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First Industrial Realty Trust Reports Fourth Quarter and Full Year 2020 Results
"
Portfolio Performance
- In service occupancy was 95.7% at the end of the fourth quarter of 2020, compared to 96.3% at the end of the third quarter of 2020, and 97.6% at the end of the fourth quarter of 2019.
- In the fourth quarter, rental rates increased 10.4% on a cash basis. For the full year, rental rates increased 13.5% on a cash basis, which is the second highest annual increase in company history.
- The Company, to date, has signed approximately 54% of 2021 rollovers by square footage at a cash rental rate increase of approximately 13%. We expect increases in cash rental rates for new and renewal lease commencements of 10% to 14% in 2021.
- For the fourth quarter, tenant retention of square footage up for renewal was 80.6% and leasing costs were
$3.58 per square foot. For the full year, tenant retention of square footage up for renewal was 76.8% and leasing costs were$3.01 per square foot. - Same property cash basis net operating income before termination fees ("SS NOI") increased 1.3% reflecting increased rental rates on new and renewal leasing and contractual rent escalations, partially offset by lower average occupancy and an increase in free rent. For the full year, SS NOI increased 4.4%.
In 2020, the Company:
- Collected 99% of monthly rental billings every month from April through December. Factoring in reserves, collections were nearly 100% during this period.
- Collected 100% of amounts outstanding related to tenants with deferral agreements.
During the fourth quarter, the Company:
- Leased 100% of its 358,000 square-foot First Redwood Logistics Center I Building A in the Inland Empire.
- Leased 100% of its 72,000 square-foot First Redwood Logistics Center II
Building C in the Inland Empire. - Leased 100% of its three-building 377,000 square-foot
First Cypress Creek Commerce Center inSouth Florida . - Leased 101,000 square feet of its 434,000 square-foot
First Park 121Building E in Dallas to bring that building to 100% leased. - Leased 100% of its 199,000 square-foot
First Fossil Creek Commerce Center inDallas . - Leased 25,000 square feet of its 125,000 square-foot
First Park 121Building B in Dallas to bring that building to 100% leased. - Leased 88,000 square feet of its 356,000 square-foot
First Joliet Logistics Center in Chicago to bring that building to 100% leased.
In the first quarter of 2021 to date, the Company:
- Leased 100% of its 44,000 square-foot First Redwood Logistics Center I Building B in the Inland Empire.
Investment and Disposition Activities
In the fourth quarter, the Company:
- Commenced development of two projects in
South Florida totaling 733,000 square feet, with an estimated total investment of$112.9 million comprised of:- First Park Miami - three buildings totaling 592,000 square feet;
$91.2 million estimated investment. - First 95 Distribution Center - 141,000 square feet;
$21.7 million estimated investment.
- First Park Miami - three buildings totaling 592,000 square feet;
- Acquired a 644,000 square-foot 100% leased building in
Phoenix for$42.6 million from ourFirst Park @ PV303 joint venture upon completion. Purchase price is net of our$5.2 million share of the joint venture's gain on sale and incentive fee. - Sold 15 buildings totaling 1.3 million square feet for a total of
$97.1 million . - Sold 93 acres to two separate users at the
First Park @ PV303 joint venture;First Industrial's share of the sales price was$11.0 million .
For the full year 2020, the Company:
- Placed in service 10 developments, 79% leased, totaling 2.5 million square feet, with an estimated total investment of
$221.7 million and a cash yield of 7.2%. - Acquired eight buildings totaling 1.5 million square feet for
$154.4 million . - Acquired six land parcels totaling 128.8 acres for a total investment of
$69.6 million . - Formed a new joint venture with
Diamond Realty , theU.S. real estate investment arm of Mitsubishi Corporation, that acquired 569 acres at the Camelback 303 business park inPhoenix . The total purchase price was$70.5 million andFirst Industrial has a 43% interest in the venture. - Sold 28 buildings totaling 1.9 million square feet for a total of
$153.4 million . This excludes the sale below in which the tenant exercised its purchase option. - Closed on the sale of a 618,000 square-foot building in Phoenix for $54.5 million. The transaction was recognized in the third quarter of 2019 at the time the tenant exercised its purchase option.
In the first quarter of 2021, the Company:
- Expects to commence development of three projects totaling 1.4 million square feet, with an estimated total investment of
$99.6 million comprised of:First Park @ PV303Building C inPhoenix - 548,000 square feet;$42.6 million estimated investment, site wholly owned by FR.- First Rockdale IV in
Nashville - 500,000 square feet;$26.8 million estimated investment. - First Wilson Logistics Center I in the Inland Empire - 303,000 square feet;
$30.2 million estimated investment.
- Acquired a 4.9-acre land site adjacent to our
First March Logistics Center site in the Inland Empire East for$2.7 million . - Expects to sell one building in
Houston totaling 664,000 square feet for an estimated sales price of$42 million .
"We are very pleased with the tenant demand we saw in the fourth quarter in our core portfolio and developments," said
Common Stock Dividend Increased
The board of directors declared a common dividend of
Outlook for 2021
"We are optimistic about the economic recovery strengthening as COVID-19 vaccines are distributed, treatments continue to advance, and business activity broadens," added
Low End of |
High End of |
|||
Guidance for 2021 |
Guidance for 2021 |
|||
(Per share/unit) |
(Per share/unit) |
|||
Net Income |
$ 1.06 |
$ 1.16 |
||
Add: Real Estate Depreciation/Amortization |
0.98 |
0.98 |
||
Less: Projected Gain on Sale of Real Estate (1) |
(0.19) |
(0.19) |
||
FFO (NAREIT Definition) |
$ 1.85 |
$ 1.95 |
(1) |
Gain on sale of real estate through |
The following assumptions were used for guidance:
- Average quarter-end in service occupancy of 95.5% to 96.5%.
- Same store NOI growth on a cash basis before termination fees of 3.0% to 4.0% for the full year. This range assumes 2021 bad debt expense of
$2.0 million which is consistent with last year's pre-pandemic assumption and compares to$1.8 million of realized bad debt expense in 2020. - General and administrative expense of approximately
$33.0 million to$34.0 million . - Includes the incremental costs expected in 2021 related to the Company's developments completed and under construction as of
December 31, 2020 and the aforementioned first quarter 2021 starts ofFirst Park @ PV303Building C , First Rockdale IV and First Wilson Logistics Center I. In total, the Company expects to capitalize$0.05 per share of interest in 2021. - Reflects the expected payoff of an approximately
$57.7 million secured debt maturity in the third quarter with an interest rate of 4.85%. - Reflects the impact of the expected first quarter sale of the 664,000 square-foot building in
Houston discussed above. - Other than the transactions discussed in this release, guidance does not include the impact of:
- any future debt repurchases prior to maturity or future debt issuances,
- any future investments or property sales, or
- any future equity issuances.
Conference Call
The Company's fourth quarter and full year 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.
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||||||||
Selected Financial Data |
||||||||
(Unaudited) |
||||||||
(In thousands except per share/Unit data) |
||||||||
Three Months Ended |
Twelve Months Ended |
|||||||
|
|
|
|
|||||
2020 |
2019 |
2020 |
2019 |
|||||
Statements of Operations and Other Data: |
||||||||
Total Revenues |
$ 112,289 |
$ 110,758 |
$ 448,028 |
$ 425,984 |
||||
Property Expenses |
(31,708) |
(30,642) |
(119,195) |
(116,585) |
||||
General and Administrative (a) |
(7,878) |
(8,040) |
(32,848) |
(28,569) |
||||
Depreciation of Corporate FF&E |
(213) |
(186) |
(824) |
(713) |
||||
Depreciation and Other Amortization of Real Estate |
(31,893) |
(31,065) |
(128,814) |
(120,516) |
||||
Total Expenses |
(71,692) |
(69,933) |
(281,681) |
(266,383) |
||||
Gain on Sale of Real Estate |
57,157 |
71,564 |
86,751 |
124,942 |
||||
Interest Expense |
(13,429) |
(12,708) |
(51,293) |
(50,273) |
||||
Amortization of Debt Issuance Costs |
(951) |
(788) |
(3,428) |
(3,218) |
||||
Income from Operations Before Equity in Income (Loss) of |
||||||||
Joint Ventures and Income Tax Provision |
83,374 |
98,893 |
198,377 |
231,052 |
||||
Equity in Income (Loss) of Joint Ventures |
4,436 |
(53) |
4,200 |
16,235 |
||||
Income Tax Provision |
(2,303) |
(14) |
(2,408) |
(3,406) |
||||
Net Income |
85,507 |
98,826 |
200,169 |
243,881 |
||||
Net Income Attributable to the Noncontrolling Interests |
(1,780) |
(1,965) |
(4,180) |
(5,106) |
||||
Net Income Available to |
||||||||
Common Stockholders and Participating Securities |
$ 83,727 |
$ 96,861 |
$ 195,989 |
$ 238,775 |
||||
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 |
$ 83,727 |
$ 96,861 |
$ 195,989 |
$ 238,775 |
||||
Depreciation and Other Amortization of Real Estate |
31,893 |
31,065 |
128,814 |
120,516 |
||||
Noncontrolling Interests |
1,780 |
1,965 |
4,180 |
5,106 |
||||
Gain on Sale of Real Estate |
(57,157) |
(71,564) |
(86,751) |
(124,942) |
||||
Gain on Sale of Real Estate from Joint Ventures |
(4,443) |
- |
(4,443) |
(16,714) |
||||
Income Tax Provision - Allocable to Gain on Sale of Real Estate |
||||||||
including Joint Ventures |
2,198 |
- |
2,198 |
3,095 |
||||
Funds From Operations (NAREIT) ("FFO") (b) |
$ 57,998 |
$ 58,327 |
$ 239,987 |
$ 225,836 |
||||
Amortization of Equity Based Compensation |
3,104 |
2,431 |
12,931 |
8,376 |
||||
Amortization of Debt Discounts and Hedge Costs |
104 |
104 |
416 |
239 |
||||
Amortization of Debt Issuance Costs |
951 |
788 |
3,428 |
3,218 |
||||
Depreciation of Corporate FF&E |
213 |
186 |
824 |
713 |
||||
Non-incremental Building Improvements |
(5,744) |
(6,007) |
(15,935) |
(13,809) |
||||
Non-incremental Leasing Costs |
(13,641) |
(8,510) |
(27,347) |
(20,139) |
||||
Capitalized Interest |
(1,818) |
(1,596) |
(6,847) |
(5,757) |
||||
Capitalized Overhead |
(1,104) |
(767) |
(4,936) |
(3,225) |
||||
Straight- |
||||||||
and Lease Inducements |
(2,505) |
(3,810) |
(9,939) |
(11,570) |
||||
Adjusted Funds From Operations ("AFFO") (b) |
$ 37,558 |
$ 41,146 |
$ 192,582 |
$ 183,882 |
||||
|
||||||||
Selected Financial Data |
||||||||
(Unaudited) |
||||||||
(In thousands except per share/Unit data) |
||||||||
RECONCILIATION OF NET INCOME AVAILABLE TO |
||||||||
FIRST INDUSTRIAL REALTY TRUST, INC.'S COMMON |
Three Months Ended |
Twelve Months Ended |
||||||
STOCKHOLDERS AND PARTICIPATING SECURITIES TO |
|
|
|
|
||||
ADJUSTED EBITDA (b) AND NOI (b) |
2020 |
2019 |
2020 |
2019 |
||||
Net Income Available to |
||||||||
Common Stockholders and Participating Securities |
$ 83,727 |
$ 96,861 |
$ 195,989 |
$ 238,775 |
||||
Interest Expense |
13,429 |
12,708 |
51,293 |
50,273 |
||||
Depreciation and Other Amortization of Real Estate |
31,893 |
31,065 |
128,814 |
120,516 |
||||
Severance and Retirement Benefit Expense (a) |
- |
- |
1,204 |
- |
||||
Income Tax Provision - Not Allocable to Gain on Sale of Real Estate |
105 |
14 |
210 |
311 |
||||
Income Tax Provision - Allocable to Gain on Sale of Real Estate |
||||||||
including Joint Ventures |
2,198 |
- |
2,198 |
3,095 |
||||
Noncontrolling Interests |
1,780 |
1,965 |
4,180 |
5,106 |
||||
Amortization of Debt Issuance Costs |
951 |
788 |
3,428 |
3,218 |
||||
Depreciation of Corporate FF&E |
213 |
186 |
824 |
713 |
||||
Gain on Sale of Real Estate |
(57,157) |
(71,564) |
(86,751) |
(124,942) |
||||
Gain on Sale of Real Estate from Joint Ventures |
(4,443) |
- |
(4,443) |
(16,714) |
||||
Adjusted EBITDA (b) |
$ 72,696 |
$ 72,023 |
$ 296,946 |
$ 280,351 |
||||
General and Administrative (a) |
7,878 |
8,040 |
31,644 |
28,569 |
||||
FFO from Joint Ventures |
7 |
53 |
243 |
479 |
||||
Net Operating Income ("NOI") (b) |
$ 80,581 |
$ 80,116 |
$ 328,833 |
$ 309,399 |
||||
Non-Same Store NOI |
(9,028) |
(9,331) |
(44,910) |
(32,923) |
||||
Same Store NOI Before Same Store Adjustments (b) |
$ 71,553 |
$ 70,785 |
$ 283,923 |
$ 276,476 |
||||
Straight-line Rent |
(712) |
(472) |
(1,034) |
(5,141) |
||||
Above (Below) Market Lease Amortization |
(230) |
(267) |
(941) |
(1,056) |
||||
Lease Termination Fees |
(10) |
(344) |
(713) |
(1,012) |
||||
Same Store NOI (Cash Basis without Termination Fees) (b) |
$ 70,601 |
$ 69,702 |
$ 281,235 |
$ 269,267 |
||||
Weighted Avg. Number of Shares/Units Outstanding - Basic |
130,929 |
128,837 |
129,752 |
128,831 |
||||
Weighted Avg. Number of Shares Outstanding - Basic |
128,919 |
126,682 |
127,711 |
126,392 |
||||
Weighted Avg. Number of Shares/Units Outstanding - Diluted |
131,339 |
129,308 |
130,127 |
129,241 |
||||
Weighted Avg. Number of Shares Outstanding - Diluted |
129,125 |
127,030 |
127,904 |
126,691 |
||||
Per Share/Unit Data: |
||||||||
Net Income Available to |
||||||||
Common Stockholders and Participating Securities |
$ 83,727 |
$ 96,861 |
$ 195,989 |
$ 238,775 |
||||
Less: Allocation to Participating Securities |
(137) |
(199) |
(314) |
(518) |
||||
Net Income Available to |
$ 83,590 |
$ 96,662 |
$ 195,675 |
$ 238,257 |
||||
Basic Per Share |
$ 0.65 |
$ 0.76 |
$ 1.53 |
$ 1.89 |
||||
Diluted Per Share |
$ 0.65 |
$ 0.76 |
$ 1.53 |
$ 1.88 |
||||
FFO (NAREIT) (b) |
$ 57,998 |
$ 58,327 |
$ 239,987 |
$ 225,836 |
||||
Less: Allocation to Participating Securities |
(196) |
(186) |
(791) |
(679) |
||||
FFO (NAREIT) Allocable to Common Stockholders and Unitholders |
$ 57,802 |
$ 58,141 |
$ 239,196 |
$ 225,157 |
||||
Basic Per Share/Unit |
$ 0.44 |
$ 0.45 |
$ 1.84 |
$ 1.75 |
||||
Diluted Per Share/Unit |
$ 0.44 |
$ 0.45 |
$ 1.84 |
$ 1.74 |
||||
Common Dividends/Distributions Per Share/Unit |
$ 0.25 |
$ 0.23 |
$ 1.00 |
$ 0.92 |
||||
Balance Sheet Data (end of period): |
|
|
||||||
2020 |
2019 |
|||||||
|
$ 4,087,633 |
$ 3,830,209 |
||||||
Total Assets |
3,791,938 |
3,518,828 |
||||||
Debt |
1,594,641 |
1,483,565 |
||||||
Total Liabilities |
1,844,618 |
1,720,565 |
||||||
Total Equity |
1,947,320 |
1,798,263 |
Twelve Months Ended |
||
|
||
a) |
||
General and Administrative per the Form 10-K |
32,848 |
|
Severance and Retirement Benefit Expense |
(1,204) |
|
General and Administrative per Reconciliation within the Selected Financial Data |
31,644 |
|
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 |
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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 joint ventures. For the year 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 not allocable to gain on sale of real estate, plus amortization of equity 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. |
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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. |
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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