On Tuesday, Truist Securities adjusted its price target for Rexford Industrial Realty (NYSE:REXR) shares, a real estate investment trust specializing in industrial property. The price target has been lowered to $53.00 from the previous $57.00, while the firm maintains a Buy rating on the stock.
The revision comes as Rexford announced a series of financial moves, including the acquisition of $1 billion worth of assets in Southern California at a 4.7% initial yield, which is expected to stabilize at 5.6%. Additionally, the company plans to issue $1.15 billion in exchangeable notes at a weighted average rate of 4.25%, and approximately 17 million shares of common stock at $48.95 each in a direct equity offering to an existing investor.
These strategic steps are aimed at pre-funding Rexford's pipeline, covering existing capital expenditure needs for development, and addressing a $400 million term loan maturing on July 19, 2024. The adjustment in the price target reflects a slightly higher cost of capital, according to Truist Securities.
The new price target of $53.00 is based on a combination of factors: a $51.90 discounted cash flow estimate, a projected net asset value (NAV) a year from now of $58.14 per share, and a multiple of 21 times the estimated funds from operations per share (FFOps) for 2024. Despite the reduction, the current trading price of Rexford's shares represents an 18% discount to the NAV estimate and is valued at 20 times the forecasted 2024 FFO, as per the firm's analysis.
InvestingPro Insights
As investors consider Truist Securities' revised price target for Rexford Industrial Realty, it's worth noting some key metrics and insights from InvestingPro. Rexford's commitment to increasing shareholder value is evident with its impressive track record of raising its dividend for 11 consecutive years. This is a testament to the company's financial health and disciplined approach to growth, which may appeal to income-focused investors.
Moreover, the company's liquid assets surpassing short-term obligations suggests a solid financial footing, which is crucial as it continues to expand its asset base in Southern California. However, it's important for investors to be aware that Rexford is trading at a high earnings multiple, with a P/E ratio of 40.29 and an adjusted P/E ratio for the last twelve months as of Q4 2023 at 46.2. This indicates that the stock is priced at a premium relative to its near-term earnings growth, which is reflected in a PEG ratio of 1.97 for the same period.
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