렉스포드 인더스트리얼 리얼티(REXR) 2026년 3분기 실적 콘퍼런스 콜: 점유율 개선으로 가이던스 상향

핵심 요약

• 렉스포드 인더스트리얼 리얼티(Rexford Industrial Realty)는 2026년 3분기 핵심 FFO(운영자금)가 주당 0.60달러로 전년 동기와 동일하다고 발표했다. 경영진은 연간 핵심 FFO 가이던스를 3분기 연속 상향 조정하여 주당 2.41~2.44달러 범위로 제시했다.
• 임대 면적은 370만 평방피트 이상을 기록해 회사 역사상 두 번째로 높은 분기 실적을 달성했다. 만기 임대 공간의 약 87%가 재계약되거나 대체 임차인으로 채워졌다.
• 동일 자산 점유율은 전분기 대비 200bp 상승하여 약 97%를 기록했다. 연간 평균 동일 자산 점유율 가이던스의 중간값은 40bp 상승한 95.9%로 상향 조정되었다.
• 렉스포드는 해당 분기 동안 12억 달러 규모의 포트폴리오 매각을 포함해 총 13억 달러의 자산 매각을 완료했다. 회사의 20억 달러 규모 포트폴리오 재편 계획 대비 연초 대비 누적 매각액은 15억 달러를 기록했다.
• EBITDA 대비 순부채 비율은 0.75배 감소한 3.8배를 기록했다. 렉스포드는 17억 달러의 유동성을 보유한 채 분기를 마감했으며, 연말까지 차입금 비율이 약 3.5배 수준에 도달할 것으로 예상하고 있다.
• 회사는 올해 7억 900만 달러 규모의 자사주를 매입했다. 경영진은 현재 자사주 매입, 부채 감축, 내부 개발 및 리포지셔닝 프로젝트가 자산 인수보다 더 매력적인 자본 활용 방안이라고 밝혔다.

주요 재무 데이터

사업 및 영업 실적

남부 캘리포니아의 인필(infill) 산업용 부동산 시장은 2분기 연속 순흡수면적 양수를 기록했다. 시장 임대료는 2023년 이후 처음으로 전분기 대비 소폭 상승했으나, 경영진은 세부 지역 시장, 자산 유형 및 규모별로 회복세가 고르지 않을 수 있다고 주의를 당부했다.

임대 모멘텀은 전반적으로 광범위하게 나타났다. 경공업 및 첨단 제조업이 분기 임대 계약의 약 3분의 1을 차지했으며, 물류·유통·창고 이용자가 또 다른 3분의 1을 차지했다. 나머지는 건축 자재, 의류, 식음료, 헬스케어, 엔터테인먼트 등의 업종에서 발생했다.

특히 첨단 제조업 및 물류 임차인을 중심으로 A등급 산업용 공간에 대한 수요가 개선되었다. 사우스베이 지역 실적은 물류, 항공우주, 첨단 제조업에 힘입어 견조세를 유지했으며, 오렌지카운티는 순흡수면적이 양수로 돌아섰다. 미드카운티와 샌가브리엘밸리 역시 실용적인 B등급 자산의 지속적인 임대와 함께 A등급 수요 개선세를 보였다.

렉스포드는 개발 및 리포지셔닝 프로젝트 전반에 걸쳐 약 60만 평방피트 규모의 임대 계약을 체결했다. 경영진은 임대가 시작되면 이들 계약이 연간 1,400만 달러 이상의 NOI 기여를 할 것으로 예상하고 있다. 회사는 또한 임대 진행 중 및 건설 중인 프로젝트와 관련해 약 4,000만 달러의 추가 NOI를 확보하고 있다.

12억 달러 규모의 포트폴리오 매각에는 총 520만 평방피트에 달하는 22개 자산이 포함되었다. 매각 완료 시점 기준, 해당 포트폴리오의 가중평균 잔여 임대기간은 2.7년이었으며 기존 임대료는 시장 가격보다 거의 30% 높았다. 경영진은 매각된 자산의 2027년 현금 NOI 수익률을 약 5.5%로 추정했다.

경영진 가이던스

경영진은 예상보다 양호한 임대 실적과 예상 대손충당금 감소를 이유로 연간 핵심 FFO 가이던스를 주당 $2.41~$2.44로 상향 조정했다. 회사는 또한 현금 및 순실효 기준 모두에서 동일 자산 NOI 성장률 전망치의 중간값을 75bp 상향 조정했다.

렉스포드는 계획된 잔여 5억 달러 규모 자산 매각의 대부분이 연말까지 계약 체결되거나 완료될 것으로 예상하고 있다. 경영진은 잔여 자산의 전체 매각 가격이 12억 달러 포트폴리오 거래에서 달성한 약 5.5%의 2027년 현금 NOI 수익률과 전반적으로 유사한 수준일 것으로 기대한다.

회사는 2027년 만기 도래 부채 10억 달러 중 4억 2,500만 달러를 상환했다. 경영진은 약 6.25% 수준인 현재 금리로 리파이낸싱하기보다 남은 5억 7,500만 달러를 오는 3월 만기 시점에 상환할 계획이다.

향후 몇 년 동안 경영진은 2022년과 2023년 시장 고점 부근에서 체결된 임대 계약의 만기가 도래함에 따라 현금 재임대 스프레드가 마이너스 10%대 초반에서 중반 수준을 기록할 것으로 예상한다. 이러한 전망은 시장 임대료가 정체 상태를 유지한다는 가정을 전제로 하며, 임대료 상승이 가속화될 경우 추가적인 상승 여력이 발생할 수 있다.

리스크 및 주요 관전 포인트

• 남부 캘리포니아 세부 지역 시장, 건물 등급, 면적 규모 전반에 걸쳐 시장 회복세가 여전히 불균등한 모습을 보이고 있다.
• 최근 미국 국채 금리 상승으로 일부 부동산 매수자의 자금 조달 비용이 증가하고 있으며 거래 시장 내 선별성이 강화되고 있다.
• 2022~2023년 고점기에 체결된 임대 계약의 임대료 재설정이 향후 몇 년간 현금 재임대 스프레드에 부담을 줄 것으로 예상된다.
• 많은 임차인이 여전히 공간 수요 합리화에 집중하고 있으며, 임대 결정은 기복을 보이며 계속 이루어지고 있다.
• 동일 자산 기준 97%~98%, 전체 포트폴리오 기준 94%~95%라는 경영진의 장기 안정화 점유율 목표 달성은 우호적인 시장 여건과 지속적인 개발 및 리포지셔닝 자산의 임대 마감에 달려 있다.

애널리스트 Q&A 하이라이트

2027년 동일 자산 성장률: 경영진은 렉스포드가 2026년 평균 전망치를 상회하는 점유율 추세(run rate)로 2027년에 진입할 것이라고 밝혔다. 연간 임대료 인상률은 약 3.5% 수준을 유지하고 있으며, 자산 매각을 통해 가장 가파른 임대료 재설정에 직면했던 일부 자산이 제거되었다. 이러한 요인들을 바탕으로 경영진은 동일 자산 NOI 성장률이 현재 수준에서 가속화될 수 있다고 보고 있다.

점유율 상승: 동일 자산 점유율의 전분기 대비 200bp 개선은 자산 매각이 아닌 임대 활동에 기인했다. 주요 요인으로는 370만 평방피트 규모의 임대 계약 체결, 87%의 재계약 또는 대체 임차인 채움 비율, 그리고 인랜드 엠파이어의 2개 임차인이 합산 41만 5,000평방피트를 예상보다 일찍 입주한 점 등이 꼽혔다.

자본 배치: 경영진은 자사주 매입, 부채 감축, 고수익 내부 프로젝트를 현재 가장 매력적인 자본 활용 방안으로 꼽았다. 자산 인수는 렉스포드의 장기 전략의 일부로 유지되지만, 이러한 대안 대비 우수한 기대 수익률을 창출해야 한다.

개발 파이프라인: 렉스포드는 프로젝트 착공 전 안정화 수익률 스프레드와 자본 비용을 고려하여 선별적인 태도를 유지할 계획이다. 회사는 LAX 및 웨스트 로스앤젤레스 인근의 첨단 제조업 및 기타 산업용 이용자를 위해 설계된 9000 에어포트(9000 Airport) 프로젝트를 진행할 계획이다.

임대 비용: 신규 임대 계약 기간이 길어짐에 따라 임차인 혜택(Concessions)이 소폭 증가했으나, 무상 임대(free rent) 기간은 평균 약 1개월 수준을 유지했고 통상적인 임대 기간도 약 5년으로 유지되었다. 재계약 혜택은 거래 구성에 따라 소폭 감소했다.

실적 발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good morning. My name is Holly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Rexford Industrial Realty, Inc. Third Quarter 2026 Earnings Call. [Operator Instructions]

I will now hand the call over to Doug Bettisworth, Senior Vice President, Investor Relations and Capital Markets at Rexford Industrial. Doug, please go ahead.

Doug Bettisworth

Thank you, and welcome to Rexford Industrial's Third 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 the 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 provided 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 Nahas, and our CFO, Mike Fitzmaurice. It's my pleasure to now introduce Laura Clark. Laura?

Laura Clark

Thank you, Doug, and thank you all for joining us today. The Rexford team delivered another quarter of strong execution. Leasing accelerated, occupancy increased meaningfully. We took a transformative step in our portfolio realignment, and we redeployed capital with discipline. Together, these actions strengthened Rexford, fortified our balance sheet and drove our third consecutive increase in core FFO per share guidance. That strong execution is being reinforced by continued improvement in fundamentals across the infill Southern California industrial market.

The market recorded its second consecutive quarter of positive net absorption, driven by rising tenant demand. Market rents also showed early signs of stabilization, posting marginal growth during the quarter and marking the first quarterly increase since 2023. We recognize that recoveries are rarely linear, but the direction of the market is encouraging, and we are seeing that improvement translate directly into our business.

During the quarter, we executed more than 3.7 million square feet of leasing, our second highest quarter of leasing ever. Leasing momentum was broad-based, including 600,000 square feet of repositioning and development leasing in the third quarter alone, which will generate meaningful cash flow growth as these leases commence. Same-property occupancy increased by 200 basis points sequentially as Rexford continues to outpace the broader market. That outperformance reflects the quality, functionality and competitive positioning of our infill product, amplified by the expertise of our vertically integrated team.

The strength of the leasing activity we are seeing today reflects the compelling fundamentals that underpin the Southern California industrial market. With more than 20 million consumers and an economy ranked as the 11th largest in the world, the region combines a diverse demand base with irreplaceable infrastructure. In addition, new supply remains near multi-decade lows, while increasing restrictive regulatory requirements further limit future development.

We believe the depth and durability of demand, combined with substantial structural supply constraints, create a powerful foundation for long-term growth. Against this backdrop, we are concentrating our portfolio in the assets best positioned to capitalize on these dynamics and deliver durable growth over time. This quarter, we advanced our $2 billion portfolio realignment initiative with the $1.2 billion portfolio sale, the largest transaction in Rexford's history. We executed with conviction and speed, completing a competitive process that generated strong buyer interest and attractive pricing.

Including this transaction, we have completed $1.5 billion of dispositions year-to-date, representing substantial progress towards our portfolio realignment objectives. We have acted decisively to capitalize on a unique window to realign our portfolio, prioritizing assets we believe offer the strongest long-term growth and shareholder value creation while expanding our financial flexibility and capacity to act.

Looking ahead, we have $500 million of dispositions remaining under our portfolio realignment initiative, with the majority expected to be under contract or complete by year-end. We continue to see buyer demand across our markets, supported by the depth of private capital seeking exposure to Southern California.

While recent increases in treasury rates are impacting the cost of capital for certain buyers and bringing more selectivity to the transaction market, engagement around the remaining disposition assets remains constructive. We will continue to evaluate each sale based on the underlying risk profile and forward return potential as well as the relative value of the planned use of proceeds.

I also want to highlight the significant progress we have made in driving greater operational rigor across the business. We have been deliberate in prioritizing occupancy and leasing as well as improving efficiency across our cost structure. The results are tangible: strong leasing activity alongside a 30% year-over-year reduction in G&A. We will continue to apply that focus across the business as we pursue additional efficiencies.

In summary, this year has been defined by execution and decisive action. We set clear priorities, and we are delivering on our commitments. Today, Rexford is stronger and more focused with significantly greater financial flexibility than we had at the beginning of the year. The same rigor we have brought to our operations, portfolio and capital allocation will continue to guide our decisions as we move forward with one objective, driving long-term per share value creation for our shareholders.

Finally, I want to thank the entire Rexford team. Completing the largest transaction in our company's history, while continuing to deliver strong operating performance reflects the extraordinary commitment and talent of this team. I am energized by the focus and dedication they bring every day. John?

John Nahas

Thank you, Laura, and good morning, everyone. During the third quarter, we executed 3.7 million square feet of lease transactions across our portfolio, reflecting our continued focus on driving occupancy and capturing demand across our infill markets. Supported by strong underlying tenant health and better-than-expected leasing execution, approximately 87% of expiring space was either renewed or backfilled, driving a 200 basis point increase in same-property occupancy quarter-over-quarter.

Turning to the broader market. We also saw encouraging signs that fundamentals are continuing to improve. While the recovery remains disproportionate across submarkets, size ranges and product types, the third quarter represented another step in the right direction with overall positive net absorption and improving leasing activity extending into areas that had previously been slower to build momentum.

Orange County is a good example. The submarket returned to positive net absorption during the quarter, supported by growing demand for Class A space, driven in part by increased activity from corporate users. We're seeing that trend play out in Mid-Counties and San Gabriel Valley as well with functional Class B product continuing to lease well and demand for Class A product gaining traction.

In the South Bay, activity was driven by logistics, alongside continued demand from advanced manufacturing and aerospace users seeking higher quality space with critical infrastructure. Logistics also led activity in the IE West, most notably in spaces between 100,000 and 250,000 square feet. In the San Fernando Valley, activity remained healthy for functional Class B product, particularly in spaces under 100,000 square feet with more limited demand for Class A space.

While demand drivers vary across industries and user types and many tenants remain focused on rationalizing their space needs, demand is increasingly gravitating towards highly functional infill space, which aligns well with the type of product that defines the Rexford portfolio. We saw that reflected in our repositioning and development projects where we executed approximately 600,000 square feet of leases during the quarter that will contribute more than $14 million of annualized NOI once commenced.

Our value creation platform remains a key differentiator for Rexford. Through repositioning, we deliver upgraded power and fire suppression systems, efficient loading and upscaled offices that strike an effective balance between must-have functionality and price, while our newly developed product offers best-in-class design features that maximize operating efficiencies and deliver the high-quality environment that resonates with Class A tenants.

Turning to capital allocation. During the quarter, we completed $1.3 billion of dispositions, including the $1.2 billion sale of a 5.2 million square foot portfolio. These 22 properties embodied many of the nonstrategic characteristics we identified through the asset level review conducted as part of our portfolio realignment, including greater exposure to competitive supply and more limited growth potential.

At closing, the portfolio had a weighted average remaining lease term of 2.7 years and in-place rents nearly 30% above market, resulting in an estimated 2027 cash NOI yield of approximately 5.5%. Beyond the portfolio transaction, we completed 3 additional dispositions during the quarter, all to owner users generating premium pricing.

To close, our team remains intently focused on Market cues, and we are making disciplined and strategic decisions to drive performance across the business. We have more work to do, and I'm proud of the Rexford team for what we are accomplishing and how we're doing it. Our results and the strengthening fundamentals we see in the infill Southern California market reinforce our confidence in the competitive position of the portfolio and the long-term opportunity ahead.

I'll now turn the call over to Fitz.

Michael Fitzmaurice

Thanks, Laura and John, and good morning, everyone. This was a defining quarter for capital allocation. We used proceeds from our portfolio realignment to both reduce debt and buy back stock. On the debt side, leverage came down 3/4 of a turn to 3.8x, and we've already repaid $425 million of our $1 billion of 2027 maturities, with plans to pay off the rest without refinancing at today's rates.

At the same time, we bought back $709 million of stock this year at prices well below what we believe Rexford is worth. Together, these actions leave us a stronger company than we were just 90 days ago, with less leverage, more flexibility and a higher outlook for the year.

Let me walk you through how we got there. It starts with the portfolio realignment. It has improved both the quality of our cash flows and our long-term setup. By completing $1.5 billion of dispositions year-to-date, we removed headwinds to our growth and reduced our future capital needs. The timing of the transaction also mattered.

These sales closed ahead of the recent rise in treasury rates and are funding the payoff of our 2027 maturities. We've already repaid $425 million and expect to repay the remaining $575 million at maturity in March, eliminating the need to refinance $1 billion of debt at today's rates of roughly 6.25%. And after March, our next meaningful debt maturity isn't until June 2028.

We also remain opportunistic on share buybacks. During and after the third quarter, we bought back $409 million of stock. That's an implied yield in the mid-6% range on a portfolio we believe is worth well more than where our stock trades. That compares favorably with the roughly 5.5% yield on the assets we sold. Step back and the scale becomes clear.

Since the second quarter of last year, we bought back nearly $1 billion of stock, about 10% of our shares outstanding, and we've done so while reducing leverage. These buybacks are accretive to both core FFO and NAV per share, a lasting benefit to our shareholders. We ended the quarter with $1.7 billion of liquidity and remain on track to reach approximately 3.5x net debt to EBITDA by year-end. That's a balance sheet built for opportunity.

With that context, let me turn to the quarter results. Core FFO was $0.60 per share, consistent with the third quarter of last year. The favorable impact of capital recycling activities and lower G&A expense was offset by lower same-property NOI and lower interest income. Compared with last quarter, core FFO per share declined $0.03. The decline primarily reflects timing of redeploying proceeds from our portfolio realignment, partially offset by lower interest expense and the accretion from share buybacks.

Now to guidance, where the momentum continues. We are raising the midpoint of our full year core FFO per share guidance by $0.02 to a range of $2.41 to $2.44, driven by better-than-expected leasing activity and lower full year bad debt than we previously assumed. Those same drivers are behind the 75 basis point increase in our same-property NOI growth outlook at the midpoint on both a net effective and cash basis. We are also raising our average same-property occupancy outlook by 40 basis points at the midpoint to 95.9%.

Before we turn to questions, here's the one thing we want you to walk away with. Every capital allocation decision we made this year was measured against one test. Does it create shareholder value on a per share basis? Selling assets with limited long-term growth potential, retiring debt rather than refinancing it at higher rates and buying back stock below what we believe Rexford is worth all passed that test. Together, those actions have lowered our leverage, increased our financial flexibility and gives us the capacity to act as opportunities emerge. That discipline guides every decision we make, and it's why we are so confident in where Rexford is headed.

Finally, I want to thank everyone here at Rexford. This quarter is what one team with one goal looks like. I see it, and I'm grateful to work alongside every one of you. And with that, I'll turn the call back to the operator and open the line for questions.

Operator

[Operator Instructions] I will now hand the call back to Doug Bettisworth to begin the question-and-answer session.

Doug Bettisworth

Our first question comes from Blaine Heck from Wells Fargo.

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Blaine Heck

Can you just talk about how we should think about the trend in rent spreads over the next couple of years? Will it be a linear gradual decline in recovery? Or is it likely to be somewhat lumpy based on mix? How should we think about the timing of the trough given where you are in the cycle right now and the recovery you're seeing? And then maybe talk about what sort of market rent growth assumptions might be baked into your answer as we give it.

Michael Fitzmaurice

Sure. Blaine, this is Fitz. Look, we continue to be very clear eyed and direct on our expectations for re-leasing spreads over the next couple of years as we work through leases that were signed at the peak in '22 and '23. So over the next couple of years, we do expect cash re-leasing spreads to average in the negative low- to mid-teens area. That is about a 200 basis point improvement, though, better than if we hadn't sold our noncore assets.

That's roughly about $1.5 million of NOI per year or about 30 basis points added to our same-property NOI growth profile over those few years. Our expectations are tied to assumption that the market rent is flat throughout the next couple of years, so there could be some upside if rents accelerate.

Doug Bettisworth

Our next question comes from Craig Mailman from Citi.

Craig Mailman

Good morning, everyone. Laura, I appreciate the comments. And clearly, L.A. here is seeing some early signs of improvement. I'm just kind of curious as I think you characterized it could be a little bit of an uneven recovery here, but you guys are positioning yourself with asset sales and getting leverage down.

How should we think about the posture in '27 into '28 from a strategic standpoint, now that you're getting a little bit of a market improvement, you've repositioned the portfolio, at least got a big chunk of what you want to get sold and the balance sheet is in good shape. Like how should we think about the next step in the evolution of your tenure?

Laura Clark

Craig, thanks so much for joining us today. Our focus is at this point in time is going to be continued execution of the strategic priorities that we have in front of us. Since we laid out those priorities in November, we have executed swiftly and decisively. And what you've seen and will continue to see is that we won't sit idle. We're going to control what we can control, and we believe that, that's going to improve our growth prospects as the market continues to inflect.

So we are focusing on the completion of our portfolio realignment. It is truly transforming this company. We are going to allocate that capital to the highest risk-adjusted returns as we move forward. We are going to execute on the high-yielding internal repositionings and developments that we have within our portfolio. We're going to continue to prioritize occupancy as that's going to drive leasing execution and revenue. And lastly, we're going to continue to optimize the efficiencies across the operations as we've been doing. We look forward to providing an outlook in our focus areas around 2027 and beyond when we report earnings next quarter.

Doug Bettisworth

Our next question comes from Samir Khanal from BofA.

Samir Khanal

I guess, Mike, just maybe expanding kind of on the first question there. I wanted to ask about sort of the building blocks of same-store into next year, right, especially after this, let's call it, a $2 billion portfolio realignment, the puts and takes on that. You talked about the rent roll downs, but you're also generating embedded rent bumps, right, and kind of that 3.5%. So walk us through kind of the building blocks as kind of the focus, I think, for investors have turned into kind of next year and how to think about same-store.

Michael Fitzmaurice

Yes, Samir, I appreciate the question. Look, the setup is better than this year's headline numbers suggest, number one. And then the lever -- the main lever that we're pulling here for next year, and we'll continue to pull is occupancy. Same-property occupancy ended the third quarter at about 97%, above our 2026 average outlook of about 96%. So we enter 2027 at a higher run rate. Rent steps, we continue to sign leases with about 3.5% annual increases. And look, the pool is cleaner. We sold many of the assets facing the steepest rent resets. So we do believe same-property NOI could accelerate where we're at today.

Doug Bettisworth

Next question comes from Michael Griffin from Evercore ISI.

Michael Griffin

Wondering if you could expand a little bit more on the tenant demand that you're seeing in the market. I mean, is this typically being driven by your aerospace and defense-type tenants? I know those have been busier in the South Bay, which seems to be one of the better submarkets. Or are you starting to see more of the traditional industrial users, the 3PL, e-commerce start to take space? And then in your conversations with tenants, is it more folks who had been a little bit hesitant to sign leases that are finally getting over the finish line? Or has the demand been broader-based toward new prospects in the portfolio?

John Nahas

Griff. Overall, our leasing activity was driven most heavily by light manufacturing and advanced manufacturing, which made up about 1/3 of our overall leasing activity this quarter with another 1/3 coming from logistics, distribution and warehouse. And then the remaining 1/3 was really diversified amongst construction and building materials-related uses, apparel, food and beverage, health care and a little bit of entertainment, particularly in the San Fernando Valley. The biggest change quarter-over-quarter that we've observed is really focused around this theme of Class A demand.

And as I mentioned in the prepared remarks, that has been captured not only in our repositioning and development pipeline projects, but also just in the portfolio where we have plenty of Class A buildings. The largest occupiers of Class A has been around advanced manufacturing and logistics specifically. That's a trend that we saw within the Rexford portfolio as well as the broader market. Advanced manufacturing in the South Bay has continued to be strong. And we have seen a few examples of those types of requirements spilling over to other markets.

One great example is 9615 Norwalk, which was a building that we leased from our development platform. That was leased to an advanced manufacturer who wanted more of a centralized location because they're a parts distributor, but manufacturing on site. And so we're encouraged that there's some of that demand that is going to show up in other markets. But again, most of it is largely concentrated in the South Bay, particularly the coastal portions of the South Bay market.

For the last part of your question, I think what we've seen throughout this year is the demand and the decision-making kind of comes in waves. Going back to the beginning of the year, it started off a bit slow and then it picked up towards the end of the first quarter. And then there were some lulls and surges in demand as we've gotten to this point.

So certainly coming off of a high point in activity, tenants are more decisive in terms of making decisions, but this increase in activity that we're capturing is also reflective of how we're prioritizing occupancy, which is not just around lease rate and term negotiation. Our strategy is to resource these deals with all of the vertically integrated components that we have across our operating teams that allows us to move through negotiations more quickly and capture the fact that tenants are increasingly focused on making decisions.

Doug Bettisworth

Our next question comes from Mike Mueller from JPMorgan.

Michael Mueller

Yes, 200 basis points of occupancy improvement, 90 days is quite a bit. I'm curious how are you thinking about -- what is full these days? What do you think is full occupancy?

Michael Fitzmaurice

Look, yes, I can answer both from a same-property perspective and a total portfolio perspective. For same property, we believe we can get to 97%, 98% fully stabilized over the next couple of years as long as we have the market squarely at our back. And then from a total portfolio occupancy today, we're at about 91%. We believe this portfolio can get to 94%, 95%, again, with the market squarely at our back.

So significant upside there. Obviously, a lot of that is going to be driven by the redevelopment -- or I'm sorry, development and repositioning pipeline. We have made a lot of strides this quarter with 600,000 square feet signed. So great momentum there. We got another $40 million or so of NOI tied to what's in lease-up and under construction. So excited about the prospects there.

Doug Bettisworth

Next question comes from Eric Borden from BMO.

Eric Borden

My question is on disposition pricing. Just with the treasury rates a little bit higher today versus where you transacted the bulk of the portfolio, how are the increase in the treasuries, how is that showing up in the bids on the remaining assets? Is it lower pricing, more financing contingencies or longer closing time lines? And then how much flexibility do you have to hold those properties if the terms aren't where you want them?

Laura Clark

Yes. Thanks so much for your question. So we're seeing good demand across the assets that we're selling and pricing continues to meet our expectations and the objectives that we outlined as part of the portfolio realignment. And our increased disposition guidance this quarter reflects our confidence in overall execution there. In aggregate, we expect that pricing for the remaining assets will be roughly in line with the $1.2 billion transaction where we achieved 2027 cash NOI yields in the 5.5% area.

Although the market has experienced some movement in cap rates from the latest increase in interest rates, pricing and demand across the market is highly dependent on a number of factors, including investor profile, product type and quality. So we've been incredibly disciplined in our execution to date, achieving pricing that allows us to drive NAV and FFO per share accretion, and we're going to continue to execute with that overall objective as we move forward.

Doug Bettisworth

Next question comes from Rich Anderson from Cantor.

Richard Anderson

So on the portfolio sale in particular, I'm wondering was there a portion of that portfolio that -- where you had to part with assets that you probably wouldn't have wanted to, but you had to sort of sweeten the portfolio to include core assets? And as a corollary to that question, how much did the asset sales have an influence on the sequential improvement in occupancy in same-store, if at all?

Laura Clark

Yes. Our portfolio realignment objective was about owning the right real estate in the right markets that are going to drive long-term growth at Rexford. So it was -- we made these decisions at the asset level. These were real estate decisions. And it was about focusing on enhancing the quality of the portfolio, the durability of our cash flows, at the same time, improving our balance sheet and deploying that capital where we see the highest risk-adjusted returns.

And we have incredible success in executing on that realignment to date, and we see good visibility to continue and complete that realignment largely by the end of this year. And that discipline around capital allocation is going to continue as we move forward as we've taken advantage of this unique moment in time.

Michael Fitzmaurice

And Rich, this is Fitz. In terms of the same-property occupancy sequential increase that we experienced about 200 basis points quarter-over-quarter, had nothing to do with the asset sales, everything to do with the leasing progress that we've made. Broadly speaking, it was due to the 3.7 million square feet signed, the 87% of tenants that we retained, plus we had leasing pulled forward from the fourth quarter to the third quarter. We had 2 large Inland Empire tenants, about 415,000 square feet combined took occupancy in early September.

Doug Bettisworth

Our next question comes from Greg McGinniss from Scotiabank.

Greg McGinniss

We've seen the demand in South Bay improved dramatically this year. Has that changed the project scope or underwriting on the Hertz development? And can you give us kind of your latest thoughts there in terms of build-out and potential returns?

John Nahas

Yes, Greg, our strategy there remains the same. We've long been focused on the unique nature of that asset and what it's going to deliver in the market in terms of differentiated product. Our strategy is to continue on basically as we've set out to. And that building is well set up to cater to not only the advanced manufacturing demand that we're seeing in the South Bay market but also to just the rest of the course of industrial users that can benefit from having a significant facility in close proximity to LAX and the West L.A. neighborhoods that are north of there. So we're pretty excited about that one. That project is going to start here next month, and we look forward to delivering it into a market that continues to perform pretty well.

Doug Bettisworth

Our next question comes from Jon Petersen from Jefferies.

Jonathan Petersen

Congratulations on the occupancy increase. I did want to look a little bit more at leasing costs, though. It looks like tenant improvements and leasing commissions were a bit higher this quarter. Is that -- is the net absorption in the market being driven by landlords being a little bit more aggressive on concessions?

John Nahas

Jon, so our concessions were up slightly this quarter as compared to last quarter. That was largely driven by an increased overall WALT in the leasing that we executed during the quarter, and that was particularly driven by some new deals that had longer term. We're still seeing about 1 month of free rent on average. And on average, we are still seeing 5-year deals. And in some cases, we're executing leases in the shorter term where we think there's a strategic reason to do so.

So the uptick that you're seeing is driven by some deals that we're executing in the quarter a bit longer term, particularly on the new side. On renewals, we actually had a slight reduction in terms of concessions on average based on the mix of deals that was flowing through.

Doug Bettisworth

Next question comes from Vince Tibone from Green Street.

Vince Tibone

How should we think about redevelopment starts beyond the 4 projects you have outlined that will start over the next 2 quarters? Should we expect additional projects to break ground in '27 beyond these 4? Or is it likely Rexford will take a bit of a pause for new projects after this current stuff gets underway?

John Nahas

Yes. Vince, the pipeline is generally reflective of what we see commencing in the future. We're going to be pretty selective about where we undertake development, starting with our capital allocation thresholds, solving for the appropriate spreads over a stabilized cap rate and considering cost of capital. And we expect, in general, development in the market to be more limited in terms of opportunity going forward because of the increasing regulation that has really materially changed the ability to add new supply.

So we'll navigate through that. To the extent we find opportunities to add to our development pipeline, we'll do so. But it's also going to be product that we're pretty excited about to deliver into our operating portfolio. And so it's going to have to be stuff that materially increases the competitive landscape. I would say the stuff that you see on the portfolio today fits into that exactly. We're pretty excited to start 9000 Airport, as I just mentioned, as well as the other projects that are going to start over the next few months.

Doug Bettisworth

Next question comes from Dave Rodgers from Raymond James.

David Rodgers

I wanted to ask about the redevelopment positioning portfolio that you talked about a lot. You leased over 20% of it this quarter. Curious on how those returns are coming out relative to your revised expectations as the way they lay out in the supplement. You've made a lot of comments about kind of Class A versus Class B and that obviously tilts higher quality.

So what does the demand look like in that subset? I mean it's kind of 20% of that space leasing up a quarter? Is that a realistic number? Was there something that outlied this quarter? Any color on that would be helpful. And also one last thing, the 600,000 square feet that you did do, what was the NOI contribution from that?

John Nahas

The NOI contribution was $14 million on an annualized basis. The demand we're seeing in the market, we're noting on Class A because that is one of the more notable trends as compared to certainly prior quarters this year. But throughout the year, we've seen continued demand for highly functional product, which is the type of properties that we're delivering through our repositioning program.

As we kind of work through the pipeline, the yields on the development projects and repositionings that you'll see on the supplemental will fluctuate based on mix. So for example, our development yields are up because of projects that were stabilized versus continuing under construction and the preleasing of our 190th asset in South Bay had an outsized impact on the under-construction portion as we were able to execute pre-lease there at a higher than underwritten rent. And conversely, on the repositioning side, the biggest driver that you'll say changing the mix of projects there was Salt Lake, which we stabilized at a 13.8% yield and is no longer in that bucket.

Laura Clark

Dave, I'll just jump in here. Just to speak about what we're seeing today in the fourth quarter, I would say that we're experiencing a sustained level of tenant activity, similar to what we've seen in the third quarter. And that activity continues on the remaining repositioning and development projects that we have in lease-up, including some projects that are under construction or in the future pipeline.

Doug Bettisworth

Last question comes from Omotayo Okusanya from Deutsche Bank.

Omotayo Okusanya

Congrats on the solid quarter. Question around acquisitions. Could you talk a little bit about just how you kind of think about acquisitions as part of the your overall capital allocation decisions going forward?

Laura Clark

Tayo, thanks for joining us today. So our strategy around deployment aligns with our capital allocation framework that we've been executing around all year. The execution of our portfolio realignment has put us in an incredibly favorable position. Not only have we increased the quality of our portfolio and cash flow, but we've also been able to delever the balance sheet and increase liquidity. So that certainly positions Rexford to execute on compelling opportunities as they arise.

Today, the most compelling uses of capital outside of delevering the balance sheet are share repurchases when we see that disconnect between public market value and intrinsic value and also our high-yielding internal repositioning and development opportunities. So the key for us is we're going to stay disciplined. We're going to be patient, and we're going to allocate capital where it creates the most long-term shareholder value.

In regards to acquisitions, they remain an important part of Rexford's long-term value creation strategy, but they have to compete with every other use of capital -- and today, other uses of capital are more compelling. So we will consider acquisitions when the real estate, number one, aligns with our strategy; and number two, the expected return is superior to the alternatives. We can afford to be patient, and you're going to see us continue to do that.

Doug Bettisworth

That concludes the Q&A portion of our earnings [indiscernible] remarks.

Laura Clark

Thank you all so much for joining us today, and we look forward to speaking with you soon.

Operator

This concludes today's conference call. You may now disconnect.