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 · completed before the Rexford internship

Lincoln Nguyen, Kyle Tran, Oscar Yan

10-Year DCF Model

Executive Summary

This analysis compares Rexford Industrial Realty (REXR) with EastGroup Properties (EGP), two industrial REITs running different portfolio strategies. A 10-year DCF for each, sensitivity testing, and market research support a pair trade recommendation.

The model uses T12 financial data, entry and exit cap rate scenarios, and downside stress cases. The recommendation weighs geographic concentration, tenant diversification, balance sheet strength, and exposure to 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
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 10-year pro forma

Base case · $ nominal, unlevered · years 1–5 and exit year

Base case

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

Source: company filings and author’s 10-year DCF. Academic underwriting. Not audited, realized, or sponsor-endorsed results. Completed Spring 2025 as USC coursework, before Kyle’s Rexford Industrial internship (Jun–Aug 2026).

Assumptions: 3% rent growth, 3% expense growth, 5.25% exit cap rate