REIT Pair Analysis: REXR vs. EGP

Comparative analysis of industrial REITs with 10-year DCF modeling, market research, and quantitative valuation

FBE 467 - Spring 2025

Lincoln Nguyen, Kyle Tran, Oscar Yan

10-Year DCF Model

Executive Summary

This comprehensive REIT pair analysis evaluates Rexford Industrial Realty (REXR) against EastGroup Properties (EGP), two leading industrial REITs with contrasting portfolio strategies. Through detailed 10-year DCF modeling, sensitivity analysis, and market research, we developed a pair trade recommendation based on risk-adjusted return projections and macroeconomic positioning.

Our analysis leveraged T12 financial data, entry/exit cap rate scenarios, and downside stress testing to evaluate investment merit. The recommendation considers geographic concentration risk, tenant diversification, balance sheet strength, and exposure to secular trends including e-commerce growth and manufacturing reshoring.

Investment Thesis

Overweight EGP, Underweight REXR: EGP's diversified Sunbelt exposure and conservative leverage position it favorably versus REXR's concentrated SoCal portfolio amid rising vacancy and trade policy uncertainty.

Key Metrics

$63.3M

Combined Market Analysis

13.2%

Target LP IRR

10 Years

DCF Projection Period

2.4x

Equity Multiple (EGP)

Investment Recommendation

Overweight

EGP

EastGroup Properties

NYSE: EGP | $156.60

12.4%

Projected IRR

97.1%

Occupancy

2.9x

Debt/EBITDA

States

Diversified Sunbelt exposure reduces concentration risk
Benefits from $234B CHIPS Act manufacturing reshoring
Conservative leverage provides financial flexibility
82.3% tenant retention rate demonstrates stickiness
Development pipeline in high-growth markets

Underweight

REXR

Rexford Industrial Realty

NYSE: REXR | $32.50

8.8%

Projected IRR

95.0%

Occupancy

5.1x

Debt/EBITDA

State (CA)

100% SoCal concentration creates geographic risk
Rising LA vacancy: 3.8% vs. 2.1% in 2023
Slowing rent growth: 5.2% YoY vs. 8.7% prior
Higher leverage limits acquisition flexibility
Port-dependent tenants face tariff exposure

10-Year DCF Model Preview

Download EGP Model Download REXR Model

EGP Pro Forma	Year 1	Year 2	Year 3	Year 4	Year 5	Year 10
Gross Rental Income	$892,456	$928,154	$965,280	$1,003,891	$1,044,047	$1,298,567
(-) Vacancy & Credit Loss	($26,774)	($27,845)	($28,958)	($30,117)	($31,321)	($38,957)
Effective Gross Income	$865,682	$900,309	$936,322	$973,774	$1,012,725	$1,259,610
(-) Operating Expenses	($237,036)	($244,147)	($251,471)	($259,015)	($266,786)	($316,489)
Net Operating Income	$628,646	$656,162	$684,851	$714,759	$745,939	$943,121
(-) Debt Service	($412,500)	($412,500)	($412,500)	($412,500)	($412,500)	($412,500)
Levered Cash Flow	$216,146	$243,662	$272,351	$302,259	$333,439	$530,621