Rexford Industrial Realty Inc (REXR) Q4 2020 Earnings Call Transcript

Image source: The Motley Fool.

Rexford Industrial Realty Inc (REXR -1.04%)
Q4 2020 Earnings Call
Feb 11, 2021, 1:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings and welcome to Rexford Industrial Realty Fourth Quarter and Full Year 2020 Earnings Call. [Operator Instructions] Please note this conference is being recorded.

I will now turn the conference over to David Lanzer, General Counsel. Thank you. You may begin.

David E. Lanzer -- General Counsel and Secretary

We thank you for joining us for Rexford Industrial's fourth quarter 2020 earnings conference call. In addition to the press release distributed yesterday after the market closed, 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 the answers to your questions contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. 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 our 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 reconciliations and then 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, Laura Clark and myself, David Lanzer, our General Counsel. We will make some prepared remarks and then we will open the call for your questions.

Now I will turn the call over to Michael.

Michael S. Frankel -- Co-Chief Executive Officer and Director

Thank you and welcome to Rexford Industrial's fourth quarter 2020 earnings call. Most importantly, we hope you and your families are well and healthy. Today, I'll begin with a brief introduction. Howard will then cover our transaction activity and Laura will discuss our financial results and outlook for 2021. We will then open the call for your questions.

Although last year brought significant hardship within our communities and across the globe, our team at Rexford Industrial completed one of our most outstanding years on record, despite the pandemic. Our Rexford experience demonstrates the strength of our infill Southern California tenant base and of our entrepreneurial team. The team's 2020 performance speaks for itself. We achieved record leasing volume of over 6.3 million square feet with exceptional releasing spreads averaging about 20% cash and 30% on a GAAP basis. Our investment volume of over $1.2 billion of acquisitions also set a new high watermark for the company and, combined with our strong internal growth, drove a 22.1% increase in core FFO, which grew 7.3% on a per share basis.

A range of growth sectors drove incremental tenant demand through 2020 from healthcare and consumer staples to aerospace and electric vehicles, among others, while a dramatic acceleration in e-commerce adoption pushed our infill tenant demand to unprecedented levels. When we consider these incremental demand drivers, combined with the fact that our infill Southern California industrial market serves the nation's largest zone of consumption and benefits from the incurable supply demand imbalance, it is easy to understand why our infill market is positioned to outperform.

These factors combined with our entrepreneurial business model have enabled Rexford to generate sector-leading total shareholder return of about 330% since our 2013 initial public offering, substantially exceeding the total shareholder return of any other publicly traded logistics REIT in America.

Looking forward, we see continued strength. By way of indication, CBRE recently projected Greater Los Angeles county rental rate growth of 41% over the next five years, which equates to 7.1% average annual compounded rent growth for the next five years in Greater LA. Meanwhile, by way of comparison, the same CBRE study projects 2.9% compounded annual rent growth for the nation's other major markets outside of Southern California over the same period.

Rexford's future is bright. We believe the company has never been better positioned with respect to the volume and quality of our internal and external growth opportunities. Although we've grown Rexford to become the third largest logistics REIT in the United States by market capitalization, we see substantial opportunity to accretively expand well beyond our current 1.7% market share within the fragmented infill Southern California industrial market. We intend to continue to maintain our low leverage investment-grade balance sheet to fuel our growth as we capitalize upon our deep proprietary acquisition pipeline.

The company is also well-positioned to further enhance our financial performance as we scale our business, leveraging technology, data and process improvement to drive increasing operating leverage and operating margins as we grow our portfolio into future years.

Above all else, our extraordinary performance reflects our extraordinary team. We'd like to express our deep thanks and gratitude to the entire Rexford team for your resilience, determination and great spirit in the face of unprecedented pandemic-related challenges.

And with that, I'm very pleased to turn the call over to Howard.

Howard Schwimmer -- Co-Chief Executive Officer and Director

Thanks, Michael. And thank you everyone for joining us today. Exceptional market fundamentals persisted throughout our infill Southern California industrial markets though COVID-19 and its associated shutdowns continued through the fourth quarter. Vacancy decreased and demand remained strong, driven by a variety of sectors within our highly diversified economy and a dramatic increase in e-commerce activity. As a result, we continue to see strong rental rate growth and healthy net absorption.

Our target markets, which exclude the Inland Empire East ended 2020 in historically low vacancy of 2.2%, a 40 basis point reduction from the prior quarter. By way of indication of the strength of our Southern California markets, our same-property pool ended the year at ABR of $10.48 per square foot, representing an increase of 8% year-over-year.

During the fourth quarter, we completed over 1.8 million square feet of new and renewal leasing at spreads of about 30% on a GAAP basis and 18% on a cash basis. About half of these leases were early renewals for 2021 lease expirations. At year-end, we had approximately 4.8 million square feet of expirations remaining in 2021. The mark-to-market on these leases is approximately 17%, putting us in a strong position to grow NOI as we continue to address these expirations throughout the year.

Turning to external growth. During the fourth quarter, we completed 10 acquisitions totaling approximately $875 million, adding 17 properties and 3.4 million square feet to our portfolio. For the full year, we acquired $1.2 billion of properties, adding 5 million square feet to the portfolio. Seven of these acquisitions included low coverage outdoor storage sites and land for redevelopment, totaling 36.7 acres, with improvements equating to 14% site coverage.

Our investment activity truly demonstrate the unique strength of our operating platform. To begin with, about 75% of our 2020 investments were acquired through off-market or lightly marketed transactions, originated through our proprietary research-driven sourcing methods and deep market relationships.

Additionally, we are capitalizing upon an historical generational shift in ownership as long time owners increasingly age out of active management. Consequently, we've seen an increase in UPREIT transactions, which represented almost 30% of 2020 acquisitions. In these transactions, owners contributed their property to the company in exchange for ownership in Rexford, allowing a seller to achieve tremendous tax efficiency.

Further, our value-add repositioning and asset management expertise continues to deliver substantially better than institutional yields. Recent repositioning stabilizations demonstrate the strength of our value-creation capability. For the full year 2020, we stabilized 600,000 square feet of repositioning projects at a weighted average unlevered yield on total cost of 5.6%, which represents an approximately 150 basis point or greater premium to comparative cap rates on marketed transactions.

As we look ahead in 2021, we have approximately 700,000 square feet currently under repositioning or redevelopment and another, approximately, 2 million square feet to start over the next 18 months. Given the strength of demand for highly functional industrial space and strong rent growth potential in our markets, we are optimistic for superior value-creation through timely lease-up of projects delivering this year.

Turning to dispositions. In 2020, we sold $45.5 million of properties and we expect to continue to sell assets on an opportunistic basis to unlock value and recycle capital. Finally, we are well-positioned with respect to 2021 acquisition opportunities. Subsequent to year-end, we have closed on $95 million of investments and we have approximately $280 million of new acquisitions under LOI or contract. This includes the recently announced $217 million transaction that we are targeting to close in the latter half of the year. Of course, this, and all other acquisitions, are subject to completion of due diligence and satisfaction of customary closing conditions, which are not guaranteed. We will provide more details as transactions are completed.

I'm pleased to now turn the call over to Laura.

Laura Clark -- Chief Financial Officer

Thank you, Howard. I'll begin today with details around our strong operating and financial results. For the full year, same-property NOI growth came in ahead of projections at 3.7%, driven by strong stabilized same-property occupancy, which ended the year at 98.2%. Consolidated NOI grew by over 24%, leading to core FFO per share growth of 7.3% or $1.32 per share, exceeding our guidance range. The continued strength of our tenant base also contributed to our outperformance as bad debt reserves came in better than expectations at 150 basis points of revenue for the full year.

In the fourth quarter, stabilized same-property NOI was up 2.5% on a GAAP basis and up 7.1% on a cash basis, primarily driven by strong collection of COVID-related deferral billings. Overall collections continue to be near pre-COVID levels as we collected 97.7% of contractual billings in the quarter, which includes 96% collection of deferral billings. As a reminder, during the year, we executed $4.7 million of total deferrals, or 1.4% of revenue averaging one and a half month's rent. $900,000 remains to be collected in 2021 and based on our experience to date, we feel good about the probability of collections.

With this strong performance, we are very pleased to announce that the Board declared a dividend of $0.24 per share, representing an increase of 12%, demonstrating Rexford's continued commitment to delivering superior total shareholder returns.

Turning now to our balance sheet and financing activities. Maintaining a best-in-class low leverage balance sheet, while driving superior growth remains a fundamental focus at Rexford. During the quarter, we demonstrated access to a diverse array of capital sources, funding our robust investment activity, while maintaining our sector-leading low leverage. At year-end, net debt to EBITDA was 4 times coming in at the low end of our target leverage range of 4 to 4.5 times.

In the quarter, we were pleased to secure additional investment-grade ratings from both Moody's and S&P, adding to our existing Fitch investment-grade rating. In November, we successfully completed our inaugural public bond offering, raising $400 million of 10-year senior notes with a coupon of 2.125%/ Proceeds were used to fund our investment activity and the repayment of our $100 million term loan that was due in early 2022. Also in November, we renewed our ATM program, upsizing our total capacity to $750 million and included the ability to issue shares on a forward basis.

During the quarter, we raised $35.6 million of equity through the ATM program at an average price of $50.13 per share. In December, we completed a secondary offering of 6.9 million shares of common stock, including the exercise of the underwriters' option at a net price of $47.15 per share, representing proceeds of $325.3 million. As of December 31, we had approximately $176 million of cash on hand. We remain in a very strong liquidity position with no debt maturities until 2023, full availability on our $500 million revolver, and approximately $721 million available under our ATM program.

Before we turn the call over for your questions, I'll provide an overview of our 2021 full-year guidance. Company share of core FFO is expected to be in the range of $1.40 to $1.43 per share. This represents earnings growth on a per share basis of 6% to 8%. It is important to note that, consistent with our prior practice, our guidance does not include acquisition, disposition or balance sheet activities that have not yet closed to date. Our core FFO guidance range is supported by several key factors. First, stabilized same-property NOI growth of 3% to 4% on a GAAP basis and 6% to 7% on a cash basis. Next, average full year stabilized same-property occupancy is expected to be in the range of 97% to 97.5%.

We expect G&A expense to be in the range of $44.5 million to $45.5 million. Approximately $17 million is related to non-cash equity compensation, which includes time-based and performance-based units that are tied to the company's overall performance.

Finally, net interest expense guidance is $36 million to $36.5 million. Complete details of our 2021 guidance can be found in our supplemental financial package where we have also included a roll-forward of the components of earnings-per-share growth. We hope you will find this additional detail helpful.

This completes our prepared remarks and we now welcome your questions. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question is from Jamie Feldman with Bank of America. Please proceed.

Jamie Feldman -- Bank of America -- Analyst

Thank you. I guess, just starting out going back to the guidance you outlined. Can you talk about your bad debt assumption in the '21 same-store outlook and then FFO? And then, well, first, I'll let you answer that and I'll ask the next question.

Laura Clark -- Chief Financial Officer

Yes. Hey, Jamie. Good afternoon. It's great to hear from you today. So our 2021 guidance implies a bad debt expense in a 125 to 150 basis point range for the full year, roughly in line to slightly better than our 2020, which was a 150 basis points for the full year. As you know, there is much uncertainty remains in this environment, particularly around the timing of the California moratoriums being lifted. These moratoriums, as a reminder, have given our tenants the unilateral right to defer rents and this will -- the timing of this moratoriums being lifted will have the most significant impact on the trajectory of bad debt levels in 2021, as about half of our watchlist of the bad debt is related to tenants that are following the moratoriums.

Jamie Feldman -- Bank of America -- Analyst

Okay, thanks. You mean half is tied to tenants you think are healthy, but not paying because they don't have to?

Laura Clark -- Chief Financial Officer

Yeah, absolutely. So, I mean, important to note that we are collecting the vast majority of our rents from our tenants. Collections this quarter were near 98% and that's -- it's really -- that's really close to pre-COVID levels. But -- so, big picture that the number of tenants not paying rent is really minimal. But as we talked about last quarter, we did anticipate a pickup in bad debt and about half of our bad debt reserve is related to tenants that are following moratorium. We don't have certainty, but we have a pretty high level of confidence that these tenants are in good financial health. They're open, they're operating and will begin paying rent and their outstanding AR when the moratoriums lift.

Jamie Feldman -- Bank of America -- Analyst

Okay. Do you have any latest thoughts on when the moratoriums might lift as far as your sub-markets?

Laura Clark -- Chief Financial Officer

Yeah.

David E. Lanzer -- General Counsel and Secretary

Hi, Jamie. This is...

Laura Clark -- Chief Financial Officer

That's a really...

David E. Lanzer -- General Counsel and Secretary

David. Oh, sorry. Yeah, this is David. And so the moratorium was extended by the Governor through the end of March. And this is basically the statewide enabling action that allows each locality to have their own orders in place. And so we had 48 initially that we're tracking and of those, about 22 have been rescinded. So many have already been lifted. However, the most impactful are the orders for the city in the county of LA, which are both still in effect. And so as long as the Governor's order is still allowing this, there is the potential for the orders to remain in place. And our expectation is that it's very likely that the Governor, who has already extended the order several times before, would extend it again.

Jamie Feldman -- Bank of America -- Analyst

Okay. And then how does bad debt and deferred rent impact your same-store growth rate, both, I guess, when you think about what you delivered in '20 and what you projected for '21?

Laura Clark -- Chief Financial Officer

Yeah, I mean, in terms of projections for 2020, I mean, that's -- it impacts the growth rate. Certainly, depends on where we come in, in terms of the 125 to 150 basis points. In terms of the impact to same property for 2020, that number is for the full year, it was about 210 basis points of growth impact.

Jamie Feldman -- Bank of America -- Analyst

So it was a 200 basis point drag in '20?

Laura Clark -- Chief Financial Officer

Yeah, it was a 200 basis point drag to our growth. Yeah.

Jamie Feldman -- Bank of America -- Analyst

So just to be clear, like, the 6% to 7% cash in '21, like, what do you think that is normalized?

Laura Clark -- Chief Financial Officer

Yeah, so in terms of that cash versus -- the same property cash versus GAAP spreads, so COVID deferrals and repayment account for about half of the 300 basis point variance. So our cash same property NOI guidance is 6% to 7%. So about -- and our GAAP is 3% to 4%. So that's 300 basis points. So, say, ex-COVID and the deferral collections, it's about 4.5% to 5.5% on a cash basis.

Jamie Feldman -- Bank of America -- Analyst

Okay. All right, and then finally for me, just as you think about the acquisition pipeline, can you talk about how big it looks overall today and what percent might be OP unit deals?

Howard Schwimmer -- Co-Chief Executive Officer and Director

Hi, Jamie. It's Howard. Nice to hear from you. Well, we announced we have about $280 million under LOI or contract and we really don't talk much about what that makes up until we announce the transactions. That said, we're really optimistic about more UPREIT transactions. I can't comment on what might be in play, but that audience and -- or group, let's call it, of owners, you've heard us talk about them for many years now. They continue to age and really -- they're really heading toward making their major life decisions and all of the UPREIT deals we did during the year were exactly that; people that are well into their 80s doing estate planning, there is tremendous tax efficiency around the OP transactions.

So, yeah, we're optimistic that we'll be able to talk more about those. But otherwise, the pipeline is very strong. I think, today, behind that $280 million in terms of sort of the top-line of what we track, we've seen -- I'll show you some of the heat maps of those properties. Between the one week, one month, six month, in terms of the top of the list, there's probably 200 million square feet of product that we're tracking. To give you an example of how deep the pipeline was, last year, we'd made offers on $22 billion worth of product. That's 544 LOI's. The year before, it was about half that amount in terms of the valuation of those LOI's. So the pipeline is growing. So year in and year out, we're just getting better at what we do and the opportunity set for us is growing and, obviously, now we focus on catalyzing these off-market-type transactions, which is really the differentiator in our marketplace.

Michael S. Frankel -- Co-Chief Executive Officer and Director

Jamie, this is Michael. I just wanted to add some color to that. If you put yourself in the shoes of one of those longtime owners, they've owned infill Southern California in many cases for many decades and they understand and appreciate this market. They know it has the strongest market in the country by far. And when they look at Rexford, it's a truly unique opportunity. There is no other industrial REIT in the country that's solely focused on infill Southern California. And what we hear repeatedly from these owners is they are very relevant to consider an upgrade with another REIT that's diversified across the entire country because any other market would represent a dilution in quality relative to what they already own in terms of their market presence and long-term tenant demand fundamentals. And so Rexford really is a unique solution for them.

And the other factor that could play a role, as we move forward, is the potential for the 1031 Exchange Tax treatment to be removed from the tax code. And if that happens, that's going to really, we think, drive incremental demand toward the UPREIT. So one of the UPREIT structure survives and we haven't heard otherwise, because it will be, virtually, the only solution for folks to monetize the value of the property on a tax-deferred basis and continue the growth in a manner that they could with Rexford. So for a range of reasons, we're pretty excited about the overall opportunity going forward.

Jamie Feldman -- Bank of America -- Analyst

Okay, thank you for your thoughts.

Operator

Our next question is from Emmanuel Korchman with Citigroup. Please proceed.

Emmanuel Korchman -- Citigroup -- Analyst

Hey, everyone. Just, over time, your average lease size or, I guess, that can be translated to average tenant size, has ticked up. Is that sort of by design or has that just happened based on the mix of assets you've been able to buy?

Howard Schwimmer -- Co-Chief Executive Officer and Director

Well, I think, a lot has to do with the assets we've been buying, Manny. And we -- there was a time where we could buy multi-tenant industrial at a tremendous discount and today multi-tenant is fairly attractive to people and selling at full value. So you don't see us buying a lot of those type of product -- that type of product anymore. And so because we're buying assets that have bigger tenants seats, obviously, the average tenant size is growing. We've also sold off several of those multi-tenant projects as well. So that's had an impact too. I think our average size in the portfolio now is about 20,000 square feet and that's moved up from previous. I think, and even today, if you look at the leasing we did, I think, the last quarter, the average size lease was about 17,000 feet.

Emmanuel Korchman -- Citigroup -- Analyst

And then just looking at G&A into next year. It's a pretty big ramp. Is that just based on where the equity is and just natural inflationary G&A growth or are there other investments that you guys are making as you're growing as a company?

Laura Clark -- Chief Financial Officer

Yeah, hey, Manny, it's Laura. As you've seen -- as you've all seen, we've experienced really robust growth in our overall asset base over the last few years. And over the prior two years alone, we've added $2 billion of assets to our portfolio. Last year, market capitalization grew nearly 30% and -- in 2020 and the full year of 2020. So at the same time, our G&A as a percent of revenue, which was about 11.2% in 2020 is certainly trending in the right direction and we believe we're closing the gap relative to the peer average. I'll note that, I think, it's important to think about kind of where we are in terms of nearing the completion of building out our platform. It certainly makes the G&A comparisons more difficult relative to our peers that may not be growing at the same pace. So we do expect that our G&A ratios will level out and we'll begin to see a decline in the near term as we build out the bulk of our platform.

One other note in terms of our G&A is that about $17.1 million of our G&A is non-cash compensation -- it's related to non-cash compensation. Much of this, as well as some of the cash performance compensation is tied to our overall company performance. So, our guidance assumes a max level of payout related to us achieving max performance. So we believe this is the most conservative way to provide guidance, but all that being said, if we don't perform at these max levels, we won't achieve these projected levels of G&A that we've guided to. Just as an example, if we achieve target performance versus max performance in 2021, that equates to a reduction in the cash G&A of nearly $2 million.

Michael S. Frankel -- Co-Chief Executive Officer and Director

And, Manny, this is Michael. I think the other part of your question around, are we making sort of interesting incremental investments that might be, in part, representative within that G&A. And I think that's absolutely the case. Not only are we still very much a growing company, I think there is no industrial REIT that grows anything close to the way Rexford is growing. But, I think, if you look at the incremental investments we do make, it drives a return on G&A that I think is also unique in our sector.

And I'll just give you a couple of quick examples. So you look at the investments that we make, for instance, in our originations capability. And, by that, I mean, we have a dedicated research team, a dedicated marketing team and an acquisitions team that in terms of, sort of, I would say, just size and quality and depth of expertise, is substantial. And if you look at -- and looks very different than probably any other industrial REIT in our sector. And then if you look at the return on net investment, well, we've made about $1.2 billion of investments last year and a full 75% of the transactions, which were off-market and lightly marketed transactions, which were a direct result of that incremental investment and which, in turn, drives substantially better economics and return on investment, return on equity as compared to just typical institutional-type yields and investments, had they been marketed transactions.

And then if you look at -- and you all -- I think most of you on the phone who've met with us have seen our acquisition pipeline workflow system, it's 100% digital and enables us to drive that tremendous volume of workflow. And we've invested and created a similar system on the leasing side. So leasing at Rexford is 100% digital and we try to squeeze all the latency out of the system and that's why you see us handling the growing volume of leasing activity, still driving sector-leading spreads and record volumes for Rexford year-over-year. And we take a similar approach in how we service our customers and how we operate the company internally. So it's a company that is very focused on innovation. And that does drive some of the incremental G&A, but it has very substantial long-term ramifications, including the ability to hire fewer people proportionate to our growth going forward. So we really -- as I mentioned in my prepared remarks, we see substantial operating leverage building through the company as we grow.

Emmanuel Korchman -- Citigroup -- Analyst

Thanks for that, Michael. And just final question for me on the occupancy guidance. It looks like that sort of mid-point decline is similar to the one going into 2020 that was given with '19 results. Is there anything specific that you think may expire or is that just using sort of that average absorption and turnover number and just applying it as if this was a more normal year?

Laura Clark -- Chief Financial Officer

Hey, Manny. First, I want to note a change in our occupancy guidance this year. Previously, we have guided on year-end occupancy and our guidance number now is average occupancy for the full year. I think this metric, more directly, is reflected in NOI and it's hopefully helpful for you all. So for 2021, the comparable 2021 pool, the average occupancy was 97.8% in 2020. So the midpoint of our 97% to 97.5% guidance implies around a 50 basis point decline in occupancy. We have about 4.5 million square feet of total leases expiring in 2021 and while we're seeing great activity, strong demand, there is still a lot of blocking and tackling that remains and as the pandemic continues, uncertainty does as well. So, yeah, at this point, we feel that our guidance is prudent.

Emmanuel Korchman -- Citigroup -- Analyst

Thanks, everyone.

Operator

Our next question is from Dave Rodgers with Baird. Please proceed.

Dave Rodgers -- Baird -- Analyst

Yeah. Hi, everyone. Michael, you talked about [Technical Issues] again this quarter. Can you talk about kind of the underlying market trends now looking back over the last three or four quarters, kind of [Technical Issues] any changes overall that's interesting, kind of, underlying in the market?

Michael S. Frankel -- Co-Chief Executive Officer and Director

Hi, Dave, I'm sorry, I don't know if the others could hear, but if you wouldn't mind repeating and maybe bring -- take yourself a little closer to your mic. It was just really -- you were breaking up there.

Dave Rodgers -- Baird -- Analyst

My apologies. Is this better?

Michael S. Frankel -- Co-Chief Executive Officer and Director

Much better, yeah.

Dave Rodgers -- Baird -- Analyst

All right. I guess, it really came back to your leasing spreads were strong, you mentioned that just a moment ago. But I wanted to get at more of the underlying market rent growth trends and kind of the underlying economics of the market now that you can kind of look back three, four quarters from pre-pandemic through the worst of it and now what seems to be much more normalization. Give us an update on kind of where the market trends are.

Howard Schwimmer -- Co-Chief Executive Officer and Director

Hi, Dave, it's Howard. I think, just boots on the ground today, I'll tell you that there is nothing short of astounding what we see in terms of rents. We typically reforecast our rents each quarter. The team seems to be doing it now weekly. I mean, it's unbelievable. There's such demand for space and rents are growing so quickly. I'll give you a great example. We just finished construction on a 335,000 square foot park in the Inland Empire West, I think it's 10 buildings or 10 spaces or rather 10 spaces and six buildings,that was about 18% leased at the end of the year. And I think we're just about now 48% leased with some of the leases signed and a couple about to be signed, and rents are up 20% above what our market rent assumptions were.

And you're talking about rents that literally changed $0.05 or $0.10 within the past month. So it's pretty hard to look back on prior quarters right now and garner some trends just from that. There's just so many different industries coming in into the market in terms of existing uses that are growing and businesses that are doing well. You've got the e-commerce impacts, there is a tremendous amount of leasing that we're doing now for companies that are trying to separate a bit from selling through Amazon or even just having Amazon carry their products and their warehouses versus distributing themselves. So it's just a lot of blocking and tackling on the ground right now. It's really exciting and it's going to be interesting to see where things go this year. When you talk to a lot of the brokers and look at projections, it seems like high-single-digit rent growth is where things are headed for 2021 in most of the markets.

Michael S. Frankel -- Co-Chief Executive Officer and Director

Howard, do you want to -- also just, I think, relevant to that, Howard do you want to give a sense for where the annual rent was[Phonetic]? One thing that's very unique to our market is that our leases have, for the most part, predominantly had annual rental rate increases in them. And, Howard do you want to chat about where we see that going?

Howard Schwimmer -- Co-Chief Executive Officer and Director

Yeah.

Michael S. Frankel -- Co-Chief Executive Officer and Director

The year-to-date activity in that respect?

Howard Schwimmer -- Co-Chief Executive Officer and Director

Yeah. We've really kicked up the push in terms of growing rents faster than 3% per annum in leases and we're starting to have some real traction on it. The park I just mentioned to you that we just delivered, all the leases we're setting there have 3.5% increases in them. There is a 1.1 million square foot industrial park we have in the Inland Empire West, sort of, a premier complex with mid-bay dock-high-type space and we're now doing 4% increases across the board on all the renewals and then leasing over there. So we're making a big effort and rolling this out to all of our product. And I think really we implemented that at the beginning of the year, this sort of a push. So stronger growth ahead.

Dave Rodgers -- Baird -- Analyst

That's great and then just one follow-up on the acquisitions. Obviously, big increase in acquisition volume in the last two years. How much of 2020 may have been driven just by early fear that, that might have tipped some people's hands and wanting to get out and maybe then, at the same time, took some of your competitors out of the business just for a couple of quarters, and now, maybe they're coming back? And, I guess, the question is really geared to what's going to stop acquisitions from being at or above last year's levels or is there anything really outside of economics to do that?

Howard Schwimmer -- Co-Chief Executive Officer and Director

Well, year-to-year, we really -- we don't offer guidance on acquisitions because we just can't predict what's going to happen. And earlier in the year, yes, you're right, we did have a slowdown and a pause, a lot of people were on the sidelines. We were still active a bit, but certainly thinking differently, initially, at the start of the pandemic. But most of our acquisitions occurred in the fourth quarter. We had $875 million worth of acquisitions. That said, again, I mentioned earlier, the pipeline's deep, we certainly have high hopes for where we might go. But we just can't predict. It's hard to predict really what ultimately happens throughout the year.

Dave Rodgers -- Baird -- Analyst

All right, thank you.

Operator

Our next question is from Sarah Tan with J. P. Morgan. Please proceed.

Sarah Tan -- J. P. Morgan -- Analyst

Hi, this is Sarah. I'm on for Mike Mueller. Just two questions from me. The first one is on the competitive landscape. And could you tell me a bit about the capital [Indecipherable] going forward and also prevailing cap rates that you're seeing? And the second one is, could you comment on increased port activity and the impact it has on your tenants?

Howard Schwimmer -- Co-Chief Executive Officer and Director

I'll take the first one and then, Michael, maybe you want to address the ports. As far as competition in the marketplace, we're certainly seeing a lot of capital shifting out of some of the other sectors and deciding Industrial is a great place to be. But they have limited access to our market. They're really going to be focusing on more marketed transactions that Michael described earlier. The size and breadth of our acquisitions team and our business model is to focus on lightly marketed and truly off-marketed transactions, where we really don't compete against anyone or very few people, and I gave some numbers earlier about the amount of LOIs we write in a year. I think we're our own greatest competition.

We could be buying a lot more product, it really just gets down to some of the underwriting criteria that we apply and whether we inbound or pass-on on different opportunities or whether they're just not ripe to be able to buy. So, yeah, there has always been a lot of capital in Southern California. There is no secret, there hasn't been one for years that we're really the best market in the country to own industrial product. The difficulty of those is accessing the market and we've created a differentiated business that it allows us the unique access to the market.

Michael S. Frankel -- Co-Chief Executive Officer and Director

And I'll just comment maybe briefly on the ports. We have seen a tremendous amount of record port volumes for the year, just under 3% for the year compared to 2019. And, obviously, we saw a substantial surge in the second half of the year, in part, pent-up demand being sort of reentering the market, but also reflecting really strong underlying consumer consumption and demand. So we continue to see that. There is a backlog at the ports of Southern California. Number one and number two largest ports of the country LA and Long Beach has a substantial backlog of ships anchored offshore, which is not uncommon. We've seen that in prior periods -- peak distribution periods. And they're working through that, partially caused by some pandemic-related shortage of labor and longshoremen, uploading and the containers [Technical Issues] and which is being resolved.

Net-net, we see extremely healthy volumes through the ports. And as a reminder, by the way, one of the important elements of the Rexford position and portfolio in infill Southern California is that we are predominantly driven by consumption. So in prior periods, when we've seen disruptions in the ports, we have not seen this disruption in our tenant demand. They figure out how to get the goods if they can't get it through the ports. And depending upon which research one would like to believe, probably upwards of 50% or more of goods imported through those two ports are actually consumed locally and regionally. And so that's -- regional consumption is the key driver for our demand within our tenant base as opposed to some of the big-box tenants and non-infill locations that are going to be disproportionately driven by changes in port volumes or global logistics shipping trends, etc.

Sarah Tan -- J. P. Morgan -- Analyst

Thank you.

Operator

[Operator Instruction] Our next question is from Vince Tibone with Green Street Advisors. Please proceed.

Vince Tibone -- Green Street Advisors -- Analyst

Hi, good morning. Given the success of your recent bond offering, how are you thinking about potentially repaying some of your existing debt early ahead of maturity in order to lower borrowing costs and extend the overall maturity profile?

Laura Clark -- Chief Financial Officer

Hey, Vince, it's Laura. Thank you for joining us today and welcome to the industrial sector coverage. We are constantly evaluating our debt maturity profile and especially the rates in the market today is certainly very attractive. At the end of the day, we're really focused on maintaining our very strong investment-grade profile. We're -- we ended the year with a low net debt to EBITDA at 4 times at the low end of our current range. So it's -- as I said, I mean, we're constantly evaluating it and rates continue to be very attractive.

Vince Tibone -- Green Street Advisors -- Analyst

No. Thank you for that. But just maybe to clarify or follow-up, like the term loan facilities that are on the next two unsecured debt that's coming due, could you pay those without penalty or is there something if you're gonna prepay the swaps there'll be some kind of real cash outflow there?

Laura Clark -- Chief Financial Officer

Yeah, there is a -- there is -- they are pre-payable, but there is a swap termination charge that we would incur.

Vince Tibone -- Green Street Advisors -- Analyst

Got it, thanks. One more for me. I know, in the past you've described some of your acquisition, the different deals within a Core, Core Plus, Value-Add. I'm just curious how you think about the different return threshold for each and just if you were going to categorize your 2020 acquisitions in total, how would you -- what would be the rough mix maybe between those buckets?

Howard Schwimmer -- Co-Chief Executive Officer and Director

Hi, Vince, it's Howard. Well, first of all, we don't -- we can't really predict year-to-year what that bucket will look like in terms of the mix between Value-Add or Core or even Core Plus. When you look at 2020 acquisitions, turned out to be a year that we were able to buy more Core than we've been able to land in many, many years, which we were very pleased with, frankly. So the Value-Add was -- it was a bit lower in terms of the component of the acquisitions for 2020.

Interesting, though, we -- look, we announced some transactions for 2021, we closed about $95 million and half of those transactions are Value-Add. And in terms of yields, I'd point you really to our repositioning page where if you look at both the repositionings and some of the redevelopment projects, the yields that we're projecting are very similar, achieving just below 6% return on total cost for both types of projects. So clearly there is a huge value we're creating in a marketplace that you see, today, assets that are stabilized and marketed trading at sub-4 yields to the growing amount of investors clamoring to get their hands on the product here in our markets.

Michael S. Frankel -- Co-Chief Executive Officer and Director

By the way, just to add a little more color to that, that activity that we generated last year and in recent years, if you look on a go-forward basis in terms of the embedded NOI growth embedded in our current portfolio, assuming we didn't buy another asset, we're looking at a full 23% -- almost 23.5% NOI growth potential and better than the current portfolio over the next 18 to 24 months. And roughly -- that's over $62 million of incremental NOI projected and roughly a third of that is coming from Q4 acquisitions alone. But even more interesting to me is a third of that, well over $20 million is expected to be derived from repositioning assets as we stabilize and lease them up. And those are some of the more Core -- Value-Add, Core Plus-type yields that you also were asking about.

So the company really is well-positioned but it's driven by the balance of investment activity that you're sort of asking about. And so I think it's really interesting if you look forward at the incredible impacts that these investments are scheduled to have.

Vince Tibone -- Green Street Advisors -- Analyst

That's great color. Thank you. Maybe just one more quick follow-up, if I could. Just, is there any caps in terms of how much future repositioning or Value-Add you want in your portfolio before it's stabilized or do you think it's a good deal in the market this hot, you'll kind of take the deal that you think will deliver good returns?

Michael S. Frankel -- Co-Chief Executive Officer and Director

We don't really look at deals in terms of the heat of the market, number one. I'll let Howard address that. But whether the market is hot or cold, our investing discipline, whether the stock is trading at a perceived high or a perceived low value, those are not the primary drivers of our investment criteria activity. And I'll let Howard address it otherwise.

Howard Schwimmer -- Co-Chief Executive Officer and Director

Yeah. No, I was just going to say we've spent the past 18 months rebuilding our team in terms of the design and construction growth at the company to grow our capacity. So we have some very seasoned members on this team and we literally have a licensed architect now that came from a highly prolific industrial architectural firm. So we're gearing up and we actually can handle quite a bit more in terms of the projects that we're doing right now. So it's an exciting aspect of the business and I already pointed out, the yields that we're able to achieve through that type of work. So it's an essential component of what we do and we hope to be able to grow and do even more of that than you're seeing currently on our repositioning page.

Vince Tibone -- Green Street Advisors -- Analyst

Great, thanks for the time.

Operator

Thank you. This does conclude our question and answer session. I would like to turn the call back over to management for closing remarks.

Michael S. Frankel -- Co-Chief Executive Officer and Director

Well, on behalf of the entire Rexford Industrial team, we want to thank everybody for tuning in today. We want to thank you for your interest and support of Rexford. We wish you and your families well and healthy, and we hope for vaccinations soon for all. Thank you again, and we look forward to connecting in about three months.

Operator

[Operator Closing Remarks]

Duration: 49 minutes

Call participants:

David E. Lanzer -- General Counsel and Secretary

Michael S. Frankel -- Co-Chief Executive Officer and Director

Howard Schwimmer -- Co-Chief Executive Officer and Director

Laura Clark -- Chief Financial Officer

Jamie Feldman -- Bank of America -- Analyst

Emmanuel Korchman -- Citigroup -- Analyst

Dave Rodgers -- Baird -- Analyst

Sarah Tan -- J. P. Morgan -- Analyst

Vince Tibone -- Green Street Advisors -- Analyst

More REXR analysis

All earnings call transcripts