Expenses
During the year ended December 31, 2025, we recognized debt extinguishment and modification expenses of $0.3 million, consisting of (i) a $0.2 million loss on extinguishment of debt from the write-off of unamortized debt issuance costs attributable to creditors in the unsecured revolving credit facility that were not included in the amended senior unsecured credit agreement entered into in May 2025, and (ii) $0.1 million of third-party fees associated with the modification of the $400.0 million unsecured term loan facility. No debt extinguishment and modification expenses were recognized during the year ended December 31, 2024.
Gains on Sale of Real Estate
During the year ended December 31, 2025, we recognized gains on sale of real estate of $106.0 million from the disposition of seven properties that were sold for an aggregate gross sales price of $217.5 million. During the year ended December 31, 2024, we recognized gains on sale of real estate of $18.0 million from the disposition of five properties that were sold for an aggregate gross sales price of $44.3 million.
Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023
Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 10, 2025, for a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023.
Non-GAAP Supplemental Measures: Funds From Operations and Core Funds From Operations
We calculate funds from operations (“FFO”) attributable to common stockholders in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property or assets incidental to our business, impairment losses of depreciable operating property or assets incidental to our business, real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated joint ventures.
Management uses FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization, gains and losses from property dispositions, and asset impairments, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of performance used by other REITs, FFO may be used by investors as a basis to compare our operating performance with that of other REITs.
However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. Other equity REITs may not calculate or interpret FFO in accordance with the NAREIT definition as we do, and, accordingly, our FFO may not be comparable to such other REITs’ FFO. FFO should not be used as a measure of our liquidity and is not indicative of funds available for our cash needs, including our ability to pay dividends.
We calculate “Core FFO” by adjusting FFO for non-comparable items outlined in the reconciliation below. We believe that Core FFO is a useful supplemental measure and that by adjusting for items that are not considered by us to be part of our on-going operating performance, provides a more meaningful and consistent comparison of our operating and financial performance period-over-period. Because these adjustments have a real economic impact on our financial condition and results from operations, the utility of Core FFO as a measure of our performance is limited. Other REITs may not calculate Core FFO in a consistent manner. Accordingly, our Core FFO may not be comparable to other REITs' core FFO. Core FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance. “Company share of Core FFO” in the table below reflects Core FFO attributable to common stockholders, which excludes amounts allocable to noncontrolling interests, participating securities and preferred stockholders.
The following table sets forth a reconciliation of net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to FFO and Core FFO (unaudited and in thousands):
Year Ended December 31,
Net income
Adjustments:
Depreciation and amortization
Impairment of real estate
Gains on sale of real estate
FFO
Adjustments:
Acquisition expenses (1)
Impairment of right-of-use asset (1)
Debt extinguishment and modification expenses
Amortization of loss on termination of interest rate swaps
Non-capitalizable demolition costs (1)
CEO transition costs (1)(2)
Severance costs (1)(3)
Other nonrecurring expenses (1)(4)
Write-offs of below-market lease intangibles related to terminations (5)
Core FFO
Less: preferred stock dividends
Less: Core FFO attributable to noncontrolling interests (6)
Less: Core FFO attributable to participating securities (7)
Company share of Core FFO
(1) Amounts are included in the line item “Other expenses” in the consolidated statements of operations.
(2) Reflects accelerated non-cash share-based compensation expense recognized in the fourth quarter of 2025 in connection with transition and separation arrangements for two executive officers, including transition-related restricted stock awards and other pre-existing awards.
(3) Includes costs associated with workforce reduction and workforce reorganization.
(4) Reflects nonrecurring advisory service costs.
(5) Reflects the write-off of the portion of a below-market lease intangible attributable to below-market fixed rate renewal options that were not exercised due to the termination of the lease at the end of the initial lease term.
(6) Noncontrolling interests represent (i) holders of outstanding common units of the Company's Operating Partnership that are owned by unit holders other than the Company and (ii) holders of Series 1 CPOP Units, Series 2 CPOP Units and Series 3 CPOP Units. On April 10, 2024, we exercised our conversion right to convert all 593,960 Series 1 preferred units into OP Units. On March 6, 2025, we exercised our conversion right to convert all remaining 904,583 Series 2 preferred units into OP Units.
(7) Participating securities include unvested shares of restricted stock, unvested LTIP units of partnership interest in our Operating Partnership and unvested performance units in our Operating Partnership. For the year ended December 31, 2025, Core FFO attributable to participating securities was adjusted to exclude $569 thousand of otherwise allocable Core FFO related solely to the transition‑related restricted stock awards noted above, consistent with the exclusion of the related accelerated share‑based compensation from Core FFO.
Non-GAAP Supplemental Measures: NOI and Cash NOI
Net operating income (“NOI”) is a non-GAAP measure which includes the revenue and expense directly attributable to our real estate properties. NOI is calculated as rental income less property expenses (before interest expense, depreciation and amortization).
We use NOI as a supplemental performance measure because, in excluding real estate depreciation and amortization expense, general and administrative expenses, interest expense, gains (or losses) on sale of real estate, impairment losses of depreciable operating property and other non-operating items, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that NOI will be useful to investors as a basis to compare our operating performance with that of other REITs. However, because NOI excludes depreciation and amortization expense and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties (all of which have real economic effect and could materially impact our results from operations), the utility of NOI as a measure of our performance is limited. Other equity REITs may not calculate NOI in a similar manner and, accordingly, our NOI may not be comparable to such other REITs’ NOI. Accordingly, NOI should be considered only as a supplement to net income as a measure of our performance. NOI should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs. NOI should not be used as a substitute for cash flow from operating activities in accordance with GAAP.
NOI on a cash-basis (“Cash NOI”) is a non-GAAP measure, which we calculate by adding or subtracting the following items from NOI: (i) amortization of above/(below) market lease intangibles and amortization of other deferred rent resulting from sale leaseback transactions with below market leaseback payments and (ii) straight-line rental revenue adjustments. We use Cash NOI, together with NOI, as a supplemental performance measure. Cash NOI should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs. Cash NOI should not be used as a substitute for cash flow from operating activities computed in accordance with GAAP.
The following table sets forth the revenue and expense items comprising NOI and the adjustments to calculate Cash NOI (in thousands):
Year Ended December 31,
Rental income
Less: Property expenses
Net Operating Income
Above/(below) market lease revenue adjustments
Straight line rental revenue adjustment
Cash Net Operating Income
The following table sets forth a reconciliation of net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to NOI and Cash NOI (in thousands):
Year Ended December 31,
Net income
General and administrative
Depreciation and amortization
Other expenses
Interest expense
Debt extinguishment and modification expenses
Management and leasing services
Interest income
Impairment of real estate
Gains on sale of real estate
Net Operating Income
Above/(below) market lease revenue adjustments
Straight line rental revenue adjustment
Cash Net Operating Income
Non-GAAP Supplemental Measure: EBITDA re
We calculate earnings before interest expense, income taxes, depreciation and amortization for real estate (“EBITDA re ”) in accordance with the standards established by NAREIT. EBITDA re is calculated as net income (loss) (computed in accordance with GAAP), before interest expense, income tax expense, depreciation and amortization, gains (or losses) from sales of depreciable operating property or assets incidental to our business, impairment losses of depreciable operating property or assets incidental to our business and adjustments for unconsolidated joint ventures.
We believe that EBITDA re is helpful to investors as a supplemental measure of our operating performance as a real estate company because it is a direct measure of the actual operating results of our properties. We also use this measure in ratios to compare our performance to that of our industry peers. In addition, we believe EBITDA re is frequently used by securities analysts, investors and other interested parties in the evaluation of equity REITs. However, our industry peers may not calculate EBITDA re in accordance with the NAREIT definition as we do and, accordingly, our EBITDA re may not be comparable to our peers’ EBITDA re . Accordingly, EBITDA re should be considered only as a supplement to net income (loss) as a measure of our performance.
The following table sets forth a reconciliation of net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to EBITDA re (in thousands):
Year Ended December 31,
Net income
Interest expense
Depreciation and amortization
Impairment of real estate
Gains on sale of real estate
EBITDAre
Supplemental Guarantor Information
Subsidiary issuers of obligations guaranteed by the parent are not required to provide separate financial statements, provided that the parent guarantee is “full and unconditional,” the subsidiary obligor is consolidated into the parent company’s consolidated financial statements and, subject to certain exceptions as set forth below, the alternative disclosure required by Rule 13-01 is provided, which includes narrative disclosure and summarized financial information. The Company and the Operating Partnership have filed a registration statement on Form S-3 with the SEC registering, among other securities, debt securities of the Operating Partnership, which will be fully and unconditionally guaranteed by the Company. At December 31, 2025, the Operating Partnership had issued and outstanding $300.0 million of 5.000% Senior Notes due 2028 (the “$300 Million Notes due 2028”), $400.0 million of 2.125% Senior Notes due 2030 (the “$400 Million Notes due 2030”), $400 million of 2.15% Senior Notes due 2031 (the “$400 Million Notes due 2031”), $575.0 million of 4.375% Exchangeable Senior Notes due 2027 (the “2027 Exchangeable Notes”) and $575.0 million of 4.125% Exchangeable Senior Notes due 2029 (the “2029 Exchangeable Notes” and together with the 2027 Exchangeable Notes, the “Exchangeable Notes”). The obligations of the Operating Partnership to pay principal, premiums, if any, and interest on the $300 Million Notes due 2028, $400 Million Notes due 2030, $400 Million Notes due 2031 and Exchangeable Notes are guaranteed on a senior basis by the Company. The guarantee is full and unconditional, and the Operating Partnership is a consolidated subsidiary of the Company. Accordingly, separate consolidated financial statements of the Operating Partnership have not been presented.
Furthermore, as permitted under Rule 13-01(a)(4)(vi), the Company has excluded the summarized financial information for the Operating Partnership as the assets, liabilities and results of operations of the Company and the Operating Partnership are not materially different than the corresponding amounts presented in the consolidated financial statements of the Company, and management believes such summarized financial information would be repetitive and not provide incremental value to investors.
Financial Condition, Liquidity and Capital Resources
Overview
Our short-term liquidity requirements consist primarily of funds to pay for operating expenses, interest expense, general and administrative expenses, capital expenditures, tenant improvements and leasing commissions, share repurchases, and distributions to our common and preferred stockholders and holders of common units of partnership interests in our Operating Partnership (“OP Units”). We expect to meet our short-term liquidity requirements through available cash on hand, cash flow from operations, by drawing on our unsecured revolving credit facility and by issuing shares of common stock pursuant to the ATM program or issuing other securities as described below.
Our long-term liquidity needs consist primarily of funds necessary to pay for acquisitions, recurring and nonrecurring capital expenditures and scheduled debt maturities. We intend to satisfy our long-term liquidity needs through net cash flow from operations, proceeds from long-term secured and unsecured financings, borrowings available under our unsecured revolving credit facility, the issuance of equity securities, including preferred stock, and proceeds from selective real estate dispositions as we identify capital recycling opportunities.
As of December 31, 2025, we had:
• Outstanding fixed-rate and variable-rate debt with varying maturities for an aggregate principal amount of $3.3 billion, with $67.6 million due within 12 months (including the $60.0 million term loan facility maturing on October 27, 2026, which can be extended for three remaining one-year terms at our option);
• Total scheduled interest payments on our fixed rate debt and projected net interest payments on our variable rate debt and interest rate swaps of $392.8 million, of which $123.1 million is due within 12 months;
• Commitments of $90.5 million for tenant improvements under certain tenant leases and construction work related to obligations under contractual agreements with our construction vendors; and
• Operating lease commitments with aggregate lease payments of $23.9 million, of which $1.6 million is due within 12 months.
See “Note 6 – Notes Payable” to the consolidated financial statements included in Item 15 of this Annual Report on Form 10-K for further details regarding the scheduled principal payments. Also see “Note 7 – Leases” to the consolidated financial statements for further details regarding the scheduled operating lease payments.
As of December 31, 2025, our cash and cash equivalents were $165.8 million, and we did not have any borrowings outstanding under our unsecured revolving credit facility, leaving $1.245 billion available for future borrowings after giving effect to the $4.6 million letter of credit that was issued under the unsecured revolving credit facility.
Sources of Liquidity
Cash Flow from Operations
Cash flow from operations is one of our key sources of liquidity and is primarily dependent upon: (i) the occupancy levels and lease rates at our properties, (ii) our ability to collect rent, (iii) the level of operating costs we incur and (iv) our ability to pass through operating expenses to our tenants. We are subject to a number of risks related to general economic and other unpredictable conditions, which have the potential to affect our overall performance and resulting cash flows from operations. However, based on our current portfolio mix and business strategy, we anticipate that we will be able to generate positive cash flows from operations.
ATM Program
On February 17, 2023, we established the ATM Program pursuant to which we are able to sell from time to time shares of our common stock having an aggregate sales price of up to $1.25 billion.
In connection with the ATM Program, we may sell shares of our common stock directly through sales agents or we may enter into forward equity sale agreements with certain financial institutions acting as forward purchasers whereby, at our discretion, the forward purchasers may borrow and sell shares of our common stock under the ATM Program. The use of a forward equity sale agreement allows us to lock in a share price on the sale of shares of our common stock at the time the agreement is executed but defer settling the forward equity sale agreements and receiving the proceeds from the sale of shares until a later date. Additionally, the forward price that we expect to receive upon physical settlement of an agreement will be subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread, (ii) the forward purchaser’s stock borrowing costs and (iii) scheduled dividends during the term of the agreement.
During the year ended December 31, 2025, we did not sell any shares of common stock directly through sales agents or enter into any forward equity sale agreements under the ATM Program.
As of December 31, 2025, approximately $927.4 million of common stock remained available to be sold under the ATM Program. Future sales, if any, will depend on a variety of factors, including among others, market conditions, the trading price of our common stock, determinations by us of the appropriate sources of funding for us and potential uses of funding available to us.
Securities Offerings
We evaluate the capital markets on an ongoing basis for opportunities to raise capital, and as circumstances warrant, we may issue additional securities, from time to time, to fund acquisitions, for the repayment of long-term debt upon maturity and for other general corporate purposes. Such securities may include common equity, preferred equity and/or debt of us or our subsidiaries. Any future issuance, however, is dependent upon market conditions, available pricing and capital needs and there can be no assurance that we will be able to complete any such offerings of securities.
March 2024 Forward Equity Offering — In March 2024, we entered into a forward equity sale agreement with a financial institution acting as forward purchaser in connection with an underwritten public offering of 17,179,318 shares of common stock (the “March 2024 Forward Sale Agreement”), pursuant to which, the forward purchaser borrowed and sold an aggregate of 17,179,318 shares of common stock in the offering. We did not receive any proceeds from the sale of common shares by the forward purchaser at the time of the offering. During 2024, we partially settled the March 2024 Forward Sale Agreement by issuing 7,402,550 shares of common stock, leaving a remaining 9,776,768 shares of common stock for settlement at December 31, 2024.
During the first quarter of 2025, we settled the remaining portion of the March 2024 Forward Sale Agreement by issuing the remaining 9,776,768 shares of common stock for net proceeds of $478.0 million, based on a weighted average forward price of $48.89 per share at settlement.
Capital Recycling
We continuously evaluate opportunities for the potential disposition of properties in our portfolio when we believe such disposition is appropriate in view of our business objectives and capital allocation priorities. In evaluating these opportunities, we consider a variety of criteria including, but not limited to, local market conditions and lease rates, asset type and location, as well as potential uses of proceeds and tax considerations. Tax considerations include entering into a 1031 Exchange, when possible, to defer some or all of the taxable gains, if any, on dispositions. A 1031 Exchange generally requires the identification of a replacement property within 45 days and completion of the exchange within 180 days of the sale date. In response to the January 2025 Los Angeles wildfires, the IRS provided disaster-related extensions for eligible taxpayers, in some cases extending these deadlines to October 15, 2025.
During the year ended December 31, 2025, we completed the sale of seven properties for an aggregate gross sales price of $217.5 million and net cash proceeds of $208.4 million. For property sales completed during the first three quarters of 2025, the net proceeds were transferred to qualified intermediaries (“QIs”) to facilitate potential 1031 Exchanges. As a result, these amounts were classified as restricted cash on our consolidated balance sheets while held by the QIs.
We ultimately did not identify replacement properties that met our investment criteria within the applicable 1031 Exchange periods. Accordingly, approximately $183.1 million of the proceeds held by QIs was returned to us in varying amounts through 2025. For the property sold in the fourth quarter of 2025, we did not pursue a 1031 Exchange, and therefore, the related proceeds were not transferred to a QI.
We expect to continue selectively and opportunistically disposing of properties, however, the timing of any future dispositions will depend on market conditions, asset-specific circumstances or opportunities, and our capital needs. Our ability to dispose of selective properties on advantageous terms, or at all, is dependent upon a number of factors including the availability of credit to potential buyers to purchase properties at prices that we consider acceptable.
Investment Grade Rating
Our credit ratings at December 31, 2025 were Baa2 (Stable outlook) from Moody’s and BBB+ (Stable outlook) from both S&P and Fitch with respect to our Credit Agreement (described below), Exchangeable Notes, $25.0 million unsecured guaranteed senior notes and $75.0 million unsecured guaranteed senior notes (together the “Series 2019A and 2019B Notes”), $300 Million Notes, $400 Million Notes due 2030 and $400 Million Notes due 2031. Our credit ratings at December 31, 2025 were BBB- from both S&P and Fitch with respect to our 5.875% Series B Cumulative Redeemable Preferred Stock and our 5.625% Series C Cumulative Redeemable Preferred Stock. Our credit ratings are based on our operating performance, liquidity and leverage ratios, overall financial position and other factors employed by the credit rating agencies in their rating analysis of us, and, although it is our intent to maintain our investment grade credit rating, there can be no assurance that we will be able to maintain our current credit ratings. In the event our current credit ratings are downgraded, it may become difficult or more expensive to obtain additional financing or refinance existing indebtedness as maturities become due.
Fifth Amended and Restated Credit Agreement
On May 30, 2025, we amended our senior unsecured credit agreement by entering into the Fifth Amended and Restated Credit Agreement (the “Credit Agreement”). Prior to the amendment, the credit agreement was comprised of (i) a senior unsecured revolving credit facility (the “Revolver”) in the aggregate principal amount of $1.0 billion, which also allowed us to issue letters of credit up to an aggregate amount not to exceed $100.0 million, (ii) a $300.0 million unsecured term loan facility (the “$300 Million Term Loan”) and (iii) a $400.0 million unsecured term loan facility (the “$400 Million Term Loan” and together with the $300 Million Term Loan, the “Term Facility”). The Credit Agreement, among other changes, (i) increased the borrowing capacity under the Revolver from $1.00 billion to $1.25 billion, (ii) lowered the interest rate by eliminating the 0.10% SOFR adjustment that previously applied to both the Revolver and the $400 Million Term Loan, (iii) extended the maturity date of the Revolver from May 26, 2026 to May 30, 2029 (with two six-month extensions) and (iv) extended the maturity of the $400 Million Term Loan from July 18, 2025 to May 30, 2030, among other changes. The interest rate and maturity date (May 26, 2027) of the $300 Million Term Loan remained unchanged.
On November 21, 2025, we further amended the Credit Agreement to lower the interest rate by eliminating the 0.10% SOFR adjustment that previously applied to the $300 Million Term Loan.
Subject to certain terms and conditions set forth in the Credit Agreement, we may request additional lender commitments and increase the size of the Credit Agreement by an additional $1.05 billion, which may be comprised of additional revolving commitments under the Revolver, an increase to the Term Facility, additional term loan tranches or any combination of the foregoing.
Interest on the Credit Agreement is generally to be paid based upon, at our option, either Term SOFR, daily SOFR or a base rate, plus an applicable margin based on our leverage ratio and debt ratings. The applicable margin for the Term Facility ranges from 0.80% to 1.60% per annum for SOFR-based loans and 0.00% to 0.60% per annum for base rate loans. The applicable margin for the Revolver ranges from 0.725% to 1.400% per annum for SOFR-based loans and letters of credit and 0.00% to 0.40% per annum for base rate loans. In addition to the interest payable on amounts outstanding under the Revolver, we are required to pay an applicable credit facility fee, on each lender's commitment amount under the Revolver, regardless of usage. The applicable credit facility fee ranges from 0.125% to 0.300% per annum, depending on our leverage ratio and investment grade ratings.
In addition, the Credit Agreement also features a sustainability-linked pricing component that can periodically adjust the applicable margin by -0.04%, zero or 0.04% and adjust the applicable credit facility fee by -0.01%, zero or 0.01%, depending on our achievement of the annual sustainability performance metrics. During 2025, the sustainability-linked pricing adjustment was zero for both the applicable margin and credit facility fee. In January 2026, after certifying that our sustainability performance targets were met for 2025, the applicable margin decreased by 0.040% to 0.685% for the Revolver and to 0.760% for the Term Facility, and the credit facility fee decreased by 0.010% to 0.115%.
The Revolver and the Term Facility may be voluntarily prepaid in whole or in part at any time without premium or penalty. Amounts borrowed under the Term Facility and repaid or prepaid may not be reborrowed.
The Credit Agreement contains usual and customary events of default including defaults in the payment of principal, interest or fees, defaults in compliance with the covenants set forth in the Credit Agreement and other loan documentation, cross-defaults to certain other indebtedness, and bankruptcy and other insolvency defaults. If an event of default occurs and is continuing under the Credit Agreement, the unpaid principal amount of all outstanding loans, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable.
As of the filing date of this Annual Report on Form 10-K, we did not have any borrowings outstanding under the Revolver and had $4.6 million outstanding in letters of credit that reduced our borrowing capacity, leaving $1.245 billion available for future borrowings.
Uses of Liquidity
Acquisitions
One of our most significant liquidity needs has historically been for the acquisition of real estate properties. During the year ended December 31, 2025, and subsequent to that date through the filing date of this Annual Report, we did not acquire any properties and have no acquisitions under contract or accepted offer. However, we continue to monitor potential acquisition opportunities within our target markets that we believe may represent attractive investment opportunities. While the actual number of acquisitions that we complete will be dependent upon a number of factors, in the short term, we expect to fund our future acquisitions through available cash on hand, cash flows from operations, borrowings available under the Revolver and capital recycled through property dispositions and, in the long term, through the issuance of equity securities or proceeds from long-term secured and unsecured financings.
Recurring and Nonrecurring Capital Expenditures
Capital expenditures are considered part of both our short-term and long-term liquidity requirements. During the year ended December 31, 2025, we incurred $13.3 million of recurring capital expenditures, which was a decrease of $6.3 million from the prior year, primarily due to lower roofing expenditures in the current year. During the year ended December 31, 2025, we incurred $228.8 million of nonrecurring capital expenditures, which was a decrease of $84.4 million compared to the prior year. The decrease was primarily due to the decrease in nonrecurring capital expenditures related to repositioning and development activity during 2025 compared to 2024. As discussed above under “—Factors that May Influence Future Results —Acquisitions and Value-Add Repositioning and Development of Properties,” as of December 31, 2025, 23 of our properties were under current repositioning/development or lease-up. We currently estimate that approximately $128.1 million of additional capital will be required over the next several years to complete these projects. However, this estimate is based on our current construction plans and budgets, both of which are subject to change as a result of a number of factors, including increased costs of building materials or construction services (including as a result of trade disputes and tariffs) and construction delays related to supply chain backlogs and increased lead time on building materials. If we are unable to complete construction on schedule or within budget, we could incur increased construction costs and experience potential delays in leasing the properties. We expect to fund these capital expenditures through a combination of available cash on hand, disposition proceeds, the issuance of common stock under the ATM Program, cash flow from operations and borrowings available under the Revolver.
Dividends and Distribution s
In order to maintain our qualification as a REIT, we are required to distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains. To satisfy the requirements to qualify as a REIT and generally not be subject to U.S. federal income tax, we intend to distribute a percentage of our cash flow on a quarterly basis to holders of our common stock. In addition, we intend to make distribution payments to holders of OP Units and preferred units, and dividend payments to holders of our preferred stock.
On February 2, 2026, our board of directors declared the following quarterly cash dividends/distributions:
Security
Amount per Share/Unit
Record Date
Payment Date
Common stock
March 31, 2026
April 15, 2026
OP Units
March 31, 2026
April 15, 2026
5.875% Series B Cumulative Redeemable Preferred Stock
March 16, 2026
March 31, 2026
5.625% Series C Cumulative Redeemable Preferred Stock
March 16, 2026
March 31, 2026
3.00% Cumulative Redeemable Convertible Preferred Units
March 16, 2026
March 31, 2026
Stock Repurchase Programs
On February 3, 2025, the Board authorized a stock repurchase program under which we may repurchase up to a maximum of $300 million of our outstanding common stock (the “Initial Repurchase Program”). The Board’s authorization for the Initial Repurchase Program was scheduled to expire on February 3, 2027, unless modified, extended or terminated earlier at the Board’s discretion.
On August 29, 2025, the Board terminated the Initial Repurchase Program and authorized a new stock repurchase program pursuant to which we may repurchase up to a maximum of $500 million of our outstanding common stock (the “Second Repurchase Program”). The Second Repurchase Program replaced and superseded, in all respects, the Initial Repurchase Program and is scheduled to expire on September 1, 2027, unless modified, extended or terminated earlier at the Board’s discretion.
Under our stock repurchase programs, we may purchase our shares from time to time in the open market, in privately negotiated transactions or in other transactions as permitted by federal securities laws. The amount and timing of any repurchases depend on a number of factors, including the price and availability of our shares, trading volume and general market conditions.
During the year ended December 31, 2025, we repurchased an aggregate of 6,327,283 shares of common stock for a total purchase price of $250.1 million, including commissions, at a weighted average price of $39.51 per share. Of this amount, $100.0 million was repurchased under the Initial Repurchase Program prior to its termination, and $150.1 million was repurchased under the Second Repurchase Program. All repurchased shares were retired on the respective settlement dates. As of December 31, 2025, $349.9 million remained available for repurchase under the Second Repurchase Program.
On February 2, 2026, the Board terminated the Second Repurchase Program and authorized a new stock repurchase program pursuant to which we may repurchase up to a maximum of $500.0 million of our outstanding common stock (the “New Repurchase Program”). The New Repurchase Program replaces and supersedes, in all respects, the Second Repurchase Program and is scheduled to expire on February 29, 2028, unless modified, extended or terminated earlier at the Board’s discretion. Subsequent to December 31, 2025 and through the filing date of this Annual report on Form 10-K, we repurchased and settled 347,670 shares of common stock for a total purchase price of $13.4 million under the New Repurchase Program, leaving $486.6 million available for future repurchases.
Indebtedness Outstanding
The following table sets forth certain information with respect to our consolidated indebtedness outstanding as of December 31, 2025:
Contractual
Maturity Date
Margin Above SOFR
Effective Interest Rate (1)
Principal Balance (in thousands) (2)
Unsecured and Secured Debt:
Unsecured Debt:
Revolving Credit Facility
$575M Exchangeable Senior Notes due 2027 (6)
$300M Term Loan
$125M Senior Notes
$300M Senior Notes due 2028
$575M Exchangeable Senior Notes due 2029 (6)
$25M Series 2019A Senior Notes
$400M Term Loan
$400M Senior Notes due 2030
$400M Senior Notes due 2031 (green bond)
$75M Series 2019B Senior Notes
Total Unsecured Debt
Secured Debt:
$60M Term Loan (9)
701-751 Kingshill Place
13943-13955 Balboa Boulevard
2205 126th Street
2410-2420 Santa Fe Avenue
11832-11954 La Cienega Boulevard
Gilbert/La Palma
7817 Woodley Avenue
Total Secured Debt
Total Consolidated Debt
(1) Reflects the contractual interest rate under the terms of each loan as of December 31, 2025 (and the weighted average interest rate for total consolidated debt) and includes the effect of interest rate swaps that were effective as of December 31,
2025. The interest rate is not adjusted to include the amortization of debt issuance costs or unamortized fair market value premiums/discounts or the facility fee on the Revolver.
(2) Excludes unamortized debt issuance costs and premiums/discounts totaling $26.7 million, which are presented as a reduction of the carrying value of our debt in our consolidated balance sheet as of December 31, 2025.
(3) The Revolver has two six-month extensions, subject to certain terms and conditions.
(4) As of December 31, 2025, the interest rates on these loans are comprised of daily SOFR for both the Revolver and the $400 Million Term Loan and Term SOFR for the $300 Million Term Loan, plus an applicable margin of 0.725% per annum for the Revolver and 0.80% per annum for the Term Facility, and a sustainability-related rate adjustment of zero. These loans are also subject to a 0% SOFR floor. In January 2026, the applicable margin decreased by 0.04% to 0.685% for the unsecured revolving credit facility and to 0.76% for the Term Facility after certifying that our sustainability performance targets were met for 2025.
(5) The Revolver is subject to an applicable facility fee which is calculated as a percentage of the total lenders’ commitment amount, regardless of usage. As of December 31, 2025, the applicable facility fee is 0.125% per annum with a sustainability-related interest rate adjustment of zero. The effective rate assumes daily SOFR of 3.870% as of December 31, 2025. In January 2026, the facility fee decreased by 0.010% to 0.115% after certifying that our 2025 sustainability performance targets were met.
(6) Noteholders have the right to exchange their notes upon the occurrence of certain events. Exchanges will be settled by delivering cash up to the principal amount of the Exchangeable Notes exchanged, and in respect of the remainder of the exchanged value, if any, in excess thereof, in cash or in a combination of cash and shares of our common stock, at our option.
(7) As of December 31, 2025, Term SOFR for the $300 Million Term Loan has been swapped to a fixed rate of 2.81725%, resulting in an all-in fixed rate of 3.61725% after adding the applicable margin and sustainability-related rate adjustment.
(8) As of December 31, 2025, daily SOFR for the $400.0 Million Term Loan has been swapped to a fixed rate of 3.41375% resulting in an all-in fixed rate of 4.21375% after adding the applicable margin and sustainability-related rate adjustment.
(9) The $60.0 million term loan facility (the “$60 Million Term Loan”) has interest-only payment terms bearing interest at Term SOFR increased by a 0.10% SOFR adjustment plus an applicable margin of 1.25% per annum. As of December 31, 2025, Term SOFR for this loan has been swapped to a fixed rate of 3.710%, resulting in an all-in fixed rate of 5.060% after adding the SOFR adjustment and applicable margin. The loan is secured by six properties. On July 11, 2025, we exercised a one-year extension option, extending the maturity date of this loan to October 27, 2026. Subsequently, on September 2, 2025, we amended this loan to, among other changes, add two additional one-year extension options. As of December 31, 2025, we have three remaining one-year extension options available, subject to certain terms and conditions.
The following table summarizes the composition of our outstanding debt between fixed-rate and variable-rate and secured and unsecured debt as of December 31, 2025:
Weighted Average Term Remaining (in years)
Effective
Interest Rate (1)
Principal Balance
(in thousands) (2)
% of Total
Fixed vs. Variable:
Fixed (3)
Variable
Secured vs. Unsecured:
Secured
Unsecured
(1) Includes the effect of interest rate swaps that were effective as of December 31, 2025. Interest rates are not adjusted to include the amortization of debt issuance costs or unamortized fair market value premiums/discounts or the facility fee on the Revolver.
(2) Excludes unamortized debt issuance costs and debt premiums/discounts totaling $26.7 million which are presented as a reduction of the carrying value of our debt in our consolidated balance sheet as of December 31, 2025.
(3) Fixed-rate debt includes our variable-rate debt that has been effectively fixed through the use of interest rate swaps through maturity.
At December 31, 2025, we had total indebtedness of $3.3 billion, reflecting a net debt to total combined market capitalization of approximately 24.9%. Our total market capitalization is defined as the sum of the liquidation preference of our outstanding preferred stock and preferred units plus the market value of our common stock excluding shares of nonvested restricted stock, plus the aggregate value of common units not owned by us, plus the value of our net debt. Our net debt is defined as our consolidated indebtedness less cash and cash equivalents.
Debt Covenants
The Credit Agreement, $60 Million Term Loan, $125.0 million unsecured guaranteed senior notes (the “$125 Million Notes”) and Series 2019A and 2019B Notes include a series of financial and other covenants that we must comply with. All financial ratios, metrics and terms used in the covenants below are defined in the applicable loan agreements and are tested on a quarterly basis.
• Maintaining a ratio of total indebtedness to total asset value of not more than 60%;
• For the Credit Agreement and $60 Million Term Loan, maintaining a ratio of secured debt to total asset value of not more than 45%;
• For the $125 Million Notes and Series 2019A and 2019B Notes (together the “Senior Notes”), maintaining a ratio of secured debt to total asset value of not more than 40%;
• For the Senior Notes, maintaining a ratio of total secured recourse debt to total asset value of not more than 15%;
• For the Senior Notes, maintaining a minimum tangible net worth of at least the sum of (i) $760,740,750, and (ii) an amount equal to at least 75% of the net equity proceeds received by the Company after September 30, 2016;
• Maintaining a ratio of adjusted EBITDA to fixed charges of at least 1.5 to 1.0;
• For the Credit Agreement and Senior Notes, maintaining a ratio of total unsecured debt to total unencumbered asset value of not more than 60%; and
• For the Credit Agreement and Senior Notes, maintaining a ratio of unencumbered NOI (as defined in each of the loan agreements) to unsecured interest expense of at least 1.75 to 1.00.
The $300 Million Notes due 2028, $400 Million Notes due 2030 and $400 Million Notes due 2031 (together the “Registered Notes”) contain the following covenants. All financial ratios and terms used below are as defined in the applicable indentures and are tested on an annual basis.
• Maintaining a ratio of total indebtedness to total asset value of not more than 60%;
• Maintaining a ratio of secured debt to total asset value of not more than 40%;
• Maintaining a Debt Service Coverage Ratio of at least 1.5 to 1.0; and
• Maintaining a ratio of unencumbered assets to unsecured debt of at least 1.5 to 1.0.
Subject to the terms of the Credit Agreement, $60 Million Term Loan, Senior Notes and Registered Notes, upon certain events of default, including, but not limited to, (i) a default in the payment of any principal or interest, (ii) a default in the payment of certain of our other indebtedness, and (iii) a default in compliance with the covenants set forth in the debt agreement, the principal and accrued and unpaid interest on the outstanding debt may be declared immediately due and payable at the option of the administrative agent, lenders, trustee and/or noteholders, as applicable, and in the event of bankruptcy and other insolvency defaults, the principal and accrued and unpaid interest on the outstanding debt will become immediately due and payable. In addition, we are required to maintain at all times a credit rating on the Senior Notes from either S&P, Moody’s or Fitch.
We were in compliance with all of our required quarterly and annual financial debt covenants as of December 31, 2025.
Cash Flows
Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024
The following table summarizes the changes in net cash flows associated with our operating, investing, and financing activities for the years ended December 31, 2025 and 2024 (in thousands):
Year Ended December 31,
Change
Cash provided by operating activities
Cash used in investing activities
Cash (used in) provided by financing activities
Net cash provided by operating activities . Net cash provided by operating activities increased by $63.2 million to $542.1 million for the year ended December 31, 2025, compared to $478.9 million for the year ended December 31, 2024. The increase was primarily attributable to the incremental cash flows from property acquisitions completed during 2024, favorable changes in working capital (primarily prepaid rent) and higher Cash NOI from our Same Property Portfolio, partially offset by higher cash interest paid compared to the prior year.
Net cash used in investing activities . Net cash used in investing activities decreased by $1.71 billion to $125.1 million for the year ended December 31, 2025, compared to $1.84 billion for the year ended December 31, 2024. The decrease was primarily attributable to a $1.51 billion decrease in cash paid for property acquisitions, as no acquisitions were made during the current year, and a $167.1 million increase in net proceeds from the sale of real estate as compared to the prior year.
Net cash (used in) provided by financing activities . Net cash used in financing activities was $307.2 million for the year ended December 31, 2025, compared to net cash provided by financing activities of $1.38 billion for the year ended December 31, 2024. The $1.69 billion decrease in net cash flows was primarily attributable to the following: (i) a decrease of $1.1 billion in net cash proceeds from the issuance of the Exchangeable Notes in March 2024, (ii) $250.1 million in cash used for the repurchase of common stock in 2025, with no comparable activity in the prior year, (iii) a decrease of $171.9 million in net cash proceeds from the issuance of shares of our common stock, (iv) the repayment of our $100.0 million unsecured senior notes in August 2025, and (v) a $44.7 million increase in cash dividends paid to common stockholders and common unitholders, reflecting both a higher quarterly per share/unit cash dividend and an increase in the number of common shares outstanding.
Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023
Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cash Flows” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 10, 2025, for a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023.
Inflation
We do not believe that inflation has historically had a material impact on the Company. While currently moderating, significant inflation in recent years has resulted in increased operating expenses and capital expenditures which could have a material impact on our financial position or results of operations. The majority of our leases are either triple net or provide for tenant reimbursement for costs related to real estate taxes and operating expenses. In addition, most of the leases provide for fixed rent increases. We believe that inflationary increases to real estate taxes, utility expenses and other operating expenses may be partially offset by the contractual rent increases and tenant payment of taxes and expenses described above.
Ite m 7A. Quantitative and Qualitative Disclosures About Market Risk
Market risk refers to the risk of loss from adverse changes in market prices and interest rates. A key market risk we face is interest rate risk. We are exposed to interest rate changes primarily as a result of using variable-rate debt to satisfy various short-term and long-term liquidity needs, which have interest rates based upon SOFR. We use interest rate swaps to manage, or hedge, interest rate risks related to our borrowings. Because actual interest rate movements over time are uncertain, our swaps pose potential interest rate risks, notably if interest rates fall. We also expose ourselves to credit risk, which we attempt to minimize by contracting with highly-rated banking financial counterparties. For a summary of our outstanding debt, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” under Item 7 of this Annual Report on Form 10-K. For a summary of our interest rate swaps and recent transactions, see “Note 8 – Interest Rate Derivatives” to our consolidated financial statements included in Item 15 of this Annual Report on Form 10-K.
As of December 31, 2025, we had total consolidated indebtedness, excluding unamortized debt issuance costs and premiums/discounts, of $3.28 billion. As of December 31, 2025, 100% of this consolidated indebtedness is fixed-rate debt under the terms of the loan or through the use of interest rate swaps. As such, as of December 31, 2025, if SOFR were to increase or decrease, there would be no impact to interest expense or future earnings and cash flows until the applicable interest rate swaps mature.
Interest risk amounts are our management’s estimates and were determined by considering the effect of hypothetical interest rates on our financial instruments. We calculate interest sensitivity by multiplying the amount of variable rate debt outstanding by the respective change in rate. The sensitivity analysis does not take into consideration the possibility of future changes in the balances or fair value of our floating rate debt or the effect of any change in overall economic activity that could occur in that environment. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, this analysis assumes no changes in our financial structure.
