We thank you for joining us for Rexford Industrial's Second Quarter 2020 Earnings Conference Call. In addition to the press release distributed yesterday after market close, we posted a supplemental package in the Investor Relations section on our website at www.rexfordindustrial.com. On today's call, management's remarks and answers to your questions contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. For more information about these risk factors, we encourage you to review our 10-K and other SEC filings. Rexford Industrial assumes no obligation to update any forward-looking statements in the future. In addition, certain financial information presented on this call represents non-GAAP financial measures. Our earnings release and supplemental package present GAAP reconciliation and an explanation of why such non-GAAP financial measures are useful to investors. Today'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; and our General Counsel, David Lanzer. They will make some prepared remarks and then we will open the call for your questions. Now I will turn the call over to Michael.

Thank you, and welcome to Rexford Industrial's second quarter 2020 earnings call. First, we hope that everyone joining us today as well as your colleagues, families and friends, remain well during these very challenging times. Today, I'll begin with a brief summary of our second quarter operating results. Howard will then cover our transaction activity, and Adeel will follow with more details on our financial results, balance sheet and outlook. We will then open the call for your questions. With regard to the second quarter, we are humbled by the exceptional work from our team that is driving Rexford's strong performance despite unprecedented challenges presented by the COVID-19 pandemic. We must also remark at the strength and resilience of the infill Southern California industrial property market, where the supply demand imbalance continues to differentiate this market as the highest demand, lowest supply industrial market in the nation. The extreme scarcity of developable land means there's no path to resolve our market's supply demand imbalance through new construction. One of the many reasons we choose to remain focused on creating value within infill Southern California. Our team's quarterly performance speaks for itself, highlighted by the following. We increased company's share of core FFO by 21% and to $38.8 million and generated a 6.7% increase in core FFO per share to $0.32. Our Stabilized Same Property NOI grew by 3.1% on a GAAP basis. Our Stabilized Same Property Cash NOI decreased by 2.3%, which was driven by short-term rent deferrals, averaging 1 to 2 months. We achieved 97.6% occupancy in our Stabilized Same Property Portfolio. We signed 123 leases for 1.4 million square feet during the second quarter. Our leasing spreads were 32.3% on a GAAP basis and 18.2% on a cash basis. Our leasing performance reflects the fundamental strength of our…

Thank you, Michael, and thank you, everyone, for joining us today. While vacancy rates for the infill Southern California industrial market increased during the second quarter, Rexford's portfolio demonstrated resiliency. Our Stabilized Same Property Portfolio ended the second quarter at 2.4% vacancy, which is lower than the infill markets overall, a testament to the quality of the Rexford portfolio and our management team's focus. Low market vacancy and a pervasive supply/demand imbalance continue to support strong market fundamentals. Despite the impact of COVID-19 and associated shutdowns, our markets achieved positive rental rate growth with asking rents up 2.2% on a weighted average basis over the past 12 months according to CBRE. Rexford saw a steady increase in leasing activity as we moved through the second quarter, completing our largest volume of new leasing over the past 4 quarters. Due to COVID-19 social distancing requirements, market demand is most focused on vacant space and Rexford continues to deliver the most functional quality space to each of our submarkets. As a result of our team's hard work, we believe we outperformed the market, meeting or exceeding our pre-COVID budgeted rental rates which resulted in strong blended leasing spreads, achieving GAAP and cash spreads of 32.3% and 18.2%, respectively. We are now more than halfway through the year and have made strong progress on 2020 lease expirations, even with many tenants taking a wait and see approach. Of the total 2020 expiring square footage at the start of the year not including 3 buildings moved to repositioning, we have renewed or released 57% and for our top 20 expirations by size, we've renewed or leased 58% with an additional 15% currently in active negotiations. Let me now turn to acquisitions. We acquired 7 properties during the second quarter for an aggregate purchase price…

Thank you, Howard. Beginning with our operating results. For the second quarter 2020, net income attributable to common stockholders was approximately $11.4 million or $0.10 per fully diluted share. This compares to $12.8 million or $0.12 per fully diluted share for the second quarter of 2019. For the 3 months ended June 30, 2020, company share of core FFO was $38.8 million as compared to $32.1 million for the 3 months ended June 30, 2019. On a per share basis, company share of core FFO was $0.32 per fully diluted share, representing a 6.7% increase year-over-year. Stabilized Same Property NOI was $44.3 million in the second quarter, which compares with $43 million for the same quarter in 2019, an increase of 3.1%. Our Stabilized Same Property NOI was driven by a 3% increase in same property rental revenue, while same property operating expenses increased by 2.6%. On a cash basis, Stabilized Same Property NOI decreased by 2.3% year-over-year, mainly due to rent deferrals related to COVID-19. Turning now to our balance sheet and financing activities. We continue to believe that maintaining a low levered balance sheet with ample available liquidity and a diverse array of capital sources is a competitive advantage for Rexford. In May, we completed an underwritten secondary offering of 7.2 million shares of common stock at $39.85 per share. We raised net proceeds of $285.1 million after deducting the underwriting discount, these proceeds will be used for future acquisitions to fund our development and redevelopment program and general corporate purposes. Also during the second quarter, we issued approximately 249,000 shares of common stock through our ATM at a weighted average price of $40.59 per share, which resulted in net proceeds to Rexford of approximately $9.9 million. At the end of the second quarter, we had approximately $254…

[Operator Instructions]. Our first questions come from the line of Jamie Feldman of Bank of America Merrill Lynch.

Adeel, it's been a pleasure working with you, also we wish you the best. So I guess, it seems like there's a lot of confusion already on same-store NOI and how companies are going to report it on a cash basis. So you guys reported minus 2.3%. And but can you talk about -- and I think Prologis yesterday reported a much higher number, but they did not treat their deferred rent, they kind of included it in that same quarter. So if you had done that same analysis, can you tell us what your same-store NOI would have been if you hadn't pushed it out? And also maybe talk us through why you used this methodology?

Jamie, thanks for the question. And yes, it has been a pleasure working with you guys, and you guys have been here with us since the IPO has been absolutely fantastic. The question in terms of the same-store and the cash NOI, which was reported at negative $2.3 million. If you look at our table that was presented in the earnings release, there was the acceleration of concessions of $825,000, plus a $3.6 million in deferrals. The same-store component of that, it's about $2.7 million or about roughly 61% or so, which would equate to 4.4% positive cash NOI growth year-over-year. And to the second part of your question, which is the reporting. These are arrangements and agreements and short-term amendments to the leases. And I think that was the most prudent thing to do, which was to document these as such within the construct of the lease amendment and the deferrals are reported at just exactly as that, just like a concession, but we report it in a normal contract. And so that's what you're seeing in the reporting. Naturally, as these deferred the concessions are built back in the latter half of the year, September, October and mostly which are going to be due back in 2020. And you -- we anticipate to see the cash NOI go higher because they're going to be built back. So from our perspective, the accounting of it was straightforward and simple, and that's what you're seeing on the numbers.

Okay. That's helpful. And then as we think about deferrals and rent collection, you guys gave some numbers in the release about 23.7% of your -- of the tenants that you have or the tenants contributing 23.7% of ABR having some relief agreements. But can you talk about what the actual agreements are in terms of your annual base rent?

Yes. Jamie, good question. And when we presented that data, that was simply to give the investor community and the analyst community, just the number of requests in terms of magnitude, that magnitude could have been compared with 3 different variables, which is square feet, on the lease count and, of course, ADR. That's what you're seeing there. But the data that we presented, again, in the table, if you take a look to see what -- in terms of the total relief, which was about $9.1 million, that's only 3.4% of the ABR as of June 30, 2019, which includes security deposit applications. If you further take that back and only focus on the concessions and the deferrals, that's only 1.8% of the ABR as of 6/30. So yes, the number is very small from that perspective, but the number that was presented in the release was just to give a cross-section of the relief request and just a comparison in terms of the total portfolio, in terms of size.

Okay. That's helpful. And then just last for me. I guess as you take a step back, California is actually seeing cases increase and maybe even more closures. But you've actually seen rent or rent payments increase, the percentage rent increase. Can you just talk us through your thought process? Or what you think is ahead in terms of, a, why things are improving in terms of your rent collections? And b, maybe how do you think about when PPP burns off? How do you think about the risk that maybe you do see rents maybe pull back -- or the percentage of rent collections pull back and when rent deferral periods end as well?

Jamie, it's Michael. Thanks again for your question, and great to connect with you today. So I agree it is really truly a testament to the strength of the infill tenant base, given the two factors that, a, obviously, many companies are hurt by COVID, and b, the local municipalities have given so many of them the ability to unilaterally to further rent. And what we're seeing on the ground, and frankly, we've seen this through prior cycles, including the great financial crisis is that these spaces are truly replaceable related to the -- in terms of the businesses that operate in them. They are truly mission-critical locations for these businesses. These are not like big box tenants looking at a global logistics supply chain and rationalizing logistics by getting rid of a location. These businesses, on average, can't afford to not have these locations. And so although some of them may be hurting, they do believe they have a business post COVID. They do believe that COVID is not permanent. And they also generally are reflecting the view that to the extent they give up their space today, there is a real likelihood they may not be able to reenter the market with anything comparable to the space they currently have. That's how tight the markets are in our markets. And frankly, those are some of the many reasons that we have chosen to focus exclusively on infill Southern California. And so these are similar patterns from the tenant based perspective as we've seen through prior cycles. It might seem counterintuitive. But it's consistent with our historical observations over decades. And with regard to the PPP component of it, frankly, we've taken a pretty deep dive on the PPP consumption in our tenant base. You can track tenants that…

Our next question is come from the line of Emmanuel Korchman of Citi.

Maybe first a follow-up on Jamie's PPP question. I think, Michael, unless I misheard you, you did an analysis of who received loans and did ask for relief. I guess if you think about the constructs of PPP, you actually get to -- get forgiveness on the part that you used to pay rent. So if PPP goes away, are you worried that there will be more tenants that won't be able to pay rent because they were using some of that PPP money? To me, it's kind of counterintuitive to say the guys that asked for relief got PPP because the PPP was meant to be used for salaries and rent?

Yes. No, that's a good question. Thanks, Manny, and thanks for connecting with us today. So number one, a business can receive x dollars in PPP money, and they're not required to spend any of that on rent. In other words, they can have other payroll and things that they can spend that money on and still get the full amount of their PPP loan. So they're not required to use it on rent. And furthermore, what we're seeing is rent generally speaking for these tenants is a small portion of their expense structure in their business; and number two, it's an exceedingly small portion of the PPP money that was received in aggregate from these tenants. So again, we don't really think that it's materially impactful to our tenants so far based on the data that we've seen to date. Again, that could change. But based on the data we've seen to date.

And then a clarification on the deferral agreements. Earlier in the call, I think you said those on average for 1 to 2 months. But then in one of Adeel's answers, he talked about getting most of that back, I guess, by the end of '20 or into '21. So what am I missing in terms of -- what do you mean when you say 1 to 2 months of deferral agreement?

This is David Lanzer with Rexford. And basically, what we're describing is those agreements we've worked out a deal or an arrangement, essentially a lease amendment where this tenant is deferring 1 or 2 months with the rent on average. And when we look at all the deferral agreements in whole. And then they also have a component that lays out the repayment period. And so as was noted before, most of those repayment periods are going to be paid or repaid during the third and fourth quarter of this calendar year. Does that answer your question?

It does, David. So I guess when we're on the phone with you guys in October, and we're looking at the July, August and September collections, those should naturally be higher because you're no longer again, on an average basis, talking to those tenants about deferrals. It was really just April, May and June that were deferred because that's when the conversations were happening. Is that the right way to think about it?

Well, based on what we have today in front of us and the deferral agreements that are in place, that is what our expectation would be. Obviously, different things can happen as far as orders being extended and other impacts related to COVID. But based on what we have in front of us today, that's what it looks like.

Manny, this is Adeel. Just to expand on David's question -- answer. As you also look at the table, it kind of shows you the pattern, right? May, April and May were the heaviest in terms of just the relief that was granted. June was almost half and then July was very little, if anything, at all, right? So this is exactly to the point that David was mentioning that is essentially being [indiscernible]. And these are the deferrals that David just talked about that are going to be rebuilt back in the latter half of the year.

Adeel, my last question, maybe just on that point then, if we're thinking about same-store NOI growth, I would assume that, that would mean a benefit then for 3Q and 4Q as you collect cash that should have been collected in April and May in the latter months of the year, but your same-store NOI guidance doesn't imply that. Can you help me take those two?

Absolutely. Our guidance is based on GAAP, not cash, right? So GAAP is supposed to normalize all of that stuff. So the guidance is on GAAP. If you noticed our Q2 same-store numbers, right? You didn't see the impact. And that's why when Jamie asked the question earlier, right, our cash is doing exactly what it's supposed to do because GAAP is supposed to normalize that behavior. So the gap is consistent. Is going to stay consistent even in Q3 and Q4 because it's supposed to normalize these deferrals. Q2 cash NOI was certainly impacted because you saw these deferrals factored through in. But to your point, as we go into Q3 and Q4 when those deferrals are build back, you expect to see a higher cash NOI number. So yes, absolutely from that perspective. But I wanted to make sure that it was clear for GAAP NOI versus cash NOI and the guidance is based on GAAP.

Our next question comes from the line of Blaine Heck of Wells Fargo.

Great. So just looking at the investment sales markets. Can you talk about how your acquisition has pipeline has changed, if at all, since the first quarter call. I mean, clearly, you guys have seen an uptick in activity thus far in July. Is that an indication you're starting to see any forced selling? And have you seen any movement on in-place cap rates or valuation?

Blaine, it's Howard. Let me address the question. So yes, the pipeline is very strong. We've obviously closed quite a few transactions subsequent to quarter end. We did over $70 million during the quarter and a little under $70 million post quarter already. We announced on the call earlier, we had 52 million square feet -- rather $52 million worth of product under LOI or contract. But I think your point being that I don't think that really reflects how robust our pipeline is and the amount of conversations we're having the amount of LOIs we're writing. We've written more LOIs through half of the year than we did all of last year. I think we've written a little over 400 LOIs this year, where last year in entirety, we did there about 327. So a lot of what we're doing now is really planting seeds that we're going to be able to harvest either later this year or into next year. A lot of that focus has been on some sale-leaseback type transactions. You've seen us start closing some of those. Some of the pipeline contains those. But not -- I wouldn't say there's really any forced selling occurring right now. The market is still very strong. What we didn't talk about, really, we talked about a lot of PPP impacts. But what we didn't talk about is the strength of the market, and we had one of our strongest leasing quarters in terms of new space being leased. And even just thinking about the vacates we had during the quarter, the 5 largest vacates we had, we leased 4 of them during the quarter. So the industrial market is doing pretty darn well when you think about what's happening in the world. And we've even seen some of the, I'll call it, Class A or fully leased more modern type buildings that come to market. Are garnering more offers than we've ever seen. There's obviously some shifts between people that focused on other product categories now that are looking towards industrial, so there's more capital coming over to the industrial side. And in fact, we're seeing a bit of cap rate compression now starting to occur on some of those core type transactions. We're probably isn't going to be unusual to see a lot of them starting to transact sub-4% with a bit more compression in there.

Great. That's helpful. And then the second question, just following up on guidance, both occupancy and same-store guidance seem to imply a pretty meaningful deceleration in the second half of the year, as Manny just pointed out. I guess my question is, how should we think about the level of conservatism built into those forecasts? Or do they reflect actual known move-outs or maybe tenant bankruptcies that you guys are aware of?

Blaine, thanks for the question. So yes, we did reiterate the guidance, which was consistent with what we reported last quarter. And when we built our guidance last quarter, right, naturally, we were looking at the data set, which was fairly limited, considering we were still early on into this pandemic in terms of what the world was experiencing. And it was based on really what we were able to track at that particular point in time in terms of release agreements that we had seen, which we've reported. And we knew that Q2 and Q3 were going to be dealt with in terms of these release agreements in terms of secure deposit applications, some of the deferrals that you've seen. And I think that quarter has played out exactly how we planned it. And I think in some cases, it's been very -- I mean, the optimism has been higher in terms of what you've seen in July rents, and that number is going to get hopefully higher in the next few days. But I think the reserves that were put on the guidance, which required us to reduce the guidance in terms of the total FFO. And obviously, that has a relationship with the same pool as well, was really to deal with the back half and to deal with any disruption and dislocation that our tenants can potentially experience, right? And we're seeing certainly some of that in terms of what the world is experiencing in terms of the uptick in some of the cases. And that's why it was really designed to address in the back half of the year. And actually, this still being July, right, there's still a lot of period left. So we felt like that the level of reserves still are accurate and just to maintain the guidance until we know a little bit more. So yes, I think that's what you're essentially seeing in terms of the guidance and just the reserves that are were placed on the books to deal with it. No specific tenant discussions within that reserves, they were more general in terms of looking at the trends of the collection pattern. So it was a just general reserve to address with any potential issues that could come down the pike, especially in the latter half of the year.

Okay, great. And Adeel, thanks for all your help. Great working with you over the years and good luck with everything in the future.

Thanks, Blaine. Appreciate it.

Our next question is come from the line of Mike Mueller of JPMorgan.

Adeel, same thing. It's been great working with you. In terms of the question, does the backdrop make you think differently about stabilized versus value-add acquisitions differently in any way?

Mike, it's Howard. I'll take that one. As I just alluded to, the market is exceptionally strong right now. There's a shortage, actually. It's a quality product out there. So while the vacancy rate went up in the market over the past quarter. If you really drill down, and I'll give you a great example in the infill greater LA market, which is about half the market. The vacancy rate went up, I think it was a 100 basis point increase but a good majority of that, about 60 basis points was due to 1 tenant vacating a very poor quality, 1.5 million square-foot building and another development site that vacated and is temporarily on the market for lease, just in case anybody wants to rent some very poor quality building. So if you factor those two out, the vacancy rates really only increased about 40 basis points in that market. So the market is exceptionally strong. And so we feel pretty comfortable about our activities in the market and really, our ability to achieve and exceed the rents that we've been able to forecast. And when you look at our leasing, we're hitting rents that are pre-COVID projected market rents. In fact, we're exceeding them in many cases right now. So it really has a lot of comfort to us in terms of what's happening out there.

And Mike, it's Michael. And great to hear your voice today. I just will add to that as a reminder. It's hard to predict in any one period, quarter or year, what the mix will be a value-add versus stabilized acquisitions, which I think was getting your question. And -- but what we are saying is an improving opportunity set for Rexford. Because of all the research we do, the lead generation, the opportunities that we're able to look at and approach today is a substantially greater in volume and quality as compared to even a year or 2 or 3 years ago. I don't know, Howard mentioned the number of LOIs already dramatically exceeds the this year-to-date, number realized dramatically exceeds what we did all last year over the prior year. And I think what we really focus on is we've got over 1 billion square feet in infill Southern California alone. That we've targeted that's owned by these passive, passive nonprofessional real estate owners. And by and large, those assets are in deep deferred maintenance. It's really about what degree of dysfunction are they, not what degree of function are they? And so we have this tremendous pallet of opportunity that we are mining. And so we couldn't be more excited about the opportunity to create value going forward. And to the degree to which the percentage of more value-add versus stabilized comes into play this year or next year, hard to predict.

Yes. And Mike. Let me just add one more comment to what we're doing on these acquisitions and so forth. This year, 91% of our transactions have been off-market or lightly marketed, which is actually substantially higher than last year, which I think we're close to about 80%. And if you look at all the acquisitions we've done, the projected stabilized yields are very similar to what we've seen in prior years as well. And then finally, those acquisitions so far this year, including post quarter below market in-place rents on average were about 17.5%. So they're interesting, there's great upside in them. And there's probably a little less on the value-add side. Than we've seen in quarter-to-quarter and year-to-year. And to Michael's comment, yes, we just can't predict when on what the quarter provides in terms of the value-add versus core plus or really just the core transactions.

Mike, what we are seeing in the market, too, is a lot of these passive owners who really haven't had to address their real estate needs for decades because the tenants just sort of stay put where today, some of those tenants are having issues or want to defer their rent or this and that. So in general, the turmoil in the market works in our favor with regard to generating attractive investment opportunities, particularly sometimes on the value-add side.

Our next question has come from the line of Jamie Feldman, Bank of America Merrill Lynch.

You know what, I'm all set. Thank you.

Our next question comes from the line of Chris Lucas of Capital One Securities.

I have two questions, both kind of follow-ups. Howard, I guess just kind of curious as to how, if at all, any of your conversations with sort of tax sensitive property owners are moving given the increased probability that the future might include higher capital gains, taxes and potentially negative changes to the 1031 tax-free exchange strategy? Any thoughts there?

It's a little early. I think some of that information in terms of potential loss of 1031 is a little too fresh or I think people to have digested it. But that said, a lot of the people that we converse with in the markets are long-term real estate owners. And they are extraordinarily focused on the tax consequences of selling. And so a lot of our UPREIT conversations are starting to escalate. And so unclear whether the ability to do an UPREIT could be changed in the same manner as a 1031. But if not, it certainly would create more opportunities for us to grow the portfolio through the UPREIT. Keep in mind, we have really just an -- a completely fragmented market of owners. There's quite a bit of institutional ownership. But the majority of the ownership in our markets are mom-and-pops or smaller partnerships and so forth. And a lot of them are aged. And so one of our greatest sources of opportunity, frankly, is the transition through generations of those properties. Sometimes there's a step-up in basis, but many times, the patriarchy trying to settle their estates before they get into the hands of the next-generation because there's just not an understanding of how to operate industrial properties and so forth. So we're having an increasing amount of those conversations right now. So but just too early to tell on the tax side related to some of the announcements you've seen in the news the past few days.

Okay, thanks for that Howard. And then Adeel, just maybe one question here to tie up a loose end on my end, which is -- so you note there's 98 -- for second quarter, 98.2% of the billings were either collected or there's an in-place relief agreement. So for that 1.8% of uncollected and no relief agreement in place. So it's about $1.4 million roughly. How did you guys treat that revenue? Is that not collected and therefore, not flowing through the quarter's results? Or is that deemed collectible and therefore -- but just late? How are you guys getting that $1.4 million?

Yes. And absolutely. So that is deemed collectible. It's just sitting on the balance sheet as an AR. And actually, you bring up a good point from that perspective is that if you heard my math or my calculus earlier in terms of the overall reserves, this is the data set that we are using to help us kind of work backwards into what that potential reserve should look like, right? And as I talked about in the back half of the year, right? So yes, so it's very much within our numbers and the reporting numbers, and that's the way accounting should work, but it's more on the AR side and our collectability becomes more fair reserve. That is what I talked about in terms of the doubtful to reserve. So yes, so the 1 -- so it's definitely in the reported GAAP NOIs and the cash NOIs.

Our next question has come from the line of Eric Frankel of Green Street Advisors.

Adeel, great work over the years and best of luck in the future. Rexford is in much better place, thanks to your efforts. My first question is just related to, obviously, after e-commerce and local consumption has been a really big driver of industrial demand in Southern California over the last several years. But the ports obviously have been more subdued, and this year, they've struggled quite a bit with the reduction in trade. Have you seen any change in industrial demand related to port activity, just based on the fact that I think imports are down roughly 10% year-to-date versus last year.

Michael, we can't hear you. Are you answering that one?

Eric, it's Michael, sorry. And thanks so much for joining us today. We don't really see a strong correlation, frankly, between the port traffic changes and our infill tenant demand. I think what you're going to see a greater correlation is with the big box tenants that are more focused on transshipment and global distribution. So that would be in markets like the Eastern Inland Empire and other major transshipment markets. And again, in our market, in these infill markets, and again, one of the very many reasons we stay focused on infill southern California as the demand drivers are more, as you mentioned, consumption-driven and last mile driven today and probably over 50 -- certainly, today, over 50% of goods imported are actually consumed regionally. And that's that regional consumption that's the much stronger driver within our tenant base. And so where we see weakness, it's more correlated to micro industries that are having a greater difficulty getting restarted. For instance, the entertainment industry, supplying props or related infrastructure for content, things like that, not so much to do with port traffic.

Okay. Understood. And then just kind of based on what the COVID cases rise in California over the past month or so and what the government restricting business activity, are there any more businesses that had to close again in your portfolio or percentage of them, just kind of based on the health and health guidelines?

Yes. It's interesting. And we -- back in, I think, March or so when there was the complete shutdown. We did a deep dive on our tenant base and estimated that efforts, about 80% of our tenants were still considered essential business, even back then amidst the total shutdown. And so we don't really see an impact today with these sort of lighter restrictions being put back in place in terms of creating the problems for tenants. It's really more about just the business realities, right? Irrespective of the restrictions imposed by the government. It's really more about just the fundamental demand for goods and services that some companies have declined or have not recovered, even though technically, they're allowed to operate.

Okay. That makes sense. Just final question. Howard, I guess you touched upon this. You were talking about this day. The L.A. market in the cause of the rise in the vacancy rate. Just geographically, obviously, Southern California, generally, it's more correlated to what's happening within the market and -- and then with other markets. But is there any difference in leasing activity between the submarkets you guys classify?

No, I would say not. I mean, if we look at what transpired during the quarter in terms of our leasing, it was fairly spread out throughout the different submarkets that we own in and probably follow the percentages in terms of the concentrations were half the portfolio follows the size of the market being half of the greater LA area. So we had obviously had more transactions in each of those submarkets within Greater LA than we would have in Ventura County, let's say, which is really the smallest of the submarkets. So the markets came roaring back, I think what's very interesting is if you look at our activity for the quarter, over 70% of our new leasing occurred in June. I hope and so 2/3 through the quarter, we didn't really know how the world was going to end up. And then all of a sudden, just demand skyrocketed and our team was exceptionally busy. And that activity has continued now into the third quarter as well. So we're quite pleased with the activity, and it's really occurring in all of the markets in terms of these infra markets that we're focused on.

Our next question is come from the line of Elvis Rodriguez of Bank of America.

Just a couple of follow-up questions. More macro on the municipality level, how are those conversations coming along and have the municipality sort of eased the way they are -- they're rhetoric with the tenants and allowing them to defer rent versus what you saw back in March and April? Any expectation that you can share on when do you think they'll start to push tenants to actually start paying rent?

Elvis, this is David. Thanks for the question. The answer is that really, we haven't seen them lightening up on the orders significantly. There have been a few important changes in Los Angeles County as well as the city of Los Angeles. They did modify their order to where they no longer allow publicly traded companies to not pay a rent, they no longer allow multinational companies and with respect to the county, if you have more than 100 employees, you can no longer defer rent. So those have been some positive steps in the right direction in a lot of other cities and counties then followed suit with those modifications. However, as far as the timing of those orders going away in response to your question, the governor extended the statewide order until the end of September, and then the City of LA, the County of LA, both quickly followed suit. So those orders still are in place. But as we've noted in the past, and as I think our rent collections reflect we've been very proactive in working out and using our leverage to work out deferral agreements that are more beneficial to the company than otherwise might have been afforded under the order. And we really use our leverage points in terms of tenant incentives that would be lost by a tenant if they're not paying rent. They lose certain renewal options almost all of our leases have provisions that allow us to claw back any previous incidents that were initially granted when the lease was signed, such as tenant allowances and upfront rent abatement. So we've used that leverage to really come out better than what the orders would have otherwise allowed. So we're continuing to monitor the 45 orders that affect us in Southern California. But we've been able to exceed what those otherwise would have allowed.

Great. And then just one more, maybe my final one for Adeel. And thank you, Adeel for all help over the years. So historically, you sort of have always guided to saying that cash same-store NOI is about 140 to 150 basis points over the GAAP number. Do the deferral or the collections or anything that's going on change that this year? Or how should we be thinking about where cash where the cash number will come in at the end of the year?

Yes. Elvis, appreciate the kind boards as well. And I think at the beginning of the year, we had guided to about 150 basis points higher than the GAAP spreads on the cash. At this junction, it's about 100 basis points. So once it's all said and done, if our guidance stays accurate, right, for the full year, if it comes on par with what we're saying, it should be about 100 basis points higher. And I think just the other thing that's just worth mentioning is that even though Q2 showed where they showed and we disclosed the fact that if you had factored in the deferral, it would be 4.4, but later on in the year, it would normalize itself a little bit, if not higher, right? So that's still about 100 basis points higher for the full year.

Great. Is that because of some of the deferrals, the payments will happen in, call it, 1Q of '21?

No. I don't think so. I think it's a partial product of the reserves is also, right, that we're putting on. So obviously, if you're putting reserves as I talked about, that are going to potentially impact, hopefully not in the latter half of the year. So that's why not only are you seeing some decrease in guidance on the GAAP NOI for same store, but you're also seeing some decrease on the cash side. So it's just -- it's a byproduct of that. I think very little, if any, of the deferrals are going to get paid back post 2020, but majority of them are not coming back in 2020.

We have reached the end of the question-and-answer session. I will now turn the call back over to management for any closing remarks.

Well, we'd just like to thank everybody for joining us today. And also a heartfelt thank you again to Adeel for the many years of service and partnership, and we're going to miss you next quarter Adeel. And with regard to everybody on the call, we hope you stay safe and healthy, and we look forward to reconnecting in about 3 months.

Adeel out.

Thanks, everybody.

This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.