Greetings, and welcome to the Rexford Industrial Realty, Inc. First Quarter 2020 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Steve Sweat with ICR. Thank you. You may begin.
We thank you for joining us for Rexford Industrial's Q1 2020 earnings conference call. In addition to the press release distributed yesterday after market close, we posted a supplemental package in the Investor Relations section on our website at www.bexfordindustrial.com. On today's call, management's remarks and answers to your questions contain forward looking statements as defined in the Private Securities Litigation Reform Act of 1995. 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 ks and other SEC filings.
Rexford Industrial assumes no obligation to update any forward looking statements in the future. In addition, certain financial information presented on this call represents non GAAP financial measures. Our earnings release and supplemental package present GAAP reconciliation and an explanation of why such non GAAP financial measures are useful to investors. Today's conference call is hosted by Rexford Industrial's Co Chief Executive Officers, Michael Frankel and Howard Schwimmer, together with Chief Financial Officer, Adeel Khan and our General Counsel, David Landon. They will make some prepared remarks, and then we will open the call for your questions.
Now, I'll turn the call over to Michael.
Thank you, and welcome to Rexford Industrial's Q1 2020 earnings call. To begin with, on behalf of our entire Rexford team, we hope that everyone on this call, your colleagues, friends and families are healthy and coping well during these challenging times. I'll begin with a brief summary of our Q1 operating results, followed by some perspective on the impacts from COVID-nineteen. Howard will then cover our transaction and repositioning activity, and Adeel will follow with more details on our financial results, balance sheet and outlook. We will then open the call for your questions.
Our first quarter performance continued the exceptional trends we saw in 2019. We increased company share of core FFO by 28% to $37,500,000 and generated a 10% increase in core FFO per share to 0 point dollars Our stabilized same property NOI grew by 3.7% on a GAAP basis and by 7.5% on a cash basis. We also achieved 98% occupancy in our stabilized same property portfolio. We signed 107 leases for 1,600,000 square feet. Our leasing spreads were 36.6% on a GAAP basis and 24.4 percent on a cash basis.
We acquired a 10 property portfolio during the Q1 for $203,000,000 and year to date investment volume is approximately $219,000,000 Although, Q1 results were not materially impacted by COVID-nineteen, I'll begin with a brief description of our market backdrop as we see it today. In recent years, our target infill Southern California industrial markets have been operating at historically high occupancy at about 98%, with limited and diminishing supply, causing a persistent supply demand imbalance. Market rent growth has also been accelerating and sustained high single digit growth in infill Southern California. While many businesses are facing challenges, we continue to see substantial incremental demand driven by e commerce and other distribution oriented tenants such as Amazon among others. In addition, businesses from other growing sectors of the economy continue to demand space in a market with the nation's lowest level of available supply.
These sectors include the electric vehicle industry, space exploration, pharmaceuticals, medical and healthcare products, food and consumer staples, as well as a wide range of industries feeling pressure to increase their last mile presence as they face the need to reconfigure their supply chain and inventory management. As we try to understand the impacts from the COVID-nineteen crisis, it is essential to consider the underlying tenant demand fundamentals within infill Southern California. Historical data clearly shows and our experience through prior downturns also confirms that the tenant base within infill Southern California is about as strong, diverse and as resilient and stable as it gets. While on a global scale, one might expect larger tenants to be more resilient than smaller tenants. However, it has been demonstrated that our infill markets have outperformed the big box, large tenant base located in non infill markets.
While this may seem counterintuitive, we believe the historical data paints a clear picture. It is very instructive to consider how our infill tenant base in Southern California performed during prior downturns as compared to large tenants located in non infill markets. To begin with, during the Great Recession, by way of example, vacancy within our infill markets increased by a mere 100 to 150 basis points, while vacancy in the large tenant market in the Eastern Inland Empire doubled, tripled or worse. We believe the greater resilience of our infill SoCal tenants is due to 2 key factors. First, it is due to the extreme scarcity of available product, exceptionally high barriers limiting supply and a persistent supply demand imbalance.
Additionally, the resilient nature of these entrepreneurial tenants is driven by the fact that our spaces generally represent mission critical locations required for their businesses and to support their livelihood. It is also helpful to consider how today's crisis may be similar or different from prior downturns, such as the great financial crisis and how that may impact our recovery within infill Southern California. To begin with, in early 2009, at the onset of the Great Recession, when business order flows essentially stopped, no sector was spared. We did not have the magnitude of growth in e commerce and other growth drivers that we still have today within infill Southern California. In addition, our markets were not as highly occupied in 2,008 2,009 as they are today.
In contrast today, there is the potential risk for tenants that to the extent they give up space within infill Southern California, they may not be able to re enter the market with any comparable space, particularly as the post COVID economy recovers. Further, our tenant demand recovery through the great financial crisis was constrained by a lack of bank financing needed to fuel growth. Today's crisis is health related and driven by a government mandated shutdown. The banking system remains intact and able to provide working capital as demand recovers. Consequently, there may be reason to believe that recovery within our tenant base could be faster and more robust this cycle as compared to the prior cycle.
Another key takeaway from the great financial crisis was that not only did our infill market outperform our neighboring large tenant non infill market, but Rexford also outperformed within our infill market. We believe the reasons are twofold. Number 1, our portfolio is higher quality on average than typical competing product within our submarkets, which helps us outcompete for tenants. Number 2, we are an entrepreneurial real estate team executing at a level of intensity that enables us to out compete within our market, whereas the vast majority of product is otherwise controlled by passive owners. Now I would like to provide an update on the current status of our portfolio and tenant.
Our in place portfolio is exceptionally diverse, comprising over 27,000,000 square feet with over 1400 tenants from just about every industry and type of business imaginable. Our top 10 tenants comprised only 11.8 percent of our aggregate base rent or ABR. Our portfolio is 100% located within prime infill markets in Southern California, the nation's largest, most highly valued, highest demand last mile logistics market. Approximately 30% of our leasing activity over the prior several years has been with tenants signing e commerce as an integral part of their business. Our ABR also skews towards our larger tenants who tend to have extensive operating history.
About 65 percent of ABR is driven by tenants occupying over 25,000 square feet and with almost half of ABR comprising tenants occupying greater than 50,000 square feet. With regard to current leasing activity within our portfolio, we continue to be very busy with renewals and new leases. So far, we generally continue to hit or exceed our budgeted numbers in terms of rental rate, which continue to represent very favorable leasing spreads. In some cases, we are seeing a nominal increase in tenant concession. However, there's another facet of the crisis here in California that may be unique to our state and is also different from the Great Recession.
While many states have put moratoriums on commercial evictions, our California municipalities have gone a significant step further by enabling tenants impacted by COVID-nineteen to unilaterally defer rent until the local order is lifted. Therefore, currently in our market, tenants paying or not paying rent may not be a measure of their health or long term prospects. Some tenants electing to not pay rent are merely exercising their newfound government mandated ability to defer rent. In light of these unique circumstances, we've taken a very proactive approach with our tenants, securing short term deferment and repayment agreements as necessary. It also seems fair to say that the number of tenants that continue to pay rent on a current basis, despite these government mandates, is a strong testament to the strength of our market.
So far, tenants representing 95.4 percent of ABR have either paid April rent or entered into a short term rent relief agreement. On a cash basis, we have collected over 82% of April base rent. The balance of this group, representing 13% of ABR who did not pay April rent, have executed short term relief agreements generally for 1 to 2 months of base rent to be repaid during 2020. Tenants representing about 4% of ABR have not paid April rent and have not entered into a repayment plan at this time. Many of these tenants may be taking advantage of their newfound government mandated ability to unilaterally defer rent.
As we move forward, we will continue to take an exceptionally proactive approach, working with our tenants to help them work through this challenging period, while mitigating the impacts of our local government mandates, enabling tenants to defer rent. As a result, we may experience a greater volume of short term rent deferral as compared to portfolios that are not solely located within Southern California. The good news is that we have reason to believe such deferrals will be repaid in the near term and historical data and our experience informs us that underlying tenant demand fundamentals within infill Southern California remain the strongest of any industrial market in the nation and rent deferral is currently not a strong indicator of tenant sustainability. Despite these challenges, we feel very fortunate at Rexford. We believe we have the strategy, team, focus and low leverage balance sheet to manage through this cycle, to capitalize on emerging opportunities and to emerge stronger than ever through the recovery.
Our construction team remains very busy creating value through our value add repositioning and renovation work. Our investment team is also exceptionally busy as we benefit from our low leverage balance sheet and proprietary originations platform to pursue accretive growth opportunities. With regard to tenant demand, we also continue to see an acceleration in e commerce adoption by consumers of all ages, as well as by businesses adjusting to new post COVID dynamics. This acceleration is also forcing an expansion of the range and types of goods distributed through e commerce, which is increasing the importance of our last mile distribution facility. Most importantly, we'd like to acknowledge our team for your exceptional level of execution and collaboration, demonstrating the strength of the Rexford platform.
In return, we strive to differentiate ourselves in the way we proactively support our team as they work remotely. For example, as it quickly became apparent that families with children at home faced added challenges, we responded early on by providing cash subsidies to families with young children to help them cover childcare expenses. We have also implemented a fully digital online learning environment, providing the opportunity for rapid onboarding of new employees and the training and advancement of current staff. Lastly, we believe our investment work, which largely occurs in underserved and under resourced urban infill communities, delivers substantial social benefits by improving and repositioning industrial property into thriving centers of business and commerce that provide the longer term opportunity for jobs and increased social welfare that are now more important than ever to those local communities. And with that, I'm very pleased to turn the call over to Howard.
Thanks, Michael, and thank you, everyone, for joining us today. The infill Southern California industrial market remained very strong in the Q1 with low vacancy and a supply demand envelopes that so far continued to support rental growth during March April. Our target market, which excludes the Eastern Inland Empire, ended the Q1 at 2.2 percent vacancy with asking rents up 6.3% on a weighted average basis over the past 12 months according to CBRE. We have made good progress addressing Rexford's 2020 lease expirations and continue to generate strong leasing spreads into the Q2. Nearly half of our expiring square footage is in our top 20 leases by size.
And of this, 70% is available for renewal or releasing with 92% already renewed, released or in active negotiation, and the remaining 30% is scheduled for value add repositioning. As we adapt to the current and post COVID environment, we are making adjustments to further enable leasing activity by deploying virtual touring and access to electronic lock boxes. Turning to acquisition. Year to date through April, we have acquired $219,000,000 of property, adding 935,000 square feet to the portfolio. In March, we acquired a 10 building industrial portfolio totaling 863,000 square feet located within 4 of the company's core infill Southern California markets for approximately $203,000,000 including assumed debt.
The portfolio consists of 3 single tenant buildings and 7 multi tenant industrial projects and is 88% leased to 56 tenants at rent estimated to be 16% below market in aggregate. Approximately 75% of the portfolio's value is in the region's lowest vacancy market, LA South Bay, which ended Q1 at 0.8% vacancy, with the remainder in prime infill locations within L. A. Midcounties, Orange County and Inland Empire West. The acquisition was creatively structured through a combination of cash and UPREIT units.
We expect to grow the initial unlevered yield of 4.2% through a combination of completing value add enhancements, leasing vacant space and increasing below market rent. Projected unlevered stabilized yield on total cost is about 5%. In April, we acquired Vernon Avenue, which consists of 6 acres of land with 72,000 square feet of building for $15,500,000 The low coverage property was purchased as a long term sale leaseback at land value. The triple net lease provides favorable cash flow with the future opportunities to develop a new distribution facility. The initial unlevered yield is 5.5% growing through annual rent increases.
With respect to our value add repositioning program, construction is considered an essential business in the State of California, and we continue to progress on our current pipeline. We currently have 1,100,000 square feet in repositioning or development with another 330,000 square feet planned to start development in later 2020 into 2021. However, there may be an impact on timing of project completion or commencement as many municipalities are utilizing online construction permitting and inspections sometimes experience delays. Yet, as we deliver these projects to highly occupied infill markets, current market activity provides comfort to our ability to consummate attractive leasing for these low vacancy infill locations. During the quarter, we stabilized 2 projects.
At our newly constructed 530,000 Square Foot Conejo Spectrum Business Park, We completed demising and lease up of a 98,000 square foot building and leased 2 other 50,000 square foot spaces, bringing the full project to 100 percent occupancy and achieving an aggregate unlevered return of 5.1%. We also completed demising and leasing of a 72,000 square foot building at our San Fernando Business Center. We executed 2 leases with tenants that are using the space for e commerce and omnichannel replenishment and achieved an unleveraged 5% return on total cost. With regard to acquisitions, we currently have $175,000,000 of new investments under LOI or contract. These acquisitions are subject to completion of due diligence and satisfaction of customary closing conditions.
We will provide more details as transactions are completed. In the current environment, our proven ability to transact on new attractive investment opportunities differentiates us from many other buyers that are out of the market for a variety of reasons. Our local sharpshooter focus with an entire team on the ground, including our trusted due diligence consultant, is an advantage, facilitating our ability to continue to execute our growth strategies. We have maintained a very low leverage balance sheet that puts us in a strong position to capitalize on opportunities as they may arise. Rexford's pipeline of acquisitions remains strong and the current market may provide a catalyst for certain sellers looking to unlock liquidity from their industrial real estate assets.
Still, given continued uncertainty, we will remain prudent with our capital allocation, ensuring that we remain ready to navigate the rapidly evolving environment. I'll now turn the call over to Adeel.
Thank you, Howard. Beginning with our operating results. For the Q1 of 2020, net income attributable to common stockholders was approximately $10,800,000 or $0.09 per fully diluted share. This compares to $8,000,000 or $0.08 per fully diluted share for the Q1 of 2019. For the 3 months ended March 31, 2020, company's share of core FFO was $37,500,000 as compared to $29,400,000 for the 3 months ended March 31, 2019.
On a per share basis, company's share of core FFO was $0.33 per fully diluted share, representing a 10% increase year over year. Stabilized same property NOI was $44,600,000 in the Q1. Which compares with $43,100,000 for the same quarter in 2019, an increase of 3.7%. Our stabilized same property NOI was driven by a 3.7% increase in same property rental revenue, while same property operating expenses increased by 4%. On a cash basis, stabilized same property NOI increased by 7.5% year over year.
Turning now to our balance sheet and financing activity.
As a management team, we
have been through many cycles. Our long standing belief is that a flexible, low leverage balance sheet is an advantage in all market conditions, especially now. During the Q1, we issued approximately 2,100,000 shares of common stock to our ATM at a weighted average price of $36 per share, which resulted in net proceeds to record of approximately $73,100,000,000
We also recast our credit facility in February. We were able to
expand total capacity from $350,000,000 to $500,000,000 and added 3 years of term, bringing our maturity date to February 2024. Finally, as part of our portfolio acquisition, we issued approximately 1,400,000 OP units, issued approximately 900,004 percent cumulative redeemable convertible preferred OP units and assumed $42,700,000 of secured mortgage loans. At the end of the Q1, we had approximately $112,000,000 of cash, full availability on our newly expanded $500,000,000 credit facility and approximately $270,000,000 available under the $550,000,000 ATM program. We have no debt maturities until 2022 and we remain in a very strong liquidity position with a net debt to EBITDA ratio of 3.6 times. With regard to our dividend, on May 4, 2020, our Board of Directors declared a cash dividend of $0.215 per share for the Q2 of 2020, payable July 15, 2020, to common stock and Uniqlovers a record from June 30, 2020.
Finally, I'll turn to our guidance. Given the impact of COVID-nineteen
on our tenants and the
impact of general market conditions, as well as local regulations allowing our tenants deferred rent, we're updating our guidance this fall. Please note that this guidance is based on knowledge as of today. We now expect to achieve company share of core FFO within a range of $1.26 to $1.29 per share. Our guidance is supported by several factors. We expect year end stabilized same property occupancy within the range of 95% to 96%.
We expect to achieve stabilized same property NOI growth for the year of 1.3 percent to 1.8%. Please note that our 2020 stabilized same property pool comprises 161 properties with an aggregate of 19,800,000 square feet, representing approximately 72% of our consolidated portfolio square footage. For G and A, we anticipate a full year range from $36,500,000 to $37,000,000 including about $14,000,000 in non cash equity compensation. As in the past, our guidance does not include any assumption for other acquisitions, dispositions or capital transactions, which have not just been announced. Also, our guidance for Q1 does not include acquisition costs or the costs that we typically exclude in calculating this metric.
That completes our prepared remarks. With that, we'll open the line to take any questions. Operator?
Thank you. Our first question comes from the line of Jamie Feldman with Bank of America. Please proceed with your question.
Great. Thank you. I guess just to start out, can you talk more about the tenants who have asked for rent abatement and maybe kind of tie that in with how you're thinking about tenant credit risk just so we can kind of understand what here seems to be a real concern over whether you're going to get rent paid and what is more people being opportunistic?
Hey, Jamie, it's Adeel. Thanks for the question. I think one thing that is very important for us to note before we address the credit risk is to take a look at our March numbers. And if you compare our March numbers and compare that to the historical quarters that we reported in terms of AR collections and what AR balance we typically carry, I think that's a very important fact point for us to focus on because we haven't really had any credit risk from these tenant base. So the tenants that we have curated in our portfolio over the course of last few years, right, they have been performing very well.
So there has really been no issue from that perspective. So going into this pandemic, right, I think we really do need to take stock of what the company was doing prior to this and how these tenants are performing. So there really isn't a concern from my perspective in terms of on a go forward basis once the world starts to operate normally. So I'm not sure if that answered the question in terms of the credit risk to have it expand further.
It is a good point. But so I guess in your mind, there's no tenants whose outlook changes with COVID-nineteen and kind of won't be able to make it through? Is that the right way to think about it? In your view, every one kind of springs back to normal?
I think it all depends, right? I think we are dealing with the facts that are currently present and available to us right now. I think we're certainly when we receive the requests that have been outlined in our 10 Q, in our earnings release, we're focusing with these tenants in terms of what exactly do we need to put and work with them in terms of time horizon. Obviously, we're trying to really focus on what's ahead of us in terms of Q2 and further evaluating as the ramp up takes place over the course of latter part of the year or the month, right. So we're factoring all of that in.
But in my opinion right now, there isn't really there really isn't any need for me to rethink their go forward going concern issues in terms of how these tenants behave. Now one thing that we have done in the context of looking at that analysis on the tenants that we just talked about and we did the bottoms up analysis in terms of the tenants that have reached out to us and look to see what our exposures could be for Q2 and beyond. And we've put a level of conservatism in terms of what we could potentially see from any of these tenants that could potentially go sideways in terms of their ability to come back. These are not tenant specific reserves, they're just general reserves because no tenant has really stated anything otherwise in terms of their ability to go forward in the business. So we've taken that approach and create an estimate that's what you're seeing in our guidance, right?
So you saw us effectively change our FFO guidance and by virtue of the FFO guidance, the same store guidance has also changed. In the prior initial guidance at the beginning of the year, we had about a 50 basis point general reserve, not a tenant specific, just general reserve. That has been now increased to 170 basis points for the full year. So there's a 120 basis point uptick. So we're certainly thinking through this a little bit, but again, the calculus is where we have truly done the waterfall analysis in terms of the tenants that are paying appropriately, the tenants that are requested, what deferral or release agreements have been granted to these tenants and what we have collateral left and looking at the net exposure to build this analysis using the reserves that we kind of just talked about.
Jamie, it's Michael. By the way, thank you for the question. I just wanted to elaborate a little bit. And I think as Adeel said, timing obviously is going to have a lot to do with this and the length of time the businesses remain closed is going to have a lot to do with this and there's a lot of uncertainty there. What's interesting is that the California Governor has already started opening up some of the economy that was previously restricted, including some retail businesses and others.
So maybe there's some cause for optimism there. And I think what's really interesting is, and this might be contrary to some popular assumptions out there with regard to smaller tenants. We have well over 14 100 tenants. We've had 0 bankruptcies. Yet every week, I'm reading about numerous bankruptcies in the country.
And almost all those bankruptcies are national companies with a national or even global footprint. They're biased towards retail, which is a trend that started years ago. And so the data again is telling us that at least with regard to our portfolio, we're not seeing that level of tenant distress and yet the tenant distress is coming from larger companies actually.
Okay. That's helpful. And then I guess as you think about the 170 basis points, is that kind of a grounds up tenant by tenant? Or is that more of a blanket assumption of what it could end up?
Yes. So the 170 basis points, Jamie, is so as I kind of walk through the map, we took into consideration the entire pool of tenants and the tenants that didn't request clearly have a great pattern of behavior even in April in terms of payment. So really they were out of the mix. And then we took a look at the remaining clearance requests that we received and all the tenants that have effectively received some sort of relief agreement, we factored that in because factoring their relief is important because not only their AR should be coming down in those upfront months, but then you have a deferral period that starts into Q4. So we factor all of that into this analysis to see what our true exposure are.
And what's really left from there is these remaining tenants, the 114 tenants that effectively don't have an executed agreement as of yet. So that's where you're coming up with the exposure. And then we applied a percentage to those general pool of tenants in terms of what reserve we should put. And once that reserve is calculated, that reserve must look in conjunction with the entire totality of the company revenue stream to come up with a blended rate. But the specific percentages that are applied to that pool is currently higher, right?
What you're seeing is 170 basis points across the entire company revenue strength for the year.
And Jamie, it kind of makes sense because when we did also do the bottoms up analysis of our tenants to try to figure out how much of our tenant base would be considered essential or would be allowed to stay in business. And by the way, this was before the Governor just made his latest loosening announcement. And we found that just under 80% of our tenants plus or minus, it's not too precise, but just under 80% of our tenants would be able to still be in business based on the guidelines as they were before yesterday. Now that the governor has loosened up restrictions, we'll have a greater percentage of our tenants that will be able to operate. So these numbers sort of correlate and do make some sense.
Our next question comes from the line of Blaine Heck with Wells Fargo. Please proceed with your question.
Great, thanks. Good morning up there. So I guess I want to change direction to maybe the transaction side of things. Have you guys seen any notable change in the profile of potential sellers looking to dispose of properties in your target
Blaine, it's Howard. At this point, we haven't seen any dramatic increase in sellers, although our team has been very busy in terms of writing LOIs. It's not too difficult for us in our research group to go ahead and look toward those businesses that we might expect to have some amount of pain. We put a lot of focus on making sale leaseback offers and we're dialoguing with many companies in that respect. And what we really expect is that once people get back to business, they'll be able to better evaluate what their business looks like, what their revenue streams are.
And at that point, we think things will pick up a little more in terms of willingness to sell. Yes, this has only been going on for a short period of time, so many people still have reserves in respect to hanging on to their real estate. But as we've seen in past recessions, timing is such that it generally takes months, not years. So more probably 3 to 6 months down the road, we expect that aspect of selling to start picking up a little bit.
And Blaine, it's Michael. The deal we closed in Vernon a few weeks ago, dollars 15,500,000 deal was kind of an example where we provided the seller an ability to monetize the value of real estate through a sale leaseback. And in addition to the sale leasebacks, the predominance of ownership in our markets is our private mom and pop type non real estate professional and their mantra is, God forbid, I should ever have to write a check and just let the cash flow keep coming with lower rents. And today, some of their tenants might be having more issues, and a lot of these properties, there's over 1,000,000,000 square feet here built before 1980 that suffer levels of dysfunction and require capital investment. So we are seeing also an increase in potential decision points for a lot of these private owners.
And I would say that the volume of LOIs we're putting out today is substantial and greatly exceeds any period we've ever seen before.
Got it.
That makes sense. That's very helpful. And then
then just with respect to your redevelopment activity, I know in a lot of instances in the past, you guys would pursue a strategy of kind of not renewing certain tenants in order to gain access to the building for renovation purposes. Has that strategy changed for you guys at all given the current circumstances? Are you guys looking to preserve occupancy maybe a little bit more?
Well, we make the decisions on a case by case basis. In terms of the repositioning, we're not waiting to put anything in the repositioning that had already been planned. Generally, there's a pretty big increase in place rent versus market when we do decide to put something into repositioning. And if you look at the market today, there has not been any change in rental rates. So if you look to the market in terms of asking rates, they have not gone down.
They've, in fact, probably moved up a little more. If you look at our leasing spreads and transactions that we're completing late March and all through April, we're still achieving very strong leasing spreads. So there's really, at this point, no indication that we should be holding back on some of those typical decisions that we talked to you about in terms of why we moved something in the repositioning. But that being said, we're not really looking to throw people on the street. And I think part of that decision today is going to involve our thoughts on a go forward basis for that tenant.
So, if we see a tenant that we think is severely impacted, and if we have an inclination that their business may not be able to support their rent or even pay us back rent if we've deferred anything, that's going to make the decision a lot easier of why we will push something into repo versus continuing to maintain occupancy and the revenue stream.
Our next question comes from the line of John Guinee with Stifel. Please proceed with your question.
Great. Thank you. Hey, Aviel, I think you said that you accessed the ATM for at about $36 a share. You guys are trading I think right now around 39. How do those numbers compare to the 3rd Q4 of last year?
And is it safe, Howard or Michael, to assume that the model still works if you can access an ATM, but sell shares at
the high 30s?
Yes. So John, thanks for the question. I'll actually give you Q1 averages by quarter just since you asked the question. Q1 2019, for example, where you issued shares at $34.75 So if you were just look at year over year, Q1 'twenty was at $36 so there's a little bit of correlation there. Q2 'nineteen $38.21 Q3 $44.24 and Q4 2019 was $46.77 But I think the relevant point, which is I think very important to note here is that we don't get overly focused on the spot value of the equity or the stock at any given point in time.
Our stock, as we were trading the highest 53, right? We really try to focus on what is that capital going to do in terms of utilization? What are we buying with it? And how does that model in for the short to medium term in terms of what kind of lift does that give to NOV and FFO, right? That's how we kind of focus and drive that decision, right?
So when we issued equity in Q1 2019 at $30,000,000 for $75,000,000 we clearly saw the deal parameters that were ahead of cost that was going to support that position, right? And that's no different than what we did in Q1. So as long as the opportunities that are ahead of us allow us to do what we've been doing, which is to create this accretive nature on the SFO side and NAV side, we'll make these decisions accordingly. But we tried not to get too focused and fixated on the spot costs at any given point in time for good or for bad. I mean if the stock is trading high, we're not going to try to just take down a whole lot just for the sake of it.
I don't know if that answers the question. No.
And I'll
add to that, John. Going forward, we mentioned we had $175,000,000 of product vendor LOI or contract. And more than half those transactions are some form of value add and several of them will actually move immediately on to the repositioning page with some heavy value add component to them. So there are many opportunities in the market for us still to create value.
And then thank you. A second question, any thoughts on split roll 13 and that process between now November and how that will shake out?
Well, I don't know. I'll answer the first part of the question, then maybe Howard and Mike will be in the pipe if they feel like how it's going to shake out. But I think what we did at the beginning of the year using the in place portfolio that we had in Twelvethirty Onenineteen, we did a deep dive in terms of what that could look like if this thing was to pass, right? And from our analysis at that particular point in time, there was about a penny impact if this thing was to pass and the numbers followed as such, there was a $9,000,000 uptick in expenses into real estate taxes and then $8,000,000 of that would be recovered. The one thing that was important that we also disclosed at that time, which was important to note is that there would be 2 year lag before this thing fully is deployed.
So we would have the ability to correct some of those loss of recoveries in terms of lease structure. So that penny could also be mitigated. So I think at this juncture, I don't think the math has changed materially because again, we've only 3 to 4 months out. But more importantly, I think our property base generally benefits from the fact that so much of that has been accumulated over the last 2 to 3 years. So I don't think the calculus is going to be any different.
And I generally agree with that. I mean our impact as a company is relatively insulated. And with respect to the political environment, we really can't speculate.
Our next question comes from the line of Mike Mueller with JPMorgan. Please proceed with your question.
Yes, hi. I guess, Adeel, your year end occupancy target assumes you have about a 200 to 300 basis point occupancy decline from March 31. And I guess, first, like how much of that is just a blind assumption or where you actually see evidence and you think there's pretty conviction that you're going to
end up down 250 basis points or 300 basis points?
Yes. I think the one thing about occupancy that I always caution people is that it's a year ending occupancy, right? So sometimes that doesn't tell the whole story. We don't guide on an average occupancy, which is truly where you can have a disconnect in terms of the NOI versus what the occupancy is telling you. So they are not definitely translatable back and forth, right.
So when we guide, it's what we think potentially what can happen to a tenant that is expiring on Twelvethirty Onetwenty twenty, right? So I think that's where I think there's some disconnect, but that's why there's sometimes a little bit of a disconnect from the NOI perspective. Is there a blind assumption? I think for the most part, I think we do have a lot more granularity than we get out to maybe 6 months and I think we're certainly getting there. So some of this analysis are put together in early April.
So I think that granularity and transparency improves as courses as time progresses and that's no different. I think we've been operating along those presumptions for quite some time, especially with our tenant base. I think that's just how it happens. But one thing that's important to note, which I think you've seen us do is that you've certainly seen a pattern of behavior in terms of the larger tenants and leases, right? We did a lot of leases last year in June.
There were 2020 expiring leases. We've taken care of those. So I think you're certainly seeing a certain pattern on those leases because they do come up sooner and you have a lot more visibility as opposed to some smaller medium sized tenants. So I think that's where you have a little bit of unknown factor.
Got it. Okay. And then I guess what you're hearing on the ground from the tenants about either the success they're having or the issues they're having with accessing the stimulus funds? Hi, Mike, it's Howard. We really don't know what is happening in terms of their access to stimulus funds, in terms of how we're handling discussions with tenants that have requested rent relief.
We're really suggesting obviously that they do pursue those. We've gone the extra step in providing tenants with the information on where to access the banking system to obtain them, but it's difficult for us to really be able to track their success in obtaining the funds. And we have had some requests that came in and people later withdrew them stating that they had applied and were being approved, so they were going to be able to pay the rent. But in terms of what else is happening on the ground, we're seeing more activity as it relates to vacant buildings. We're renewing tenants that we thought were going to be moving out of buildings because anything they might have been looking at, expecting another tenant to move out isn't really happening.
So it's making it's pushing some of our renewals up. And so, yes, there's a lot more activity on vacant space. We're seeing a reasonable amount of touring, although when you talk to brokers in the market, they'll tell you that touring is substantially down. But our and our approach, as you know, is whenever we do have vacant space, we proactively renovate, modernize it. So we generally have the best quality space available in each of the submarkets.
And typically in times like this, there is a flight to quality. And so we're seeing that in terms of our own portfolio in a lot of the negotiation that's going on now in vacant space and even some of the leasing we've had success of doing in the past week.
Hey, Michael, it's good to hear from you and thanks for your question. I just wanted to add a little bit on topic. As Howard mentioned, we have anecdotally seen a range of tenants who have accessed the funds that are available through these government sponsored loans that don't have to be repaid. But we have we do have a very unique situation here in Southern California and that these local municipalities, the local governments have given tenants the ability to unilaterally defer their rent. So all they have to do is claim, they don't have to prove it.
They just have to indicate that they believe they've been impacted by COVID and they can unilaterally defer rent. So that became, for many tenants, the easiest first solution. And in fact, I don't know if it might be helpful, but maybe our General Counsel, David Lamzer, if you wouldn't mind maybe just give a little overview because it really is a differentiating fact here in
California. Sure. Thanks, Mike, for the question. Yes, the thing that makes it different here in California as we've done a survey as to what other states and cities across the country are doing is California plays where the governor basically had an order that said each local municipality can come up with their own orders in terms of rent deferment and in terms of eviction moratorium. And so we're dialed in at a very granular level at what the municipality is doing within our markets and we've been tracking what the deferment time periods look like, what the repayment time periods look like.
And so that's unique to our business, but it's something that we've been very much on top of. And we've tried very hard to understand what leverage points even though the tenants do have these unilateral rights. So we've some municipalities actually still allow for late fees or security deposits or interest. And so we use those leverage points. We also get very granular as we analyze each individual lease to understand the sort of leverage we have with that particular tenant in terms of might they lose some concession, they have future tenant, might they have a full option that if they haven't paid the rent, they're going to lose.
And so that's what we've done in terms of how we've handled this and dealt with how each local order has affected our tenant base.
Our next question comes from the line of Chris Lucas with Capital One Securities. Please proceed with your question.
Hi, good afternoon, everybody. Howard, I just appreciate the color on the pipeline that you're working with. I guess I was just curious as to whether or not any of your underwriting assumptions have changed given the environment we're in. Hi, Chris. We certainly have adjusted our underwriting.
We're looking to be very conservative at this point. So we've assumed longer lease up timeframes. We've assumed no rent growth initially in some of our leasing assumptions. And we've adjusted some of the exit cap rates a little bit. And of course, the returns we're looking for in terms of stabilized yields have gone up somewhat as well.
Okay, great. Thanks. And then just more just sort of a operational question. As it relates to sort of any tenant move ins that you had scheduled either in March or April or what you're seeing sort of coming forward, are you seeing any impact from the current environment to your ability to get tenants in on time? Into their space on time?
Yes, into their space. Yes, move into their space on time to the degree you had in that were scheduled. Yes. Well, as I mentioned earlier, most of the leasing is occurring on vacant space for the exact reason you're referring to. And it's our concern that people occupying the space have nowhere to go because there's just not a lot of movement.
We just did a 40,000 foot lease in a building in Orange County, and it's a vacant building and was something that we had a bit of renovation work to do. And that was exactly what the tenant's concern was, was that they wanted to make sure we could get that work done as fast as possible so they could get their business in there and up and running. And so we had to get a little creative on how we got them comfortable. We literally told them that we'll give them some other space we had in the market temporarily if they had to move out of their existing building prior to us being able to deliver the space because they don't want to pay holdup for rent on the other space they're in. So that is actually a great question and it is a concern of people who are looking in the market.
They generally have a requirement that they need to fulfill right away. And that's why we put so much emphasis on those vacant spaces we have in terms of getting them move in ready.
And just while Robert was talking, I was given a note we moved 70,000 square feet in April. So clearly, we're operating.
Great. Thank you. Appreciate it. That's all I have.
Our next question comes from the line of Manny Korchman with Citi.
Michael, I appreciate your remarks on sort of the resiliency of the Southern California tenant. I guess the question is, there's space with you, isn't there only space or isn't only one of a couple of there's space with you, isn't there only space or isn't only one of a couple of spaces, but it is sort of a satellite location. Are those types of spaces sort of more at risk or less at risk? Or do you see the resilience there different in any way than that single location small customer?
Hi, Manny. Thanks for your question. Thanks for joining us today. Well, I can tell you from past history and the data really tells us that they that's not a differentiating factor. Those are not less sustainable or those aren't less resilient tenants.
In fact, I think what we've learned over the years is that they have a presence in our market because they have to. And I'll explain that in a sec. Our market is the most expensive operating environment by far by any measure. Rental rates are over 80% higher. Operating costs, taxation, you name it, utilities, everything is higher and more expensive in our market.
So frankly, if you didn't have to be in our market, you probably left 25 years ago or decades ago. And the reason they have to be here is because they need to distribute product in an efficient manner into the largest regional population, the largest zone of consumption in the country by far. It'd be one of the largest countries in the world, in fact, on a standalone basis. And so what we've learned over time is that these are mission critical locations, whether the company is based here and it's their sole location or whether they're a company that has locations in other markets or could even be based in another market. I think that's really what our experience and what the data has told us.
Great. And then just thinking about the rent referrals for a second, if they were to all sort of pay on the new timelines that you've agreed to, when would the cash payments start coming in and sort of when would you be all caught up?
Yes, Manny, I would say 95% of the cash deferral payments would be caught up in 2020. We only have a handful of leases that extended into early 2021, but majority of them start in September and finish up paying back within 2 to 3 months, so effectively in 2020.
Well, on behalf of Rexford Industrial, again, we want to wish you all well and the best of health, and we're looking forward to reconnecting in about 3 months, and we hope that the operating environment and the health of our communities is solid. And I want to thank you for joining us today. And again, stay well, stay healthy.
Ladies and gentlemen, that does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.