On Thursday, Citi maintained a Neutral rating on Rexford Industrial Realty (NYSE:REXR) shares, with a consistent price target of $50.00. The third quarter earnings for REXR presented a complex outcome.
The company's funds from operations (FFO) slightly exceeded the market's expectations by one cent but fell short of Citi's prediction by the same margin. REXR raised its 2024 FFO guidance midpoint by one cent, attributing the increase to recent acquisitions.
REXR reported having an additional $200 million worth of deals in its acquisition pipeline. However, the company's rent spreads and mark-to-market (MTM) rates showed signs of slowing down. The guidance for same-store occupancy (SS occupancy) and same-store net operating income (SSNOI) growth was also lowered at the midpoints.
This adjustment was primarily due to the anticipated vacancy by LL Flooring at one of REXR's largest spaces, which negated the positive impact of ongoing rent from a tenant on a cash basis of accounting.
The company's third-quarter cash rent spreads saw a deceleration of approximately 27% compared to previous quarters. REXR's management had previously indicated on the second quarter call that the expected reduction in fiscal year 2024 spreads would be driven by a slowdown in the second half of the year, resulting from a combination of smaller tenants and more recent lease agreements.
The detailed financial results and guidance adjustments reflect the company's current position and outlook, as well as the challenges and opportunities it faces in the real estate market. The maintained Neutral rating and price target suggest a watchful approach to the company's stock performance in light of the mixed financial indicators.
In other recent news, Rexford Industrial Realty has seen significant growth in the second quarter of 2024, displaying substantial increases in funds from operations (FFO) per share and net operating income (NOI).
Following this, JPMorgan revised Rexford's price target upward to $52, maintaining a neutral stance after reviewing the company's Q2 earnings. Meanwhile, Scotiabank reiterated its Sector Outperform rating for the company, emphasizing Rexford's strong South Bay portfolio.
In a different vein, Regional Express Holdings (Rex), an Australian airline, is considering Ernst & Young as administrators due to financial distress. The Australian government has expressed readiness to support Rex, emphasizing the importance of maintaining air services in rural areas.
Analysts from Evercore ISI and JPMorgan suggest potential growth in Rexford's financials, with Evercore raising its price target to $55 from $54. However, Mizuho Securities and Baird have reduced their price targets to $50 and $49 respectively, maintaining a neutral rating. These are the recent developments in both Rexford Industrial Realty and Regional Express Holdings.
InvestingPro Insights
To complement the analysis of Rexford Industrial Realty's (NYSE:REXR) recent performance, InvestingPro data provides additional context. Despite the challenges highlighted in the earnings report, REXR's financials show some positive trends. The company's revenue growth of 19.93% over the last twelve months and a quarterly growth of 21.36% in Q2 2024 indicate strong top-line performance, aligning with the company's acquisition strategy mentioned in the article.
InvestingPro Tips reveal that REXR "has raised its dividend for 11 consecutive years," which may appeal to income-focused investors, especially given the current dividend yield of 3.38%. This consistent dividend growth, coupled with the company's profitability over the last twelve months, suggests financial stability amid market fluctuations.
However, the InvestingPro data also shows that REXR is "trading at a high earnings multiple" with a P/E ratio of 40.85. This high valuation metric could explain the Neutral rating from Citi, as it may indicate limited upside potential at current price levels.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips that could provide deeper insights into REXR's financial health and market position.
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