Rexford Industrial Realty, Inc. (REXR) Q1 2026 Earnings Report, Transcript and Summary

Good afternoon. My name is Pia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rexford Industrial, Inc. First Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the call over to Mikayla Lynch, Director Relations and Capital Markets at Rexford Industrial. Mikayla, please go ahead.

Thank you, and welcome to Rexford Industrial's First Quarter 2026 Earnings Conference Call. In addition to yesterday's earnings release, we posted a supplemental package and earnings presentation in the Investor Relations section on our website to support today's remarks. As a reminder, management's remarks and responses to your questions may contain forward-looking statements as defined by federal securities laws, which are based on certain assumptions and subject to risks and uncertainties outlined in our 10-K and other SEC filings. As such, actual results may differ, and we assume no obligation to update any forward-looking statements in the future. We'll also discuss non-GAAP financial measures on today's call. Our earnings presentation and supplemental package provide GAAP reconciliations as well as an explanation of why these measures are useful to investors. Joining me today are Rexford's CEO, Laura Clark, together with our COO, John Mehas and our CFO, Mike Fitzmaurice. It's my pleasure to now introduce Laura Clark. Laura?

Thank you, Mikayla, and thank you all for joining us today. The Rexford team delivered a strong quarter. We set a record for leasing activity, executing 4.1 million square feet of leases reflecting increased tenant activity and demand for our higher quality portfolio. The decisive actions we are taking to advance our strategic priorities are driving top and online growth. supporting our outperformance and higher expectations for the full year. Today, I'll provide an update on our strategic focus areas and the broader environment. John will then discuss our operating performance, and share a deeper view on market trends. Finally, Fitz will walk through our financial results and increased full year outlook. We entered the year with clearly defined goals to drive long-term shareholder value. In the first quarter, we made meaningful progress against our 3 strategic areas of focus: opportunistic dispositions, accretive capital recycling and operational rigor. I'll start with our promatic disposition strategy, which is focused on strengthening future cash flows and reducing development exposure. To date, we have closed on $144 million of dispositions with another $170 million under contract or accepted offer, keeping us firmly on track to achieve our target for the year. Through these strategic dispositions, we are derisking cash flows capturing premium valuations and avoiding future dilutive capital spend, all while directly supporting our next priority, accretive capital recycling. As we redeploy capital from dispositions, our investment decisions remain anchored and our commitment to delivering superior risk-adjusted returns. Given the dislocation between Rexford's public market valuation in the intrinsic value of our platform, share repurchases remain a compelling driver of FFO and NAV per share accretion. In the first quarter, we executed $200 million of share repurchases. Looking ahead, we will continue to evaluate opportunities across our portfolio to increase the quality and durability of our future cash flow growth and unlock meaningful value through accretive capital recycling. We also made material progress against our commitment to enhanced operational rigor. Last quarter, we shared our focus on prioritizing occupancy amid softer market fundamentals. Our team's strength of execution proactively engaging tenants, addressing end market requirements and driving demand for our assets translated into stronger leasing and shorter downtime. Our first quarter results and increased full year guidance expectations directly reflect our efforts to preserve cash flows and reduce capital cost, a continued focus moving forward. Regarding operational efficiency, our actions to date have positioned us to achieve meaningful G&A savings, bringing G&A as a percentage of revenue below the peer average, and we expect to continue reducing this level over time. Turning to the infill Southern California Industrial market, where Rexford's unique positioning provides unparalleled visibility into conditions on the ground. Infill Southern California is home to more than 24 million people, represents the 12th largest economy in the world and includes the fourth largest industrial market globally. A diverse set of macro and microeconomic drivers shapes demand and supply across the segment end market, meaning that no submarket, building size or quality tier performs the same. Importantly, this diversity underpins strong long-term supply and demand fundamentals. Against that backdrop, the first quarter reflected a shift across the market, increased tenant activity translated into higher leasing volumes. Specifically, first quarter leasing activity for the Rexford portfolio was over 70% higher year-over-year. In addition, current leasing interest on our vacant spaces increased to approximately 90% compared to 75% last quarter and a year ago. Notably, momentum accelerated through the quarter with the majority of our leases executed in the second half of the quarter. While demand in certain submarkets and product types remain soft and market fundamentals are still under pressure. We are encouraged by the early positive signs we are seeing within our portfolio and the market. We view this incremental improvement as a necessary precursor to broader stabilization, setting the stage for an eventual tightening in availability and lower vacancy across the market. Importantly, our high-quality functional assets and supply constrained locations reinforce our confidence in Rexford's ability to deliver outsized growth. Supply under construction remains near historic lows and the structural barriers to new supply that have emerged in recent years, including significantly increased regulatory restrictions have fundamentally altered the market's ability to add supply. We believe these long-term constraints will deepen Rexford's competitive moat and reinforce the value of our irreplaceable portfolio. These favorable dynamics are amplified for buildings under 50,000 square feet and align with Rexford's core focus on smaller format consumption-driven industrial. Supply under construction in this size range is immaterial, and approximately 80% of the existing inventory was built over 50 years ago, reflecting the long-standing difficulty of adding smaller format product and positions our value creation platform to deliver outsized per share growth over time. In closing, we're encouraged by the incremental improvement we're seeing in the market. We're confident Rexford will continue to capitalize as the market approaches the trough and demand conditions improve, and we remain well positioned to deliver meaningful, sustainable value creation for our shareholders. Before turning the call over to John, I'd like to congratulate him on his well-deserved promotion to COO, recognizing his exceptional leadership and substantial contributions across Rexford's operations. John?

Thank you, Laura, and good morning, everyone. Before I begin, I would like to express my gratitude for the opportunity to step into the COO role. I'm proud to be a part of a tremendous Rexford team, and I'm excited to help lead Rexford as we execute upon our strategy to drive performance. Overall, we delivered a solid first quarter with results tracking ahead of our expectations and reinforcing the durability of our platform. Leasing activity gained momentum throughout the quarter and our focus on prioritizing occupancy has resulted in over 4.1 million square feet of lease transactions. The volume is comprised of 144 deals, averaging 29,000 square feet with approximately 70% coming from renewals. And including the renewal of Tyco at our 1.1 million square foot building on Production Avenue in the Inland Empire West. Cash re-leasing spreads for the quarter were negative 15.4% and inclusive of the Tire co renewal and negative 1.8%, excluding the Tireco renewal, in line with our expectations. I'd like to take a moment to further describe the Tire co renewal, given its relative size and impact. The renewal was strategic for a number of factors. First, at the time of negotiation, we had visibility to the upcoming vacancy of an immediately adjacent building, similar in size and functionality, that would have represented an efficient low-cost relocation option for the tenant. Second, considering the significant capital investment and downtime associated with the potential vacancy next year, it was financially advantageous to preserve the occupancy. Finally, we opportunistically chose to limit the extended term to 3 years and to convert the lease structure to gross, thereby allowing us to collect a material reduction in property tax assessments anticipated to occur over the term. While this renewal generated an approximately 30% negative spread, it was amplified by the above-market in-place rent that was established during the last lease extension and is not indicative of future leasing spreads in the portfolio. Turning to the market. As Laura mentioned, we are seeing higher levels of leasing activity. Demand drivers continue to emanate from consumption-related sectors such as construction-related uses, food and beverage and automotive businesses. And notably, we have not seen a negative impact on demand related to the current geopolitical conflict. Importantly, the level of activity and conversion rate to executed leases continues to be dependent on product size, class and submarket, demand for spaces under 50,000 square feet remains healthy and well diversified. Tenants seeking larger spaces over 50,000 square feet are generally focused on functional space that can be leased at value rates. As a result, Class A product in certain submarkets, such as San Fernando Valley, Orange County and San Gabriel Valley continue to see slow activity as evidenced by delayed rent commencement on development projects that we have delivered in those markets. Focusing further on submarket-specific demand, we continue to see notable increased activity from 3PLs in the Inland Empire West and from advanced manufacturers, which are seeking both larger and smaller format spaces in specific portions of the San Fernando Valley and South Bay markets. One such example is the stabilization of our completed repositioning project at 1315 Storm Parkway, which is a 38,000 square foot building in the South Bay that we leased to an advanced manufacturer. Overall, we are encouraged by these trends and the general increase in activity. However, we continue to closely monitor net absorption across our markets. The overall infill SoCal market continues to experience negative net absorption, resulting in a 20 basis point increase in vacancy with rents declining approximately 70 basis points compared to last quarter. Deal terms aside from rate continue to be stable, including concessions and annual escalations. Moving on to capital allocation. We remain focused on our disposition strategy and disciplined capital deployment. During the quarter, we disposed of 5 assets comprised of 2 development projects that did not meet our current return requirements and 3 operating assets that were sold to users at premium valuations. Subsequent to quarter end, we closed on 1 additional property that was formerly in our near-term development pipeline, and we have $170 million of additional dispositions under contract or accepted offer which are subject to customary closing conditions. In regard to repositioning and development, we continue to rigorously evaluate the strategy for each asset in our pipeline with a focus on maximizing risk-adjusted returns. As a result, 2 projects were removed from our prior near-term pipeline to pursue more accretive outcomes. At Green Drive in the City of Industry, we were able to meet an active user sale requirement and have pivoted to executing a sale and capitalizing on a premium valuation. At Mulberry Avenue in the Inland Empire West, we are foregoing a previously planned repositioning project that no longer meets our return requirements and the property is now being offered both for sale and for lease as is. At the same time, we continue to move forward with value creation opportunities that meet our underwriting targets. Rofin Road in San Diego was added to our future development pipeline as it will ultimately deliver a highly competitive building and a desirable location and is forecasted to achieve a 200 basis point development spread. With that, I'll turn it over to Fitz.

Thanks, Laura and John, and good morning, everyone. We are pleased with our first quarter financial results, which reflect our continued focus on what we can control, driving accuracy, recycling capital accretively and preserving balance sheet flexibility and strength. Starting with financial results. First quarter Core FFO per share of $0.61 was $0.01 above our internal forecast and up $0.02 sequentially from the fourth quarter last year. The $0.01 beat was largely driven by stronger NOI growth and accretive share buybacks. The $0.02 sequential improvement was driven primarily by lower G&A and also accretive share buybacks and stronger NOI growth. Same property NOI growth was 90 basis points on a net effective basis and negative 40 basis points on cash. While the year-over-year change benefited from average occupancy gains, we did experience higher concessions. Regarding bad debt, as expected, expense was elevated this quarter. It was concentrated in a few tenants and now broad-based. Our tenant watch list continues to trend low, underscoring the strong credit quality and stability inherent in our diverse tenant base. Turning to capital recycling and the balance sheet. Disposition proceeds were redeployed into share buybacks. We bought back $200 million of shares at a weighted average price of $36 bringing our cumulative total since mid-2025 to $450 million. This capital rotation was meaningfully accretive and selling assets and redeploying into shares at a significant discount to intrinsic value was a key factor in our ability to raise full year guidance. We view share buybacks at these price levels as a superior use of capital, providing a direct and meaningful increase to shareholder returns. We ended the quarter with net debt to adjusted EBITDA of 4.5x and $1.3 billion of total liquidity with no significant maturities in balance sheet that gives us strength and flexibility. Based on approximately $300 million of remaining dispositions expected to be completed by the end of the year, we have significant liquidity and opportunity to deploy capital towards the highest risk-adjusted returns across our suite of opportunities, share buybacks, repositionings and select developments. Turning to our 2026 guidance increase. We are raising our full year Core FFO per share at midpoint by $0.02, primarily driven by outperformance in the first quarter due to strong leasing activity as we continue to prioritize occupancy and accretive capital recycling. We have also raised our same-property NOI growth outlook by 50 basis points at the midpoint both on a net effective and cash basis. Average same-property occupancy is now expected to be 95.1% to 95.6%, up 30 basis points at the midpoint. Our bad debt assumption of 75 basis points of revenue remains unchanged, as does our net effective re-leasing spreads of 5%. All other assumptions, G&A of approximately $60 million and interest expense of approximately $112 million remain intact. On the repositioning and development front, we expect to stabilize and commence rent on approximately 1.1 million square feet of value-add projects generating $17 million of annualized NOI, with the majority expected to come online in the second half of this year. This is down slightly from our earlier expectations due to rent commencement delays that John noted. Conversely, approximately $12 million of annualized in-place NOI will come offline related to 2026 construction starts in line with last quarter. The weighted average timing of the annualized NOI coming offline is late in the third quarter. Before we open up the call for questions, we acknowledge the near-term pressure from re-leasing spreads given the market rent decline over the past 3 years. However, our focus is clear: control the controllables. We are navigating the current phase of the cycle with a clear, disciplined strategy centered on execution. Our primary bridge to growth is a rigorous focus on driving occupancy in our overall portfolio, and we have a robust repositioning and development pipeline, representing roughly $50 million of NOI poised to come online over the next 2-plus years which serves as a powerful offset to current market rent resets. Furthermore, we are aggressively optimizing our capital allocation by selling noncore assets and redeploying those proceeds into accretive share buybacks at attractive valuations. By pairing these actions with a lean approach to G&A, we are strengthening our cash flows while positioning us for outsized growth as the broader environment improves. In closing, a big congrats to John on his promotion. John, I truly appreciate your leadership and our continued partnership. Finally, on behalf of Laura, John and myself, I want to extend our gratitude to the entire Rexford team for their ongoing dedication and consistent execution of our strategic goals. And with that, I'll turn the call back to the operator and open the line for questions.

[Operator Instructions] I will now hand the call back to Mike balance to begin the Q&A session.

Our first question comes from Craig Mailman from Citigroup. Craig .

Laura, you had mentioned that you're seeing some improvement in that accelerated through the back half -- the back end of the quarter. Can you talk about just where you're seeing that pocket of strength in terms of your submarkets? What -- I heard John's comments on 3PLs in the West. But any other verticals or tenant type to call out as you guys are seeing some kind of continuing bottoming in the process in?

Yes. Craig, this is John Nahas. I'll jump in and take that. So overall, we've continued to see some consistent themes construction-related uses, advanced manufacturing in certain submarkets, as I mentioned in the prepared remarks. Food and beverage, those are themes that we saw active last quarter and those continue this quarter across all markets. And then from there, there's really a bifurcation whether we're talking about below 50,000 square feet, where we continue to see a broad base of demand just based on consumption in the infill markets. And then above the 50,000 square feet, it gets a little bit more submarket dependent. So while 3PL activity remains increased in Empire, it's not the only tenant activity we're seeing out there, it does go beyond a bit more, but it's really mixed and micro market dependent. I think it's maybe helpful to talk a little bit about where we are today with activity compared to where we were last year. We saw the back half of 2025 show increased activity as compared to the first half of the year, where there was a bit more turmoil from tariffs and other macroeconomic impacts. And that produced some good volumes in the market. When we got to the fourth quarter, there were deals that were being executed, but what we did not see at the time was the early formation of the leasing pipeline. So there, it was slower touring activity. And so as a result, this quarter, we saw less conversion into executed deals particularly around some of the Class A product. And I mentioned this in the prepared remarks as well, that's a pocket in a number of submarkets where we still don't see the same levels of demand recovery. There are exceptions to that, the South Bay market, in particular, is one to point out where Class A really fits the advanced manufacturing demand. I mentioned San Fernando Valley, there are certain pockets, particularly Santa Clarita Valley where we see that tenant demand forming as well as in San Diego. And then, there's been some recent deals that hit the market in the Long Beach area where that demand is forming as well. So it's really kind of across the board feeling better. There's better sentiment in the market. This quarter, we are seeing more signs of that early leasing pipeline starting to form, but we're watching it very closely in terms of how that's going to convert into executed deals, which we would expect to see happen over the next 2 to 3 months.

Thanks, Craig. Our next question comes from Sameer Connell from Bank of America.

I guess, Laura, on the one hand, it looks like you're starting to see improvements in the market. You talked about tenant activity. But when I look at sort of the development leasing side, it's still taking a bit longer. So I guess maybe just reconcile kind of the 2 items.

Yes. John just touched on what we're seeing from a development perspective in terms of some of the drivers there. But just overall, Samir, what I would say is, I mean, we are encouraged by the early signs of improvement a pickup in activity. We're seeing obviously increased tenant decision-making and increased level of lease executions and that certainly varies by size, submarket and product type. So -- but all that said, market fundamentals are under pressure. Net absorption is negative and vacancy ticked up. So we take all of these different dynamics into account we do see the bottom forming of the cycle and these -- but these are good early signs. And as we look ahead, we expect and hope to continue to see quarters of improved incremental demand. And that's what's really going to be critical to net absorption turning positive in the market, vacancy moving down and rates firming.

Thanks, Samir. Our next question comes from Greg McGinniss from Scotiabank.

Good morning. I'm curious who you're finding as buyers for the dispositions, whether those are in place assets or ones that are coming from the redevelopment pipeline and what types of cap rates being achieved on those?

Yes. Greg, this is John. So if you look at what we sold in the first quarter, as an example, there's really 2 buckets. There's the development sites that we sold and the buyer profile for that tends to be merchant developers that are well known in the region and good groups that develop product here. Those deals don't really trade on a cap rate basis. It's more about land basis that supports their underwriting targets. And then the other half of the sales that we completed were operating assets that were sold to users. And so that pricing there represents pretty strong cap rates on a blended basis. We were below 4% this quarter with the 3 assets that we sold to users. And the reason for that is the users don't really look at it from a cap rate basis. They're looking at it from a dollar per square foot standpoint. And there's other considerations that drive that demand, such as some of the accelerated depreciation benefits that they now have, not only from the real estate but investments that they're making into fixturization and equipment. Right now in the market overall, we're still seeing low transaction volume. And so it presents this opportunity for users to continue to be active. And so we're capitalizing on that where it generates these low cap rates that allow us to accretively recycle capital. We actually had a couple of repositioning projects that I mentioned in my prepared remarks where we've shifted gears on strategy to take advantage of interest in the market. So we're going to continue to do that where we see low cap rate opportunities that will allow us to collect those proceeds and put them to work at higher yields.

Thank you, Greg. Our next question comes from Michael Griffin from Evercore.

Just wondering if you can give us some more color on where market rents are. And I realize it can be submarket by submarket, but maybe for the portfolio broadly. And now rents signed in the quarter were call it in the mid range, but you've got $18 rents expiring for the rest of the year. If you kept your, I guess, net effective and cash mark-to-market guidance the same, which I believe cash mark-to-market is 0 to down 5%. Does that imply that the, I guess, rents you're signing on those expiring leases are going to come in and -- in the mid-$16 range. Is it $17 just maybe help us contextualize where market rents are and the expectations for the rest of the year?

Yes. Our expectations for re-leasing spreads haven't changed since last quarter. On a net effective basis, they're going to be between 5% and 10%. And on a cash basis, flat to negative 5%. As we disclosed last night, Tire Co did have a disproportionate impact on our re-leasing pods this quarter. As we move throughout the remaining part of the year, we do expect releasing spreads to reaccelerate to the back half of this year.

Our next question comes from Michael Mueller from JPMorgan.

If you continue to buy stock back like you did in the first quarter, would it likely be coupled with an increase in disposition activity?

Mike, yes. Look, buybacks are tied to disposition activity. Our expectations for this year are between $400 million and $500 million. Today, we get about $145 million already closed and another 170 under contract. But look, we view buybacks through an opportunistic lens. And we see a disconnect between our intrinsic value and the current market price, we're going to lean in. We demonstrated this approach over the last months. We have a $500 million remaining on the program. In terms of appetite, it's obviously share price sensitive balance with ensuring we maintain our low leverage of 4.5x and other competing uses of capital.

Our next question comes from John Kim from BMO.

On the buybacks, you certainly make a compelling case to continue it. But looking at the market reaction today and year-to-date, it doesn't seem like you're really being rewarded for it. So I'm wondering if this doing how it continues, would you consider pausing buyback back activity?

John, thanks, so much for the question. The -- as we think about the foundation of how we're allocating capital is, how we're going to drive the highest we're going to allocate capital to the highest risk-adjusted returns. And obviously, where we're going to be able to drive FFO per share, NAV per share and shareholder value and growth in those areas. So we are going to continue to assess what are -- where are those opportunities to do that. As Fitz mentioned, when you look at the disconnect between our intrinsic value and where the stock is trading that has been a compelling use of capital today. So we will continue to assess that as well as opportunities to invest within our value creation platform through our repositioning and select developments as we move through the year.

Our next question comes from Vince Tibone from Green Street.

So I just wanted to dive into the leasing activity, you mentioned was at a record high. I mean looking at the sup, it looks like it's mostly driven by renewals and then the tire co-lease being a part of that. But outside of Tire Co, are you generally attacking -- trying to do more early renewals than in the past? And spreads obviously have held up a little better there. So just trying to get a sense of your strategy on the renewal side of thing in a softer market. Are you going after more renewals as a way to -- hopefully have helped the retention or hold up better on the rent side of things. Just curious your approach there.

Vince, this is John. As you noted, the Taco transaction did help lift the overall leasing volumes. And then when you look beyond that, there's a number of deals that were made across the various unit sizes across our portfolio. And so really, when it comes to renewals and retention, we're prioritizing that where we can. As part of our overall strategy to prioritize occupancy. I will say that tenants in today's market, depending on the size range and depending on the submarket, there might be more options that work for them. And so part of the activity levels that we're seeing overall with tenants touring is being driven by tenants evaluating what's available in the market relative to the space that they currently have. And so when we see that happening, we're we're pretty proactive in engagement and in some cases, trying to preempt that exercise. That was part of the strategy with that tireco renewal, as I had mentioned. And our numbers show that. I think our retention is up a bit and renewals are making up a slightly higher component of our overall leasing activity in the quarter, which is a result of that approach.

Our next question comes from Vikram Nahla from Mizuho.

I guess I just had one clarification and then a broader question. it, you mentioned sort of the leasing dollar ramp up. I'm wondering if you can give us a square footage target you have to keep the portfolio occupancy for the core portfolio? And then how much you need to lease square footage wise for the development portfolio to meet your goals? And then just maybe a bigger picture question for the whole team. Clearly, you're selling attractively buying back stock. But I'm wondering if there's a thought to take a deep dive into the portfolio, maybe identify markets or submarkets you don't want to be in long term and take advantage right now by doing a bigger sale -- $1 billion sale or just muni portfolio sale, where you position this portfolio for the long run.

Sure. Vikram. In terms of square footage that we expect to commence as it relates to our guidance between $8.5 million this year, which includes about 1 million square foot -- 1 milling core square foot from repositioning and development.

In regards to your question on additional dispositions we do continually assess the portfolio. We're looking to assess the portfolio for additional opportunity to build a more resilient and higher growth platform and portfolio going forward. We're assessing risk, we're assessing capital needs. We are assessing product that aligns with our ability to drive true value creation and differentiated growth. Really importantly, though, and as is contemplated in our current disposition guidance for the year, we are focused on recycling capital on an accretive basis that enables us to drive FFO and NAV per share growth.

Our next question comes from Richard Anderson from Cantor Fitzgerald.

So I just wanted to ask a broad question myself. -- around some of the sort of tangential demand factors around advanced manufacturing and data centers and even in your case, aerospace and defense, being a potential lightning rod of demand as well in Southern California? And how that sort of manifests itself in your smaller format consumption-oriented platform. I'm just curious if -- is there a dotted line, a straight line, a dark line to your business from these sort of outside demand factors? Or do you feel it directly in your leasing process?

Rich, this is John. So just to start off the bat, data centers is not really a core component of our business. There's a lot of power demands that come with that. And so -- that one is not something that makes up a material opportunity for our portfolio. But when it comes to advanced manufacturing, the answer is yes. It is a very bold connected line, and we see that demand being applied to spaces, both large and small. The property I mentioned in the prepared remarks, Storm Parkway, it's pretty close to our average unit size represents the typical unit in the Rexford portfolio, and we leased that to an advanced manufacturer. It's important to note that there's all different facets and layers to this sector. Some of them are the biggest household names that everybody recognize that are producing things that everyone is familiar with. And then there's all of the suppliers and vendors and service providers that kind of come with that industry. And we see a lot of demand, especially in the South Bay markets, specifically the coastal portions of that market where there's demand across all those ranges. We've executed those with the household names, and we've been very happy with the level of demand that ranges from some of our smallest units in that market going down to 5,000 square feet that are a little bit more incubator type, up to things like storm and beyond, even Western, which we stabilized last year which is in Class A development and we delivered in Torrance fits into that category. So it's a very relevant and active sector. As I mentioned also, we do see this demand in other pockets of San Fernando Valley, San Diego and now a little bit in Long Beach and a little bit into Orange County. So we're very focused. We spend a lot of time focused on the demand that comes from that sector in the market and have had some success to date. So we're pretty pleased by it.

Our next question comes from Nick Thillman from Baird.

I was hoping to unpack the decline in lease term signings during the quarter, if there's anything to specifically call out there. I would think if tenants were sort of seeing an inflection point or abutting the out phase that they would be seeking a little bit more term and lock in favorable terms. But this is a strategy that Rexford is pursuing to sort of the weather the near term and kick out for a cycle in, say, 2029 and beyond. I guess just -- is there anything worth highlighting within the lease term? Or are we just reading through on print and there's some hodgepodge numbers that are in there?

Yes. Nick, so it really depends there are tenants in the market who are trying to capitalize on current market rate levels and lock it up for longer periods of time. And in some cases, that might be the best decision to meet that requirement and do that deal. In others, we may proactively try to shorten terms strategically so that we can get to a reset moment, if we believe that, that's going to come in the next few years. I think Tire co is a good example of that, we chose to limit that term on the extension to 3 years. It really just depends on competitive supply and how much leverage there is on each side of the table for each 1 of those situations. In terms of also the overall statistics for the activity that we converted in the first quarter, it also comes down to size. And so the mix of units that falls into our volume can have an impact, generally speaking, the smaller units in our portfolio, on average, tend to have shorter terms anyway. So that is impacting the number as well.

Our next question comes from Brendan Lynch from Barclays.

Maybe you can just talk about the long-term plan for the asset. I'd imagine getting the lease renewal makes it easier to dispose of if you so choose, and it doesn't really fit in with the rest of your portfolio. So just how we should think about that going forward?

Brandon, our focus was on addressing the lease roll for next year as we thought about structuring that renewal. So it's not really a read-through to any longer-term strategic plan for that asset.

Thanks, Brendan. Our final question comes from Yang Ku from Wells Fargo.

Yes. Thank you. Good morning out there. I just wanted to go back to rent a little bit. It looks like the pro forma targeted rent in your redevelopment portfolio seems to be a little bit higher than current market rent. So I'm just wondering, is that part of a mix issue? Or is there some type of rent growth that's taken to that pro forma yield?

No, that as it is to do with the mix issue.

Thanks. That concludes the Q&A portion of our earnings call. I'd now like to turn the call over to Laura Clark for closing remarks.

Thank you all for joining us today. We look forward to spending time with you throughout the quarter, and I hope everyone has a wonderful weekend.

Thank you. And ladies and gentlemen, this concludes today's conference call. You may now disconnect.