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First Industrial Realty Trust Reports Second Quarter 2020 Results
"
Tenant Rent Collections During COVID-19 Pandemic
As of
- Collected 98% of second quarter monthly rental billings.
- Collected 97% of July billings which is ahead of the pace experienced in the second quarter.
Portfolio Performance
- In service occupancy was 97.7% at the end of the second quarter of 2020, compared to 97.1% at the end of the first quarter of 2020, and 97.3% at the end of the second quarter of 2019.
- Tenant retention of square footage up for renewal was 88.7%.
- Same property cash basis net operating income before termination fees increased 6.3% reflecting increased rental rates on leasing, a decrease in free rent and contractual rent escalations, partially offset by an increase in bad debt expense and slightly lower average occupancy.
- Rental rates increased 11.0% on a cash basis and 32.4% on a straight-line basis; leasing costs were
$2.48 per square foot. - Cash rental rate change was 8.6% for the 83% of total 2020 rollovers signed through
July 22 nd.
Development and Value –Add Acquisition Activity
During the second quarter, the Company:
- Leased 100% of the 585,000 square-foot Nottingham Ridge Logistics Center
Building A development forward inBaltimore ; acquired in the first quarter, the total two-building project is now 93% occupied ahead of the 12-month budgeted lease-up.
In the third quarter to-date, the Company:
- Signed a build-to-suit lease for
First Nandina II Logistics Center in the Inland Empire; a new 221,000 square-foot build-to-suit development; total estimated investment of$22.4 million .
Investment and Disposition Activities
In the second quarter, the Company:
- Acquired a 39,000 square-foot building and an adjacent 46,000 square-foot building in the
East Bay market ofNorthern California for$17.8 million . - Acquired a 9.7-acre covered land investment in the Inland Empire for
$3.5 million . - Sold three buildings totaling 211,000 square feet located in
Detroit ,Chicago and our last asset inIndianapolis for a total of$14.6 million .
In the third quarter to-date, the Company:
- Acquired a 6.6-acre site in
Seattle for$6.1 million that is developable to 129,000 square feet.
Capital
During the second quarter, the Company:
- Paid off a
$15.1 million mortgage loan with an interest rate of 6.5%.
In the third quarter to-date, the Company:
- On
July 7, 2020 , entered into a note and guaranty agreement to issue$300 million of fixed rate senior unsecured notes in a private placement offering with a weighted average rate of 2.81%. The notes are comprised of two tranches:$100 million with a 10-year term at an interest rate of 2.74% and$200 million with a 12-year term at an interest rate of 2.84%. The Company anticipates closing the offering on or aboutSeptember 17, 2020 . - On
July 15, 2020 , entered into a new unsecured term loan facility that refinances its$200 million unsecured term loan facility previously scheduled to matureJanuary 29, 2021 . The new loan has an initial maturity date ofJuly 15, 2021 and includes two one-year extensions at the Company's option, subject to certain conditions. The new loan features interest-only payments and now bears an interest rate of LIBOR plus 150 basis points. The Company entered into new interest rate swap agreements that convert the new loan to a fixed interest rate of 2.49% beginning inFebruary 2021 .
"We further enhanced our liquidity position through the private placement offering and new unsecured term loan at attractive interest rates that additionally push out our maturities," said
Board of Directors
"We thank
Outlook for 2020
"We are increasing the midpoint of our FFO per share guidance by
Low End of |
High End of |
|||
Guidance for 2020 |
Guidance for 2020 |
|||
(Per share/unit) |
(Per share/unit) |
|||
Net Income |
$ 0.94 |
$ 1.02 |
||
Add: Real Estate Depreciation/Amortization |
1.00 |
1.00 |
||
Less: Gain on Sale of Real Estate Through |
(0.18) |
(0.18) |
||
FFO (NAREIT Definition) (1) |
$ 1.76 |
$ 1.84 |
(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%. This assumes Pier 1 Imports vacates
September 1 st. - Same property NOI growth on a cash basis before termination fees of 3.25% to 4.25% for the full year, an increase of 25 basis points at the midpoint. This range assumes full year 2020 bad debt expense of
$2.6 million , which includes approximately$0.8 million realized in the first half of 2020. This 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
June 30, 2020 and the aforementioned future start ofFirst Nandina II Logistics Center . In total, the Company expects to capitalize$0.04 per share of interest in 2020. - Guidance reflects the
$300 million private placement offering expected to close in the third quarter and the new$200 term loan facility which refinances the$200 million term loan facility previously scheduled to matureJanuary 29, 2021 . - 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 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 second 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 |
Six Months Ended |
|||||||
|
|
|
|
|||||
2020 |
2019 |
2020 |
2019 |
|||||
Statements of Operations and Other Data: |
||||||||
Total Revenues |
$ 109,202 |
$ 104,095 |
$ 219,545 |
$ 208,636 |
||||
Property Expenses |
(28,051) |
(27,379) |
(57,132) |
(57,547) |
||||
General and Administrative (a) |
(8,234) |
(6,782) |
(17,485) |
(13,584) |
||||
Depreciation of Corporate FF&E |
(200) |
(171) |
(394) |
(371) |
||||
Depreciation and Other Amortization of Real Estate |
(32,032) |
(29,603) |
(62,769) |
(59,458) |
||||
Total Expenses |
(68,517) |
(63,935) |
(137,780) |
(130,960) |
||||
Gain on Sale of Real Estate |
9,076 |
1,097 |
23,069 |
889 |
||||
Interest Expense |
(12,285) |
(12,332) |
(25,089) |
(25,099) |
||||
Amortization of Debt Issuance Costs |
(784) |
(794) |
(1,572) |
(1,625) |
||||
Income from Operations Before Equity in (Loss) Income of |
||||||||
Joint Venture and Income Tax Provision |
36,692 |
28,131 |
78,173 |
51,841 |
||||
Equity in (Loss) Income of Joint Venture |
(45) |
15,516 |
(74) |
16,360 |
||||
Income Tax Provision |
(221) |
(2,934) |
(144) |
(3,148) |
||||
Net Income |
36,426 |
40,713 |
77,955 |
65,053 |
||||
Net Income Attributable to the Noncontrolling Interest |
(757) |
(913) |
(1,652) |
(1,450) |
||||
Net Income Available to |
||||||||
Common Stockholders and Participating Securities |
$ 35,669 |
$ 39,800 |
$ 76,303 |
$ 63,603 |
||||
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 |
$ 35,669 |
$ 39,800 |
$ 76,303 |
$ 63,603 |
||||
Depreciation and Other Amortization of Real Estate |
32,032 |
29,603 |
62,769 |
59,458 |
||||
Noncontrolling Interest |
757 |
913 |
1,652 |
1,450 |
||||
Gain on Sale of Depreciable Real Estate |
(9,076) |
(1,097) |
(23,069) |
(889) |
||||
Gain on Sale of Real Estate from Joint Venture |
- |
(15,747) |
- |
(16,714) |
||||
Income Tax Provision - Gain on Sale of Real Estate from Joint Venture |
- |
2,877 |
- |
3,095 |
||||
Funds From Operations (NAREIT) ("FFO") (b) |
$ 59,382 |
$ 56,349 |
$ 117,655 |
$ 110,003 |
||||
Amortization of Stock Based Compensation |
3,108 |
2,053 |
6,749 |
3,815 |
||||
Amortization of Debt Discounts and Hedge Costs |
104 |
25 |
208 |
50 |
||||
Amortization of Debt Issuance Costs |
784 |
794 |
1,572 |
1,625 |
||||
Depreciation of Corporate FF&E |
200 |
171 |
394 |
371 |
||||
Non-incremental Building Improvements |
(3,098) |
(3,111) |
(4,603) |
(4,662) |
||||
Non-incremental Leasing Costs |
(4,461) |
(3,893) |
(7,959) |
(7,491) |
||||
Capitalized Interest |
(1,900) |
(1,376) |
(3,458) |
(2,320) |
||||
Capitalized Overhead |
(998) |
(825) |
(2,718) |
(1,619) |
||||
Straight- |
||||||||
and Lease Inducements |
(2,364) |
(3,182) |
(5,535) |
(6,257) |
||||
Adjusted Funds From Operations ("AFFO") (b) |
$ 50,757 |
$ 47,005 |
$ 102,305 |
$ 93,515 |
|
||||||||
Selected Financial Data |
||||||||
(Unaudited) |
||||||||
(In thousands except per share/Unit data) |
||||||||
RECONCILIATION OF NET INCOME AVAILABLE TO |
||||||||
|
Three Months Ended |
Six 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 |
$ 35,669 |
$ 39,800 |
$ 76,303 |
$ 63,603 |
||||
Interest Expense |
12,285 |
12,332 |
25,089 |
25,099 |
||||
Depreciation and Other Amortization of Real Estate |
32,032 |
29,603 |
62,769 |
59,458 |
||||
Severance and Retirement Benefit Expense (a) |
- |
- |
1,204 |
- |
||||
Income Tax Provision |
221 |
57 |
144 |
53 |
||||
Income Tax Provision - Gain on Sale of Real Estate from Joint Venture |
- |
2,877 |
- |
3,095 |
||||
Noncontrolling Interest |
757 |
913 |
1,652 |
1,450 |
||||
Amortization of Debt Issuance Costs |
784 |
794 |
1,572 |
1,625 |
||||
Depreciation of Corporate FF&E |
200 |
171 |
394 |
371 |
||||
Gain on Sale of Real Estate |
(9,076) |
(1,097) |
(23,069) |
(889) |
||||
Gain on Sale of Real Estate from Joint Venture |
- |
(15,747) |
- |
(16,714) |
||||
Adjusted EBITDA (b) |
$ 72,872 |
$ 69,703 |
$ 146,058 |
$ 137,151 |
||||
General and Administrative (a) |
8,234 |
6,782 |
16,281 |
13,584 |
||||
FFO from Joint Venture |
45 |
231 |
74 |
354 |
||||
Net Operating Income ("NOI") (b) |
$ 81,151 |
$ 76,716 |
$ 162,413 |
$ 151,089 |
||||
Non-Same Store NOI |
(8,239) |
(5,950) |
(16,920) |
(10,362) |
||||
Same Store NOI Before Same Store Adjustments (b) |
$ 72,912 |
$ 70,766 |
$ 145,493 |
$ 140,727 |
||||
Straight-line Rent |
(180) |
(1,990) |
(28) |
(4,768) |
||||
Above (Below) Market Lease Amortization |
(224) |
(264) |
(481) |
(524) |
||||
Lease Termination Fees |
(86) |
(413) |
(702) |
(985) |
||||
Same Store NOI (Cash Basis without Termination Fees) (b) |
$ 72,422 |
$ 68,099 |
$ 144,282 |
$ 134,450 |
||||
Weighted Avg. Number of Shares/Units Outstanding - Basic |
129,081 |
128,831 |
129,075 |
128,824 |
||||
Weighted Avg. Number of Shares Outstanding - Basic |
127,074 |
126,206 |
127,004 |
126,200 |
||||
Weighted Avg. Number of Shares/Units Outstanding - Diluted |
129,461 |
129,221 |
129,430 |
129,199 |
||||
Weighted Avg. Number of Shares Outstanding - Diluted |
127,266 |
126,489 |
127,189 |
126,472 |
||||
Per Share/Unit Data: |
||||||||
Net Income Available to |
||||||||
Common Stockholders and Participating Securities |
$ 35,669 |
$ 39,800 |
$ 76,303 |
$ 63,603 |
||||
Less: Allocation to Participating Securities |
(59) |
(89) |
(118) |
(149) |
||||
Net Income Available to |
$ 35,610 |
$ 39,711 |
$ 76,185 |
$ 63,454 |
||||
Basic and Diluted Per Share |
$ 0.28 |
$ 0.31 |
$ 0.60 |
$ 0.50 |
||||
FFO (NAREIT) (b) |
$ 59,382 |
$ 56,349 |
$ 117,655 |
$ 110,003 |
||||
Less: Allocation to Participating Securities |
(204) |
(177) |
(376) |
(314) |
||||
FFO (NAREIT) Allocable to Common Stockholders and Unitholders |
$ 59,178 |
$ 56,172 |
$ 117,279 |
$ 109,689 |
||||
Basic Per Share/Unit |
$ 0.46 |
$ 0.44 |
$ 0.91 |
$ 0.85 |
||||
Diluted Per Share/Unit |
$ 0.46 |
$ 0.43 |
$ 0.91 |
$ 0.85 |
||||
Common Dividends/Distributions Per Share/Unit |
$ 0.25 |
$ 0.23 |
$ 0.50 |
$ 0.46 |
Balance Sheet Data (end of period): |
|
|
||
2020 |
2019 |
|||
|
$ 4,055,488 |
$ 3,830,209 |
||
Total Assets |
3,651,884 |
3,518,828 |
||
Debt |
1,629,010 |
1,483,565 |
||
Total Liabilities |
1,855,211 |
1,720,565 |
||
Total Equity |
1,796,673 |
1,798,263 |
a) |
Six Months Ended |
|
General and Administrative per the Form 10-Q |
17,485 |
|
Severance and Retirement Benefit Expense |
(1,204) |
|
General and Administrative per Reconciliation within the Selected Financial Data |
16,281 |
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 six 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