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First Industrial Realty Trust Reports First Quarter 2020 Results
"Our first quarter financial results and portfolio performance were strong, reflecting the economic and industry conditions prior to the impact of the COVID-19 pandemic on the
Tenant Rent Collections During COVID-19 Pandemic
- At the end of March, collected 97% of March billings which is in line with pre-COVID-19 monthly collections.
- As of
April 22 nd, collected 93% of April billings including rent from Pier 1 Imports for a 644,000 square-foot facility inBaltimore .
Portfolio Performance
- In service occupancy was 97.1% at the end of the first quarter of 2020, compared to 97.6% at the end of the fourth quarter of 2019, and 97.3% at the end of the first quarter of 2019.
- Tenant retention of square footage up for renewal was 68.9% for the first quarter.
- Same property cash basis net operating income ("SS NOI") increased 8.4%. Lower free rent accounted for 4.1%, with the remainder primarily reflecting contractual rent escalations and increased rental rates on leasing, partially offset by slightly lower average occupancy.
- In the first quarter, rental rates increased 10.8% on a cash basis and 26.5% on a straight-line basis; leasing costs were
$2.70 per square foot.
Development Activity
During the first quarter, the Company:
- Placed in service the 644,000 square-foot Ferrero build-to-suit development at PV303 in
Phoenix ; total investment of$53.0 million and a stabilized yield of 7.9%.
Investment and Disposition Activities
In the first quarter, the Company:
Acquired Nottingham Ridge Logistics Center , a two-building development forward totaling 751,000 square feet inBaltimore . The total estimated investment is$82.0 million with an expected cash yield of 5.7%. The project is currently 15% pre-leased.- Acquired a 63-acre infill site for development of First Park Miami for
$48.9 million ; potentially buildable up to 1.2 million square feet. - Acquired a 23,000 square-foot building in the
East Bay market ofNorthern California for$4.9 million . - Acquired a land site in the Inland Empire East and a building for redevelopment in the
South Bay submarket ofLos Angeles for a total of$16.4 million . - Sold remaining 9-building portfolio in
Tampa comprised of 226,000 square feet for$26.5 million .
In the second quarter to date, the Company:
- Acquired a 39,000 square-foot building in the
East Bay market ofNorthern California for$9.1 million . - Sold two buildings totaling 191,000 square feet located in
Detroit andChicago for a total of$13.5 million .
Capital
During the first quarter, the Company:
- Paid a common dividend of
$0.25 per share/unit for the quarter endingMarch 31, 2020 onApril 20, 2020 to stockholders of record onMarch 31, 2020 , as previously disclosed. The new dividend rate represented an 8.7% increase from the prior rate of$0.23 per share/unit.
In the second quarter to date, the Company:
- Paid off a
$15.1 million mortgage loan at an interest rate of 6.5%.
"Our balance sheet is well-positioned to weather the economic impact of COVID-19," said
Outlook for 2020
"The COVID-19 pandemic has caused a pause in our nation's economic activity including that of some of our tenants," said
Low End of |
High End of |
|||
Guidance for 2020 |
Guidance for 2020 |
|||
(Per share/unit) |
(Per share/unit) |
|||
Net Income |
$ 0.91 |
$ 1.01 |
||
Add: Real Estate Depreciation/Amortization |
0.99 |
0.99 |
||
Less: |
(0.17) |
(0.17) |
||
FFO (NAREIT Definition) (1) |
$ 1.73 |
$ 1.83 |
(1) |
FFO before severance costs related to the closure of our |
The following assumptions were used:
- Average quarter-end in service occupancy of 96.0% to 97.0%, a reduction of 100 basis points at the midpoint. This assumes Pier 1 Imports vacates
July 1 st. - Same property NOI growth on a cash basis before termination fees of 2.75% to 4.25% for the full year, a decrease of 125 basis points at the midpoint. This range assumes 2020 bad debt expense of
$3.0 million , including approximately$300,000 realized in 1Q20. This is an increase of$1 million from prior guidance and excludes any potential non-cash write-offs of deferred rent receivables related to tenants that are having financial difficulties. - General and administrative expense of approximately
$31.0 million to$32.0 million . This range excludes$1.2 million of severance costs related to the closure of ourIndianapolis office and retirement benefit expense for accelerated vesting of equity awards. - Guidance includes the incremental costs expected in 2020 related to the Company's developments completed and under construction as of
March 31, 2020 . In total, the Company expects to capitalize$0.04 per share of interest in 2020. - Guidance reflects the second quarter payoff of an approximately
$15.1 million secured debt maturity with an interest rate of 6.5%. - Guidance reflects the impact of the expected sale of the 618,000 square-foot building in
Phoenix for$55 million in 3Q20. - Other than the above, guidance does not include the impact of:
- any other future debt repurchases prior to maturity or future debt issuances,
- any future investments or property sales,
- any future gain related to the final settlement of one insurance claim for a damaged property previously disclosed, or
- any future equity issuances.
Conference Call
The Company's first quarter 2020 supplemental information can be viewed at www.firstindustrial.com under the "Investors" tab.
FFO Definition
In accordance with the NAREIT definition of FFO,
About
Forward-Looking Information
This press release and the presentation to which it refers may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. We intend for such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on certain assumptions and describe our future plans, strategies and expectations, and are generally identifiable by use of the words "believe," "expect," "plan, "intend," "anticipate," "estimate," "project," "seek," "target," "potential," "focus," "may," "will," "should" or similar words. Although we believe the expectations reflected in forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that results will not materially differ. Factors which could have a materially adverse effect on our operations and future prospects include, but are not limited to: changes in national, international, regional and local economic conditions generally and real estate markets specifically; changes in legislation/regulation (including changes to laws governing the taxation of real estate investment trusts) local economic conditions generally and real estate markets specifically; changes in legislation/regulation (including changes to laws governing the taxation of real estate investment trusts) and actions of regulatory authorities; the uncertainty and economic impact of pandemics, epidemics or other public health emergencies or fear of such events, such as the recent outbreak of coronavirus disease 2019 (COVID-19); our ability to qualify and maintain our status as a real estate investment trust; the availability and attractiveness of financing (including both public and private capital) and changes in interest rates; the availability and attractiveness of terms of additional debt repurchases; our ability to retain our credit agency ratings; our ability to comply with applicable financial covenants; our competitive environment; changes in supply, demand and valuation of industrial properties and land in our current and potential market areas; our ability to identify, acquire, develop and/or manage properties on favorable terms; our ability to dispose of properties on favorable terms; our ability to manage the integration of properties we acquire; potential liability relating to environmental matters; defaults on or non-renewal of leases by our tenants; decreased rental rates or increased vacancy rates; higher-than-expected real estate construction costs and delays in development or lease-up schedules; potential natural disasters and other potentially catastrophic events such as acts of war and/or terrorism; litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; risks associated with our investments in joint ventures, including our lack of sole decision-making authority; and other risks and uncertainties described under the heading "Risk Factors" and elsewhere in our annual report on Form 10-K for the year ended
A schedule of selected financial information is attached.
Selected Financial Data (Unaudited) (In thousands except per share/Unit data) |
|||||
Three Months Ended |
|||||
|
|
||||
2020 |
2019 |
||||
Statements of Operations and Other Data: |
|||||
Total Revenues |
$ 110,343 |
$ 104,541 |
|||
Property Expenses |
(29,081) |
(30,168) |
|||
General and Administrative (a) |
(9,251) |
(6,802) |
|||
Depreciation of Corporate FF&E |
(194) |
(200) |
|||
Depreciation and Other Amortization of Real Estate |
(30,737) |
(29,855) |
|||
Total Expenses |
(69,263) |
(67,025) |
|||
Gain (Loss) on Sale of Real Estate |
13,993 |
(208) |
|||
Interest Expense |
(12,804) |
(12,767) |
|||
Amortization of Debt Issuance Costs |
(788) |
(831) |
|||
Income from Operations Before Equity in (Loss) Income of Joint Venture and Income Tax Benefit (Provision) |
41,481 |
23,710 |
|||
Equity in (Loss) Income of Joint Venture |
(29) |
844 |
|||
Income Tax Benefit (Provision) |
77 |
(214) |
|||
Net Income |
41,529 |
24,340 |
|||
Net Income Attributable to the Noncontrolling Interest |
(895) |
(537) |
|||
Net Income Available to Common Stockholders and Participating Securities |
$ 40,634 |
$ 23,803 |
|||
RECONCILIATION OF NET INCOME AVAILABLE TO FIRST INDUSTRIAL REALTY TRUST, INC.'S COMMON STOCKHOLDERS AND PARTICIPATING SECURITIES TO FFO (b) AND AFFO (b) |
|||||
Net Income Available to Common Stockholders and Participating Securities |
$ 40,634 |
$ 23,803 |
|||
Depreciation and Other Amortization of Real Estate |
30,737 |
29,855 |
|||
Noncontrolling Interest |
895 |
537 |
|||
(Gain) Loss on Sale of Depreciable Real Estate |
(13,993) |
208 |
|||
Gain on Sale of Real Estate from Joint Venture |
- |
(967) |
|||
Income Tax Provision - Gain on Sale of Real Estate from Joint Venture |
- |
218 |
|||
Funds From Operations (NAREIT) ("FFO") (b) |
$ 58,273 |
$ 53,654 |
|||
Amortization of Stock Based Compensation |
3,641 |
1,762 |
|||
Amortization of Debt Discounts and Hedge Costs |
104 |
25 |
|||
Amortization of Debt Issuance Costs |
788 |
831 |
|||
Depreciation of Corporate FF&E |
194 |
200 |
|||
Non-incremental Building Improvements |
(1,505) |
(1,551) |
|||
Non-incremental Leasing Costs |
(3,498) |
(3,598) |
|||
Capitalized Interest |
(1,558) |
(944) |
|||
Capitalized Overhead |
(1,720) |
(794) |
|||
Straight- and Lease Inducements |
(3,171) |
(3,075) |
|||
Adjusted Funds From Operations ("AFFO") (b) |
$ 51,548 |
$ 46,510 |
|||
Selected Financial Data (Unaudited) (In thousands except per share/Unit data) |
|||||
RECONCILIATION OF NET INCOME AVAILABLE TO FIRST INDUSTRIAL REALTY TRUST, INC.'S COMMON STOCKHOLDERS AND PARTICIPATING SECURITIES TO ADJUSTED EBITDA (b) AND NOI (b) |
|||||
Three Months Ended |
|||||
|
|
||||
2020 |
2019 |
||||
Net Income Available to Common Stockholders and Participating Securities |
$ 40,634 |
$ 23,803 |
|||
Interest Expense |
12,804 |
12,767 |
|||
Depreciation and Other Amortization of Real Estate |
30,737 |
29,855 |
|||
Severance and Retirement Benefit Expense (a) |
1,204 |
- |
|||
Income Tax Benefit |
(77) |
(4) |
|||
Income Tax Provision - Gain on Sale of Real Estate from Joint Venture |
- |
218 |
|||
Noncontrolling Interest |
895 |
537 |
|||
Amortization of Debt Issuance Costs |
788 |
831 |
|||
Depreciation of Corporate FF&E |
194 |
200 |
|||
(Gain) Loss on Sale of Real Estate |
(13,993) |
208 |
|||
Gain on Sale of Real Estate from Joint Venture |
- |
(967) |
|||
Adjusted EBITDA (b) |
$ 73,186 |
$ 67,448 |
|||
General and Administrative (a) |
8,047 |
6,802 |
|||
FFO from Joint Venture |
29 |
123 |
|||
Net Operating Income ("NOI") (b) |
$ 81,262 |
$ 74,373 |
|||
Non-Same Store NOI |
(8,391) |
(4,147) |
|||
Same Store NOI Before Same Store Adjustments (b) |
$ 72,871 |
$ 70,226 |
|||
Straight-line Rent |
154 |
(2,840) |
|||
Above (Below) Market Lease Amortization |
(257) |
(259) |
|||
Lease Termination Fees |
(616) |
(571) |
|||
Same Store NOI (Cash Basis without Termination Fees) (b) |
$ 72,152 |
$ 66,556 |
|||
Weighted Avg. Number of Shares/Units Outstanding - Basic |
129,070 |
128,818 |
|||
Weighted Avg. Number of Shares Outstanding - Basic |
126,934 |
126,194 |
|||
Weighted Avg. Number of Shares/Units Outstanding - Diluted |
129,400 |
129,178 |
|||
Weighted Avg. Number of Shares Outstanding - Diluted |
127,111 |
126,456 |
|||
Per Share/Unit Data: |
|||||
Net Income Available to Common Stockholders and Participating Securities |
$ 40,634 |
$ 23,803 |
|||
Less: Allocation to Participating Securities |
(59) |
(60) |
|||
Net Income Available to |
$ 40,575 |
$ 23,743 |
|||
Basic and Diluted Per Share |
$ 0.32 |
$ 0.19 |
|||
FFO (NAREIT) (b) |
$ 58,273 |
$ 53,654 |
|||
Less: Allocation to Participating Securities |
(172) |
(137) |
|||
FFO (NAREIT) Allocable to Common Stockholders and Unitholders |
$ 58,101 |
$ 53,517 |
|||
Basic Per Share/Unit |
$ 0.45 |
$ 0.42 |
|||
Diluted Per Share/Unit |
$ 0.45 |
$ 0.41 |
|||
Common Dividends/Distributions Per Share/Unit |
$ 0.25 |
$ 0.23 |
|||
Balance Sheet Data (end of period): |
|
|
|||
2020 |
2019 |
||||
|
|
$ 3,830,209 |
|||
Total Assets |
3,662,774 |
3,518,828 |
|||
Debt |
1,644,783 |
1,483,565 |
|||
Total Liabilities |
1,871,793 |
1,720,565 |
|||
Total Equity |
1,790,981 |
1,798,263 |
Three Months Ended |
|
|
|
a) |
|
General and Administrative per the Form 10-Q |
9,251 |
Severance and Retirement Benefit Expense |
(1,204) |
General and Administrative per Reconciliation within the Selected Financial Data |
8,047 |
b) Investors in, and analysts following, the real estate industry utilize funds from operations ("FFO"), net operating income ("NOI"), adjusted EBITDA and adjusted funds from operations ("AFFO"), variously defined below, as supplemental performance measures. While we believe net income available to |
|
In accordance with the NAREIT definition of FFO, we calculate FFO to be equal to net income available to |
|
NOI is defined as our revenues, minus property expenses such as real estate taxes, repairs and maintenance, property management, utilities, insurance and other expenses. |
|
Adjusted EBITDA is defined as NOI minus general and administrative expenses and the equity in FFO from our investment in a joint venture. For the three months ended |
|
AFFO is defined as adjusted EBITDA minus interest expense, minus capitalized interest and overhead, (minus)/plus amortization of debt discounts and hedge costs, minus straight-line rental income, amortization of above (below) market leases and lease inducements, minus provision for income taxes or plus benefit for income taxes, plus amortization of stock based compensation, minus severance and retirement benefit expense and minus non-incremental capital expenditures. For AFFO purposes, we also exclude the income tax provision or benefit related to the gain or loss on sale of real estate, which is comparable to the NAREIT FFO treatment. Non-incremental capital expenditures refer to building improvements and leasing costs required to maintain current revenues plus tenant improvements amortized back to the tenant over the lease term. Excluded are first generation leasing costs, capital expenditures underwritten at acquisition and development/redevelopment costs. |
|
FFO, NOI, adjusted EBITDA and AFFO do not represent cash generated from operating activities in accordance with GAAP and are not necessarily indicative of cash available to fund cash needs, including the repayment of principal on debt and payment of dividends and distributions. FFO, NOI, adjusted EBITDA and AFFO should not be considered as substitutes for net income available to common stockholders and participating securities (calculated in accordance with GAAP) as a measure of results of operations or cash flows (calculated in accordance with GAAP) as a measure of liquidity. FFO, NOI, adjusted EBITDA and AFFO as currently calculated by us may not be comparable to similarly titled, but variously calculated, measures of other REITs. |
|
In addition, we consider cash-basis same store NOI ("SS NOI") to be a useful supplemental measure of our operating performance. Same store properties include all properties owned prior to |
|
We define SS NOI as NOI, less NOI of properties not in the |
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SOURCE
Art Harmon, Vice President, Investor Relations and Marketing, 312-344-4320