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First Industrial Realty Trust Reports Second Quarter 2021 Results
"Our leasing wins, portfolio performance and development pipeline reflect the outstanding effort of our team in the second quarter," said
Portfolio Performance
- In service occupancy was 96.6% at the end of the second quarter of 2021, compared to 95.7% at the end of the first quarter of 2021, and 97.7% at the end of the second quarter of 2020.
- Same property cash basis net operating income before termination fees ("SS NOI") increased 2.1%.
- Cash rental rates increased 15.7% and increased 29.5% on a straight-line basis.
- Tenant retention by square footage was 71.1% and leasing costs were
$3.28 per square foot.
During the second quarter, the Company:
- Leased 100% of the 250,000 square-foot
First Logistics Center @I-78 /81Building B inCentral Pennsylvania . - Leased 100% of the 100,000 square-foot
First Independence Logistics Center inPhiladelphia . - Leased 100% of the 259,000 square-foot
First Park Miami Building 2 inSouth Florida . The lease is expected to commence mid-first quarter of 2022. - Leased 100% of the 141,000 square-foot First 95 Distribution Center in
South Florida . The lease will commence upon completion, which is anticipated by the early fourth quarter. - Leased 117,000 square feet at its 199,000 square-foot First Grand Parkway Commerce Center
Building II inHouston to bring the two-building, 372,000 square-foot project to 55% leased. - Leased 100% of the 125,000 square-foot
First Park 121Building C inDallas . See "Investment and Disposition Activities" below. - Leased 109,000 square feet at its 219,000 square-foot
First Park Miami Building 1 inSouth Florida . See "Investment and Disposition Activities" below.
In the third quarter to-date, the Company:
- Leased 97,000 of the 220,000 square-foot
First Park 121Building A inDallas to bring the two-building, 345,000 square-foot phase 1 of the project to 64% leased.
Investment and Disposition Activities
In the second quarter, the Company:
- Commenced development of four projects totaling 2.7 million square feet, with an estimated total investment of
$266.0 million comprised of:First Logistics Center @ 283Building A inCentral Pennsylvania - 1.1 million square feet;$124.7 million estimated investment on a site acquired during the quarter for$83.0 million on which an additional 700,000 square feet can be developed.- First Rockdale V in
Nashville - 692,000 square feet; build-to-suit;$58.7 million estimated investment. First Park 121 Buildings C and D inDallas - 375,000 square feet total; pre-leased 100% of the 125,000 square-footBuilding C ;$30.0 million estimated investment.- First Aurora Commerce Center
Building E inDenver - 588,000 square feet;$52.6 million estimated investment.
- Acquired two buildings totaling 114,000 square feet located in
Denver andCentral Florida for$18.4 million . - Acquired the remaining 138-acres at our
First Park @ PV303 joint venture inPhoenix for$21.5 million that is developable up to 2.2 million square feet. Purchase price reflects a$10.2 million reduction fromFirst Industrial's share of the gain and earned promote. - Sold three buildings and one unit totaling 373,000 square feet located in
Dallas ,Milwaukee andSouth Florida for$26.2 million . - Sold a 36-acre site in
Central Pennsylvania for$11.0 million .
In the third quarter, the Company:
- Plans to commence development of three projects totaling 692,000 square feet, with an estimated total investment of
$107.5 million comprised of:First Park Miami Building 1 inSouth Florida - 219,000 square feet; 50% pre-leased;$38.8 million estimated investment.First Loop Logistics Park inCentral Florida - four buildings totaling 344,000 square feet;$44.8 million estimated investment.- First Steele in
Seattle - 129,000 square feet;$23.9 million estimated investment.
- Acquired a 95-acre site in the Inland Empire East for
$26.6 million that is developable up to 1.4 million square feet.
Capital
During the second quarter, the Company:
- Paid off a
$57.9 million mortgage loan with an interest rate of 4.85%.
In the third quarter, as previously announced, the Company:
- On
July 7, 2021 , closed a$750 million senior unsecured revolving credit facility which amended and restated its previous facility. The facility matures onJuly 7, 2025 and has two six-month extension options. The agreement provides for interest-only payments currently at an interest rate of LIBOR plus 77.5 basis points based on the Company's current credit ratings and consolidated leverage ratio which is a 32.5 basis point reduction in the credit spread compared to the prior facility. - On
July 7, 2021 , closed a new unsecured term loan facility that refinances its$200 million unsecured term loan facility previously scheduled to mature onJuly 15, 2021 . The new term loan matures onJuly 7, 2026 and provides for interest-only payments currently at an interest rate of LIBOR plus 85 basis points based on the Company's current credit ratings and consolidated leverage ratio which is a 65 basis point reduction in the credit spread compared to the prior term loan. With the interest rate swap agreements in place, the new fixed interest rate on the new term loan is 1.84%.
"Initial pricing on both facilities is based on the BBB+/Baa1 credit ratings level which is one level better than our current credit ratings and is evidence of our strong balance sheet and credit metrics," said
Outlook for 2021
"We are increasing the midpoint of our FFO guidance by
Low End of |
High End of |
|||||||
Guidance for 2021 |
Guidance for 2021 |
|||||||
(Per share/unit) |
(Per share/unit) |
|||||||
Net Income |
$ |
1.32 |
$ |
1.40 |
||||
Add: Real Estate Depreciation/Amortization |
0.99 |
0.99 |
||||||
Less: Gain on Sale of Real Estate, Net of Allocable Income Tax Provision |
(0.42) |
(0.42) |
||||||
FFO (NAREIT Definition) |
$ |
1.89 |
$ |
1.97 |
||||
The following assumptions were used for guidance:
- Average quarter-end in service occupancy of 96.0% to 97.0%, an increase of 25 basis points at the midpoint. This reflects the benefit of incremental leasing in the second quarter and a revised lease-up assumption for the 644,000 square-foot facility in
Baltimore from 3Q21 to 2022. - SS NOI growth on a cash basis before termination fees of 3.75% to 4.75% for the full year, an increase of 25 basis points at the midpoint. Same Store revenues for the six months ended
June 30, 2020 excludes approximately$1 million of insurance settlement gain relating to a building destroyed by fire in 2016. - 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
June 30, 2021 and the aforementioned planned third quarter starts ofFirst Park Miami Building 1,First Loop Logistics Park and First Steele. In total, the Company expects to capitalize$0.07 per share of interest in 2021. - 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 second quarter 2021 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 |
|||||||||||||||
|
|
|
|
|||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Statements of Operations and Other Data: |
||||||||||||||||
Total Revenues |
$ |
117,398 |
$ |
109,202 |
$ |
233,657 |
$ |
219,545 |
||||||||
Property Expenses |
(31,748) |
(28,051) |
(64,990) |
(57,132) |
||||||||||||
General and Administrative (a) |
(8,469) |
(8,234) |
(17,033) |
(17,485) |
||||||||||||
Depreciation of Corporate FF&E |
(212) |
(200) |
(400) |
(394) |
||||||||||||
Depreciation and Other Amortization of Real Estate |
(32,234) |
(32,032) |
(64,021) |
(62,769) |
||||||||||||
Total Expenses |
(72,663) |
(68,517) |
(146,444) |
(137,780) |
||||||||||||
Gain on Sale of Real Estate |
22,854 |
9,076 |
57,499 |
23,069 |
||||||||||||
Interest Expense |
(11,852) |
(12,285) |
(24,525) |
(25,089) |
||||||||||||
Amortization of Debt Issuance Costs |
(935) |
(784) |
(1,884) |
(1,572) |
||||||||||||
Income from Operations Before Equity in Loss of Joint Ventures and Income Tax Provision |
$ |
54,802 |
$ |
36,692 |
$ |
118,303 |
$ |
78,173 |
||||||||
Equity in Loss of Joint Ventures |
(66) |
(45) |
(139) |
(74) |
||||||||||||
Income Tax Provision |
(1,575) |
(221) |
(1,420) |
(144) |
||||||||||||
Net Income |
$ |
53,161 |
$ |
36,426 |
$ |
116,744 |
$ |
77,955 |
||||||||
Net Income Attributable to the Noncontrolling Interests |
(1,225) |
(757) |
(2,610) |
(1,652) |
||||||||||||
Net Income Available to Common Stockholders and Participating Securities |
$ |
51,936 |
$ |
35,669 |
$ |
114,134 |
$ |
76,303 |
||||||||
RECONCILIATION OF NET INCOME AVAILABLE TO STOCKHOLDERS AND PARTICIPATING SECURITIES TO FFO (b) AND AFFO (b) |
||||||||||||||||
Net Income Available to |
$ |
51,936 |
$ |
35,669 |
$ |
114,134 |
$ |
76,303 |
||||||||
Depreciation and Other Amortization of Real Estate |
32,234 |
32,032 |
64,021 |
62,769 |
||||||||||||
Noncontrolling Interests |
1,225 |
757 |
2,610 |
1,652 |
||||||||||||
Gain on Sale of Real Estate |
(22,854) |
(9,076) |
(57,499) |
(23,069) |
||||||||||||
Income Tax Provision - Allocable to Gain on Sale of Real Estate including Joint Ventures |
1,472 |
— |
1,551 |
— |
||||||||||||
Funds From Operations (NAREIT) ("FFO") (b) |
$ |
64,013 |
$ |
59,382 |
$ |
124,817 |
$ |
117,655 |
||||||||
Amortization of Equity Based Compensation |
3,451 |
3,108 |
7,064 |
6,749 |
||||||||||||
Amortization of Debt Discounts and Hedge Costs |
104 |
104 |
208 |
208 |
||||||||||||
Amortization of Debt Issuance Costs |
935 |
784 |
1,884 |
1,572 |
||||||||||||
Depreciation of Corporate FF&E |
212 |
200 |
400 |
394 |
||||||||||||
Non-incremental |
(2,287) |
(3,098) |
(4,637) |
(4,603) |
||||||||||||
Non-incremental Leasing Costs |
(9,429) |
(4,461) |
(14,048) |
(7,959) |
||||||||||||
Capitalized Interest |
(2,413) |
(1,900) |
(4,336) |
(3,458) |
||||||||||||
Capitalized Overhead |
(1,456) |
(998) |
(3,079) |
(2,718) |
||||||||||||
Straight- Leases and Lease Inducements |
(3,752) |
(2,364) |
(9,180) |
(5,535) |
||||||||||||
Adjusted Funds From Operations ("AFFO") (b) |
$ |
49,378 |
$ |
50,757 |
$ |
99,093 |
$ |
102,305 |
RECONCILIATION OF NET INCOME AVAILABLE TO STOCKHOLDERS AND PARTICIPATING SECURITIES TO |
||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||
|
|
|
|
|||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Net Income Available to |
$ |
51,936 |
$ |
35,669 |
$ |
114,134 |
$ |
76,303 |
||||||||
Interest Expense |
11,852 |
12,285 |
24,525 |
25,089 |
||||||||||||
Depreciation and Other Amortization of Real Estate |
32,234 |
32,032 |
64,021 |
62,769 |
||||||||||||
Severance and Retirement Benefit Expense (a) |
— |
— |
— |
1,204 |
||||||||||||
Income Tax Provision (Benefit) - Not Allocable to Gain on Sale |
103 |
221 |
(131) |
144 |
||||||||||||
Income Tax Provision - Allocable to Gain on Sale of Real Estate |
1,472 |
— |
1,551 |
— |
||||||||||||
Noncontrolling Interests |
1,225 |
757 |
2,610 |
1,652 |
||||||||||||
Amortization of Debt Issuance Costs |
935 |
784 |
1,884 |
1,572 |
||||||||||||
Depreciation of Corporate FF&E |
212 |
200 |
400 |
394 |
||||||||||||
Gain on Sale of Real Estate |
(22,854) |
(9,076) |
(57,499) |
(23,069) |
||||||||||||
Adjusted EBITDA (b) |
$ |
77,115 |
$ |
72,872 |
$ |
151,495 |
$ |
146,058 |
||||||||
General and Administrative (a) |
8,469 |
8,234 |
17,033 |
16,281 |
||||||||||||
FFO from Joint Ventures |
66 |
45 |
139 |
74 |
||||||||||||
Net Operating Income ("NOI") (b) |
$ |
85,650 |
$ |
81,151 |
$ |
168,667 |
$ |
162,413 |
||||||||
Non-Same Store NOI |
(7,073) |
(4,826) |
(12,831) |
(10,608) |
||||||||||||
Same Store NOI Before Same Store Adjustments (b) |
$ |
78,577 |
$ |
76,325 |
$ |
155,836 |
$ |
151,805 |
||||||||
Straight-line Rent |
(2,044) |
(1,393) |
(4,387) |
(3,038) |
||||||||||||
Above (Below) Market Lease Amortization |
(220) |
(249) |
(445) |
(530) |
||||||||||||
Lease Termination Fees |
(130) |
(86) |
(255) |
(702) |
||||||||||||
Same Store NOI (Cash Basis without Termination Fees) (b) |
$ |
76,183 |
$ |
74,597 |
$ |
150,749 |
$ |
147,535 |
||||||||
Weighted Avg. Number of Shares/Units Outstanding - Basic |
131,188 |
129,081 |
131,180 |
129,075 |
||||||||||||
Weighted Avg. Number of Shares Outstanding - Basic |
129,098 |
127,074 |
129,093 |
127,004 |
||||||||||||
Weighted Avg. Number of Shares/Units Outstanding - Diluted |
131,704 |
129,461 |
131,669 |
129,430 |
||||||||||||
Weighted Avg. Number of Shares Outstanding - Diluted |
129,187 |
127,266 |
129,179 |
127,189 |
||||||||||||
Per Share/Unit Data: |
||||||||||||||||
Net Income Available to |
$ |
51,936 |
$ |
35,669 |
$ |
114,134 |
$ |
76,303 |
||||||||
Less: Allocation to |
(61) |
(59) |
(122) |
(118) |
||||||||||||
Net Income Available to Common Stockholders |
$ |
51,875 |
$ |
35,610 |
$ |
114,012 |
$ |
76,185 |
||||||||
Basic and Diluted Per Share |
$ |
0.40 |
$ |
0.28 |
$ |
0.88 |
$ |
0.60 |
||||||||
FFO (NAREIT) (b) |
$ |
64,013 |
$ |
59,382 |
$ |
124,817 |
$ |
117,655 |
||||||||
Less: Allocation to |
(184) |
(204) |
(337) |
(376) |
||||||||||||
FFO (NAREIT) Allocable to Common Stockholders and Unitholders |
$ |
63,829 |
$ |
59,178 |
$ |
124,480 |
$ |
117,279 |
||||||||
Basic Per Share/Unit |
$ |
0.49 |
$ |
0.46 |
$ |
0.95 |
$ |
0.91 |
||||||||
Diluted Per Share/Unit |
$ |
0.48 |
$ |
0.46 |
$ |
0.95 |
$ |
0.91 |
||||||||
Common Dividends/Distributions Per Share/Unit |
$ |
0.27 |
$ |
0.25 |
$ |
0.54 |
$ |
0.50 |
Balance Sheet Data (end of period): |
|
|
||||||
|
$ |
4,308,922 |
$ |
4,087,633 |
||||
Total Assets |
3,863,828 |
3,791,938 |
||||||
Debt |
1,595,572 |
1,594,641 |
||||||
Total Liabilities |
1,861,780 |
1,844,618 |
||||||
Total Equity |
2,002,048 |
1,947,320 |
||||||
(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 joint ventures. 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 rent, 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. 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