Rexford Industrial Realty Inc (REXR) 2013 Q4 法說會逐字稿

Greetings and welcome to the Rexford Industrial Realty, Inc. fourth quarter 2013 earnings conference call. At this time all participants and are in a listen-only mode. A question and answer session will follow the formal presentation.

(Operator Instructions). I would now like to turn the conference over to your host, Steve Swett, ICR. Thank you, you may now begin.

Good afternoon. I'd like to thank you for joining us for Rexford Industrial's fourth quarter 2013 earnings conference call. In addition to the press release distributed today, we have posted a quarterly supplemental package with additional details on our results in the investor relations section on our website at www.RexfordIndustrial.com.

On today's call management's remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are usually identified by the use of words such as anticipates, believes, estimates, expects, intends, may, plans, projects, seeks, should, will, and variations of such words or similar expressions.

Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. Examples of forward-looking statements include those related to revenue, operating income, or financial guidance.

As a reminder, forward-looking statements represent management's current estimates. Rexford Industrial assumes no obligation to update any forward-looking statements in the future. We encourage listeners to review the more detailed discussions related to these forward-looking statements contained in the Company's filings with the SEC.

In addition, certain other financial information provided on this call represents non-GAAP financial measures. The Company's earnings release and supplemental information package, which we'll release this afternoon are available on the Company's website, present reconciliations to the appropriate GAAP measures and explain why the Company believes such non-GAAP financial measures are useful to investors.

This afternoon's conference call is hosted by Rexford Industrial's co-Chief Executive Officers, Michael Frankel and Howard Schwimmer, together with Chief Financial Officer Adeel Khan. They will make some prepared remarks and then we will open up the call to your questions. Now I will turn the call over to Michael.

Thank you and welcome to Rexford Industrial's fourth quarter 2013 earnings conference call. I will begin with a brief summary of our operating and financial results for the fourth quarter and full-year 2013. Howard will then provide an overview of our market and recent investment activity, and Adeel will then follow with more details on the fourth quarter financial results, an update on our balance sheet and some color on our outlook for 2014.

Let me begin by stating that 2013 was a very productive year for Rexford. We recorded strong results within our portfolio with substantial leasing volume, significant gains in leased percentage and occupancy, and double-digit growth in our same store NOI. We acquired approximately 1.7 million square feet of properties for about $157.5 million, representing a 37% increase in our portfolio by square footage.

We also completed our IPO and formation transactions in July, which provide Rexford with an enhanced capital structure to support the execution of our growth initiatives.

While we have spoken to many of you over the past year, it's worthwhile to provide a quick overview of Rexford and what makes us so excited about our unique opportunities. Rexford Industrial is the only pure play, publicly traded industrial REIT focused solely on Southern California: the largest, most diverse industrial market in the nation.

In addition, Southern California combines any unique blend of strong underlying long-term drivers of increasing industrial tenant demand. These drivers include the nation's largest and growing regional population and consumption base with the nation's largest and most diverse base of distribution and manufacturing-driven businesses, the nation's two busiest ports of L.A. and Long Beach, and the increasing movement of goods locally, driven by an increasing share of consumer and business transactions taking place via e-commerce.

Our target infill submarkets have historically demonstrated among the highest occupancy and highest rental rates in the nation. With significant land and economic constraints limiting the introduction of new industrial supplies for lease, we believe Rexford is uniquely positioned to capture strong and sustainable internal growth and cash flow and valuation over time.

Further, in our highly fragmented infill markets our external growth prospects are substantial. With our decades of experience and relationships, unique originations, methods, and exclusive Southern California focus, augmented now with our flexible public company capital structure, we expect to source and close attractive acquisitions on a steady pace.

Our recent activity is indicative, as we had increased the square footage of our underlying portfolio by 24% in only eight months since our IPO, with our pace of acquisitions accelerating over the more recent four months.

Turning to our fourth quarter 2013 operations, our portfolio continues to perform well. As we reported in our operations update in late February, our total consolidated portfolio was 89.7% occupied at the end of the fourth quarter. Occupancy on a same-property portfolio basis was 89.3% at year end, an increase of 300 basis points compared to fourth quarter 2012.

On a same-property basis we generated a 10% increase in fourth-quarter revenue as compared to the prior year period, which was driven primarily by a combination of increased occupancy and positive re-leasing spreads. Same-property portfolio NOI increased 7% year-over-year. On a cash basis our same-property portfolio NOI was up 15% year-over-year.

With regard to leasing, for the consolidated portfolio we signed 91 leases accounting for approximately 386,000 square feet during the fourth quarter, including 38 new leases and 53 renewals. For the full year 2013 we leased nearly 2 million square feet, which represents nearly 1/3 of our entire consolidated portfolio. And we achieved over 454,000 square feet net positive absorption, representing 7.2% of our portfolio.

These accomplishments are a testament to the high quality of our properties, their superior locations, and the hard work of our entire Rexford leasing and asset management team. Along with continued improvement in our lease percentage and occupancy, we continue to see signs of strengthening fundamentals across our infill markets as evidenced by our positive re-leasing spreads.

For our new and renewal leases combined, in the fourth quarter 2013 we recorded average GAAP rental rate increases of 12.9% and cash rental rate increases of 3.5%. Our cash rental spreads for new leases as opposed to renewals was 4.5%.

These positive rental spreads confirm our comments last year that the momentum we had seen in GAAP leasing spreads was a leading indicator of an inflection point in the cash spreads which has now turned positive. Further, with over 20% of leases rolling in each of the next two years, we see a substantial opportunity to roll relatively low recessionary in-place rents to higher levels in the near to medium term.

While we expect the positive momentum we are seeing across our portfolio to continue through 2014, our short-term quarterly metrics may experience a degree of variation. As we see our landlord pricing power recovering, we may selectively move or remove some tenants as leases roll in order to achieve higher rents by re-tenanting or by executing on value-add repositioning opportunities.

Due to the relatively small size of our portfolio, execution of these strategies may impact monthly or quarterly occupancy numbers on a short-term basis. However, these strategies are also expected to deliver accretive near and long-term impacts to our cash flow and asset value. These efforts reflect the unique opportunities associated with our Southern California infill locations and smaller, midsize, multitenant focus to create incremental long-term value and cash flow growth for shareholders.

Moving on, we are pleased to announce earlier this month that Peter Schwab was elected as a new independent director on our Board. Peter brings a wealth of experience to Rexford, particularly with respect to financing and corporate management, and complements the significant experience and expertise of our current Board members. We look forward to Peter's contributions as we continue to execute our strategies to refine and grow our operating platform going forward.

Overall, and I believe I speak for Howard and our entire management team, we were extremely pleased with our results in the fourth quarter of 2013 and believe we are exceptionally well-positioned to continue to execute our growth and capital strategies as we move forward in 2014 and beyond. With that, I'll turn the call over to Howard.

Thank you, Michael, and thank you everyone for joining us today. I will update you on our markets and review our recent transactions, which continue to run and an active pace into 2014.

Beginning with an update on our markets, fundamentals of our core Southern California infill industrial markets continue to improve. We are seeing strength in virtually every submarket in which we operate, growing demand for space, and increasing pricing power for well-located and functional industrial properties like Rexford's.

In Los Angeles County, overall vacancy remained extremely tight for the fourth quarter at 2.1%, according to CBRE. Absorption remains solid and asking rents were up 10% year-over-year. In Orange County net absorption was very strong for the full year 2013 at 1.8 million square feet. Asking rents were up 5% in the past 12 months, and with further declines in availability, CBRE is forecasting an acceleration in asking rents in Orange County in 2014.

San Diego County also continued to show rapid improvement with more than 600,000 square feet of net absorption in the fourth quarter, which was the 10th straight quarter of positive net absorption. As availability has trended lower, CBRE estimated that San Diego asking rents were up 16% in the past year.

As a reminder, Rexford's primary focus is the 1.6 billion square foot Southern California infill market, which is distinguished from the eastern Inland Empire, non-infill, big-box market. The forecast is generally more temperate going forward for the big-box non-infill markets that are not Rexford's focus, while rental rates have largely recovered to near peak levels, and where increases in development have occurred and are expected to continue.

Our results confirm many of these trends, and we believe we are particularly well positioned within our infill portfolio to capture the benefits of this market strength to drive rent growth on a sustainable basis. With our occupancy rates still below-market occupancy due to our redevelopment and repositioning activities, which are now largely in a lease-up stage, we are able to capitalize on the general lack of availability to drive rent growth and increasing cash flow within our portfolio.

With asking rents still substantially below prior peak rents, 14% below peak in Los Angeles County, 15% below peak in Orange County, and 8% below peak in San Diego County according to CBRE, we see a substantial runway ahead of us in terms of our ability to raise rents.

Due to the scarcity of supply, with the inability to introduce competing product for lease in our high barrier markets, and in the face of increasing long-term tenant demand, our infill markets represent a virtual pressure cooker on rents, which is driving sustained rate increases into future periods.

Moving on to our transaction activity, in 2013 we closed $157.5 million in acquisitions, representing 1.7 million square feet. And in the eight months since our IPO, we have acquired $112.8 million of property, representing a 24% increase by square foot of our own portfolio.

We are pleased with the number of deals we closed in the fourth quarter and the pace has continued into the early part of 2014. Since the start of the fourth quarter, we acquired 10 properties for $98.8 million. Let me provide a little color on these transactions to give you a flavor for the types of opportunities we were able to be higher, given our competitive advantages with deep market relationships, strong capital structure, and unique sourcing methodologies.

The majority of these acquisitions have been sourced off market or through very lightly marketed transactions which are enabling investments with above-market stabilized units. In November we acquired Yorba Linda Business Park, a 115,000 square foot Orange County industrial park for $12.7 million, or about $110 per square foot. This four-building complex was 79% occupied, and to drive lease-up we plan to selectively remove excess office space to enhance industrial functionality and marketability of vacant spaces, to capture a stabilized yield on cost in the low 7% range.

In November we also purchased The Park, a six-building industrial Park in Anaheim for $10.6 million, or about $88 a square foot. The project was 85% occupied at the time of acquisition, and through selective demising of spaces, renovations and lease-up, we expect to achieve a stabilized yield in the high 7% to 8%, to the low 8% range.

In December we acquired Bonita Thompson for $27.2 million or about $74 per square foot. Located in the San Gabriel Valley, Bonita Thompson consists of two 24-foot clear height, single-tenant distribution buildings with 52 dockside loading positions. The buildings are currently 100% occupied with the potential to demise after lease expirations. We expect to achieve a stabilized yield in the high 6% range.

In December we purchased Madera, a 200,000 square foot industrial and office property located in Simi Valley for $15.8 million, or about $79 per square foot. The industrial building had a 10-year sale leaseback, and upon sale of the vacant office building which is currently in escrow, our yield is projected in the 7% range.

In December we also acquired Vanowen, a 31,000 square foot industrial building located in the San Fernando Valley, for $3.4 million or about $110 per square foot. The property is 100% leased to four tenants, and after cosmetic improvements to enhance market rental values, is projected to stabilize at a yield in the 7% range.

Subsequent to the year-end and through February, we acquired four additional properties totaling approximately 352,000 square feet for an aggregate cost of $29.1 million. In January we acquired Rosecrans, a 72,000 square foot industrial building located in the South Bay submarket, for $5 million or about $70 per square foot. The seller is consolidating into half the building under a five-year leaseback, enabling value-added improvements to modernize and demise the building to increase its rental value. We expect to achieve a stabilized yield in the mid-7% range.

In January we purchased Oxnard Street, located in Van Nuys, for $8.9 million or $114 per square foot. The six-building business park is currently 98% occupied, and we plan aesthetic and modernization improvements which we expect to facilitate an accelerated growth. We expect stabilized yield in the 7% range.

In February, we acquired Ontario Airport Business Park, a five-building multitenant complex, for $8.6 million or about $75 per square foot. The project is currently 95% occupied at rents which we believe are well below market. Upon expected re-leasing and/or renewals we expect a stabilized return in the low to mid-7% range.

And finally, in February the Company acquired 228th Street, a six-building 88,000 square feet industrial complex located within the South Bay submarket, for $6 million or about $75 per square foot. While the property is 100% occupied, value-add improvements are planned to modernize and enhance functionality to enable substantially higher market rents which we expect to support stabilized yields at over 8%.

The last two acquisitions were partially funded through a tax-efficient exchange using proceeds from the sale of Kaiser, a 125,000 square foot industrial property in San Diego which was sold in January for $10.1 million.

Looking ahead, we have visibility towards a substantial pipeline of additional opportunities. With our comprehensive sourcing methodologies and deep market relationships, we continue to believe we are uniquely positioned to mine accretive opportunities within our target markets. We remain comfortable with a full-year acquisition goal of $200 million or more of new investments.

I'll now turn the call over to Adeel to discuss our fourth-quarter results, balance sheet, and financing activity.

Thank you, Howard. In my comments today, I will first review our operating results. Then I will review our balance sheet and recent financing transactions. And finally, I will provide some comments on our outlook for 2014.

Starting with our operating results, for the three months ending December 31, 2013, Rexford Industrial reported Company [share of] FFO of $4.3 million, or $0.17 per fully diluted share. This was our first full quarter as a public company, and per share earnings and as a full comparison to any period prior to July 2013 includes results of our predecessor entities, and may not be comparable to the current quarter's results.

For the fourth quarter 2013 our results include the impact of increases in portfolio occupancy and positive releasing spreads. In addition there's the impact of acquisitions completed during the fourth quarter, combined with a full quarter effect of acquisitions completed during the third quarter 2013.

On a same-property basis, we generated a 10% increase in fourth-quarter revenue as compared to the prior-year period. The same-property operating expenses increased 17%, primarily driven by higher overhead allocation, and higher repair and maintenance costs associated with the substantial growth of our portfolio, as well as relative increasing property taxes due to refunds booked in the comparable quarter.

Same-property portfolio NOI increased 7% year-over-year, and on a cash basis our same-property portfolio NOI was up 15% year-over-year.

Turning now to our balance sheet and financing activities, at December 31 Rexford Industrial had total consolidated debt outstanding of approximately $192.6 million. Our consolidated debt includes approximately $111.2 million of secured property debt. Most of this debt is variable rate financing with an average current interest rate of 2.2%.

In order to fix a portion of this variable rate debt, we recently executed two forward interest rate swaps to effectively fix the interest rate on our $60 million term loan. The swaps include $30 million of swaps with a forward start date in approximately 12 months, and $30 million of swaps at a forward start date in approximately 18 months. Respective fixed rates are 3.726% and 3.91%, and both have terms through February of 2019.

Our $200 million unsecured credit facility had a balance of $81.4 million at the end of the fourth quarter, and on a pro forma basis including funding for the acquisition subsequent to the year-end, balance today at $100.9 million. As a reminder, our unsecured revolving credit facility has an accordion feature that allows the Company to increase the capacity to $400 million, subject to certain requirements.

We believe our balance sheet continues to remain a significant point of strength for the Company, with a pro forma debt to market capitalization of 38% and approximately $99 million of current capacity including cash, and immediate availability on our revolving line of credit, plus an additional $200 million available through our line of credit accordion. Going forward we expect to maintain a strong balance sheet with ample capacity to support our growth strategies.

Moving on, I would like to provide some color on our outlook for 2014. During 2014 we will continue to execute on our internal and external growth strategies. For our current portfolio we are projecting year-end 2014 occupancy of about 92.5% to 93.5% and we anticipate acquisitions for the full year of $200 million or more.

For G&A we anticipate a full-year expense of $10 million to $11 million. We are also comfortable with the expectation that as we increase our net asset value for internal and external growth over time, our net asset value growth will generally outpace our G&A growth, enabling higher margins in the medium to long term.

As we move through the year, we look forward to updating our outlook and we will continue to look at providing additional disclosure over time. With that we will open to the call to your questions. Operator?

Thank you. At this time we will be conducting a question-and-answer session. (Operator Instructions). Michael Mueller, JPMorgan Chase & Co.

Hi, a few questions. First of all, what was the same-store sequential increase from Q3 for occupancy?

[3%].

That's year-over-year; right? So we're looking from September 30 to 12/31?

Just give us a second here. So, same-store at the end of Q3 was 87.3%.

Okay.

There (multiple speakers) for you on supplemental that shows you how the [plans for] mix change from September 30 to December 31.

Got it. Okay. What are you expecting in terms of 2014 rent spreads? It looks like you ended the year with cash spreads up at around 3% to 4%. What's the outlook for 2014?

Hi, Michael. It's Howard. I think going forward we are very confident that this is not a one-time occurrence in terms of those rent spreads. We think it's going to continue on to the future.

You may look at our markets today. We have very low vacancy, as we pointed out. We're very supply constrained, so things are really shifting over to the landlord side. And we find that we're really able to push on rents.

I'll give you a great example. We have a project in City of Industry. We have a tenant there occupying two spaces that are in, I think, a total of 26,000 square feet. They're paying us about $0.55 a square foot. They want to stay, but they want us to extend the lease at the current rates.

We just leased the space next door to it at over $0.70 a square foot. So, you do the math on that. It's not a 3% or 4% increase in the cash rents, but it's very significant.

Our portfolio, as you recall also, we were doing some shorter-term leases through the recession. So we have the opportunity to capture increasing rents fairly rapidly. And so we have a great runway over the next couple of years to really move up rents in the existing portfolio.

Okay. Over the near term for this year, though, do you think it's substantially more than that 3% to 4% number?

I think that we are pretty comfortable in that range. It's a little early in the year to start telling you that it's going to be significantly greater. But probably in the 6% or 7% range I would expect for the year.

Okay. And last question; I guess with the acquisition target or goal of about $200 million, $200 million plus, can you talk a little bit about the financing plan out for that, what you envision?

Sure, Mike. This is the deal. I think the key things to keep in mind here is the balance sheet continues to be our strongest asset here. It's really well-positioned for us, and I think we are going to continue to use the line of credit to the best -- that's best resource that we have available right now. And we're going to continue to use that in the immediate future.

And as we move further into our acquisition strategy, we will continue to entertain other capital strategies and other ideas. As we move further, keeping in mind the balance sheet is being so strong right now, we are going to keep it always in the back of our head to make sure that stays a significant strength for us as a Company.

Okay. Thanks.

Jamie Feldman, Bank of America.

Hey guys, this is actually Stephen with Jamie Feldman. I have a couple of questions. I guess the first -- I missed the capacity you guys talked about. Adeel, could you repeat that?

Sure. The capacity currently is -- we are at a pro forma basis, $101 million. So at the $200 million, it's $99 million available. But you have got to keep in mind we have another $200 million in the accordion. So that's another level that you need to consider into the equation.

Okay. Thank you. And the other question I had -- in terms of the acquisition outlook for the $200 million, what are you envisioning in terms of the mix of value-add versus core in your acquisitions? Do you think it's going to be closer to what you guys have been doing so far in 2014?

And then in terms of competition on those acquisitions, are you starting to see any sort of creep from any other players; anything like that? Thank you.

Hi, Stephen. It's Howard. That's a great question on the acquisitions. I think this quarter we are reporting on a significant volume of transactions and I tried to go into more detail to give you a flavor of really the way that we looked at those deals. For the most part, you see that they predominantly have some form of value-add occurring in them.

In terms of our modeling, we modeled about 50% of our acquisitions to be what we'd call core plus, which those involve a lot of times some light amount of value-add. 25% of the acquisitions would be true value-add and then 25% being core type acquisitions.

As far as our competition, it still the one-off individual buyer, the family office and typically other smaller companies that just don't have the same capitalization and market penetration as Rexford does. But I think what you are really asking is, do we see our public peers in these deals? And if we go after something that's actively marketed, sure, will see some of them.

But it's important to point out that over half the deals that we buy are off-market transactions where we rarely see our competitors, peers competing on with us.

Okay. Thank you.

Blaine Heck, Wells Fargo Securities.

Thanks. Good afternoon. Adeel, just following up on the balance sheet questions, on my numbers including the $29.1 million of acquisitions you guys have done thus far, took the leverage at about 36% on a debt to gross asset value basis.

What are the target leverage levels you guys are looking at, at this point? How much capacity do you think it gives you before getting to kind of the upper end of the range?

That's a great question. I think the one thing that we have to keep in mind here is, as a small company, leverage ratio is naturally going to bounce around a little bit, you know. I think over the course of the next year or so, I think the line of credit is a great resource for us and I think we have a significant runway within that.

So that leverage ratio will fluctuate. But over the course of the long-term if you take a cross-section, we would like to be at about 40%, but you know just -- 40% or lower. But the key thing in mind is, based on our size, that can bounce around from quarter to quarter.

Sure. Okay. And then, so after considering some of the swaps you have in place or coming into place pretty soon here, the Company still has around 65% of its debt floating. Is that a percentage you guys are going to look to decrease over time? Or are you comfortable with that at this point?

And absolutely. I think just on a pro forma basis if you take the current static debt, where we would be about 34% fixed as the swaps kick in next year. And we will continue to monitor that percentage of fixed versus variable as we go further and look for opportunities to move that percentage more on the fixed side, as the opportunity presents itself.

Okay. On the acquisition side, have you guys been able to fund any deals using OP units? And does that seem like it will be kind of a viable source of funding going forward?

You know, we look at it as a tremendous opportunity and we have engaged with many, many parties in those discussions already. I think that's more of a long-term conversation. Keep in mind, many of these people are families that have owned these buildings for decades and they are now starting to think about their estate planning end transitions. But we think it's going to be something that proves out to be very accretive for us.

Blaine, it's Michael. I'll just add one thing to that, that it's -- the powerful aspect of having that OP unit contribution structure, now that we have a public currency in our stock, is very powerful because it's a huge catalyst to initiate dialogue with a lot of these owners who own a substantial amount of product in our markets.

And frankly many of those may not end up being OP transactions in a contribution basis; they'll end up being cash sale purchases. But it will have been the OP transaction opportunity that initiated the dialogue. So it's a great opener and we have numerous of those discussions are ongoing.

Okay. Great. And then last one for me -- it looks like you guys have the office building on Madera Road up for sale. Can you comment on how far along that process is and maybe possible pricing? And then are there any other targeted dispositions at this point?

I was hoping someone would ask that question. We closed escrow on the office building this morning.

Okay.

That was our plan on this asset. We really wanted to get to this very high-quality industrial building with the 10 year sale-leaseback. But in order to accomplish that, we had to take on this office building and we were able to underwrite the office building at a very low price, so that we knew it would be easy to sell it.

And we proved ourselves right. We sold it literally -- what was it, 45 days or not even that, since we closed the transaction. I'm sorry; what was the other part of your question?

Just if there are any other targeted dispositions at this point?

We don't really have anything that we are targeting. That's not to say that something could come along or where we are made an offer on a building that we can't refuse to sell. But at the present time we are not actively targeting anything else.

Okay. Great. Thanks.

Nikhil Bhalla, FBR.

Hi. Good afternoon, everyone. Just a question on San Diego. So if I look at the occupancy trends in your supplemental here, it looks like every one of your markets saw a pretty robust -- saw improvement over the third quarter, with the exception of San Diego. That was down about 100 basis points. Any color on why that may be the case?

Yes. Sure, Nikhil. It's Howard. Really that decline in San Diego is attributed to one property. We had a shorter-term tenant, sort of someone that was put in place in a property on Yarrow Drive that exited about 46,000 square feet.

What's interesting is that we had them in there -- this is a classic case, we had a recessionary rent in and it's a very good space. And we had multiple parties looking at it, so we expect to be able to achieve a very positive spread in terms of the gap and as well as the cash spread on terms of the leasing.

Overall we are seeing some pretty significant improvement in San Diego. We had another building there that was in a business park, about 17,000 square feet. We had a shorter-term tenant in that.

We actually leased the building and had to exit that tenant, and I think we moved the rent from like $0.30 well in the $0.50 range in that space. So we are seeing those improvements. And as we pointed out in our earlier comments, activity is greatly improving there.

Got it. And just on some expenses here, Adeel, this question is for you. The SG&A expenses, I mean if you were to think about a run rate -- what you had in the fourth quarter, is that a good run great to use? Or do you think it would be a little bit higher going forward?

Well, I think as we stated in our comments earlier, on the lower end it's about $10 million. On the high end it's about $11 million. Again, the only thing that I would add into that is that with the increased cost related to the growth in our portfolio and some full-year costs, the answer is somewhere in the middle. But I think what you saw in the quarter is eventually what you are going to see from the low end of the range.

Okay.

But the range is $10 million to $11 million for the year.

Okay. And one other question on just other expenses, below the D&A line; could you just explain what all is included in that?

Right. I can explain that. This is Adeel again. Essentially it's the allocation for the management of those properties -- overhead allocations and things of that nature, and we have separated that out. We might combine that in the future, but that's essentially what goes through that line item.

And is that a good run rate to use for future quarters?

Yes. That's correct.

Okay. Great. Thank you so much.

Thank you. At this time we have no further questions. I would like to turn to call back over to our speakers for closing comments.

Well, thank you, operator, and thank you everybody again for joining us today. We appreciate your interest in Rexford Industrial and we look forward to speaking with you again after the first quarter.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.