Business Context and Reporting Period
Rexford Industrial Realty, Inc. filed a Form 8-K on April 10, 2019, reporting the acquisition of an industrial property located at 1515 East 15th Street in Los Angeles, California. The property consists of approximately 238,015 square feet on 2.13 acres.
Key Financial Metrics and Transaction Details
- Acquisition Consideration: The company issued 593,960 newly issued 4.43937% Cumulative Redeemable Convertible Preferred Units (Series 1 CPOP Units) of its Operating Partnership.
- Valuation Basis: The transaction was priced based on a common stock price of $31.56, representing the trailing 30-day average closing price as of the letter of intent date.
- Liquidation Preference: The Series 1 CPOP Units carry a liquidation preference of $45.50952 per unit, totaling approximately $27.0 million in aggregate.
- Distribution Rate: Holders are entitled to cumulative cash distributions at 4.43937% per annum, payable quarterly beginning June 28, 2019.
- Stock Price: On the filing date, the closing price of the Company's common stock on the NYSE was $37.01.
Material Changes and Transaction Structure
The filing details the creation of a new class of preferred units to finance the acquisition. The Series 1 CPOP Units rank senior to Common Units and on parity with existing Series A and Series B preferred units. These units are convertible into Common Units on a one-for-one basis at the holder's option at any time, or at the Operating Partnership's option on or after April 10, 2024. The liquidation preference represents a 44.2% premium to the Average Value used for pricing.
Guidance, Risks, and Contingencies
The filing does not provide updated financial guidance or outlook beyond the specific terms of this transaction. Risks associated with the transaction include the dilution of existing common unit holders upon conversion and the obligation to pay cumulative cash distributions on the new preferred units. The Company provided customary indemnification to the seller regarding taxable transfers of the property.
Key Facts for Investor Verification
- Verify the impact of the $27.0 million aggregate liquidation preference on the company's capital structure.
- Confirm the quarterly cash distribution obligations starting June 28, 2019.
- Review the conversion terms allowing holders to convert to Common Units at any time, which could affect share count.
- Examine the Fifth Amended and Restated Agreement of Limited Partnership (Exhibit 10.1) for full legal terms.