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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
April 21, 2004
Date of Report (Date of earliest event reported)
FIRST INDUSTRIAL REALTY TRUST, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 1-13102 36-3935116
(State or other jurisdiction of (Commission file (I.R.S. Employer
incorporation or organization) number) Identification No.)
311 S. WACKER DRIVE, SUITE 4000
CHICAGO, ILLINOIS 60606
(Address of principal executive offices, zip code)
(312) 344-4300
(Registrant's telephone number, including area code)
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ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On April 21, 2004, First Industrial Realty Trust, Inc. (the "Company")
issued a press release announcing its financial results for the fiscal quarter
ended March 31, 2004 and certain other information.
Attached and incorporated by reference as Exhibit 99.1 is a copy of the
Company's press release dated April 21, 2004, announcing its financial results
for the fiscal quarter ended March 31, 2004.
On April 22, 2004, the Company will hold an investor conference and
webcast at 11a.m. EDT to disclose and discuss the financial results for the
first fiscal quarter of 2004.
The information furnished in this report, including the Exhibit
attached hereto, shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933, except as shall be
expressly set forth by specific reference to such filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST INDUSTRIAL REALTY TRUST, INC.
By: /s/ Michael J. Havala
-----------------------------------
Name: Michael J. Havala
Title: Chief Financial Officer
Date: April 21, 2004
EXHIBIT INDEX
Number Description
- ------ -------------------------------------
99.1 Press Release, dated April 21, 2004.
EXHIBIT 99.1
FIRST INDUSTRIAL REALTY TRUST REPORTS
FIRST QUARTER RESULTS
o Improved Occupancy for the Fourth Consecutive Quarter
o Generated Net Economic Gains of $16.2 Million
o Leased 5.5 Million Square Feet
CHICAGO, April 21, 2004 - First Industrial Realty Trust, Inc. (NYSE: FR), the
nation's largest provider of diversified industrial real estate, today announced
results for the quarter ended March 31, 2004. Diluted earnings per share,
including income from discontinued operations and before extraordinary items
(EPS), was $0.57, compared to $0.66 for the same quarter in 2003. Excluding the
$0.24 per share in income related to a lease termination fee the Company
received in the first quarter of 2003, EPS increased by 34.7 percent in the
first quarter of 2004. Earnings in the quarter were $23.0 million, compared to
$25.5 million for the same quarter in 2003.
"We remain encouraged by the improving economic outlook and the uptick in
activity we have seen in many of our markets throughout the country," said Mike
Brennan, president and chief executive officer. "Our results to-date are on
track with our plan and we believe we have significant growth opportunity both
in our portfolio and through the redeployment of certain assets into
higher-yielding investments. Additionally, our first quarter investment results
continue to demonstrate our ability to successfully generate industry-leading
unleveraged internal rates of return."
The highlights of the Company's results are presented below:
Portfolio Performance
o Leased 5.5 million square feet during the quarter.
o Increased occupancy to 88.5% at quarter end.
o Tenant retention was 64.2% for the quarter.
o Actual cash-on-cash rental rates declined 3.7% for the quarter.
o Same property net operating income (NOI) declined 2.9% for the quarter
excluding $10.7 million in income related to a lease termination fee the
Company received in the first quarter of 2003. Including the lease
termination fee, same property NOI declined 21.0%.
-more-
Page 2 of 7
Investment Performance
o For the quarter, net economic gains were $16.2 million, comprised of $7.8
million from merchant sales, $8.0 million from existing property sales and
$0.4 million from land sales.
o For the quarter, acquired $55.2 million of property, comprising 1.9 million
square feet, at a stabilized weighted average 10.5% capitalization (cap)
rate.
o $70.5 million in property acquisitions currently under contract or letter
of intent.
o For the quarter, placed in service $15.4 million of new developments,
comprising 338,748 square feet, with an expected aggregate first-year
stabilized yield of approximately 8.5%.
o Development under construction at the end of the quarter stood at $155.2
million and was 70% leased.
o For the quarter, sold $111.9 million of property, including land, at a
weighted average 8.5% cap rate and a weighted average 20.8% unleveraged
internal rate of return (IRR).
o The Company and its partner, the Kuwait Finance House (KFH), agreed to
offer for sale the properties owned by their institutional fund formed in
2001.
o The pipeline of properties that the Company expects to sell over the next
18 months is $746 million.
Solid Financial Position
o Fixed-charge coverage was 2.3 times and interest coverage was 2.8 times.
o Unencumbered assets represented 97.2% of total assets at quarter end.
o The weighted average maturity of permanent debt at the end of the quarter
was 10.4 years, one of the longest in the REIT industry.
Supplemental Reporting Measure
Funds from operations (FFO) per share/unit decreased 11.0 percent to $0.81 per
share/unit on a diluted basis, compared to $0.91 per share/unit on a diluted
basis for the same quarter in 2003. Excluding the $0.24 per share in income
related to a lease termination fee the Company received in the first quarter of
2003, FFO per share/unit increased by 20.5 percent in the first quarter of 2004.
FFO totaled $37.9 million for the quarter, compared to $41.2 million for the
first quarter in 2003. First Industrial defines FFO as net income available to
common stockholders, plus depreciation and amortization of real estate, minus
accumulated depreciation and amortization on real estate sold.
Outlook for 2004
Brennan continued, "We believe we have significant earnings growth opportunity
within our current portfolio, and while we continue to expect a competitive
leasing environment in 2004, we expect occupancy and market rents to strengthen
as the year progresses.
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Page 3 of 7
"We are estimating a full-year 2004 EPS range of between $2.15 and $2.35. This
estimate assumes slightly negative same property NOI growth in 2004, excluding
the $10.7 million in income related to a lease termination fee the Company
received in the first quarter of 2003. Sales volume in 2004 is assumed to be
approximately $400 million to $500 million with a 8.0% to 9.0% average cap rate,
with book gains from property sales/fees of between $95 million and $105
million. Investment volume assumptions for 2004, which include both new
developments and acquisitions, are approximately $400 million to $500 million
with a 9.0% to 10.0% average cap rate. We assume no significant changes in
relative G&A or capital expenditures, nor do we assume any significant changes
in our balance sheet structure. We estimate full-year 2004 FFO per share/unit in
the range of $3.35 to $3.55, with second quarter 2004 FFO per share/unit in the
range of $0.73 to $0.83. Our assumption for net economic gains for 2004 is
between $60 million and $70 million, weighted toward the second half of the
year."
Low End of High End of
Guidance for Guidance for
2Q 2004 2Q 2004
(Per share/unit) (Per share/unit)
---------------- ----------------
Net Income Available to Common Stockholders $ 0.41 $ 0.51
Add: Real Estate Depreciation/Amortization 0.48 0.48
Less: Accumulated Depreciation/Amortization on Real Estate Sold (0.16) (0.16)
---------------- ----------------
FFO $ 0.73 $ 0.83
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Low End of High End of
Guidance for 2004 Guidance for 2004
(Per share/unit) (Per share/unit)
----------------- -----------------
Net Income Available to Common Stockholders $ 2.15 $ 2.35
Add: Real Estate Depreciation/Amortization 1.94 1.94
Less: Accumulated Depreciation/Amortization on Real Estate Sold (0.74) (0.74)
---------------- ----------------
FFO $ 3.35 $ 3.55
================ ================
Brennan continued, "A number of factors could impact our ability to deliver
results in line with our assumptions, such as interest rates, the overall
economy, the supply and demand of industrial real estate, the timing and yields
for divestment and investment, and numerous other variables. There can be no
assurance that First Industrial can achieve such results for 2004. However, I
believe that First Industrial has the proper strategic and tactical design to
deliver such results. We believe our I-N-D-L infrastructure - with its offensive
and defensive characteristics - will continue to support our efforts and prove
its value."
COMPANY INFORMATION
First Industrial Realty Trust, Inc., the nation's largest provider of
diversified industrial real estate, serves every aspect of Corporate America's
industrial real estate needs, including customized supply chain solutions,
through its unique I-N-D-L operating platform, which utilizes a pure Industrial
focus and National scope to provide Diverse facility types, while offering
Local, full-service management and expertise. The Company owns, operates and has
under development 76 million square feet of industrial real estate in markets
throughout the United States. Building, buying, selling, leasing and managing
industrial property in major markets nationwide, First Industrial develops
long-term relationships with corporate real estate directors, tenants and
brokers to better serve customers with creative, flexible industrial real estate
solutions.
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Page 4 of 7
FORWARD-LOOKING INFORMATION
This press release contains forward-looking information about the Company. A
number of factors could cause the Company's actual results to differ materially
from those anticipated, including changes in: economic conditions generally and
the real estate market specifically, legislative/regulatory changes (including
changes to laws governing the taxation of real estate investment trusts),
availability of financing, interest rate levels, competition, supply and demand
for industrial properties in the Company's current and proposed market areas,
potential environmental liabilities, slippage in development or lease-up
schedules, tenant credit risks, higher-than-expected costs and changes in
general accounting principles, policies and guidelines applicable to real estate
investment trusts. For further information on these and other factors that could
impact the Company and the statements contained herein, reference should be made
to the Company's filings with the Securities and Exchange Commission.
A schedule of selected financial information is attached.
First Industrial Realty Trust, Inc. will host a quarterly conference call at
10:00 a.m. Central daylight time, 11:00 a.m. Eastern daylight time, on Thursday,
April 22, 2004. The call-in number is (800) 865-4460 and the passcode is "First
Industrial." The conference call will also be webcast live on First Industrial's
web site, www.firstindustrial.com, under the "Investor Relations" tab. The
webcast will be available on the Company's web site for approximately one week
following the call.
The Company's first quarter supplemental information can be viewed on First
Industrial's website, www.firstindustrial.com, under the "Investor Relations"
tab. For a hard copy of the Company's quarterly supplemental information report
or other investor materials, please contact:
Karen Henderson
First Industrial Realty Trust, Inc.
311 South Wacker Drive, Suite 4000
Chicago, IL 60606
Phone: (312) 344-4335 - Facsimile: (312) 922-9851
-more-
FIRST INDUSTRIAL REALTY TRUST, INC.
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT FOR PER SHARE/UNIT AND PROPERTY DATA)
(UNAUDITED)
THREE MONTHS ENDED
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MARCH 31, MARCH 31,
2004 2003
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STATEMENT OF OPERATIONS AND OTHER DATA:
Total Revenues $ 84,491 $ 86,727
Property Expenses (28,959) (27,380)
General & Administrative Expense (7,223) (6,764)
Amortization of Deferred Financing Costs (446) (438)
Amortization of Corporate F,F&E (319) (308)
Depreciation and Amortization of Real Estate (21,998) (16,801)
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Total Expenses (58,945) (51,691)
Interest Income 712 776
Interest Expense (23,698) (23,826)
Loss from Early Retirement of Debt -- (1,466)
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INCOME FROM CONTINUING OPERATIONS BEFORE EQUITY IN NET
INCOME OF JOINT VENTURES AND INCOME ALLOCATED TO
MINORITY INTEREST 2,560 10,520
Equity in Net Income of Joint Ventures (c) 245 174
Minority Interest Allocable to Continuing Operations 307 (862)
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INCOME FROM CONTINUING OPERATIONS 3,112 9,832
Income from Discontinued Operations (Including Gain on Sale
of Real Estate of $24,731 and $18,458 for the Three Months
Ended March 31, 2004 and 2003, respectively (b)) 25,835 23,070
Minority Interest Allocable to Discontinued Operations (b) (3,689) (3,456)
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INCOME BEFORE GAIN ON SALE OF REAL ESTATE 25,258 29,446
Gain on Sale of Real Estate 3,246 1,299
Minority Interest Allocable to Gain on Sale of Real Estate (464) (195)
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NET INCOME 28,040 30,550
Preferred Dividends (5,044) (5,044)
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NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 22,996 $ 25,506
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RECONCILIATION OF NET INCOME AVAILABLE TO
COMMON STOCKHOLDERS TO FFO (a) AND FAD (a)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 22,996 $ 25,506
Add: Depreciation and Amortization of Real Estate 21,998 16,801
Add: Depreciation and Amortization of Real Estate
- Included in Discontinued Operations 501 2,136
Add: Minority Interest 3,846 4,513
Add: Depreciation and Amortization of Real Estate- Joint Ventures (c) 433 384
Less: Accumulated Depreciation/Amortization on Real Estate Sold (11,827) (7,918)
Less: Accumulated Depreciation/Amortization on Real Estate
Sold- Joint Ventures (c) (5) (212)
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FUNDS FROM OPERATIONS ("FFO") (a) $ 37,942 $ 41,210
Add: Loss From Early Retirement of Debt -- 1,466
Add: Restricted Stock Amortization 1,404 1,131
Add: Amortization of Deferred Financing Costs 446 438
Add: Amortization of Corporate F,F&E 319 308
Less: Non-Incremental Capital Expenditures (7,218) (8,719)
Less: Straight-Line Rent (1,696) (401)
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FUNDS AVAILABLE FOR DISTRIBUTION ("FAD") (a) $ 31,197 $ 35,433
========== ==========
THREE MONTHS ENDED
-------------------------------
MARCH 31, MARCH 31,
2004 2003
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RECONCILIATION OF NET INCOME AVAILABLE TO
COMMON STOCKHOLDERS TO EBITDA (a) AND NOI (a)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 22,996 $ 25,506
Add: Interest Expense 23,698 23,826
Add: Depreciation and Amortization of Real Estate 21,998 16,801
Add: Depreciation and Amortization of Real Estate
- Included in Discontinued Operations 501 2,136
Add: Preferred Dividends 5,044 5,044
Add: Income Allocated to Minority Interest 3,846 4,513
Add: Loss From Early Retirement of Debt -- 1,466
Add: Amortization of Deferred Financing Costs 446 438
Add: Amortization of Corporate F,F&E 319 308
Add: Depreciation and Amortization of Real Estate- Joint Ventures (c) 433 384
Less: Accumulated Depreciation/Amortization on Real Estate
Sold- Joint Ventures (c) (5) (212)
Less: Accumulated Depreciation/Amortization on Real Estate Sold (11,827) (7,918)
------------ ------------
EBITDA (a) $ 67,449 $ 72,292
Add: General and Administrative Expense 7,223 6,764
Less: Net Economic Gains (16,150) (11,839)
Less: Equity in FFO of Joint Ventures (c) (673) (346)
------------ ------------
NET OPERATING INCOME ("NOI") (a) $ 57,849 $ 66,871
============ ============
WEIGHTED AVG. NUMBER OF SHARES/UNITS OUTSTANDING- BASIC 46,229 45,198
WEIGHTED AVG. NUMBER OF SHARES/UNITS OUTSTANDING- DILUTED 46,694 45,258
WEIGHTED AVG. NUMBER OF SHARES OUTSTANDING- BASIC 39,530 38,386
WEIGHTED AVG. NUMBER OF SHARES OUTSTANDING- DILUTED 39,995 38,446
PER SHARE/UNIT DATA:
FFO :
- Basic $ 0.82 $ 0.91
- Diluted $ 0.81 $ 0.91
Income from Continuing Operations Less Preferred Stock
Dividends Per Weighted Average Common Share Outstanding:
- Basic $ 0.02 $ 0.15
- Diluted $ 0.02 $ 0.15
Net Income Available to Common Stockholders Per Weighted
Average Common Share Outstanding:
- Basic $ 0.58 $ 0.66
- Diluted $ 0.57 $ 0.66
Dividends/Distributions $ 0.6850 $ 0.6850
FFO PAYOUT RATIO 83.5% 75.1%
FAD PAYOUT RATIO 101.5% 87.4%
BALANCE SHEET DATA (END OF PERIOD):
Real Estate Before Accumulated Depreciation $ 2,723,952 $ 2,692,941
Real Estate Held For Sale, Net 6,217 5,339
Total Assets 2,629,787 2,598,575
Debt 1,419,444 1,407,801
Total Liabilities 1,549,390 1,545,800
Stockholders' Equity and Minority Interest $ 1,080,397 $ 1,052,775
PROPERTY DATA (END OF PERIOD):
Total Properties 825 890
Total Gross Leasable Area (in sq ft) 58,533,396 59,099,354
Occupancy 88.5% 87.3%
(a) Investors in and analysts following the real estate industry utilize
FFO, NOI, EBITDA and FAD, variously defined, as supplemental
performance measures. While the Company believes net income available
to common stockholders, as defined by GAAP, is the most appropriate
measure, it considers FFO, NOI, EBITDA and FAD, given their wide use by
and relevance to investors and analysts, appropriate supplemental
performance measures. FFO, reflecting the assumption that real estate
asset values rise or fall with market conditions, principally adjusts
for the effects of GAAP depreciation and amortization of real estate
assets. NOI provides a measure of rental operations, and does not
factor in depreciation and amortization and non-property specific
expenses such as general and administrative expenses. EBITDA provides a
tool to further evaluate the ability to incur and service debt and to
fund dividends and other cash needs. FAD provides a tool to further
evaluate ability to fund dividends. In addition, FFO, NOI, EBITDA and
FAD are commonly used in various ratios, pricing multiples/yields and
returns and valuation calculations used to measure financial position,
performance and value.
The Company calculates FFO to be equal to net income available to
common stockholders plus depreciation and amortization on real estate
minus accumulated depreciation and amortization on real estate sold.
NOI is defined as revenues of the Company, minus property expenses such
as real estate taxes, repairs and maintenance, property management,
utilities, insurance and other expenses. NOI includes NOI from
discontinued operations.
EBITDA is defined as NOI plus the equity in FFO of the Company's joint
ventures, which are accounted for under the equity method of
accounting, plus Net Economic Gains (Losses), minus general and
administrative expenses. Net Economic Gains/Losses are calculated by
subtracting from gain on sale of real estate (calculated in accordance
with GAAP, including gains on sale of real estate classified as
discontinued operations) the recapture of accumulated depreciation and
amortization on real estate sold. EBITDA includes EBITDA from
discontinued operations.
FAD is defined as EBITDA minus GAAP interest expense, minus preferred
stock dividends, minus straight-line rental income, plus restricted
stock amortization, minus non-incremental capital expenditures.
Non-incremental capital expenditures are building improvements and
leasing costs required to maintain current revenues.
FFO, NOI, EBITDA and FAD 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,
EBITDA and FAD should not be considered as substitutes for net income
available to common stockholders (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, EBITDA and
FAD as calculated by the Company may not be comparable to similarly
titled, but differently calculated, measures of other REITs or to the
definition of FFO published by NAREIT.
(b) In August 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("FAS 144"). FAS 144
requires that the operations and gain (loss) on sale of all properties
sold subsequent to December 31, 2001, that were not held for sale at
December 31, 2001, and properties that were classified as held for sale
subsequent to December 31, 2001, be presented in discontinued
operations. FAS 144 also requires that prior periods be restated.
(c) Represents the Company's share of net income, depreciation and
amortization of real estate and accumulated depreciation and
amortization on real estate sold from the Company's joint ventures in
which it owns minority equity interests.
