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Investing.com - Evercore ISI downgraded Rexford Industrial Realty (NYSE:REXR) from Outperform to In Line and lowered its price target to $38.00 from $39.00, citing a delayed recovery in rental rates. The industrial REIT, currently trading at $35.43, shows mixed signals with a high P/E ratio of 27x relative to its growth rate, according to InvestingPro data.
The research firm noted that while Rexford reported core FFO of $0.59, matching Evercore’s estimate and beating consensus of $0.58, market headwinds related to supply and rent growth persist in the Southern California industrial market. Despite these challenges, the company maintains strong fundamentals with a healthy 77.5% gross profit margin and has consistently raised its dividend for 12 consecutive years.
Evercore adopted a more cautious view on rent growth over the next 18 months, anticipating further market rent declines in 2026 that will impact re-leasing spread assumptions and reduce FFO growth. The firm also extended its timeline for lease-up in Rexford’s repositioning and redevelopment pipeline. For deeper insights into Rexford’s financial health and growth prospects, investors can access comprehensive analysis through InvestingPro’s detailed research reports.
The downgrade reflects concerns about Rexford’s lower cash mark-to-market, which fell to 3% in the second quarter, and uncertainty about rent growth trajectory that will likely limit stock upside in the near term.
Evercore’s revised model places its 2025 FFO estimate at $2.37, at the low end of the range and slightly below consensus of $2.38, while its 2026 estimate was cut from $2.45 to $2.40, implying just 1.6% growth compared to 6.6% expected for industrial peers.
In other recent news, Rexford Industrial Realty announced impressive financial results for the second quarter of 2025, surpassing analyst expectations. The company reported an earnings per share (EPS) of $0.48, significantly beating the forecasted $0.25, marking a 92% surprise. Revenue also exceeded predictions, reaching $249.51 million against a forecast of $245.12 million. Rexford reaffirmed its full-year 2025 Core FFO outlook at $2.37 to $2.41 per share, highlighting continued growth from repositioning and redevelopment activities. The company maintains a strong liquidity position with over $1.8 billion available, including $560 million in cash. Despite some challenges such as declining market rents and macroeconomic uncertainties, Rexford continues to focus on high-quality infill locations in Southern California. The firm has executed leases for 1.7 million square feet and stabilized seven repositioning projects. Analysts, including those from Citi and Bank of America, are closely monitoring the company’s strategic moves and operational performance.
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