Rexford Industrial Announces Pricing of Offering of $500 Million Exchangeable Senior Notes due 2027 and $500 Million Exchangeable Senior Notes due 2029
- Rexford Industrial Realty, Inc. announces the pricing of $500 million each of 4.375% exchangeable senior notes due 2027 and 4.125% exchangeable senior notes due 2029 in a private offering.
- The notes are fully and unconditionally guaranteed by Rexford Industrial and will be settled on March 28, 2024, after customary closing conditions.
- The offering includes a 30-day option for the initial purchasers to buy additional notes to cover over-allotments.
- The notes will accrue interest at rates of 4.375% per annum for the 2027 notes and 4.125% per annum for the 2029 notes, payable semi-annually starting in 2024.
- The notes will mature in 2027 and 2029, with noteholders having the right to exchange their notes under certain conditions.
- The initial exchange rate and price represent a premium over the last reported stock price on March 26, 2024.
- The net proceeds from the offering will be used for acquisitions, development activities, and general corporate purposes.
- None.
Rexford Industrial Realty's recent announcement of a $1 billion exchangeable senior notes offering is a significant capital market activity. The dual tranches, with varying maturities in 2027 and 2029 and interest rates of 4.375% and 4.125% respectively, reflect a strategic approach to managing the company's capital structure. Given the current interest rate environment, these rates seem competitive and could indicate confidence in Rexford Industrial's creditworthiness and future performance.
Moreover, the option for additional purchases to cover over-allotments suggests strong demand expectations from institutional investors. This could be a positive signal for the company's stock, as it implies investor confidence. However, the impact on the stock price will depend on how the market interprets the use of proceeds. If used effectively for acquisitions and developments, it could lead to growth, but it also increases the company's leverage, which could be a concern if not managed properly.
The use of proceeds from the notes for potential acquisitions and development activities is a clear indication of Rexford Industrial's growth strategy in the industrial real estate sector. This sector has been performing well due to the e-commerce boom and the subsequent demand for warehouse and distribution centers. If Rexford can secure good locations and enhance their portfolio, this could lead to increased rental income and property values over time.
The exchangeable nature of the notes, allowing conversion to common stock at a 30% premium to the current share price, also aligns investors' interests with the company's success. However, the dilution effect upon conversion needs to be monitored, as it could potentially affect existing shareholders' value. The redemption feature of the 2029 notes provides flexibility to the company to manage debt in response to market conditions, which is a prudent feature from a risk management perspective.
The offering's compliance with Rule 144A is noteworthy as it targets qualified institutional buyers, streamlining the process and potentially reducing the time to market compared to a public offering. The associated registration rights agreement is a commitment to provide liquidity for the exchangeable shares, which could enhance the notes' attractiveness to investors. However, the limitations within this agreement and the absence of a current resale registration statement underscore the importance of understanding the legal complexities and risks involved in such private offerings.
The stipulation of a 'fundamental change' clause in the indentures is a protective measure for investors, offering them an exit strategy in case of significant corporate events that could impact their investment. This highlights the company's attempt to balance investor protection with its financing objectives.
The notes will be senior, unsecured obligations of the operating partnership and will accrue interest at a rate of
The 2027 notes will not be redeemable at the operating partnership's option before their maturity. The 2029 notes will be redeemable, in whole or in part (subject to certain limitations), for cash at the operating partnership's option at any time, and from time to time, on or after May 20, 2027 and on or before the 41st scheduled trading day immediately before the maturity date of the 2029 notes, but only if the last reported sale price per share of Rexford Industrial's common stock exceeds
If a "fundamental change" (as defined in the indentures that will govern the notes) occurs, then, subject to a limited exception, noteholders may require the operating partnership to repurchase their notes for cash. The repurchase price will be equal to the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.
The notes of each series will be entitled to the benefits of a registration rights agreement pursuant to which Rexford Industrial will agree to register the resale of the shares of Rexford Industrial's common stock, if any, deliverable upon exchange of the notes of such series under the Securities Act.
The operating partnership estimates that the net proceeds from the offering of the notes will be approximately
The offer and sale of the notes, the guarantees and any shares of Rexford Industrial's common stock deliverable upon exchange of the notes have not been registered under the Securities Act or any other securities laws, and the notes and any such shares cannot be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws. Although the operating partnership and Rexford Industrial intend to enter into a registration rights agreement pursuant to which Rexford Industrial will agree to file a resale registration statement under the Securities Act covering the resale of shares of Rexford Industrial's common stock, if any, deliverable upon exchange of the notes, the registration rights agreement will contain significant limitations, and a resale registration statement may not be available at the time investors wish to resell the shares of Rexford Industrial's common stock, if any, deliverable upon exchange of their notes. This press release does not constitute an offer to sell, or the solicitation of an offer to buy, the notes or any shares of Rexford Industrial's common stock deliverable upon exchange of the notes, nor will there be any sale of the notes or any such shares of Rexford Industrial's common stock, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful.
About Rexford Industrial
Rexford Industrial creates value by investing in, operating and redeveloping industrial properties throughout infill
Forward-Looking Statements
This press release includes forward-looking statements, including statements regarding the completion of the offering and the expected amount and intended use of the net proceeds. Forward-looking statements represent Rexford Industrial's current expectations regarding future events and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those implied by the forward-looking statements. Among those risks and uncertainties are market conditions, the satisfaction of the closing conditions related to the offering and risks relating to Rexford Industrial's business, including those described in periodic reports that Rexford Industrial files from time to time with the
Contact:
investorrelations@rexfordindustrial.com
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SOURCE Rexford Industrial Realty, Inc.
