Rexford Industrial Realty (REXR) risk factors, FY2024 10-K

Risks Related to Our Business and Operations

1. 01Our portfolio of properties is concentrated in the industrial real estate sector, and our business would be adversely affected by an economic downturn in that sector
2. 02Our portfolio of properties is dependent upon regional and local economic conditions and is geographically concentrated in Southern California infill markets, which causes us to be especially susceptible to adverse developments in those markets
3. 03The impact from governmental emergency declarations with emergency powers, may impact our ability to collect rent and could adversely impact our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations
4. 04Our properties are concentrated in certain industries that make us susceptible to adverse events with respect to those industries
5. 05We may be unable to identify and complete acquisitions of properties that meet our criteria, which may impede our growth
6. 06Our acquisition activities may pose risks that could harm our business
7. 07We may be unable to source off-market or lightly marketed investment opportunities in the future
8. 08Our future acquisitions may not yield the returns we expect
9. 09We may not be able to control our operating costs or our expenses may remain constant or increase, even if our revenues do not increase, causing our results of operations to be adversely affected
10. 10Many of our costs, such as operating expenses and general and administrative expenses, interest expense and real estate acquisition and construction costs, could be adversely impacted by periods of heightened inflation and changes in U.S. trade policies
11. 11An increase in interest rates would increase our interest costs on variable rate debt and new debt and could adversely affect our ability to refinance existing debt, conduct repositioning, redevelopment, and acquisition activity, recycling of capital and leasing activity
12. 12The potential impacts of current and future climate change and governmental initiatives remain uncertain at this time but could result in increased operating costs
13. 13Adverse U.S. and global market, economic and political conditions, including the ongoing conflict between Ukraine and Russia, recent events in the Middle East and other events or circumstances beyond our control could have a material adverse effect on us
14. 14We may be unable to renew leases, lease vacant space or re-lease space as leases expire, or renewing existing leases may require significant concessions, inducements and/or capital expenditures
15. 15We face significant competition in the leasing market, which may decrease or hinder opportunities to increase the occupancy and rental rates of our properties
16. 16A substantial majority of the leases at our properties are with tenants who have non-investment grade credit ratings, which may result in our leasing to tenants that are more likely to default in their obligations than a tenant with an investment grade credit rating
17. 17We may acquire properties or portfolios of properties through tax-deferred contribution transactions, which could result in stockholder dilution and limit our ability to sell such assets
18. 18Our real estate development, redevelopment and repositioning activities are subject to risks
19. 19Potential losses, including from adverse weather conditions and natural disasters, such as earthquakes, may not be covered by insurance, and we may be unable to rebuild our existing properties in the event of a substantial or comprehensive loss of such properties
20. 20Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers
21. 21We face risks associated with security breaches through cyber-attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (“IT”) networks and related systems
22. 22non-performance by financial institutions, could adversely affect our business, financial condition or results of operations

Risks Related to Our Capital Structure

1. 23Our growth depends on external sources of capital that are outside of our control and may not be available to us on commercially reasonable terms or at all
2. 24Some of our financing arrangements involve balloon payment obligations, which may adversely affect our financial condition and our ability to make distributions
3. 25Our debt level reduces cash available for distribution and may expose us to the risk of default under our debt obligations
4. 26Mortgage and other secured debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in a property or group of properties subject to mortgage debt
5. 27Failure to hedge effectively against interest rate changes may adversely affect us
6. 28Our unsecured credit facility, unsecured notes and certain of our other secured loans contain, and any other future indebtedness we incur may contain, various covenants, including business activity restrictions, and the failure to comply with those covenants could materially adversely affect us

Risks Related to Investments in Real Estate and Real Estate-Related Debt

1. 29Our performance and value are subject to risks associated with real estate assets and the real estate industry
2. 30Illiquidity of real estate investments could significantly impede our ability to sell a property if and when we decide to do so or to respond to adverse changes in the performance of our properties and resulting in harm to our financial condition
3. 31property, changes in the financial condition or prospects of prospective purchasers, changes in national or international economic conditions, and changes in laws, regulations or fiscal policies of jurisdictions in which the property is located
4. 32Declining real estate valuations and impairment charges could materially adversely affect us
5. 33Acquired properties may be located in new markets where we may face risks associated with investing in an unfamiliar market
6. 34We may choose not to distribute the proceeds of any sales of real estate to our stockholders, which may reduce the amount of our cash distributions to stockholders
7. 35If any of our insurance carriers becomes insolvent, we could be adversely affected
8. 36Our property taxes could increase due to property tax rate changes or reassessment, which could adversely impact our cash flows
9. 37We face certain risks in connection with Section 1031 Exchanges
10. 38We could incur significant costs related to government regulation and litigation over environmental matters
11. 39Our properties may contain lead based paint, contain or develop harmful mold or suffer from other air quality issues, which could lead to liability for adverse health effects and costs of remediation
12. 40We may incur significant costs complying with various federal, state and local laws, regulations and covenants that are applicable to our properties
13. 41could also be subject to local, state or federal eminent domain or condemnation proceedings, which could impact the functionality of those properties (or portions thereof) impacted
14. 42The commercial loan that we originated is subject to the risk of delinquency and foreclosure, which could result in a significant loss to us and a material adverse effect on our results of operations

Risks Related to Our Organizational Structure

1. 43Conflicts of interest may exist or could arise in the future between the interests of our stockholders and the interests of holders of common units, which may impede business decisions that could benefit our stockholders
2. 44Some of our directors and executive officers have outside business interests, including interests in real estate-related businesses, and, therefore, may have conflicts of interest with us
3. 45We could increase the number of authorized shares of stock, classify and reclassify unissued stock and issue stock without stockholder approval
4. 46Certain provisions of Maryland law could inhibit changes in control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interest
5. 47Certain provisions in the partnership agreement of our Operating Partnership may delay or prevent unsolicited acquisition of us
6. 48Tax Matters Agreements limit our ability to sell or otherwise dispose of certain properties, even though a sale or disposition may otherwise be in our stockholders’ best interest
7. 49Tax Matters Agreements may require our Operating Partnership to maintain certain debt levels that otherwise would not be required to operate our business
8. 50Our board of directors may change our investment and financing policies without stockholder approval and we may become more highly leveraged, which may increase our risk of default under our debt obligations
9. 51Our rights and the rights of our stockholders to take action against our directors and officers are limited
10. 52We are a holding company with no direct operations and, as such, we will rely on funds received from our Operating Partnership to pay liabilities, and the interests of our stockholders will be structurally subordinated to all liabilities and obligations of our Operating Partnership and its subsidiaries

Risks Related to Our Status as a REIT

1. 53Failure to maintain our qualification as a REIT would have significant adverse consequences to us and the per share trading price of our common stock
2. 54If our Operating Partnership failed to qualify as a partnership for federal income tax purposes, we would cease to qualify as a REIT and suffer other adverse consequences
3. 55Our taxable REIT subsidiaries will be subject to federal income tax, and we will be required to pay a 100% penalty tax on certain income or deductions if our transactions with our taxable REIT subsidiaries are not conducted on arm’s length terms
4. 56To maintain our REIT qualification, we may be forced to borrow funds during unfavorable market conditions
5. 57Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends
6. 58The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for federal income tax purposes
7. 59Complying with REIT requirements may affect our profitability and may force us to liquidate or forgo otherwise attractive investments
8. 60Legislative or other actions affecting REITs could have a negative effect on us