REXR US Equity☆

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the sections of this Annual Report on Form 10-K entitled “Risk Factors,” “Forward-Looking Statements,” “Business” and our audited consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements reflecting current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled “Risk Factors” and elsewhere in this Annual Report on Form 10-K.

Company Overview

Rexford Industrial Realty, Inc. is a self-administered and self-managed full-service REIT focused on owning and operating industrial properties in Southern California infill markets. We were formed as a Maryland corporation on January 18, 2013 and Rexford Industrial Realty, L.P. (the “Operating Partnership”), of which we are the sole general partner, was formed as a Maryland limited partnership on January 18, 2013. Through our controlling interest in our Operating Partnership and its

49

subsidiaries, we own, manage, lease, acquire and develop industrial real estate primarily located in Southern California infill markets, and from time to time, acquire or provide mortgage debt secured by industrial property. We are organized and conduct our operations to qualify as a REIT under the Code, and generally are not subject to federal taxes on our income to the extent we distribute our income to our shareholders and maintain our qualification as a REIT.

As of December 31, 2020, our consolidated portfolio consisted of 248 properties with approximately 31.5 million rentable square feet. In addition, we currently manage an additional 20 properties with approximately 1.0 million rentable square feet.

Our goal is to generate attractive risk-adjusted returns for our stockholders by providing superior access to industrial property investments and mortgage debt secured by industrial property in high barrier Southern California infill markets. Our target markets provide us with opportunities to acquire both stabilized properties generating favorable cash flow, as well as properties or land parcels where we can enhance returns through value-add renovations and redevelopment of new industrial buildings. Scarcity of available space and high barriers limiting new construction of for-lease product all contribute to create superior long-term supply/demand fundamentals within our target infill Southern California industrial property markets. With our vertically integrated operating platform and extensive value-add investment and management capabilities, we believe we are positioned to capitalize upon the opportunities in our markets to achieve our objectives.

Highlights

Acquisitions

•During 2020, we acquired 38 properties, with a combined 5.0 million rentable square feet, for an aggregate cost of $1.2 billion.

Repositioning & Redevelopment

•During 2020, we completed repositioning and lease-up of eight of our repositioning properties located at 2455 Conejo Spectrum Street, 635 8th Street, 16121 Carmenita Road, 10015 Waples Court, 1210 North Red Gum Street, 7110 Rosecrans Avenue, 29003 Avenue Sherman and 727 Kingshill Place with a combined 0.6 million rentable square feet.

•In October 2020, we completed the construction of the redevelopment project branded as “The Merge,” which contains six industrial buildings with a total of 333,544 rentable square feet. As of December 31, 2020, the project was 18% leased.

Dispositions

•During 2020, we sold four properties with a combined 0.3 million rentable square feet, for a total gross sales price of $45.5 million and total net cash proceeds of $43.6 million.

Equity

•During 2020, we issued 17,253,161 shares of common stock as follows:

◦We sold 3,165,661 shares of common stock under our various at-the-market equity offering programs, for gross proceeds of $126.5 million, or approximately $39.96 per share, and net proceeds of $124.7 million after deducting the sales agents’ fee.

◦During the second quarter we completed an underwritten public offering of 7,187,500 shares of our common stock at a price to the underwriters of $39.67 per share, for net proceeds of approximately $285.0 million after deducting offering costs.

◦During the fourth quarter we completed an underwritten public offering of 6,900,000 shares of our common stock at a price to the underwriters of $47.15 per share, for net proceeds of approximately $325.0 million after deducting offering costs.

•During 2020, our acquisition activity included three UPREIT transactions, whereby we issued a combined 3,798,356 common units of limited partnership interests in the Operating Partnership representing $179.3 million of purchase price value and 906,374 newly issued 4.00% cumulative redeemable convertible preferred units of partnership interest in the Operating Partnership (the “Series 2 CPOP Units”) valued at $40.8 million.

50

Financing

•In February 2020, we amended our senior unsecured credit facility to, among other changes, increase the aggregate commitment for our unsecured revolving credit facility to $500 million from $350 million and extend the maturity date of the unsecured revolving credit facility to February 2024 from February 2021.

•In November 2020, we completed an underwritten public offering of $400.0 million of 2.125% senior notes due 2030. The notes were issued to the public at 99.211% of the principal amount. The net proceeds from the offering, after deducting the underwriting discount, were approximately $394.2 million and were partially used to repay our $100.0 million term loan due February 14, 2022.

•During 2020, we assumed total debt of $63.2 million as part of the consideration for the acquisition of 11 properties during 2020. The $63.2 million is comprised of 11 secured fixed-rate mortgage loans with interest rates ranging from 3.70% to 5.24% and with maturities ranging from 3.0 years to 8.3 years from the date assumed.

•In October 2020, we received investment grade ratings of Baa3 from Moody’s Investors Services (“Moody’s) and BBB from Standard and Poor’s Ratings Services (“S&P”), complementing our current BBB rating received from Fitch Ratings (“Fitch”). As a result of obtaining these ratings, we elected to convert the pricing structure under our unsecured revolving credit facility and unsecured term loan facilities to be based on such ratings, resulting in an overall reduction in our interest rate spreads.

Factors That May Influence Future Results of Operations

COVID-19 Update

The outbreak of COVID-19and the related responses by public health and governmental authorities to contain its outbreak and spread has significantly impacted the global and national economies, our industry and the industries in which our tenants operate.

In Southern California, where all of our industrial properties are located, local government authorities reacted to the COVID-19 pandemic early on by instituting quarantines, restrictions on travel, “shelter in place” rules, restrictions on types of businesses that may continue to operate, and/or restrictions on the types of construction projects that may continue. Since the onset of the pandemic, state and local government restrictions have gone through a cycle of easing and tightening in response to resurgences in COVID-19 cases, causing some businesses to close and resume operations in tandem with changes in restrictions. The State of California is currently under a risk-based four-tier system which is used to determine on a county-by-county basis which types of businesses are allowed to reopen or required to restrict activities. We cannot predict when restrictions currently in place will expire or if additional restrictions will be added. Most municipalities in Southern California, including many municipalities in which we own properties, have mandated a moratorium on all commercial evictions and have given tenants impacted by COVID-19 the unilateral right to defer rent while the emergency orders are in effect, with repayment generally within six to twelve months after the end of the local emergency. Only a small number of municipalities have allowed their local orders to expire or modified the orders to exclude some tenants (based on the tenant’s number of employees, being a publicly traded company or multinational company, or other characteristics), and in many of the local municipalities in which we operate, the eviction restrictions and rent deferment rights are set to expire by March 31, 2021, while in other municipalities the restrictions expire when the local emergency is lifted. We cannot currently predict whether or not these restrictions may be extended or for how long. Some of the orders have been extended multiple times. A number of our tenants have taken advantage of the relief provided by the local government mandates authorizing deferral of rent, irrespective of such tenants’ actual ability to pay such rent, and we are currently unable to predict the ultimate impact that the COVID-19 pandemic will have on our tenants or the number of tenants that will take advantage of the relief provided by the local government mandates authorizing the deferral of rent.

While we are currently unable to completely estimate the impact that the COVID-19 pandemic and efforts to contain its spread, as well as the California emergency orders authorizing tenant deferral of rent, will have on our business and our tenants during 2021, as of February 16, 2021 we have taken the following steps and seen the following impact on our portfolio (using tenant counts and in-place annualized base rent (defined below) as of December 31, 2020):

•We had 1,533 leases representing in-place annualized base rent (“ABR”) of $310.4 million. ABR is defined/calculated as the monthly contractual base rent per the leases, excluding any rent abatements, as of December 31, 2020, multiplied by 12.

•During 2020, we executed rent relief agreements (which comprise application of security deposits, acceleration of concessions and deferral of base rent) with 270 tenants, including 120 tenants that received deferred base rent of $4.6 million or 1.5% of ABR. See the table below for a summary of rent relief provided to tenants applicable to the second,

51

third and fourth quarters of 2020 and January 2021.

•We have executed rent relief agreements with two of our top ten tenants as of December 31, 2020, including one that received a deferral of contractual base rent for approximately three months. As of December 31, 2020, all of our top ten tenants were current on their rent payments.

•We cannot be certain of the number of tenants not paying or deferring rent out of need versus those merely taking advantage of their local California government-mandated right to unilaterally defer rent without an agreement.

•We may in the future amend or enter into additional rent relief agreements.

The following table sets forth the following information regarding contractual rent for the second, third and fourth quarters of 2020 and January 2021 (dollars in thousands): (i) amount billed, (ii) percentage collected (as of February 16, 2021) prior to the impact of consummated rent relief agreements, (iii) the amount of rent relief provided to tenants by the (a) application of security deposits to contractual base rent, (b) acceleration of future existing contractual rent concessions to cover contractual base rent and (c) deferral of contractual base rent and (iv) percentage collected (as of February 16, 2021) after adjusting for rent relief provided by rent relief agreements.

Rent Relief

(1)Contractual Billings include contractual base rent and tenant reimbursements (including prior year recoverable expense reconciliation adjustments) charged to in-place tenants before the impact of consummated COVID-19 related rent relief agreements, as well as COVID-19 deferral billings (see footnote (7) below for details).

(2)Represents the cash collection percentage of Contractual Billings.

(3)Reflects collections through February 16, 2021, for all periods presented.

(4)The typical deferral period has been approximately one to two months with repayment generally beginning in the third or fourth quarter of 2020.

(5)Represents the cash collection percentage of Contractual Billings after adjusting for Rent Relief provided by rent relief agreements.

(6)During the second quarter of 2020, $96,000 of rent relief was provided to a tenant in the form of a base rent deferral with repayment scheduled to begin in the fourth quarter of 2020. During the third quarter of 2020, this base rent deferral was waived in connection with the execution of an early renewal lease.

(7)The following table provides a breakdown of third and fourth quarter 2020 and January 2021 Contractual Billings between regular billings and COVID-19 deferral billings and percentage collected through February 16, 2021 (dollars in thousands):

52

While the volume of rent relief requests and rent relief agreements executed has significantly decreased and tapered off from its peak in April 2020, for any rent relief requests we might receive in the future, we will continue to perform an evaluation of each tenant’s individual circumstances prior to executing such rent relief agreements. Not all tenant rent relief requests will ultimately result in rent relief agreements, nor are we forgoing our contractual rights under any of our lease agreements. Rent collections and rent relief requests received to-date may not be indicative of collections or requests in any future period.

The long-term impacts of the ongoing COVID-19 pandemic and efforts to contain its spread, as well as the actions of many California municipalities enabling tenants impacted by COVID-19 to unilaterally defer their rent, on our operations is uncertain. A continuing outbreak could have a material adverse impact on our financial results and business operations, including our timing and ability to collect rents, including rents that have been deferred pursuant to consummated rent relief agreements. Further, the impacts of a potential worsening of global economic conditions and the continued disruptions to, and volatility in, the credit and financial markets, consumer spending as well as other unanticipated consequences remain unknown. The situation surrounding the COVID-19 pandemic remains fluid, and we are actively managing our ongoing response in collaboration with tenants and government officials and assessing potential impacts to our financial position and operating results, as well as potential adverse developments in our business. For further information regarding the impact of COVID-19 on the Company, see Part II, Item 1A titled “Risk Factors.”

Market and Portfolio Fundamentals

Our operating results depend upon the infill Southern California industrial real estate market.

The infill Southern California industrial real estate sector has continued to exhibit strong fundamentals, even amidst the ongoing COVID-19 pandemic. These high-barrier infill markets are characterized by a relative scarcity of available product, generally operating at approximately 98% occupancy, coupled with the limited ability to introduce new supply due to high land and development costs and a dearth of developable land in markets experiencing a net reduction in supply as over time more industrial property is converted to non-industrial uses than can be delivered. Consequently, available industrial supply has continued to decrease in many of our target infill submarkets and construction deliveries have fallen short of demand. Meanwhile, underlying tenant demand within our infill target markets continues to demonstrate growth, illustrated or driven by strong re-leasing spreads and renewal activity over the last several years, inclusive of 2020, an expanding regional economy, substantial growth in ecommerce transaction and delivery volumes, as well as further compression of delivery time-frames to consumers and to businesses, increasing the significance of last-mile facilities for timely fulfillment. Although we continue to observe a number of positive trends within our target infill markets, the COVID-19 pandemic, the ongoing government-led cycle of easing and tightening business restrictions and the actions taken by many California municipalities enabling some tenants impacted by COVID-19 to unilaterally defer their rent are unprecedented events and the long-term impact on the global economy and our infill Southern California markets cannot be determined at present.

Despite the above-mentioned challenges, tenant demand remains strong within our portfolio, which is strategically located within prime infill Southern California industrial markets. The quality and intensity of tenant demand through 2020 is demonstrated through the Company’s favorable leasing spreads and leasing volume, which continue at pre-COVID-19 levels, as well as achieving rental rates and related terms from new and renewing tenants that continue to generally meet and exceed budgeted targets set during pre-COVID-19 periods (see “—Leasing Activity and Rental Rates” below). This tenant demand has been driven by a wide range of sectors, from consumer products, healthcare and medical products to aerospace, food and logistics, among other sectors. We have also observed a notable increase in ecommerce-oriented tenants securing space within our portfolio, in part driven by the impacts of the COVID-19 pandemic, which has accelerated the growth in the range and volume of goods and customers transacting through ecommerce. Our portfolio, positioned within the largest last-mile logistics distribution market in the nation, is well-positioned to attract incremental ecommerce-oriented demand. We believe our portfolio’s leasing performance throughout 2020 has generally outpaced that of the infill markets within which we operate, although, as discussed in more details below, our target infill markets continue to operate at or near historically high levels of occupancy. We believe this performance has been driven by our highly entrepreneurial business model focused on acquiring and improving industrial property in superior locations so that our portfolio reflects a higher level of quality and functionality, on average, as compared to

53

typical available product within the markets within which we operate. We also believe the quality and entrepreneurial approach demonstrated by our team of real estate professionals actively managing our properties and our tenants enables the potential to outcompete within our markets that we believe are generally otherwise owned by more passive, less-focused real estate owners. However, there can be no assurance that tenant demand may continue at strong levels to the extent impacts from the COVID-19 pandemic referenced above persist into future periods.

General Market Conditions

The following are general market conditions and do not necessarily reflect the results of our portfolio. For our portfolio specific results see “—Rental Revenues” and “—Results of Operations” below.

In Los Angeles County, vacancy increased year-over-year, while still remaining at low levels, and average asking lease rates decreased slightly year-over-year. Current market conditions indicate rents are likely to increase in 2021, as demand has been consistently strong, occupancy still remains at near capacity levels and new redevelopment is limited by a lack of land availability and an increase in land and development costs.

In Orange County, vacancy increased year-over-year, while still remaining at low levels, and average asking lease rates increased year-over-year as a result of increased demand related to the accelerated adoption of ecommerce. Current market conditions indicate rents are likely to continue to increase in 2021, as demand has been steady and there remains a continued low availability of industrial product in this region.

In San Diego, vacancy decreased slightly year-over-year and average asking lease rates decreased year-over-year.

In Ventura County, vacancy decreased year-over-year and average asking lease rates increased year-over year.

Lastly, in the Inland Empire, new industrial product continues to be absorbed well in the market. In the Inland Empire West, which contains infill markets in which we operate, vacancy decreased year-over-year and remained at historically low levels, and asking lease rates increased year-over-year. We generally do not focus on properties located within the non-infill Inland Empire East sub-market where available land and the development and construction pipeline for new supply is substantial.

Acquisitions and Value-Add Repositioning and Redevelopment of Properties

The Company’s growth strategy comprises acquiring leased, stabilized properties as well as properties with value-add opportunities to improve functionality and to deploy our value-driven asset management programs in order to increase cash flow and value. Acquisitions may comprise single property investments as well as the purchase of portfolios of properties, with transaction values ranging from approximately $10 million single property investments to portfolios potentially valued in the billions of dollars. The Company’s geographic focus remains infill Southern California. However, from time-to-time, portfolios could be acquired comprising a critical mass of infill Southern California industrial property that could include some assets located in markets outside of infill Southern California. In general, to the extent non-infill-Southern California assets were to be acquired as part of a larger portfolio, the Company may underwrite such investments with the potential to dispose such assets over a certain period of time in order to maximize its core focus on infill Southern California, while endeavoring to take appropriate steps to satisfy REIT safe harbor requirements to avoid prohibited transactions under REIT tax laws.

A key component of our growth strategy is to acquire properties through off-market and lightly marketed transactions that are often operating at below-market occupancy or below-market rent at the time of acquisition or that have near-term lease roll-over or that provide opportunities to add value through functional or physical repositioning and improvements. Through various repositioning, redevelopment, and professional leasing and marketing strategies, we seek to increase the properties’ functionality and attractiveness to prospective tenants and, over time, to stabilize the properties at occupancy rates that meet or exceed market rates.

A repositioning can consist of a range of improvements to a property. This may include a complete structural renovation of a property whereby we convert large underutilized spaces into a series of smaller and more functional spaces, or it may include the creation of additional square footage, the modernization of the property site, the elimination of functional obsolescence, the addition or enhancement of loading areas and truck access, the enhancement of fire-life-safety systems or other accretive improvements, in each case designed to improve the cash flow and value of the property. We have a number of significant repositioning properties, which are presented in the tables below, as well as range of smaller spaces in repositioning that due to their smaller size, relative scope, projected repositioning costs or relatively nominal amount of down-time, are not presented below, however, in the aggregate, may be substantial.

A repositioning property that is considered significant, is typically defined as a property where a significant amount of space is held vacant in order to implement capital improvements, the cost to complete repositioning work and lease-up is estimated to be greater than $1 million and the repositioning and lease-up time frame is estimated to be greater than six months. A repositioning is considered complete once the investment is fully or nearly fully deployed and the property is marketable for leasing. Because each repositioning effort is unique and determined based on the property, targeted tenants and overall trends in

54

the general market and specific submarket, the timing and effect of the repositioning on our rental revenue and occupancy levels will vary, and, as a result, will affect the comparison of our results of operations from period to period with limited predictability.

A redevelopment property is defined as a property where we plan to fully or partially demolish an existing building(s) due to building obsolescence and/or a property with excess land where we plan to construct a ground-up building.

As of December 31, 2020, three of our properties were under current repositioning or redevelopment and one of our properties was in the lease-up stage. In addition, we anticipate beginning repositioning/redevelopment construction work on 14 additional properties during 2021. A summary of these repositioning/redevelopment properties are set forth in the tables below, as well the properties that were stabilized during 2020 and 2019, as the timing of these stabilizations have a direct impact on our current and comparative results of operations. We consider a repositioning/redevelopment property to be stabilized upon the earlier of (i) reaching 90% occupancy or (ii) one year from the date construction work is completed.

The ongoing COVID-19 pandemic and restrictions intended to prevent its spread, including impacts to our employees, may cause delays or increase costs associated with building materials or construction services necessary for construction, which could adversely impact our ability to continue or complete construction as planned, on budget or at all for our repositioning and development projects. Additionally, most municipalities are taking longer to issue construction permits and complete inspections as their employees are permitting remotely and inspections occasionally experience delays, which has had and may continue to have an impact on project completion timing. For further information regarding the impact of COVID-19 on the Company, see Part I, Item 1A titled “Risk Factors.”

Estimated Construction Period(1)

Current Repositioning:

Future Repositioning:

Lease-up:

55

Estimated Construction Period(1)

Current Redevelopment:

Total Current Redevelopment 201,880

Future Redevelopment:

Total Future Redevelopment 913,686

(1)The estimated start period is the period we anticipate starting physical construction on a project. Prior to physical construction, we engage in pre-construction activities, which include design work, securing permits or entitlements, site work, and other necessary activities preceding construction. In prior filings, the estimated start period included pre-construction activities. The estimated completion period is our current estimate of the period in which we will have substantially completed a project and the project is made available for occupancy. We expect to update our timing estimates on a quarterly basis. The estimated construction period is subject to change as a result of a number of factors including but not limited to permit requirements, delays in construction (including delays related to the COVID-19 pandemic), changes in scope, and other unforeseen circumstances.

(2)“Total Property Rentable Square Feet” is the total rentable square footage of the entire property or particular building(s) (footnoted if applicable) under repositioning/lease-up. “Repositioning/Lease-up Rentable Square Feet ” is the actual

56

rentable square footage that is subject to repositioning at the property/building, and may be less than Total Property Rentable Square Feet.

(3)At 12821 Knott Street, we are repositioning the existing 120,800 rentable square foot building and are constructing approximately 45,000 rentable square feet of new warehouse space.

(4)12133 Greenstone Avenue is a single tenant container storage facility with a 12,586 rentable square foot truck terminal building on 4.8 acres with excess land.

(5)Rancho Pacifica Buildings 1 & 6 are located at 2301-2329 Pacifica Place and 2332-2366 Pacifica Place, and represent two buildings totaling 488,114 rentable square feet, out of six buildings at our Rancho Pacifica Park property, which have a total 1,152,883 rentable square feet.

(6)As of December 31, 2020, 15650-15700 Avalon Boulevard contains two buildings totaling 166,088 rentable square feet. In December 2020, the tenant extended their lease on a short-term basis through April 30, 2021. Upon termination of the lease, we plan to demolish one of the existing buildings and reposition the property into a single-tenant low coverage facility which will have one 98,259 rentable square foot building at completion.

(7)Represents the estimated rentable square footage of the project upon completion of redevelopment.

(8)At 4416 Azusa Canyon Road, we will demolish the existing building (70,510 rentable square feet) and construct a new 128,350 rentable square foot building upon termination of the in-place lease.

(9)9615 Norwalk Boulevard is a 10.26 acre storage-yard with buildings totaling 26,362 rentable square feet. In January 2019, we converted the tenant’s month to month land lease to a term lease with an expiration date of March 31, 2021. We will demolish the existing buildings and construct a new 201,808 rentable square foot building upon termination of this land lease.

(10)In February 2021, we leased 15601 Avalon Boulevard to a tenant under a short-term lease. Upon termination of the lease, we will demolish the existing building (63,690 rentable square feet) and construct a new 84,727 rentable square foot building.

(11)As of December 31, 2020, 12752-12822 Monarch Street contains two buildings totaling 276,585 rentable square feet. We plan to demolish one building with 98,360 rentable square feet and add a new 97,613 rentable square foot building after the in-place lease terminates. At completion, the total project will contain 275,838 rentable square feet.

(12)We consider a repositioning property to be stabilized upon the earlier of (i) reaching 90% occupancy or (ii) one year from the date construction work is completed.

(13)Repositioning construction work for 7110 East Rosecrans Avenue was completed in the 3Q-2019 and is considered stabilized as of 3Q-2020, which is one year from the date construction work was completed.

(14)During 1Q-2020, we acquired 701-727 Kingshill Place, a six-building property totaling 169,914 rentable square feet. The information presented above is related to only one of the six buildings which is located at 727 Kingshill Place (46,005 rentable square feet).

(15)On September 9, 2020, the tenant occupying a 58,802 rentable square foot unit at 2722 Fairview Street exercised its option to purchase the property, and on September 30, 2020, the sale was completed.

Properties that are nonoperational as a result of repositioning or redevelopment activity may qualify for varying levels of interest, insurance and real estate tax capitalization during the redevelopment and construction period. An increase in our repositioning and redevelopment activities resulting from value-add acquisitions could cause an increase in the asset balances qualifying for interest, insurance and tax capitalization in future periods. We capitalized $3.9 million of interest expense and $1.2 million of insurance and real estate tax expense during the year ended December 31, 2020, related to our repositioning and redevelopment projects.

Rental Revenues

Our operating results depend primarily upon generating rental revenue from the properties in our portfolio. The amount of rental revenue generated by these properties is affected by our ability to maintain or increase occupancy levels and rental rates at our properties, which will depend upon our ability to lease vacant space and re-lease expiring space at favorable rates.

Occupancy Rates

As of December 31, 2020, our consolidated portfolio, inclusive of space in repositioning as described in the subsequent paragraph, was approximately 95.2% occupied, while our stabilized consolidated portfolio exclusive of such space was approximately 96.7% occupied. We believe the opportunity to increase occupancy at our properties will be an important driver of

57

future revenue growth. An opportunity to drive this growth will derive from the completion and lease-up of repositioning and redevelopment projects that are currently under construction.

As summarized in the tables under “Acquisitions and Value-Add Repositioning and Redevelopment of Properties” above, as of December 31, 2020, three of our properties with a combined 0.4 million rentable square feet at completion are in current repositioning or redevelopment, and one property with 0.3 million rentable square feet is in lease-up. Additionally, we have a near-term pipeline of 14 repositioning and redevelopment projects with a combined 2.0 million of estimated rentable square feet at completion. Vacant space at these properties are concentrated in our Los Angeles, Orange County and San Bernardino markets and represent 1.5% of our total consolidated portfolio square footage as of December 31, 2020. Including vacant space at these properties our weighted average occupancy rate as of December 31, 2020, in Los Angeles, Orange County, and San Bernardino was 97.2%, 95.7% and 87.5%, respectively. Excluding vacant repositioning and lease-up space at these properties, our weighted average occupancy rate as of December 31, 2020, in these markets was 97.7%, 99.2% and 92.7%, respectively. We believe that an important portion of our long-term future growth will come from the completion of these projects currently under or scheduled for repositioning, as well as through the identification or acquisition of new opportunities for redevelopment and repositioning, whether in our existing portfolio or through new investments, which may vary from period to period subject to market conditions.

The occupancy rate of properties not undergoing repositioning is affected by regional and local economic conditions in our Southern California infill markets. In the last several years, the Los Angeles, Orange and San Diego county markets have continued to show historically low vacancy and positive absorption, resulting from high tenant demand combined with low product availability. Accordingly, our properties in these markets have generally exhibited a similar trend. While we believe the opportunity to increase occupancy and rental rates at our properties will be an important driver of future revenue growth, there can be no assurance that recent positive market trends will continue, due in part to the ongoing COVID-19 pandemic and the impact it will have on the global economy and our local infill Southern California markets.

Leasing Activity and Rental Rates

The following tables set forth our leasing activity for new and renewal leases on a quarterly basis for the year ended December 31, 2020:

New Leases

Renewal Leases Expiring Leases(6) Retention %(7)

(1)Effective rent per square foot is the average base rent calculated in accordance with GAAP, over the term of the lease, expressed in dollars per square foot per year. Includes all new and renewal leases that were executed during each respective quarter.

58

(2)Calculated as the change between GAAP rents, which straightlines rental rate increases and abatements, for new or renewal leases and the expiring GAAP rents on the expiring leases for the same space.

(3)Calculated as the change between starting cash rents, excluding any abatements, for new or renewal leases and the expiring cash rents on the expiring leases for the same space.

(4)The GAAP and cash re-leasing spreads for new leases executed during the year ended December 31, 2020, exclude 61 leases aggregating 1,413,171 rentable square feet for which there was no comparable lease data. Of these 61 excluded leases, 10 leases aggregating 485,012 rentable square feet are leases of recently repositioned/redeveloped space. Comparable leases generally exclude: (i) space that has never been occupied under our ownership, (ii) recently repositioned/redeveloped space, (iii) space that has been vacant for over one year or (iv) space with lease terms shorter than six months.

(5)The GAAP and cash re-leasing rent spreads for renewal leases executed during the year ended December 31, 2020, exclude six leases aggregating 178,310 rentable square feet for which there was no comparable lease data. Comparable leases generally exclude: (i) space with different lease structures or (ii) space with lease terms shorter than six months.

(6)Includes four leases totaling 211,782 rentable square feet that expired during the year ended December 31, 2020, for which the space was placed into repositioning after each tenant vacated.

(7)Retention is calculated as renewal lease square footage plus relocation/expansion square footage, divided by the square footage of leases expiring during the period. Retention excludes square footage related to the following: (i) expiring leases associated with space that is placed into repositioning after the tenant vacates, (ii) early terminations with pre-negotiated replacement leases and (iii) move outs where space is directly leased by subtenants.

Our leasing activity is impacted both by our repositioning and redevelopment efforts, as well as by market conditions. While we reposition a property, its space may become unavailable for leasing until completion of our repositioning efforts. During the year ended December 31, 2020, we stabilized properties with a combined 0.6 million rentable square feet and we have one property in the lease-up stage. As of December 31, 2020, we have three current repositioning/redevelopment projects with estimated construction completion periods ranging from the first quarter of 2021 through the fourth quarter of 2021, and additional repositioning and redevelopment projects in our pipeline with estimated completion dates through the first quarter of 2023. We expect these properties to have positive impacts on our leasing activity and revenue generation as we complete our value-add plans and place these properties in service.

Scheduled Lease Expirations

Our ability to re-lease space subject to expiring leases is affected by economic and competitive conditions in our markets and by the relative desirability of our individual properties, which may impact our results of operations.

As of December 31, 2020, 1.1 million rentable square feet of our portfolio was available for lease, 0.1 million rentable square feet of vacant space was under repositioning and leases representing 0.3 million rentable square feet of our portfolio expired on December 31, 2020. Additionally, leases representing 15.3% and 14.5% of the aggregate rentable square footage of our portfolio are scheduled to expire during the years ending December 31, 2021 and 2022, respectively. During the year ended December 31, 2020, we renewed 234 leases for 3.7 million rentable square feet, resulting in a 74.8% retention rate. Our retention rate during the period was impacted by the combination of low vacancy and high demand in many of our key markets. New and renewal leases signed during the current year had a weighted average term of 4.7 and 4.4 years, respectively, and we expect future new and renewal leases to have similar terms.

The leases scheduled to expire during the years ending December 31, 2021 and 2022, represent 15.5% and 16.2%, respectively, of the total annualized base rent for our portfolio as of December 31, 2020. We estimate that, on a weighted average basis, in-place rents of leases scheduled to expire in 2021 and 2022 are currently below current market asking rates, although individual units or properties within any particular submarket may currently be leased either above, below, or at the current market asking rates within that submarket.

As described under “Market and Portfolio Fundamentals” above, while market indicators, including changes in vacancy rates and average asking lease rates, varied by market, overall there was continued low market vacancy and pervasive supply and demand imbalance across our submarkets, which continues to support strong market fundamentals including positive rental growth. Therefore we expect market dynamics to remain strong heading into 2021 and that these positive trends will provide a favorable environment for additional increases in lease renewal rates. Accordingly, we expect 2021 will show positive renewal rates and leasing spreads, however, due to the continued uncertainty created by the ongoing COVID-19 pandemic, we cannot guarantee that they will be as strong as the rental rates and leasing spreads we have experienced in 2020 and prior to 2020. For further information regarding the impact of COVID-19 on the Company, see Part I, Item 1A titled “Risk Factors.”

59

Conditions in Our Markets

The properties in our portfolio are located primarily in Southern California infill markets. Positive or negative changes in economic or other conditions, including the impact of the ongoing COVID-19 pandemic, and related state and local government reactions, adverse weather conditions and natural disasters in this market may affect our overall performance.

Property Expenses

Our property expenses generally consist of utilities, real estate taxes, insurance, site repair and maintenance costs, and the allocation of overhead costs. For the majority of our properties, our property expenses are recovered, in part, by either the triple net provisions or modified gross expense reimbursements in tenant leases. The majority of our leases also comprise contractual three percent or greater annual rental rate increases meant, in part, to help mitigate potential increases in property expenses over time. However, the terms of our leases vary and, in some instances, we may absorb property expenses. Our overall financial results will be impacted by the extent to which we are able to pass-through property expenses to our tenants.

Taxable REIT Subsidiary

As of December 31, 2020, our Operating Partnership indirectly and wholly owns Rexford Industrial Realty and Management, Inc., which we refer to as the services company. We have elected, together with our services company, to treat our services company as a taxable REIT subsidiary for federal income tax purposes. A taxable REIT subsidiary generally may provide non-customary and other services to our tenants and engage in activities that we may not engage in directly without adversely affecting our qualification as a REIT, provided a taxable REIT subsidiary may not operate or manage a lodging facility or health care facility or provide rights to any brand name under which any lodging facility or health care facility is operated. We may form additional taxable REIT subsidiaries in the future, and our Operating Partnership may contribute some or all of its interests in certain wholly owned subsidiaries or their assets to our services company. Any income earned by our taxable REIT subsidiaries will not be included in our taxable income for purposes of the 75% or 95% gross income tests, except to the extent such income is distributed to us as a dividend, in which case such dividend income will qualify under the 95%, but not the 75%, gross income test. Because a taxable REIT subsidiary is subject to federal income tax, and state and local income tax (where applicable) as a regular corporation, the income earned by our taxable REIT subsidiaries generally will be subject to an additional level of tax as compared to the income earned by our other subsidiaries. Our taxable REIT subsidiary is a C-corporation subject to federal and state income tax. However it has a cumulative unrecognized net operation loss carryforward and therefore there is no income tax provision for the years ended December 31, 2020 and 2019.

Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions in certain circumstances that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses for the reporting periods. Actual amounts may differ from these estimates and assumptions. We have summarized below those accounting policies that require material subjective or complex judgments and that have the most significant impact on financial condition and results of operations. Management evaluates these estimates on an ongoing basis, based upon information currently available and on various assumptions that it believes are reasonable as of the date hereof. In addition, other companies in similar businesses may use different estimation policies and methodologies, which may impact the comparability of our results of operations and financial condition to those of other companies.

A critical accounting policy is one that is both important to the portrayal of an entity’s financial condition and results of operations and requires judgment on the part of management. Generally, the judgment requires management to make estimates and assumptions about the effect of matters that are inherently uncertain. Estimates are prepared using management’s best judgment, after considering past and current economic conditions and expectations for the future. Changes in estimates could affect our financial position and specific items in our results of operations that are used by the users of our financial statements in their evaluation of our performance.

The following critical accounting policies discussion reflects what we believe are the most significant estimates, assumptions, and judgments used in the preparation of our consolidated financial statements. For further discussion of our significant accounting policies and discussion of new accounting pronouncements, see Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements under Item 15 of this report on Form 10-K.

60

Investment in Real Estate

Acquisitions

We account for acquisitions of properties under Accounting Standards Update 2017-01, Business Combinations - Clarifying the Definition of a Business, which provides a framework for determining whether transactions should be accounted for as acquisitions of assets or businesses and further revises the definition of a business.

We evaluated the acquisitions that we completed during the years ended December 31, 2020 and 2019, and determined that under this framework these transactions should be accounted for as asset acquisitions. Our acquisitions of properties generally no longer meet the revised definition of a business and accordingly are accounted for as asset acquisitions.

For asset acquisitions, we allocate the cost of the acquisition, which includes the purchase price and associated acquisition transaction costs, to the individual assets acquired and liabilities assumed on a relative fair value basis. These individual assets and liabilities typically include land, building and improvements, tenant improvements, intangible assets and liabilities related to above- and below-market leases, intangible assets related to in-place leases, and from time to time, assumed debt. As there is no measurement period concept for an asset acquisition, the allocated cost of the acquired assets is finalized in the period in which the acquisition occurs.

We determine the fair value of the tangible assets of an acquired property by valuing the property as if it were vacant. This “as-if vacant” value is estimated using an income, or discounted cash flow, approach that relies upon Level 3 inputs, which are unobservable inputs based on the Company’s assumptions about the assumptions a market participant would use. These Level 3 inputs include discount rates, capitalization rates, market rents and comparable sales data for similar properties. Estimates of future cash flows are based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions. In calculating the “as-if-vacant” value for acquisitions completed during the year ended December 31, 2020, we used discount rates ranging from 4.75% and 7.00% and capitalization rates ranging from 4.00% to 6.00%.

In determining the fair value of intangible lease assets or liabilities, we also consider Level 3 inputs. Acquired above- and below-market leases are valued based on the present value of the difference between prevailing market rates and the in-place rates measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed rate renewal options for below-market leases, if applicable. The estimated fair value of acquired in-place at-market tenant leases are the costs that would have been incurred to lease the property to the occupancy level of the property at the date of acquisition. Such estimates include the value associated with leasing commissions, legal and other costs, as well as the estimated period necessary to lease such property to its occupancy level at the time of its acquisition. In determining the fair value of acquisitions completed during the year ended December 31, 2020, we used an estimated average lease-up period ranging from six months to nine months.

The difference between the fair value and the face value of debt assumed in connection with an acquisition is recorded as a premium or discount and amortized to “interest expense” over the life of the debt assumed. The valuation of assumed liabilities is based on our estimate of the current market rates for similar liabilities in effect at the acquisition date. In determining the fair value of debt assumed during the year ended December 31, 2020, we used estimated market interest rates ranging from 3.00% to 3.75%.

Capitalization of Costs

We capitalize direct costs incurred in developing, renovating, rehabilitating and improving real estate assets as part of the investment basis. This includes certain general and administrative costs, including payroll, bonus, and non-cash equity compensation of the personnel performing redevelopment, renovations and rehabilitation if such costs are identifiable to a specific activity to get the real estate asset ready for its intended use. During the development and construction periods of a project, we also capitalize interest, real estate taxes and insurance costs. We cease capitalization of costs upon substantial completion of the project, but no later than one year from cessation of major construction activity. If some portions of a project are substantially complete and ready for use and other portions have not yet reached that stage, we cease capitalizing costs on the completed portion of the project but continue to capitalize for the incomplete portion of the project. Costs incurred in making repairs and maintaining real estate assets are expensed as incurred.

We capitalized interest costs of $3.9 million, $3.9 million and $2.1 million during the years ended December 31, 2020, 2019 and 2018, respectively. We capitalized real estate taxes and insurance aggregating $1.2 million, $1.3 million and $0.9 million during the years ended December 31, 2020, 2019 and 2018, respectively. We capitalized compensation costs for employees who provide construction services of $4.1 million, $2.7 million and $2.2 million during the years ended December 31, 2020, 2019 and 2018, respectively.

61

Impairment of Long-Lived Assets

In accordance with the provisions of the Impairment or Disposal of Long-Lived Assets Subsections of ASC Topic 360: Property, Plant, and Equipment, we assess the carrying values of our respective long-lived assets, including goodwill, whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable.

Recoverability of real estate assets is measured by comparison of the carrying amount of the asset to the estimated future undiscounted cash flows. To review real estate assets for recoverability, we consider current market conditions as well as our intent with respect to holding or disposing of the asset. The intent with regard to the underlying assets might change as market conditions and other factors change. Fair value is determined through various valuation techniques, including discounted cash flow models, applying a capitalization rate to estimated net operating income of a property, quoted market values and third party appraisals, where considered necessary. The use of projected future cash flows is based on assumptions that are consistent with estimates of future expectations and the strategic plan used to manage our underlying business. If our analysis indicates that the carrying value of the real estate asset is not recoverable on an undiscounted cash flow basis, we will recognize an impairment charge for the amount by which the carrying value exceeds the current estimated fair value of the real estate property.

Assumptions and estimates used in the recoverability analyses for future cash flows, discount rates and capitalization rates are complex and subjective. Changes in economic and operating conditions or our intent with respect to our investment that occur subsequent to our impairment analyses could impact these assumptions and result in future impairment of our real estate properties.

Revenue Recognition

Our primary sources of revenue are rental income, management, leasing and development services and gains on sale of real estate.

Rental Income

We lease industrial space to tenants primarily under non-cancelable operating leases that generally contain provisions for minimum base rents plus reimbursement for certain operating expenses. Total minimum annual lease payments are recognized in rental income on a straight-line basis over the term of the related lease, regardless of when payments are contractually due, when collectability is probable. Rental revenue recognition commences when the tenant takes possession or controls the physical use of the leased space. Lease termination fees, which are included in rental income, are recognized when the related leases are canceled and we have no continuing obligation to provide services to such former tenants.

Our lease agreements with tenants generally contain provisions that require tenants to reimburse us for certain property expenses. Estimated reimbursements from tenants for these property expenses, which include real estate taxes, insurance, common area maintenance and other recoverable operating expenses, are recognized as revenues in the period that the expenses are incurred. Subsequent to year-end, we perform final reconciliations on a lease-by-lease basis and bill or credit each tenant for any cumulative annual adjustments.

Management, leasing and development services

We provide property management services and leasing services to related party and third-party property owners (the “customer”) in exchange for fees and commissions. Property management services include performing property inspections, monitoring repairs and maintenance, negotiating vendor contracts, maintaining tenant relations and providing financial and accounting oversight. For these services, we earn monthly management fees, which are based on a fixed percentage of each managed property’s monthly tenant cash receipts. We have determined that control over the services is passed to the customer simultaneously as performance occurs. Accordingly, management fee revenue is earned as services are provided to the customer.

Leasing commissions are earned when we provide leasing services to the customer that result in an executed lease with a tenant. We have determined that control over the services is transferred to the customer upon execution of each lease agreement. We earn leasing commissions based on a fixed percentage of rental income generated for each executed lease agreement and there is no variable income component.

62

Gain or Loss on Sale of Real Estate

We account for dispositions of real estate properties, which are considered nonfinancial assets, in accordance with ASC 610-20: Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets and recognize a gain or loss on sale of real estate upon transferring control of the nonfinancial asset to the purchaser, which is generally satisfied at the time of sale. If we were to conduct a partial sale of real estate by transferring a controlling interest in a nonfinancial asset, while retaining a noncontrolling ownership interest, we would measure any noncontrolling interest received or retained at fair value, and recognize a full gain or loss. If we receive consideration before transferring control of a nonfinancial asset, we recognize a contract liability. If we transfer control of the asset before consideration is received, we recognize a contract asset.

Valuation of Operating Lease Receivables

We may be subject to tenant defaults and bankruptcies that could affect the collection of outstanding receivables, including deferred rent receivables arising from the straight-line recognition of rental income, related to our operating leases. In order to mitigate these risks, we perform credit reviews and analyses on prospective tenants before significant leases are executed and on existing tenants before properties are acquired. On a quarterly basis, we perform an assessment of the collectability of operating lease receivables on a tenant-by-tenant basis, which includes reviewing the age and nature of our receivables, the payment history and financial condition of the tenant, our assessment of the tenant’s ability to meet its lease obligations and the status of negotiations of any disputes with the tenant. Any changes in the collectability assessment for an operating lease is recognized as an adjustment, which can be a reduction or increase, to rental income in the consolidated statements of operations. As a result of our quarterly collectability assessments, we recognized $5.0 million and $0.7 million, $1.2 million for the year ended December 31, 2020, 2019, and 2018, respectively, as a reduction of rental income in the consolidated statements of operations.

Results of Operations

Our consolidated results of operations are often not comparable from period to period due to the effect of (i) property acquisitions, (ii) property dispositions and (iii) properties that are taken out of service for repositioning or redevelopment during the comparative reporting periods. Our “Total Portfolio” represents all of the properties owned during the reported periods. To eliminate the effect of changes in our Total Portfolio due to acquisitions, dispositions and repositioning/redevelopment and to highlight the operating results of our on-going business, we have separately presented the results of our “Stabilized Same Properties Portfolio.”

Comparison of the Year Ended December 31, 2020 to the Year Ended December 31, 2019

For the comparison of the years ended December 31, 2020 and 2019, our Stabilized Same Properties Portfolio includes all properties in our industrial portfolio that were wholly-owned by us for the period from January 1, 2019 through December 31, 2020, and that were stabilized prior to January 1, 2019, which consisted of 159 properties aggregating approximately 19.7 million rentable square feet. Results for our Stabilized Same Properties Portfolio exclude any properties that were acquired or sold during the period from January 1, 2019 through December 31, 2020, properties classified as current or future repositioning, redevelopment or lease-up during 2019 or 2020, interest income, interest expense and corporate general and administrative expenses.

For the comparison of the years ended December 31, 2020 and 2019, our Total Portfolio includes the properties in our Stabilized Same Properties Portfolio, the 78 properties aggregating approximately 10.3 million rentable square feet that were acquired during 2020 and 2019, and the eight properties aggregating approximately 0.4 million rentable square feet that were sold during 2020 and 2019.

As of December 31, 2020 and 2019, our Stabilized Same Properties Portfolio occupancy was approximately 98.2% and 98.3%, respectively. For the years ended December 31, 2020 and 2019, our Stabilized Same Properties Portfolio weighted average occupancy was approximately 98.3% and 98.0%, respectively.

63

Stabilized Same Properties Portfolio Total Portfolio

($ in thousands)

REVENUES

Management, leasing and development services — — — — % 420 406 14 3.4 %

OPERATING EXPENSES

OTHER EXPENSE

Loss on extinguishment of debt — — — (104) — (104)

Rental Income

On January 1, 2019, we adopted Accounting Standards Codification Topic 842, Leases (“ASC 842”) using the modified retrospective approach and elected the “non-separation practical expedient” in ASC 842 that alleviates the requirement to separately present lease and non-lease components of lease contracts if certain criteria are met. As a result, we account for and present all rental income earned pursuant to tenant leases, including tenant reimbursements, as a single component in one line, “Rental income,” in our consolidated statements of operations. Prior to the adoption ASC 842, we presented rental revenue, tenant reimbursements and other income related to leases separately in our consolidated statements of operations.

The following table reports the breakdown of 2020 and 2019 rental income, as reported prior to the adoption of ASC 842 (dollars in thousands). We believe that the below presentation of rental income is not, and is not intended to be, a presentation in accordance with GAAP. We are presenting this information because we believe it is frequently used by management, investors, securities analysts and other interested parties to evaluate the Company’s performance.

Stabilized Same Properties Portfolio Total Portfolio

64

Our Stabilized Same Properties Portfolio and Total Portfolio rental income increased by $8.5 million, or 3.8%, and $65.1 million, or 24.6%, respectively, during the year ended December 31, 2020, compared to the year ended December 31, 2019, for the reasons described below:

(1) Rental Revenue

Our Stabilized Same Properties Portfolio and Total Portfolio rental revenue increased by $8.2 million, or 4.4%, and $54.2 million, or 24.3%, respectively, for the year ended December 31, 2020, compared to the year ended December 31, 2019. The increase in our Stabilized Same Properties Portfolio rental revenue is primarily due to an increase in average rental rates on new and renewal leases and the increase in the weighted average occupancy of the portfolio, partially offset by an increase of approximately $3.5 million in reserves/write-offs for tenant and deferred rent receivables deemed not probable of collection, primarily due to the impacts of COVID-19, and a decrease of approximately $1.4 million in the amortization of net below-market lease intangibles. Our Total Portfolio rental revenue was also positively impacted by the incremental revenues from the 78 properties we acquired during 2019 and 2020, partially offset by the decrease in revenues from the eight properties that were sold during 2019 and 2020.

Refer to “—COVID-19 Update” above for a summary of COVID-19 related rent relief provided to tenants during 2020 and January 2021. Because rent relief provided to tenants (e.g., acceleration of future contractual rent concessions and the deferral of contractual base rent) did not substantially change the total amount of rent payments in the original lease contracts (only the timing of rent payments has changed), to the extent amounts remain collectable, rental income recognized in each period over the term of the lease will not substantially change. See Note 2 “Summary of Significant Accounting Policies—COVID-19 Lease Concessions” to our consolidated financial statements under Item 15 of this report on Form 10-K for additional information.

(2) Tenant Reimbursements

Our Stabilized Same Properties Portfolio and Total Portfolio tenant reimbursements revenue increased by $1.0 million, or 2.9%, and $11.8 million or 29.1%, respectively, for the year ended December 31, 2020, compared to the year ended December 31, 2019. The increase in our Stabilized Same Properties Portfolio tenant reimbursements revenue is primarily due to an increase in reimbursable property expenses, partially offset by lower tenant reimbursements resulting from the completion of prior year recoverable expense reconciliations for comparable periods. Our Total Portfolio tenant reimbursements revenue was also impacted by the incremental reimbursements from the 78 properties we acquired during 2019 and 2020, partially offset by the decrease in reimbursements from the eight properties that were sold during 2019 and 2020.

(3) Other Income

Our Stabilized Same Properties Portfolio and Total Portfolio other income decreased by $0.7 million, or 57.5%, and $0.8 million, or 56.8%, respectively, for the year ended December 31, 2020, compared to the year ended December 31, 2019, primarily due to a decrease in late fee income as a result of COVID-19 related California governmental measures, many of which prohibit landlords from charging tenant late fees, and the reversal of prior year late fees.

Management, Leasing and Development Services

Our Total Portfolio management, leasing and development services revenue increased by $14 thousand, or 3.4%, for the year ended December 31, 2020, compared to the year ended December 31, 2019.

Interest Income

Our Total Portfolio interest income decreased by $2.2 million, or 86.8%, during the year ended December 31, 2020, compared to the year ended December 31, 2019, due to a decrease in both the average interest rate earned and the average cash balance invested in money market accounts.

Property Expenses

Our Stabilized Same Properties Portfolio and Total Portfolio property expenses increased by $2.2 million, or 4.2%, and $16.4 million, or 26.0%, respectively, during the year ended December 31, 2020, compared to the year ended December 31, 2019. The increase in our Stabilized Same Properties Portfolio property expenses is primarily due to increases in real estate tax expense relating to California Proposition 13 annual increases, allocated overhead costs, repairs and maintenance expense, insurance expense and utilities expense. Our Total Portfolio property expenses were also impacted by incremental expenses from the 78

65

properties we acquired during 2019 and 2020, partially offset by the decrease in property expenses from the eight properties that were sold during 2019 and 2020.

General and Administrative

Our Total Portfolio general and administrative expenses increased by $6.5 million, or 21.4% for the year ended December 31, 2020, compared to the year ended December 31, 2019. The increase is primarily due to increases in payroll related expenses, non-cash equity compensation expense and accrued bonus expense.

Depreciation and Amortization

Our Stabilized Same Properties Portfolio depreciation and amortization expense decreased by $3.3 million, or 4.1%, for the year ended December 31, 2020, compared to the year ended December 31, 2019, primarily due to acquisition-related tenant improvements and in-place lease intangibles becoming fully depreciated at certain properties during 2019 and 2020, partially offset by an increase in depreciation expense related to capital improvements placed into service during 2019 and 2020 and an increase in amortization of deferred leasing costs. Our Total Portfolio depreciation and amortization expense increased by $16.4 million, or 16.6%, for the year ended December 31, 2020, compared to the year ended December 31, 2019, primarily due to incremental expense from the 78 properties we acquired during 2019 and 2020, and an increase in depreciation expense related to capital improvements, partially offset by the decrease in our Stabilized Same Properties Portfolio depreciation and amortization expense noted above.

Acquisition Expenses

Our Total Portfolio acquisition expenses decreased by $47.0 thousand, or 27.5%, for the year ended December 31, 2020, compared to the year ended December 31, 2019.

Interest Expense

Our Total Portfolio interest expense increased by $4.0 million, or 14.8%, for the year ended December 31, 2020, compared to the year ended December 31, 2019, primarily due to a $2.2 million increase related to the private placement of $100.0 million of senior notes that was completed in July 2019, a $1.4 million increase related to the assumption of $63.2 million of debt as part of the consideration for the acquisition of 11 properties during 2020, and a $1.1 million increase due to the issuance of $400.0 million of senior notes in November 2020, partially offset by a $0.9 million decrease related to our variable rate $60 million term loan due to decreases in the LIBOR rate.

Loss on Extinguishment of Debt

In November 2020, we repaid our $100.0 million term loan facility in advance of the February 2022 maturity date. The loss on extinguishment of debt of $0.1 million represents the write-off of unamortized debt issuance costs related to the term loan.

Gain on Sale of Real Estate

During the year ended December 31, 2020, we recognized a total gain on sale of real estate of $13.6 million, which is comprised of (i) a combined gain of $14.5 million from the disposition of four properties that were sold for an aggregate gross sales price of $45.5 million, and (ii) a $0.9 million loss on disposition of personal property that was originally acquired as part of the acquisition of 1055 Sandhill Avenue and valued at $2.8 million. During the year ended December 31, 2019, we recognized a total gain on sale of real estate of $16.3 million from the disposition of three properties and one industrial condominium unit that were sold for an aggregate gross sales price of $33.6 million.

Comparison of the Year Ended December 31, 2019 to the Year Ended December 31, 2018

Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations” in our Form 10-K for the year ended December 31, 2019, filed with the SEC on February 19, 2020, for a discussion of the year ended December 31, 2019 compared to the year ended December 31, 2018.

66

Non-GAAP Supplemental Measure: Funds From Operations

We calculate funds from operations (“FFO”) attributable to common stockholders in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, gains (or losses) from sales of assets incidental to our business, impairment losses of depreciable operating property or assets incidental to our business, real estate related depreciation and amortization (excluding amortization of deferred financing costs), and after adjustments for unconsolidated joint ventures.

Management uses FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization, gains and losses from property dispositions, and asset impairments, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of performance used by other REITs, FFO may be used by investors as a basis to compare our operating performance with that of other REITs.

However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. Other equity REITs may not calculate or interpret FFO in accordance with the NAREIT definition as we do, and, accordingly, our FFO may not be comparable to such other REITs’ FFO. FFO should not be used as a measure of our liquidity and is not indicative of funds available for our cash needs, including our ability to pay dividends.

The following table sets forth a reconciliation of net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to FFO (in thousands):

Year Ended December 31,

Add:

Deduct:

Less: FFO attributable to noncontrolling interest (2) (7,654) (3,897) (2,295)

Less: FFO attributable to participating securities (3) (772) (733) (642)

(1)Gain on sale of real estate for the year ended December 31, 2020, includes a total gain of $14.5 million from the sale of depreciable operating properties and a loss of $0.9 million from the sale of assets incidental to our business. For additional details, see Note 11 to our consolidated financial statements included in Item 15 of this Report on Form 10-K.

(2)Noncontrolling interests represent (i) holders of outstanding common units of the Company's Operating Partnership that are owned by unit holders other than the Company and (ii) holders of Series 1 CPOP Units and Series 2 CPOP Units.

(3)Participating securities include unvested shares of restricted stock, unvested LTIP units of partnership interest in our Operating Partnership and unvested performance units in our Operating Partnership.

Non-GAAP Supplemental Measures: NOI and Cash NOI

Net operating income (“NOI”) is a non-GAAP measure which includes the revenue and expense directly attributable to our real estate properties. NOI is calculated as rental income less property expenses (before interest expense, depreciation and amortization).

67

We use NOI as a supplemental performance measure because, in excluding real estate depreciation and amortization expense, general and administrative expenses, interest expense, gains (or losses) on sale of real estate and other non-operating items, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that NOI will be useful to investors as a basis to compare our operating performance with that of other REITs. However, because NOI excludes depreciation and amortization expense and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties (all of which have real economic effect and could materially impact our results from operations), the utility of NOI as a measure of our performance is limited. Other equity REITs may not calculate NOI in a similar manner and, accordingly, our NOI may not be comparable to such other REITs’ NOI. Accordingly, NOI should be considered only as a supplement to net income as a measure of our performance. NOI should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs. NOI should not be used as a substitute for cash flow from operating activities in accordance with GAAP.

NOI on a cash-basis (“Cash NOI”) is a non-GAAP measure, which we calculate by adding or subtracting the following items from NOI: i) fair value lease revenue and ii) straight-line rental revenue adjustments. We use Cash NOI, together with NOI, as a supplemental performance measure. Cash NOI should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs. Cash NOI should not be used as a substitute for cash flow from operating activities computed in accordance with GAAP.

The following table sets forth the revenue and expense items comprising NOI and the adjustments to calculate Cash NOI (in thousands):

Year Ended December 31,

The following table sets forth a reconciliation of net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to NOI and Cash NOI (in thousands):

Year Ended December 31,

Add:

Loss on extinguishment of debt 104 — —

Deduct:

Management, leasing and development services 420 406 473

68

Non-GAAP Supplemental Measure: EBITDAre

We calculate earnings before interest expense, income taxes, depreciation and amortization for real estate (“EBITDAre”) in accordance with the standards established by NAREIT. EBITDAre is calculated as net income (loss) (computed in accordance with GAAP), before interest expense, income tax expense, depreciation and amortization, gains (or losses) from sales of depreciable operating property, impairment losses and adjustments to reflect our proportionate share of EBITDAre from our prior unconsolidated joint venture.

We believe that EBITDAre is helpful to investors as a supplemental measure of our operating performance as a real estate company because it is a direct measure of the actual operating results of our properties. We also use this measure in ratios to compare our performance to that of our industry peers. In addition, we believe EBITDAre is frequently used by securities analysts, investors and other interested parties in the evaluation of equity REITs. However, our industry peers may not calculate EBITDAre in accordance with the NAREIT definition as we do and, accordingly, our EBITDAre may not be comparable to our peers’ EBITDAre. Accordingly, EBITDAre should be considered only as a supplement to net income (loss) as a measure of our performance.

The following table sets forth a reconciliation of net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to EBITDAre (in thousands):

Year Ended December 31,

Supplemental Guarantor Information

In March 2020, the Securities and Exchange Commission (SEC) adopted amendments to Rule 3-10 of Regulation S-X and created Rule 13-01 to simplify disclosure requirements related to certain registered securities. The rule became effective January 4, 2021. The Company and the Operating Partnership have filed a registration statement on Form S-3 with the SEC registering, among other securities, debt securities of the Operating Partnership, which will be fully and unconditionally guaranteed by the Company. At December 31, 2020, the Operating Partnership had issued and outstanding $400.0 million of 2.125% senior notes due 2030 (the “$400 Million Notes”). The obligations of the Operating Partnership to pay principal, premiums, if any, and interest on the $400 Million Notes are guaranteed on a senior basis by the Company. The guarantee is full and unconditional, and the Operating Partnership is a consolidated subsidiary of the Company.

As a result of the amendments to Rule 3-10 of Regulation S-X, subsidiary issuers of obligations guaranteed by the parent are not required to provide separate financial statements, provided that the subsidiary obligor is consolidated into the parent company’s consolidated financial statements, the parent guarantee is “full and unconditional” and, subject to certain exceptions as set forth below, the alternative disclosure required by Rule 13-01 is provided, which includes narrative disclosure and summarized financial information. Accordingly, separate consolidated financial statements of the Operating Partnership have not been presented. Furthermore, as permitted under Rule 13-01(a)(4)(vi), the Company has excluded the summarized financial information for the Operating Partnership as the assets, liabilities and results of operations of the Company and the Operating Partnership are not materially different than the corresponding amounts presented in the consolidated financial statements of the Company, and management believes such summarized financial information would be repetitive and not provide incremental value to investors.

Financial Condition, Liquidity and Capital Resources

Overview

Our short-term liquidity requirements consist primarily of funds to pay for operating expenses, interest expense, general and administrative expenses, capital expenditures, tenant improvements and leasing commissions, and distributions to our common and preferred stockholders and holders of common units of partnership interests in our Operating Partnership (“OP Units”). We expect to meet our short-term liquidity requirements through available cash on hand, cash flow from operations, by drawing on our unsecured revolving credit facility and by issuing shares of common stock pursuant to the at-the-market equity offering program or issuing other securities as described below.

69

Our long-term liquidity needs consist primarily of funds necessary to pay for acquisitions, recurring and non-recurring capital expenditures and scheduled debt maturities. We intend to satisfy our long-term liquidity needs through net cash flow from operations, proceeds from long-term secured and unsecured financings, borrowings available under our unsecured revolving credit facility, the issuance of equity securities, including preferred stock, and proceeds from selective real estate dispositions as we identify capital recycling opportunities.

As of December 31, 2020, our cash and cash equivalents were $176.3 million, and we did not have any borrowings outstanding under our unsecured revolving credit facility, leaving $500.0 million available for future borrowings.

Sources of Liquidity

Cash Flow from Operations

Cash flow from operations is one of our key sources of liquidity and is primarily dependent upon: (i) the occupancy levels and lease rates at our properties, (ii) our ability to collect rent, (iii) the level of operating costs we incur and (iv) our ability to pass through operating expenses to our tenants. Our ability to use cash from operations to continue to meet our liquidity needs could be affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic. We are subject to a number of risks, which have been heightened as the result of the COVID-19 pandemic, related to general economic conditions, including reduced occupancy levels, tenant defaults and bankruptcies and potential reductions in rental rates on new and renewal leases, which have the potential to affect our overall performance and resulting cash flows from operations.

ATM Program

On November 9, 2020, we established a new at-the-market equity offering program (the “$750 Million ATM Program”) pursuant to which we may sell from time to time up to an aggregate of $750.0 million of our common stock through sales agents or forward sellers. The $750 Million ATM Program replaces our previous $550.0 million at-the-market equity offering program which was established on June 13, 2019 (the “Prior ATM Program”). Under the Prior ATM Program, we had offered and sold shares of our common stock having an aggregate gross sales price of $296.5 million through November 9, 2020.

During the year ended December 31, 2020, we sold a total of 3,165,661 shares of our common stock under the $750 Million ATM Program and the Prior ATM Program at a weighted average price of $39.96 per share, for gross proceeds of $126.5 million, and net proceeds of $124.7 million, after deducting the sales agents’ fee. As of December 31, 2020, we had the capacity to issue up to an additional $720.7 million of common stock under the $750 Million ATM Program.

Future sales, if any, will depend on a variety of factors to be determined by us from time to time, including among others, market conditions, the trading price of our common stock and capital needs. We intend to use the net proceeds from the offering of shares under the $750 Million ATM Program, if any, to fund potential acquisition opportunities, repay amounts outstanding from time to time under our unsecured revolving credit facility or other debt financing obligations, to fund our development or redevelopment activities and/or for general corporate purposes.

Securities Offerings

During the second quarter of 2020, we completed an underwritten public offering of 7,187,500 shares of our common stock, including the underwriters’ exercise in full of their option to purchase an additional 937,500 shares of our common stock, at a price to the underwriters of $39.67 per share, for net proceeds of approximately $285.0 million after deducting offering costs.

In December 2020, we completed an underwritten public offering of 6,900,000 shares of our common stock, including the underwriters’ exercise in full of their option to purchase an additional 900,000 shares of our common stock, at a price to the underwriters of $47.15 per share, for net proceeds of approximately $325.0 million after deducting offering costs.

We used the net proceeds from these offerings to fund the acquisition of properties and for general corporate purposes.

On November 16, 2020, we completed an underwritten public offering of $400.0 million of 2.125% senior notes due 2030. The $400 Million Notes were issued at 99.211% of the principal amount, with a coupon rate of 2.125%. Interest on the $400 Million Notes is payable semiannually on the first day of June and December in each year, beginning on June 1, 2021, until maturity on December 1, 2030.

We may redeem the $400 Million Notes at our option and sole discretion in whole at any time or in part from time to time prior to September 1, 2030 (three months prior to the maturity date of the $400 Million Notes) at a redemption price equal to the greater of (i) 100% of the principal amount of the $400 Million Notes being redeemed; and (ii) a make-whole premium calculated in accordance with the indenture. Notwithstanding the foregoing, on or after September 1, 2030 (three months prior to

70

the maturity date of the $400 Million Notes), the redemption price will be equal to 100% of the principal amount of the $400 Million Notes being redeemed.

We used the net proceeds from the $400 Million Notes to fund acquisitions, development and redevelopment activities and the repayment of our $100 Million Term Loan Facility that was due on February 14, 2022.

We evaluate the capital markets on an ongoing basis for opportunities to raise capital, and as circumstances warrant, we may issue additional securities, from time to time, to fund acquisitions, for the repayment of long-term debt upon maturity and for other general corporate purposes. Such securities may include common equity, preferred equity and/or debt of us or our subsidiaries. Any future issuance, however, is dependent upon market conditions, available pricing and capital needs and there can be no assurance that we will be able to complete any such offerings of securities.

Capital Recycling

We continuously evaluate opportunities for the potential disposition of properties in our portfolio when we believe such disposition is appropriate in view of our business objectives. In evaluating these opportunities, we consider a variety of criteria including, but not limited to, local market conditions and lease rates, asset type and location, as well as potential uses of proceeds and tax considerations. Tax considerations include entering into a 1031 Exchange transaction, when possible, to defer some or all of the taxable gains, if any, on dispositions.

During the year ended December 31, 2020, we completed the sale of four properties for a total gross sales price of $45.5 million and total net cash proceeds of $43.6 million. The net cash proceeds were used to partially fund the acquisition of an industrial park with four buildings during the year ended December 31, 2020, through a 1031 Exchange transaction.

We anticipate continuing to selectively and opportunistically dispose of properties, however, the timing of any potential future dispositions will depend on market conditions, asset-specific circumstances or opportunities, and our capital needs. Our ability to dispose of selective properties on advantageous terms, or at all, is dependent upon a number of factors including the availability of credit to potential buyers to purchase properties at prices that we consider acceptable, which may be impacted by the current COVID-19 pandemic. For further information regarding the impact of COVID-19 on the Company, see Part I, Item 1A titled “Risk Factors.”

Investment Grade Rating

On October 29, 2020, we received an investment grade rating of Baa3 from Moody’s and an investment grade rating of BBB from S&P, complementing our current BBB rating received from Fitch. In November 2020, Fitch affirmed our investment grade credit rating of BBB with a stable outlook on our Credit Agreement (described below), our $225 million unsecured term loan facility (the “$225 Million Term Loan Facility”), our $150 million unsecured term loan facility (the “$150 Million Term Loan Facility”), our $100 million unsecured guaranteed senior notes (the “$100 Million Notes”), our $125 million unsecured guaranteed senior notes (the “$125 Million Notes”) and our $25 million unsecured guaranteed senior notes and $75 million unsecured guaranteed senior notes (together the “Series 2019A and 2019B Notes”). They also affirmed our investment grade credit rating of BB+ on our 5.875% Series A Cumulative Redeemable Preferred Stock, our 5.875% Series B Cumulative Redeemable Preferred Stock and our Series C Preferred Stock. Our credit ratings are based on our operating performance, liquidity and leverage ratios, overall financial position and other factors employed by the credit rating agencies in their rating analysis of us, and, although it is our intent to maintain our investment grade credit rating, there can be no assurance that we will be able to maintain our current credit ratings. In the event our current credit ratings are downgraded, it may become difficult or more expensive to obtain additional financing or refinance existing indebtedness as maturities become due.

Credit Agreement

On February 13, 2020, we amended our $450 million credit agreement, that was scheduled to mature on February 14, 2021, by entering into a Third Amended and Restated Credit Agreement (the “Credit Agreement”), which provides for a $600.0 million senior unsecured credit facility, comprised of a $500.0 million unsecured revolving credit facility (the “Revolver”) and a $100.0 million unsecured term loan facility (the “$100 Million Term Loan Facility”) which was fully drawn under the prior credit agreement. The Revolver is scheduled to mature on February 13, 2024, and has two six-month extension options available, and the $100 Million Term Loan Facility, which was scheduled to mature on February 14, 2022, was fully repaid without premium or penalty on November 16, 2020, and may not be reborrowed. Subject to certain terms and conditions set forth in the Credit Agreement, we may request additional lender commitments up to an additional aggregate $900.0 million, which may be comprised of additional revolving commitments under the Revolver, additional term loan tranches or a combination of the foregoing.

As a result of obtaining the two additional investment grade ratings noted above, effective October 29, 2020, we elected to convert the pricing structure under the Credit Agreement to be based on such ratings, whereas the pricing structure was previously based upon our leverage ratio. As such, as of December 31, 2020, interest on the Credit Agreement is based upon, at

71

our option, either (i) LIBOR plus an applicable margin that is based upon our investment grade ratings or (ii) the Base Rate (which is defined as the highest of (a) the federal funds rate plus 0.50%, (b) the administrative agent’s prime rate or (c) the Eurodollar Rate plus 1.00%) plus an applicable margin that is based on our investment grade ratings. The margins for the Revolver range in amount 0.725% to 1.40% per annum for LIBOR-based loans and 0.00% to 0.45% per annum for Base Rate-based loans, depending on our investment grade ratings. Prior to repayment, the margins for the $100 Million Term Loan Facility ranged in amount from 0.85% to 1.65% per annum for LIBOR-based loans and 0.00% to 0.65% per annum for Base Rate-based loans, depending on our investment grade ratings.

In addition to the interest payable on amounts outstanding under the Revolver, we are required to pay an applicable facility fee, based upon our credit ratings, on each lender's commitment amount under the Revolver, regardless of usage. The applicable facility fee ranges in amount from 0.125% to 0.30% per annum, depending on our investment grade rating.

The Revolver may be voluntarily prepaid in whole or in part at any time without premium or penalty.

The Credit Agreement contains usual and customary events of default including defaults in the payment of principal, interest or fees, defaults in compliance with the covenants set forth in the Credit Agreement and other loan documentation, cross-defaults to certain other indebtedness, and bankruptcy and other insolvency defaults. If an event of default occurs and is continuing under the Credit Agreement, the unpaid principal amount of all outstanding loans, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable.

As of the filing date of this Annual Report on Form 10-K, we did not have any borrowings outstanding under the Revolver, leaving $500.0 million available for future borrowings.

Uses of Liquidity

Acquisitions

One of our most significant liquidity needs has historically been for the acquisition of real estate properties. During the year ended December 31, 2020, we acquired 38 properties with a combined 5.0 million rentable square feet for a total gross purchase price of $1.2 billion, and we are actively monitoring a volume of properties in our markets that we believe represent attractive potential investment opportunities to continue to grow our business. As of the filing date of this Annual Report on Form 10-K, we have approximately $324.0 million of acquisitions under contract or letter of intent. There can be no assurance we will complete any such acquisitions. While the actual number of acquisitions that we complete will be dependent upon a number of factors, in the short term, we expect to fund our acquisitions through available cash on hand, cash flows from operations, borrowings available under the Revolver, recycling capital through property dispositions and, in the long term, through the issuance of equity securities or proceeds from long-term secured and unsecured financings.

Recurring and Nonrecurring Capital Expenditures

Capital expenditures are considered part of both our short-term and long-term liquidity requirements. During the year ended December 31, 2020, we incurred $6.9 million of recurring capital expenditures, which was an increase of $0.1 million over the prior year. During the year ended December 31, 2020, we incurred $66.6 million of non-recurring capital expenditures, which was an increase of $32.5 million over the prior year. The increase was primarily due to the increase in non-recurring capital expenditures related to repositioning/redevelopment activity during 2020 compared to 2019. As discussed above under —Factors that May Influence Future Results —Acquisitions and Value-Add Repositioning and Redevelopment of Properties, as of December 31, 2020, four of our properties were under current repositioning, redevelopment, or lease-up, and we have a pipeline of 14 additional properties for which we anticipate beginning construction work during 2021. We currently estimate that approximately $147.4 million of capital will be required over the next three years (2021-2023) to complete the repositioning/redevelopment of these properties. However, this estimate is based on our current construction plans and budgets, both of which are subject to change as a result of a number of factors, including as a result of the COVID-19 pandemic and restrictions intended to prevent its spread, which has and may continue to cause delays or which may increase costs associated with building materials or construction services. If we are unable to complete construction on schedule or within budget, we could incur increased construction costs and experience potential delays in leasing the properties. We expect to fund these projects through a combination of cash flow from operations, the issuance of common stock under the $750 Million ATM Program and borrowings available under the Revolver.

Commitments and Contractual Obligations

72

The following table sets forth our principal obligations and commitments as of December 31, 2020, including (i) scheduled principal payments and debt maturities, (ii) periodic interest payments related to our outstanding indebtedness and interest rate swaps, (iii) operating lease payments and (iv) other contractual obligations (in thousands):

Payments Due by Period

(1)Reflects scheduled interest payments on our fixed rate debt, including the $400 Million Notes, $100 Million Notes, $125 Million Notes, Series 2019A and 2019B Notes and our various mortgage loans.

(2)Reflects an estimate of interest payments due on variable rate debt, including the impact of interest rate swaps. For variable rate debt where interest is paid based on LIBOR plus an applicable LIBOR margin, we used the applicable LIBOR margin in effect as of December 31, 2020, and the one-month LIBOR rate of 0.1439%, as of December 31, 2020. Furthermore, it is assumed that any maturity extension options available are not exercised.

(3)See Note 6 to our consolidated financial statements included in Item 15 of this Report on Form 10-K for further details regarding our office and ground leases.

(4)Includes total commitments for tenant improvements related to obligations under certain tenant leases and construction work related to obligations under contractual agreements with our construction vendors. We anticipate these obligations to be paid as incurred in 2021 and 2022, however, as the timing of these obligations is subject to a number of factors, for purposes of this table, we have included the full amount under “Less than 1 Year (2021).”

Dividends and Distributions

In order to maintain our qualification as a REIT, we are required to distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains. To satisfy the requirements to qualify as a REIT and generally not be subject to U.S. federal income tax, we intend to distribute a percentage of our cash flow on a quarterly basis to holders of our common stock. In addition, we intend to make distribution payments to holders of OP Units and preferred units, and dividend payments to holders of our preferred stock.

On February 8, 2021, our board of directors declared the following quarterly cash dividends/distributions:

Security Amount per Share/Unit Record Date Payment Date

73

Consolidated Indebtedness

The following table sets forth certain information with respect to our consolidated indebtedness outstanding as of December 31, 2020:

Unsecured and Secured Debt:

Unsecured Debt:

Secured Debt:

(1)Includes the effect of interest rate swaps that were effective as of December 31, 2020. Assumes a 1-month LIBOR rate of 0.1439% as of December 31, 2020, as applicable. Excludes the effect of amortization of debt issuance costs, discounts and the facility fee on the Revolver.

(2)Excludes unamortized debt issuance costs and discounts totaling $7.3 million as of December 31, 2020.

(3)The Revolver is subject to an applicable facility fee which is calculated as a percentage of the total lenders’ commitment amount, regardless of usage. The applicable facility fee will range from 0.125% to 0.30% per annum depending upon our investment grade rating.

(4)Two additional six-month extensions are available at the borrower’s option, subject to certain terms and conditions.

(5)The interest rates on these loans are comprised of LIBOR plus a LIBOR margin. The LIBOR margin will range from 0.725% to 1.400% per annum for the Revolver, 0.90% to 1.75% per annum for the $225 Million Term Loan Facility and 1.40% to 2.35% per annum for the $150 Million Term Loan Facility, depending on our investment grade rating, which may change from time to time.

(6)As of December 31, 2020, the $225 Million Term Loan Facility has been effectively fixed at 1.374% plus the applicable LIBOR margin through the use of two interest rate swaps as follows: (i) $125 million with a strike rate of 1.349% and an effective date of February 14, 2018, and (ii) $100 million with a strike rate of 1.406% and an effective date of August 14, 2018, plus the applicable LIBOR margin.

74

(7)As of December 31, 2020, the $150 Million Term Loan Facility has been effectively fixed at 2.7625% plus an applicable LIBOR margin through the use of an interest rate swap with a notional value of $150.0 million and an effective date of July 22, 2019.

(8)The $60 million term loan is secured by six properties. One 24-month extension is available at the borrower’s option, subject to certain terms and conditions.

The following table summarizes the composition of our consolidated debt between fixed-rate and variable-rate and secured and unsecured debt as of December 31, 2020:

Fixed vs. Variable:

Secured vs. Unsecured:

(1)Includes the effect of interest rate swaps that were effective as of December 31, 2020. Excludes the effect of amortization of debt issuance costs, discounts and the facility fee on the Revolver. Assumes a one-month LIBOR rate of 0.1439% as of December 31, 2020, as applicable.

(2)Excludes unamortized debt issuance costs and debt discounts totaling $7.3 million as of December 31, 2020.

At December 31, 2020, we had total indebtedness of $1.22 billion, excluding unamortized debt issuance costs and debt discounts, with a weighted average interest rate of approximately 3.06% and an average term-to-maturity of 6.6 years. As of December 31, 2020, $1.16 billion, or 95%, of our outstanding indebtedness had an interest rate that was effectively fixed under either the terms of the loan ($790.0 million) or an interest rate swap ($375.0 million).

At December 31, 2020, we had total indebtedness of $1.2 billion, reflecting a net debt to total combined market capitalization of approximately 12.9%. Our total market capitalization is defined as the sum of the liquidation preference of our outstanding preferred stock and preferred units plus the market value of our common stock excluding shares of nonvested restricted stock, plus the aggregate value of common units not owned by us, plus the value of our net debt. Our net debt is defined as our consolidated indebtedness less cash and cash equivalents.

Debt Covenants

The Credit Facility, $225 Million Term Loan Facility, $150 Million Term Loan Facility, $100 Million Notes, $125 Million Notes and Series 2019A and 2019B Notes all include a series of financial and other covenants that we must comply with, including the following covenants which are tested on a quarterly basis:

•Maintaining a ratio of total indebtedness to total asset value of not more than 60%;

•For the Credit Agreement, $225 Million Term Loan Facility and $150 Million Term Loan Facility, maintaining a ratio of secured debt to total asset value of not more than 45%;

•For the $100 Million Notes, $125 Million Notes and Series 2019A and 2019B Notes (together the “Senior Notes”), maintaining a ratio of secured debt to total asset value of not more than 40%;

•For the Senior Notes, maintaining a ratio of total secured recourse debt to total asset value of not more than 15%;

•For the Credit Agreement, $225 Million Term Loan Facility and $150 Million Term Loan Facility, maintaining a minimum tangible net worth of at least the sum of (i) $2,061,865,500, and (ii) an amount equal to at least 75% of the net equity proceeds received by the Company after September 30, 2019;

•For the Senior Notes, maintaining a minimum tangible net worth of at least the sum of (i) $760,740,750, and (ii) an amount equal to at least 75% of the net equity proceeds received by the Company after September 30, 2016;

•Maintaining a ratio of adjusted EBITDA (as defined in each of the loan agreements) to fixed charges of at least 1.5 to 1.0;

•Maintaining a ratio of total unsecured debt to total unencumbered asset value of not more than 60%; and

•Maintaining a ratio of unencumbered NOI (as defined in each of the loan agreements) to unsecured interest expense of at least 1.75 to 1.00.

75

The $400 Million Notes contains the following covenants that we must comply with:

•Maintaining a ratio of total indebtedness to total asset value of not more than 60%;

•Maintaining a ratio of secured debt to total asset value of not more than 40%;

•Maintaining a Debt Service Coverage Ratio of at least 1.5 to 1.0; and

•Maintaining a ratio of unencumbered assets to unsecured debt of at least 1.5 to 1.0.

The Credit Agreement, $225 Million Term Loan Facility, $150 Million Term Loan Facility and Senior Notes also contain limitations on our ability to pay distributions on our common stock. Specifically, our cash dividends may not exceed the greater of (i) 95% of our FFO (as defined in the credit agreement) and (ii) the amount required for us to qualify and maintain our REIT status. If an event of default exists, we may only make distributions sufficient to qualify and maintain our REIT status.

Additionally, subject to the terms of the Senior Notes, upon certain events of default, including, but not limited to, (i) a default in the payment of any principal, make-whole payment amount, or interest under the Senior Notes, (ii) a default in the payment of certain of our other indebtedness, (iii) a default in compliance with the covenants set forth in the Senior Notes agreement and (iv) bankruptcy and other insolvency defaults, the principal and accrued and unpaid interest and the make-whole payment amount on the outstanding Senior Notes will become due and payable at the option of the purchasers. In addition, we are required to maintain at all times a credit rating on the Senior Notes from either S&P, Moody’s or Fitch. As noted above, on October 29, 2020, we received an investment grade rating of Baa3 from Moody’s and BBB from S&P, complementing our current BBB rating from Fitch.

The $60 Million Term Loan contains the following financial covenants:

•Maintaining a Debt Service Coverage Ratio (as defined in the term loan agreement) of at least 1.10 to 1.00, to be tested quarterly;

•Maintaining Unencumbered Liquid Assets (as defined in the term loan agreement) of not less than (i) $5 million, or (ii) $8 million if we elect to have Line of Credit Availability (as defined in the term loan agreement) included in the calculation, of which $2 million must be cash or cash equivalents, to be tested annually as of December 31 of each year;

•Maintaining a minimum Fair Market Net Worth (as defined in the term loan agreement) of at least $75 million, to be tested annually as of December 31 of each year.

We were in compliance with all of our quarterly and annual debt covenants as of December 31, 2020.

Off Balance Sheet Arrangements

As of December 31, 2020, we did not have any off-balance sheet arrangements.

Cash Flows

Comparison of the Year Ended December 31, 2020 to the Year Ended December 31, 2019

The following table summarizes the changes in net cash flows associated with our operating, investing, and financing activities for the years ended December 31, 2020 and 2019 (in thousands):

Year Ended December 31,

Net cash provided by operating activities. Net cash provided by operating activities increased by $43.5 million to $183.0 million for the year ended December 31, 2020, compared to $139.5 million for the year ended December 31, 2019. The increase was primarily attributable to net proceeds of $19.6 million from the sale of our property located at 2722 Fairview Street, which was sold pursuant to the tenant exercising its option to purchase the property (see Note 6 “Leases—Lessor – Sales-Type Lease” to our consolidated financial statements for further details), incremental cash flows from property acquisitions completed subsequent

76

to January 1, 2019, and the increase in Cash NOI from our Stabilized Same Properties Portfolio, partially offset by changes in working capital and higher cash interest as compared to the prior year.

Net cash used in investing activities. Net cash used in investing activities increased by $14.8 million to $987.5 million for the year ended December 31, 2020, compared to $972.7 million for the year ended December 31, 2019. The increase was primarily attributable to a $31.6 million increase in cash paid for construction and repositioning projects and a $8.3 million decrease in net proceeds received from the sale of properties for comparable periods, partially offset by a $25.2 million decrease in cash paid for property acquisitions and acquisition related deposits.

Net cash provided by financing activities. Net cash provided by financing activities increased by $171.7 million to $903.2 million for the year ended December 31, 2020, compared to $731.5 million for the year ended December 31, 2019. The increase was primarily attributable to the following: (i) an increase of $396.8 million in cash proceeds from the issuance of the $400 Million Notes in November 2020, and (ii) an increase of $95.2 million in net cash proceeds from the sale of shares of our common stock. These increases were partially offset by the following: (i) a decrease of $100.0 million from the repayment of the $100 Million Term Loan Facility in November 2020, (ii) a decrease of $100.0 million in cash proceeds from the issuance of the Series 2019A and 2019B Notes in July 2019, (iii) a decrease of $83.2 million in net cash proceeds from the issuance of the Series C Preferred Stock in September 2019, (iv) an increase of $25.1 million in dividends and distributions paid to common stockholders and common unitholders primarily resulting from the increase in the number of common shares outstanding and the increase in our quarterly per share cash dividend, (v) an increase of $5.9 million in deferred loan costs paid related to the amendment of our senior unsecured credit facility in February 2020 and the issuance of the $400 Million Notes in November 2020, and (vi) an increase of $5.2 million in dividends and distributions paid to preferred stockholders and preferred unit holders resulting from the issuance of the Series C Preferred Stock in September 2019, the Series 1 CPOP Units in April 2019 and the Series 2 CPOP Units in March 2020.

Comparison of the Year Ended December 31, 2019 to the Year Ended December 31, 2018

Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cash Flows” in our Form 10-K for the year ended December 31, 2019, filed with the SEC on February 19, 2020, for a discussion of the year ended December 31, 2019 compared to the year ended December 31, 2018.

Inflation

The majority of our leases are either triple net or provide for tenant reimbursement for costs related to real estate taxes and operating expenses. In addition, most of the leases provide for fixed rent increases. We believe that inflationary increases to real estate taxes, utility expenses and other operating expenses may be partially offset by the contractual rent increases and tenant payment of taxes and expenses described above. We do not believe that inflation has had a material impact on our historical financial position or results of operations.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market risk refers to the risk of loss from adverse changes in market prices and interest rates. A key market risk we face is interest rate risk. We are exposed to interest rate changes primarily as a result of using variable-rate debt to satisfy various short-term and long-term liquidity needs, which have interest rates based upon LIBOR. We use interest rate swaps to manage, or hedge, interest rate risks related to our borrowings. Because actual interest rate movements over time are uncertain, our swaps pose potential interest rate risks, notably if interest rates fall. We also expose ourselves to credit risk, which we attempt to minimize by contracting with highly-rated banking financial counterparties. For a summary of our outstanding variable-rate debt, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition, Liquidity and Capital Resources. For a summary of our interest rate swaps, see Note 7 to our consolidated financial statements included in Item 15 of this Report on Form 10-K.

As of December 31, 2020, the $225 Million Term Loan Facility has been effectively fixed through the use of two interest rate swaps. The first interest rate swap has a notional value of $125.0 million, an effective date of February 14, 2018, a maturity date of January 14, 2022, and currently fixes the annual interest rate payable at 1.349% plus an applicable LIBOR margin under the terms of the $225 Million Term Loan Facility. The second interest rate swap has a notional value of $100.0 million, an effective date of August 14, 2018, a maturity date of January 14, 2022, and currently fixes the annual interest rate payable on the $225 Million Term Loan Facility at 1.406% plus an applicable LIBOR margin under the terms of the $225 Million Term Loan Facility.

77

As of December 31, 2020, the $150 Million Term Loan Facility has been effectively fixed through the use of an interest rate swap. The interest rate swap has a notional value of $150.0 million, an effective date of July 22, 2019, a maturity date of November 22, 2024, and currently fixes the annual interest rate payable on the $150 Million Term Loan Facility at 2.7625% plus an applicable LIBOR margin under the terms of the $150 Million Term Loan Facility.

At December 31, 2020, we had total consolidated indebtedness, excluding unamortized debt issuance costs and discounts, of $1.22 billion. Of this total amount, $1.16 billion, or 95%, had an interest rate that was effectively fixed under the terms of the loan or an interest rate swap. The remaining $58.5 million, or 5%, comprises our variable-rate debt. Based upon the amount of variable-rate debt outstanding as of December 31, 2020, if LIBOR were to increase by 50 basis points, the increase in interest expense on our variable-rate debt would decrease our future earnings and cash flows by approximately $0.3 million annually. If LIBOR were to decrease by 50 basis points, assuming an interest rate floor of 0%, the decrease in interest expense on our variable-rate debt would increase our future earnings and cash flows by approximately $0.1 million annually.

Interest risk amounts are our management’s estimates and were determined by considering the effect of hypothetical interest rates on our financial instruments. We calculate interest sensitivity by multiplying the amount of variable rate debt outstanding by the respective change in rate. The sensitivity analysis does not take into consideration possible changes in the balances or fair value of our floating rate debt or the effect of any change in overall economic activity that could occur in that environment. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, this analysis assumes no changes in our financial structure.

Item 8. Financial Statements and Supplementary Data

All information required by this item is listed in the Index to Financial Statements in Part IV, Item 15(a)(1).

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is processed, recorded, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Co-Chief Executive Officers and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of management, including the Co-Chief Executive Officers and Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures as of December 31, 2020, the end of the period covered by this report. Based on this evaluation, management has concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2020 at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There have been no significant changes that occurred during the fourth quarter of the most recent year covered by this report in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

78

Management’s Report on Internal Control Over Financial Reporting

Internal control over financial reporting is a process designed by, or under the supervision of, our Co-Chief Executive Officers and Chief Financial Officer and effected by our board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on the consolidated financial statements.

Management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company has used the criteria set forth in the Internal Control–Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission to assess our internal control over financial reporting. Based upon this assessment, management concluded that internal control over financial reporting operated effectively as of December 31, 2020.

The effectiveness of our internal control over financial reporting as of December 31, 2020, has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which appears herein within Item 15. See Report of Independent Registered Public Accounting Firm.

Item 9B. Other Information.

None.

79

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by Item 10 will be contained in a definitive proxy statement for our Annual Meeting of Stockholders, which we anticipate will be filed no later than 120 days after the end of our fiscal year ended December 31, 2020 and is incorporated by reference.

Item 11. Executive Compensation

The information required by Item 11 will be contained in a definitive proxy statement for our Annual Meeting of Stockholders, which we anticipate will be filed no later than 120 days after the end of our fiscal year ended December 31, 2020 and is incorporated by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 will be contained in a definitive proxy statement for our Annual Meeting of Stockholders, which we anticipate will be filed no later than 120 days after the end of our fiscal year ended December 31, 2020 and is incorporated by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 will be contained in a definitive proxy statement for our Annual Meeting of Stockholders, which we anticipate will be filed no later than 120 days after the end of our fiscal year ended December 31, 2020 and is incorporated by reference.

Item 14. Principal Accounting Fees and Services

The information required by Item 14 will be contained in a definitive proxy statement for our Annual Meeting of Stockholders, which we anticipate will be filed no later than 120 days after the end of our fiscal year ended December 31, 2020 and is incorporated by reference.

80

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a)(1) and (2) Financial Statements and Schedules

The following financial information is included in Part IV of this Report on the pages indicated:

Reports of Independent Registered Public Accounting Firm F-1

Audited Consolidated Financial Statements of Rexford Industrial Realty, Inc.:

Consolidated Balance Sheets as of December 31, 2020 and 2019 F-4

Notes to Consolidated Financial Statements F-10

Schedule III – Real Estate and Accumulated Depreciation F-48

All other schedules are omitted because the required information is not present in amounts sufficient to require submission of the schedule or because the information required is included in the financial statements and notes thereto.

81

(3). Exhibits

Exhibit Number Exhibit Description Form File No. Exhibit No. Filing Date

82

83

21.1* List of Subsidiaries of the Company

22.1* List of Issuers of Guaranteed Securities

23.1* Consent of Ernst & Young LLP

24.1* Power of Attorney (included on the signature page of this Form 10-K)

84

* Filed herein

† Compensatory plan or arrangement

Item 16. Form 10-K Summary

None.

85

SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

Rexford Industrial Realty, Inc.

February 18, 2021 /s/ Michael S. Frankel

Michael S. Frankel

Co-Chief Executive Officer (Principal Executive Officer)

February 18, 2021 /s/ Howard Schwimmer

Howard Schwimmer

Co-Chief Executive Officer (Principal Executive Officer)

February 18, 2021 /s/ Laura E. Clark

Laura E. Clark

Chief Financial Officer(Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

86

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of Rexford Industrial Realty, Inc., hereby severally constitute Michael S. Frankel, Howard Schwimmer and Laura E. Clark, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, the Form 10-K filed herewith and any and all amendments to said Form 10-K, and generally to do all such things in our names and in our capacities as officers and directors to enable Rexford Industrial Realty, Inc. to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Form 10-K and any and all amendments thereto.

Signature Title Date

Michael S. Frankel

Howard Schwimmer

Laura E. Clark

/s/ Richard Ziman Chairman of the Board February 18, 2021

Richard Ziman

/s/ Robert L. Antin Director February 18, 2021

Robert L. Antin

/s/ Diana J. Ingram Director February 18, 2021

Diana J. Ingram

/s/ Debra L. Morris Director February 18, 2021

Debra L. Morris

/s/ Tyler H. Rose Director February 18, 2021

Tyler H. Rose

/s/ Peter Schwab Director February 18, 2021

Peter Schwab

87

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Rexford Industrial Realty, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Rexford Industrial Realty, Inc. (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 18, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

F-1

Recognition of acquired real estate - Purchase price accounting

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2012.

Los Angeles, California

February 18, 2021

F-2

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Rexford Industrial Realty, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Rexford Industrial Realty, Inc.’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Rexford Industrial Realty, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Rexford Industrial Realty, Inc. as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2020 and the related notes and financial statement schedule listed in the Index at Item 15(a), and our report dated February 18, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying management’s annual report on internal control over financial reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Los Angeles, California

February 18, 2021

F-3

REXFORD INDUSTRIAL REALTY, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands - except share and per share data)

ASSETS

Furniture, fixtures, and equipment 132 141

Restricted cash 1,230 —

Acquired lease intangible assets, net 92,172 73,090

Acquired indefinite-lived intangible 5,156 5,156

Interest rate swap asset — 766

Assets associated with real estate held for sale, net 8,845 —

LIABILITIES & EQUITY

Liabilities

Accounts payable, accrued expenses and other liabilities 45,384 31,112

Acquired lease intangible liabilities, net 67,256 59,340

Liabilities associated with real estate held for sale 193 —

Equity

Rexford Industrial Realty, Inc. stockholders’ equity

Cumulative distributions in excess of earnings (163,389) (118,751)

Accumulated other comprehensive loss (17,709) (7,542)

The accompanying notes are an integral part of these consolidated financial statements.

F-4

REXFORD INDUSTRIAL REALTY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands - except share and per share data)

Year Ended December 31,

REVENUES

Management, leasing and development services 420 406 473

OPERATING EXPENSES

OTHER EXPENSES

Loss on extinguishment of debt (104) — —

Less: net income attributable to noncontrolling interests (4,492) (2,022) (865)

NET INCOME ATTRIBUTABLE TO REXFORD INDUSTRIAL REALTY, INC. 76,403 61,979 46,210

Less: earnings allocated to participating securities (509) (447) (378)

The accompanying notes are an integral part of these consolidated financial statements.

F-5

REXFORD INDUSTRIAL REALTY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Year Ended December 31,

Other comprehensive loss: cash flow hedge adjustment (10,880) (14,141) (555)

The accompanying notes are an integral part of these consolidated financial statements.

F-6

REXFORD INDUSTRIAL REALTY, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands - except share data)

Other comprehensive loss — — — — — (537) (537) (18) (555)

Distributions — — — — — — — (1,599) (1,599)

Cumulative effect of adoption of ASC 842 — — — — (222) — (222) — (222)

Preferred unit distributions — — — — — — — (870) (870)

Distributions — — — — — — — (2,143) (2,143)

F-7

Preferred unit distributions — — — — — — — (2,546) (2,546)

Distributions — — — — — — — (4,246) (4,246)

The accompanying notes are an integral part of these consolidated financial statements.

F-8

REXFORD INDUSTRIAL REALTY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Year Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

Loss on extinguishment of debt 104 — —

Amortization of (premium) discount on notes payable, net (188) 6 5

Payments for termination of cash flow swap (1,239) — —

Amortization of payments for termination of cash flow swap 218 — —

Change in working capital components:

Sales-type lease receivable 20,302 — —

Accounts payable, accrued expenses and other liabilities 4,825 1,573 651

CASH FLOWS FROM INVESTING ACTIVITIES:

Payment for deposits on real estate acquisitions (4,067) (14,526) (25)

CASH FLOWS FROM FINANCING ACTIVITIES:

Issuance of preferred stock, net — 83,233 —

Distributions paid to common unitholders (3,328) (2,019) (1,496)

Distributions paid to preferred unitholders (2,546) (870) —

Supplemental disclosure of cash flow information:

Supplemental disclosure of noncash transactions:

Lease reclassification from operating lease to sales-type lease:

Sales-type lease receivable $ 20,302 $ — $ —

Investments in real estate, net (16,117) — —

Deferred rent receivable, net (63) — —

Deferred leasing costs, net (164) — —

Acquired lease intangible assets, net (136) — —

Gain on sale recognized due to lease classification $ 3,822 $ — $ —

The accompanying notes are an integral part of these consolidated financial statements.

F-9

REXFORD INDUSTRIAL REALTY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization

Rexford Industrial Realty, Inc. is a self-administered and self-managed full-service real estate investment trust (“REIT”) focused on owning and operating industrial properties in Southern California infill markets. We were formed as a Maryland corporation on January 18, 2013 and Rexford Industrial Realty, L.P. (the “Operating Partnership”), of which we are the sole general partner, was formed as a Maryland limited partnership on January 18, 2013. Through our controlling interest in our Operating Partnership and its subsidiaries, we own, manage, lease, acquire and develop industrial real estate principally located in Southern California infill markets, and from time to time, acquire or provide mortgage debt secured by industrial property. As of December 31, 2020, our consolidated portfolio consisted of 248 properties with approximately 31.5 million rentable square feet. In addition, we currently manage an additional 20 properties with approximately 1.0 million rentable square feet.

The terms “us,” “we,” “our,” and the “Company” as used in these financial statements refer to Rexford Industrial Realty, Inc. and, unless the context requires otherwise, its subsidiaries (including our Operating Partnership).

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying financial statements are the consolidated financial statements of Rexford Industrial Realty, Inc. and its subsidiaries, including our Operating Partnership. All significant intercompany balances and transactions have been eliminated in the consolidated financial statements.

Under consolidation guidance, we have determined that our Operating Partnership is a variable interest entity because the holders of limited partnership interests do not have substantive kick-out rights or participating rights. Furthermore, we are the primary beneficiary of the Operating Partnership because we have the obligation to absorb losses and the right to receive benefits from the Operating Partnership and the exclusive power to direct the activities of the Operating Partnership. As of December 31, 2020 and 2019, the assets and liabilities of the Company and the Operating Partnership are substantially the same, as the Company does not have any significant assets other than its investment in the Operating Partnership.

The accompanying consolidated financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) as established by the Financial Accounting Standards Board (“FASB”) in the Accounting Standards Codification (“ASC”) including modifications issued under Accounting Standards Updates (“ASUs”). Any reference to the number of properties, buildings and square footage are unaudited and outside the scope of our independent auditor’s audit of our financial statements in accordance with the standards of the Public Company Accounting Oversight Board.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include all cash and liquid investments with an initial maturity of three months or less. The carrying amount approximates fair value due to the short-term maturity of these investments.

Restricted Cash

Restricted cash is comprised of escrow reserves that we are required to set aside for future costs as required by certain agreements with our lenders, and from time to time, includes cash proceeds from property sales that are being held by qualified intermediaries for purposes of facilitating tax-deferred like-kind exchanges under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Code”). As of December 31, 2020, the restricted cash balance of $1.2 million was comprised of $1.2 million of net cash proceeds from the sale of one of our properties and $26 thousand of reserves for real estate taxes related to the property located at 960-970 Knox Street. As of December 31, 2019, we did not have a balance in restricted cash.