REAL ESTATE NEWS

EQT Real Estate is continuing to expand its U.S. industrial footprint, acquiring a new portfolio in Southern California for roughly $1.2 billion.

The seller was Rexford Industrial Realty, Inc., which announced the news. The square footage and the exact location of the portfolio were not revealed.

Accounting for expected moveouts and expected roll-down of in-place rents, the portfolio is forecasted to generate an NOI yield of 5.5 percent in 2027, according to Rexford.

For EQT, this marks another purchase in the industrial sector. Last month, it snagged 11 properties in high-growth markets through a $268 million facility from ING Capital. And earlier this year, EQT paid $575 million for a 25-warehouse portfolio, located in both the Southeast and Northeast regions.

On the other hand, the sale for Rexford aligns with its $2 billion disposition initiative of non-core assets, which include properties with limited long-term potential, above-market in-place rents, shorter remaining lease terms and areas with high supply. This is designed to boost its balance sheet, cash flow and portfolio quality.

The Los Angeles-based firm said it is under contract to dispose of roughly $1.5 billion of assets year-to-date. It's hopeful to meet the $2 billion threshold by the year's end. The $1.5 billion sale is expected to close by the end of September, subject to customary conditions.

Pending the closure, Rexford is planning to use the proceeds to repay debt set to expire in 2027, support capital allocation priorities, stock buybacks and development and repositioning projects.

"This transaction is a significant step in our portfolio realignment and underscores our disciplined approach to capital allocation," said Laura Clark, CEO of Rexford.

"By strategically recycling capital from select non-core assets, we are concentrating our portfolio around the properties we believe offer the strongest long-term cash flow growth and value creation opportunity. The result is a stronger, more focused Rexford with enhanced financial flexibility, better positioned to deliver long-term shareholder value."

While industrial is facing challenges of heightened vacancy, CoStar sees light at the end of the tunnel. The firm, in a forecast, projects that slowing construction and strengthening absorption will gradually reduce industrial availability after vacancies rise modestly into early 2027. That's resulting in CoStar raising its annual rent gain forecast from 1.6 percent to 1.9 percent in both 2026 and 2027.

Source: GlobeSt/ALM